May 22

Reservation of Power of Appointment in Deed Does Not Conflict With Conveyance of Property to Children

Margaret Hession sought legal assistance to protect her house in the event she might need Medicaid benefits. As part of the Medicaid planning, she executed a deed transferring her house to her children. The deed reserved a life estate for her and granted her a special power of appointment that allowed her to appoint the property to any person except herself, her creditors, her estate, or her estate’s creditors. Ms. Hession decided her daughter Deaven Skye should inherit less than her other children. She wrote a will that exercised her power of appointment and reduced Ms. Skye’s interest in the property from one-third to 5 percent.

After Ms. Hession died, Ms. Skye objected to the will and argued that the power of appointment was void. The trial court dismissed Ms. Skye’s objection and admitted the will to probate. Ms. Skye appealed, arguing that the provisions in the deed granting the remainder interests and reserving a power of appointment are irreconcilably repugnant to each other.

The Massachusetts Court of Appeals, rules that the reservation of the power of appointment is consistent with the other provisions of the deed. According to the court, “because of the reservation of the life estate, the deed conveyed not present possessory estates but rather remainder interests; and, because of the reservation of the power, the remainder interests were defined, in part, by this limitation.” The court specifically does not express a “view on the effect of the reserved power of appointment on [Ms. Hession’s] strategy of avoiding MassHealth look-back period regulations.”

For the full text of this decision, click here.

May 19

Medicaid Recipient Who Transferred Assets to Wife During Period of Ineligibility Is Subject to Penalty Period

Martin Fagan was injured in a motorcycle crash and entered a nursing home. In 2012, he began receiving Medicaid benefits. In 2015, he received a $2 million personal injury settlement, and the state discontinued his Medicaid benefits. Mr. Fagan transferred $879,453.32 of the settlement proceeds to his wife in two chunks. When Mr. Fagan reapplied for Medicaid, the state determined that he transferred assets for less than market value and imposed a transfer penalty.

Mr. Fagan appealed, arguing that because the transfers to his wife were pre-eligibility transfers, he could transfer an unlimited amount to her without incurring a penalty. The state upheld the penalty period, and Mr. Fagan sued for injunctive relief in federal court. The state and Mr. Fagan filed motions for summary judgment.

The U.S. District Court, District of Connecticut, grants summary judgment to the state, holding that the penalty period is appropriate. The court rules that any transfer to a community spouse made after the institutionalized spouse is Medicaid eligible is prohibited if it happens during the same period of institutionalization. According to the court, there is no reason why statutory language “should be interpreted to give an institutionalized individual, found ineligible for benefits upon redetermination, a second opportunity to make transfers to his spouse prohibited at the time of his initial eligibility determination when the coverage relates to the same period of institutionalization.” 

For the full text of this opinion, click here.

May 17

Executor Does Not Have Standing to Pursue Legal Malpractice Claim When Estate Is Not Damaged

Marietta Meisler had a trust that apportioned assets equally between her two children. In 2000, she hired Richard Weinberg to draft another trust that gave her daughter, Carole Meisler, a 60 percent interest in the trust.

After Marietta died, Carole sued Mr. Weinberg for legal malpractice, alleging that his failure to include successor replacement language in the trust led to the estate not being divided according to Marietta’s wishes. Mr. Weinberg filed a motion for summary judgment. The trial court found Carole did not have standing to sue for legal malpractice, and Carole appealed, arguing that as executor, she had standing to sue.

The Ohio Court of Appeals, Eighth District, affirms, holding that Carole does not have standing to sue Mr. Weinberg because she did not have an attorney-client relationship with him and the damages sought are individual to Carole. The court rules that an executor does not have “standing to assert a legal malpractice claim when the estate as a whole has not been diminished.” The court notes that even if Carole has standing, there is no evidence that the attorney acted contrary to Marietta’s wishes.

For the full text of this decision, go to:

May 15

Nursing Home’s Claim Against Resident’s Spouse Under Necessaries Statute Can Continue

Cora Sue Bell’s husband, Robert, resided in a nursing home for a few months before he died, accruing $1,678 in unpaid nursing services.

The nursing home sued Mrs. Bell under Ohio’s necessaries statute. The statute requires a married person to pay for a spouse’s necessities if the spouse is unable to support him- or herself. Mrs. Bell argued that Mr. Bell could support himself because he had 54 days of skilled nursing home Medicare coverage remaining. The trial court granted summary judgment to Mrs. Bell, ruling that the nursing home was required to pursue a claim against Mr. Bell’s estate before pursuing a claim under the necessaries statute. The nursing home appealed.

The Ohio Court of Appeals, 12th District, reverses, holding that summary judgment is not appropriate because more facts are needed to determine whether Mr. Bell could support himself. The court rules that the necessaries statute creates a separate cause of action that is not dependent on pursuing a claim against the estate. According to the court, the fact that Mr. Bell had insurance policies through Medicare that may have covered the nursing costs is not enough to affirmatively demonstrate that the nursing home “could not establish the inability to support element of its necessaries claim.”

For the full text of this decision, go to:

April 28

Federal Medicaid Law Preempts Florida’s Reimbursement Statute, U.S. Court Rules

In 2008, then 13-year-old Gianinna Gallardo was struck by a vehicle after getting off of a school bus, leaving her in a persistent vegetative state and unable to care for herself in any manner.  Her parents filed a lawsuit against the driver of the vehicle, the school bus driver and the school district.  The case eventually settled for $800,000, or about 4 percent of the case’s $20 million value.  Because Medicaid had provided $862,688.77 in medical payments on Gianinna’s behalf, her attorney advised the Agency for Health Care Administration (AHCA), Florida’s Medicaid agency, of the settlement.   The attorney also advised the agency that $35,367.52 of the settlement represented past medical expenses that were recoverable by AHCA.

Florida’s reimbursement statute uses a uniform formula in which the recipient’s gross settlement is first reduced by 25 percent to account for attorney fees, the remainder is divided in half, and AHCA is then entitled to recover the lesser of its total medical payments or one half.   Under this formula, AHCA would recover $323,508.29 in medical payments from Gianinna’s settlement. 

Gianinna’s parents filed suit against the agency in federal court seeking an injunction and a declaration that Florida’s reimbursement statute violates federal law inasmuch as it allows the state to recover from the portion of her settlement beyond that allocable to past medical expenses.  AHCA countered that it was entitled to satisfy its lien from the portion of the settlement representing compensation for both past and future medical expenses. The parties filed cross motions for summary judgment.

The U.S. District Court, N.D. Florida, grants the Gallardos’ motion for summary judgment and denies AHCA’s motion.  The court finds that, consistent with the U.S. Supreme Court’s decision in Arkansas Department of Health and Human Services, et al. v. Ahlborn (547 U.S. 268 (2006)), AHCA is entitled to recover for past medical payments it made on Gianinna’s behalf only from that portion of the settlement allocated to past medical expenses.  The court rules that where, as here, the state reimbursement law explicitly allows for recovery from the portion of the settlement attributable to future medical care, that portion of the state law violates, and is preempted by, federal Medicaid law.

For the full text of this opinion, click here.

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