March 24

Class Certified in Case Against LTC Insurer that Denied Coverage to Assisted Living Residents

A U.S. district court in Connecticut certifies a class action against a long-term care insurance company by policyholders who claim they were unfairly denied coverage because they lived in a managed care community or assisted living facility. Gardner v. Continental Casualty Company (U.S. Dist. Ct., D. Conn., No. 3:13cv1918 (JBA), March 1, 2016).

A group of individuals purchased long-term care insurance from Continental Casualty Company. The policies provide that in order to qualify for benefits, claimants must demonstrate that the facility they live in meets the definition of a long-term care facility. The policy defines a long-term care facility as one that is licensed by the state. The individuals moved into managed care communities or assisted living facilities and applied for benefits. The company denied benefits on the grounds that the facilities were not licensed facilities.

The individuals filed a lawsuit against the company, arguing that the insurance company wrongly denied them benefits. They asked the court to certify a class of all people who currently own two specific types of long-term care insurance policies and a subclass of all people who owned long-term care insurance and were denied care at a managed care community or assisted living facility.

The United States District Court, District of Connecticut, grants class certification. The court rules that the class is easily ascertainable and including all current policyholders is not too broad. In addition, the court finds that the subclass is not too small to meet the numerosity requirement because the class will consist of at least 29 people. The court also rules that the plaintiffs have demonstrated commonality and typicality because they have shown that class members’ claims depend on a common contention that is capable of class-wide resolution.

For the full text of this decision, go to: https://ecf.ctd.uscourts.gov/cgi-bin/show_public_doc?2013cv1918-168

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March 21

Plaintiffs Go Back to Court to Enforce Settlement Ending Medicare’s Improvement Standard

The plaintiffs in Jimmo v. Sebelius, the landmark settlement that was supposed to end Medicare’s “improvement standard,” are back in court to try to force the Centers for Medicare & Medicaid Services (CMS) to fulfill its obligation under the settlement.

Under the settlement agreement in Jimmo v. Sebelius, the federal government agreed to end Medicare’s longstanding practice of requiring that beneficiaries with chronic conditions and disabilities show a likelihood of improvement in order to receive coverage of skilled care and therapy services.  Medicare is required to cover skilled care as long as the beneficiary needs it, even if the care would simply maintain the beneficiary’s current condition or slow further deterioration. 

Medicare conducted an educational campaign and updated its benefit policy manual, but three years after the settlement, the Center for Medicare Advocacy is still getting reports that many Medicare providers continue to deny coverage to individuals who are not improving. In response, the Center for Medicare Advocacy and Vermont Legal Aid, co-counsels for the original plaintiffs in the Jimmo case, have filed a motion for resolution of non-compliance with the settlement order in district court in Vermont.

“We are returning to the court to ask for relief that CMS has refused to provide,” said Gill Deford, Director of Litigation for the Center for Medicare Advocacy, and lead counsel for the plaintiffs. “For over two years, we have tried repeatedly to get Medicare to take additional steps to make sure that providers and contractors knew that the days of using an Improvement Standard test have ended but the agency would not do anything. We’ve provided overwhelming evidence that providers and contractors were not educated about the Settlement Agreement and that Medicare beneficiaries were still having their coverage terminated.”

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March 17

Medicaid’s Anti-Lien Provision Applies Only to Living Medicaid Recipients

A Florida court of appeals rules that Medicaid’s anti-lien provision does not apply to a Medicaid lien imposed on a Medicaid recipient’s property after the recipient dies. Estate of Hernandez v. Agency for Health Care Admin. (Fla. Ct. App., 3rd Dist., No. 3D14-2115, Feb. 17, 2016).

Betsy Hernandez died of a rare condition. Her estate filed a wrongful death lawsuit against the hospital that treated her. The hospital agreed to settle the lawsuit for $700,000, and Medicaid placed a lien on the settlement to recoup medical expenses paid on Ms. Hernandez’s behalf.

The Medicaid agency claimed it was entitled to $262,500 before any wrongful death apportionment. The estate argued that the agency sought money allocated to survivors and that under Arkansas Department of Health and Human Services, et al. v. Ahlborn (547 U.S. 268 (2006)), states cannot assert a lien on portions of a settlement not allocated to medical expenses. The trial court denied the estate’s motion for a hearing, and the estate appealed.

The Florida Court of Appeals, 3rd District, affirms, holding that “the Medicaid Act’s anti-lien provision does not apply to a Medicaid lien imposed against the property of a Medicaid recipient after her death.” The court holds that Ahlborn and Wos v. E.M.A (U.S., No. 12-98, March 20, 2013) do not apply because Medicaid’s anti-lien provision applies only to living Medicaid recipients.

For the full text of this decision, go to: http://www.3dca.flcourts.org/Opinions/3D14-2115.pdf

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March 10

Trust Is an Available Asset Because Trustees Have Discretion to Make Distributions

A New York appeals court rules that a Medicaid applicant’s trust is an available asset because the trustees have discretion to make distributions to her. In the Matter of Frances Flannery v. Zucker (N.Y. Sup. Ct., App. Div., 4th Dept., No. TP 15-01033, Feb. 11, 2016).

Frances Flannery was the beneficiary of a trust that granted her children, as the trustees of the trust, the authority to distribute as much of the principal as they felt in their discretion was necessary to provide for Ms. Flannery’s health and welfare. Ms. Flannery applied for Medicaid, and the state denied her benefits after determining the trust was an available asset.

Ms. Flannery appealed, arguing that the trust is not an available asset because her children refuse to make distributions of the principal to her. After a hearing, the state affirmed the denial of benefits, and Ms. Flannery appealed to court.

The New York Supreme Court, Appellate Division, affirms the denial of Medicaid benefits. According to the court, “because the principal of the trust may, in the discretion of [Ms. Flannery’s] children be paid for [Ms. Flannery’s] benefit,” the principal of the trust is an available asset “despite the fact that her children refuse to exercise their discretion to make such payments of principal.”

For the full text of this decision, go to: http://www.nycourts.gov/courts/ad4/Clerk/Decisions/2016/02-11-16/PDF/0066.pdf

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March 7

State Cannot Retroactively Recover Medicaid Benefits from Estates

A Michigan appeals court rules that the state cannot recover Medicaid benefits from estates before the date that the estate recovery program was implemented. In re Estate of Gorney (Mich. Ct. App., No. 323090, Feb. 4, 2016).

Four individuals applied for Medicaid benefits sometime before 2010. They did not receive any notification about estate recovery at the time of their initial application. In 2011, the state received federal approval for its estate recovery program, and the state determined that July 1, 2010, was the effective date. In 2012, the Medicaid recipients applied for Medicaid redetermination and received notice that the state could seek recovery for Medicaid benefits from their estates.

When the recipients died, the state filed claims against their estates to recover Medicaid benefits paid since July 1, 2010, but the estates denied the claims. The probate court rejected the state’s claim, and the state appealed. The estates argued that the state violated due process by recovering benefits paid since July 1, 2010, when the state did not notify them about the estate recovery program until 2012. 

The Michigan Court of Appeals affirms in part, holding that while the notice provided to the estates in 2012 did not violate due process, the state could not recover benefits retroactive to July 1, 2010. According to the court, “by applying the recovery program retroactively to July 1, 2010, the Legislature deprived individuals of their right to elect whether to accept benefits and encumber their estates, or whether to make alternative healthcare arrangements.”

For the full text of this decision, go to: http://publicdocs.courts.mi.gov:81/OPINIONS/FINAL/COA/20160204_C323090_52_323090.OPN.PDF

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