May 9

State Not Required to Deduct Pre-Eligibility Nursing Home Expenses From Patient Amount

A Florida appeals court rules that the state is not required to deduct all of a Medicaid applicant’s pre-eligibility nursing home expenses from the applicant’s income when calculating the applicant’s monthly contribution to nursing home costs. Goodwin v. Florida Agency for Health Care Administration (Fla. Ct. App., 1st Dist., No. 1D12-4430, April 4, 2016).

After Gabrielle Goodwin injured her spinal cord, she entered a nursing home. She applied for Medicaid through a program that required her to contribute to her cost of care by paying a monthly co-pay that was based on her income. To calculate Ms. Goodwin’s patient responsibility amount (PRA), the state is required to deduct unpaid medical expenses from Ms. Goodwin’s income. The state calculated Ms. Goodwin’s PRA at $1,000.

Ms. Goodwin appealed, arguing that the state should have deducted all of her unpaid, pre-eligibility nursing home expenses — about $70,000 — from her income. The state denied her appeal, ruling that federal regulations require the state to deduct medical care not covered under the state’s Medicaid plan and that Ms. Goodwin’s care was covered. Ms. Goodwin appealed to court, arguing that covered care only included care the state actually paid for.

The Florida District Court of Appeal, First District, affirms, holding that the state is not required to deduct all of Ms. Goodwin’s pre-eligibility nursing home expenses. According to the court, because the state’s “Medicaid program routinely includes and covers the nursing home care that Ms. Goodwin received” before becoming eligible for Medicaid, the state considers them Medicaid-covered expenses.

For the full text of this decision, go to:

May 5

Lawsuit to Prevent State from Recovering Medicaid Benefits from Spousal Annuity May Proceed

A U.S. district court rules that a case by the family of a Kentucky Medicaid recipient challenging the state’s adherence to federal law regarding spousal annuities rather than to a less restrictive state regulation may proceed against the secretary of Kentucky’s Medicaid agency because the secretary does not have qualified immunity. Singleton v. Commonwealth of Kentucky (U.S. Dist. Ct., E. D. Ky., No. 15-15-GFVT, March 31, 2016).

Claude Singleton entered a nursing home and applied for Medicaid. His wife, Mary, purchased an annuity with herself as annuitant. Ms. Singleton wished to name the state as remainder beneficiary up to the amount of Medicaid paid on her behalf. State regulations provide that the state must be named remainder beneficiary for the amount of Medicaid benefits paid on behalf of the annuitant, and this did not change even after federal Medicaid law was amended in 2006 to require that states be named as a remainder beneficiary for Medicaid benefits paid on behalf of the institutionalized individual.  However, Ms. Singleton’s attorneys – the ElderLawAnswers member firm of McClelland & Associates, PLLC —  informed her that the state Medicaid agency’s branch manager would view structuring the annuity pursuant to the state’s regulation as a transfer for less than market value, so Ms. Singleton changed the state’s remainder beneficiary amount to Medicaid paid on behalf of Mr. Singleton.  

After Ms. Singleton died, her children, the annuity’s secondary beneficiaries, sued the secretary of the state Medicaid agency, along with other parties, arguing that state regulations may be less restrictive than federal law and that the branch manager’s alleged policy of rejecting annuities drafted pursuant to Kentucky’s own statute was improper. The state filed a motion to dismiss, arguing, among other things, that the secretary has immunity.

The United States District Court for the Eastern District of Kentucky denies the motion to dismiss the claim against the secretary in her official capacity. The court holds that because the Ms. Singleton’s children are seeking prospective injunctive relief by seeking to prevent the state from collecting any more than the amount paid by the state on behalf of Ms. Singleton, the secretary is not entitled to immunity.

For the full text of this decision, go to:

May 2

Bank’s Lien Has Priority Over State’s Medicaid Recovery Claim

A New York appeals court rules that a bank’s claim against a Medicaid recipient’s property has priority over the state’s claim for Medicaid recovery because the bank’s lien was filed first. In re Estate of Shambo (N.Y. Sup. Ct., App. Div., 3rd Dept., No. 521174, April 7, 2016).

Three years after Peggy Lee Shambo began receiving Medicaid benefits, Ms. Shambo and her husband took out a mortgage on their property with Wells Fargo Bank. Mr. Shambo died and the probate court authorized the sale of the property, but it was not sold.

Ms. Shambo died intestate and the state Medicaid agency filed a claim to recover Medicaid benefits paid on her behalf. The probate court permitted the claim, but Wells Fargo commenced a foreclosure action on the property. The state filed a motion for summary judgment, arguing that its claim had priority. The probate court denied the motion, and the state appealed. 

The New York Supreme Court, Appellate Division, Third Department, grants summary judgment to Wells Fargo. The court concludes that although Ms. Shambo received Medicaid before the mortgage was given, the state did not have a prior lien against the property.  Therefore, Wells Fargo’s prior specific lien gives it priority over the state’s claim.

For the full text of this decision, go to:

April 14

SSA Directs Local Offices to Give Specifics When Rejecting Trusts

The Social Security Administration recently issued an Emergency Message to all personnel requiring workers to specifically inform SSI applicants or beneficiaries of the reasons a special needs trust has been rejected by the agency.

In the past, when the SSA determined that assets in an SSI beneficiary or applicant’s trust were countable, the agency would frequently send a notice to the beneficiary or applicant telling him that he was ineligible for benefits because his assets exceeded the resource limit.  However, this notice almost never explained the reasoning behind the SSA’s rejection of the trust.

The new Emergency Message, which went out to all field level SSA personnel, requires caseworkers to spell out exactly what portion of the Program Operations Manual System (POMS) applies to the trust being rejected.  Unfortunately, the Emergency Message does not tell field workers that they have to explain their reasoning in plain English — merely citing the appropriate section of the POMS appears to be enough.  While this will make it relatively easy for professionals to determine what went wrong with a trust and whether an appeal is in order, it will likely give the layperson little if any guidance about his or her trust.

To read the Emergency Message, go to:

April 11

Medicaid Applicant Who Transferred Assets in Exchange for Promissory Note May Proceed with Suit Against State

A U.S. district court holds that a Medicaid applicant who was denied Medicaid benefits after transferring assets to her children in exchange for a promissory note may proceed with her claim against the state because Medicaid law confers a private right of action and the Eleventh Amendment does not bar the claim. Ansley v. Lake (U.S. Dist. Ct., W.D. Okla., No. CIV-14-1383-D, March 9, 2016).

Beverly Ansley and her husband owned a farm. They loaned their children cash and mineral rights and received a promissory note in exchange. Ms. Ansley applied for Medicaid benefits, but the state denied the benefits due to a lease of the farmland and the promissory note.

Ms. Ansley filed a lawsuit in federal court against the state, asking for retroactive, injunctive, and declaratory relief. She argued that her husband had terminated the farming lease, so it was no longer an issue, and that the promissory note was not a countable resource. The state filed a motion to dismiss, arguing that the statutory and regulatory provisions at issue do not grant an enforceable right under § 1983 and that the Eleventh Amendment barred Ms. Ansley’s claims for relief.

The U. S. District Court, Western District of Oklahoma, denies the motion to dismiss in part. The court holds that federal Medicaid law regarding a Medicaid applicant’s eligibility for Medicaid after transferring assets does confer a private right of action under § 1983. While the court dismisses Ms. Ansley’s claim for declaratory relief, the court holds that the Eleventh Amendment immunity does not bar claims for injunctive or retroactive benefits.

For the full text of this decision, go to:

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