Reversing a trial court, a Michigan court of appeals holds that the estate of a Medicaid recipient is not entitled to an undue hardship exception to estate recovery applicable to estates with houses of modest value because the house had been sold before the hardship waiver was requested. Ketchum v. Department of Health and Human Services (Mich. Ct. App., No. 324741, March 1, 2016).

Wilma Ketchum received Medicaid benefits until her death. After she died, her house was sold for less than half the average value of other houses in the county. The state filed a claim to recover Medicaid benefits paid on her behalf. Ms. Ketchum’s estate denied the claim, arguing that it was entitled to a hardship waiver. Under state law, an undue hardship exists if the estate consists of a home of modest value. State regulations provide that hardship waivers are temporary and expire when the reason for the waiver no longer exists.

The state denied the estate’s request for a hardship waiver because the house had been sold before the waiver was requested. The estate appealed, and an administrative law judge ruled in favor of the state. The trial court reversed, holding that state law required an exemption for houses valued at equal to or less than 50 percent of the average price of a home, and that regulations limiting that exemption were not valid. The state appealed.

The Michigan Court of Appeals reverses, holding that the undue hardship waiver did not apply because the house had been sold. According to the court, once a house has been sold and “turned to cash, the condition that caused the undue hardship, the presence of a home of modest value, no longer exists and the ability to obtain an undue hardship waiver necessarily expires.”

For the full text of this decision, go to: http://publicdocs.courts.mi.gov:81/OPINIONS/FINAL/COA/20160301_C324741_67_324741.OPN.PDF

A U.S. district court reverses a previous decision and grants a preliminary injunction to a group of Medicaid applicants who argued they are entitled to a post-default notice before their Medicaid application is considered abandoned. Fishman v. Daines (U.S. Dist. Ct., E.D. N.Y., No. 09-cv-5248(JFB)(ARL), Mar. 4, 2016).

Once New York State determines a Medicaid applicant is no longer entitled to Medicaid, it sends a letter notifying the applicant that he or she may request a fair hearing. The state then sends two more letters, notifying applicants that a fair hearing has been requested and scheduled. If an applicant misses the hearing, a default judgment will be entered against him or her.

Two Medicaid applicants initiated a class action against the state of New York, claiming that the state does not provide proper notice before entering a default judgment. The applicants asked for a preliminary injunction, requiring the state to mail a default notice to applicants before their appeals are abandoned. The state Medicaid manual provides that a case is considered abandoned after the applicant misses a hearing and does not respond to a mailing inquiring whether the applicant wishes further action. The U.S. district court denied the preliminary injunction, finding that the applicants received sufficient notice. The applicants appealed, and the U.S. Court of Appeals for the Second Circuit reversed and remanded, ordering the district court to consider whether the rights conferred in the federal regulations governing dismissal of appeals are broader than what is guaranteed by the due process clause.

The U.S. District Court, Eastern District of New York, grants the preliminary injunction, holding that the applicants have shown a likelihood of success on the merits based on federal and state regulations. According to the court, federal regulation requires that the state cannot dismiss a Medicaid fair hearing request without good cause and the state Medicaid manual requires that notice be provided before a claim is abandoned, so before dismissing an appeal as abandoned, the state must send out a post-default notice.

For the full text of this decision, go to: https://www.gpo.gov/fdsys/pkg/USCOURTS-nyed-2_09-cv-05248/pdf/USCOURTS-nyed-2_09-cv-05248-2.pdf

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., 3^rd 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, 3^rd 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