November 2

State Not Required to Consider Medicaid Applicant’s Reformed Trust

A Massachusetts appeals court holds that the state is not required to recognize the reformation of a Medicaid applicant’s trust after the original trust was considered an available asset. Needham v. Director of the Office of Medicaid (Mass. Ct. App., No. 14-P-182, Oct. 20, 2015).

Maurice Needham created an irrevocable trust that instructed the trustee to accumulate principal to use for Mr. Needham’s benefit. The state denied Mr. Needham’s application for Medicaid benefits, finding that the irrevocable trust was an available asset because Mr. Needham retained control over the assets. Mr. Needham reformed the trust to remove the provision that made him ineligible for benefits, and appealed the state’s decision.

The hearing officer determined that under the original trust, Mr. Needham was not eligible for benefits and concluded that the reformation of the trust was a transfer of assets within the look-back period. Mr. Needham appealed to court, which ruled that because a court had approved the reformation of the trust ab initio, it was as if the original trust never existed. The state appealed.

The Massachusetts Court of Appeals reverses, holding that the state was not required to consider the reformed trust. The court states that if Medicaid applicants were allowed to reform trusts during the look-back period, then “persons of means would be permitted to enjoy otherwise countable assets held in trust throughout their lives, transfer those assets for less than fair market value by reforming the trust ab initio when their health declines, and thereby obtain Medicaid payment for long-term nursing home care without complying with the waiting period imposed by Federal law.”

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October 5

Ohio High Court Rules That Interspousal Transfer of Home Prior to Medicaid Eligibility Is Improper

A narrowly divided Ohio Supreme Court rules that the transfer of a home between spouses prior to Medicaid eligibility is an improper transfer and is subject to the community spouse resource allowance (CSRA) cap.  Ohio ElderLawAnswers member Thom L. Cooper of Cooper, Adel & Associates was among those representing the plaintiff. Estate of Atkinson v. Ohio Department of Job and Family Services (Ohio, No. 2013–1773, Aug. 26, 2015).

In 2000 Marcella Atkinson and her husband transferred their home into a revocable living trust. In April 2011, Mrs. Atkinson entered a nursing home and soon applied for Medicaid benefits. In August 2011, following Medicaid’s “snapshot” of the couple’s assets, the home was removed from the trust and placed in Mrs. Atkinson’s name. The next day, Mrs. Atkinson transferred the house to her husband. The state determined an improper transfer had occurred and imposed a penalty period.  Mrs. Atkinson passed away, and her estate appealed to court, arguing that under federal and state statutes a spouse is not ineligible for Medicaid for transferring a home to the other spouse and that an institutionalized spouse may transfer unlimited assets to the community spouse between the date the spouse is institutionalized and the date that the spouse’s Medicaid eligibility is determined. The estate lost at both the trial court and the Ohio Court of Appeals, and the estate appealed.  

In a 4-3 decision, the Supreme Court of Ohio rules that transfers between spouses are not unlimited after the snapshot date and before Medicaid eligibility and that such transfers are proper only up to the amount that fully funds the CSRA. The court rejects the estate’s reliance on the Sixth Circuit Court of Appeals’ holding in Hughes v. McCarthy (6th Cir., No. 12-3765, Oct. 25, 2013) that an annuity purchased by a community spouse before a Medicaid eligibility determination is not an improper transfer, finding that the purchase of annuities are subject to special rules and “not applicable under these facts.”  The court, however, remands the case for review of the penalty imposed because the Medicaid agency may have applied the wrong statute.  “Neither federal nor state law,” the court writes, “supports the agency’s confiscation, after the CSRA has been set, of the entire amount of transferred assets, some or all of which may have already been allocated to the community spouse on the snapshot date.”

A dissent joined by three justices states that “What this family did is and was permitted by state and federal law. . .  the home is explicitly excluded from the definition of ‘resources’ for purposes of establishing the CSRA.” [emphasis in original]

For the full text of this decision, click here.

For an earlier article on the oral arguments in the case and a link to the video of those arguments, click here.

For a brief commentary on the Ohio court’s decision by Penn State Dickinson Law professor Katherine C. Pearson, click here.

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September 21

Medicaid Applicant Not Required to Exhaust Administrative Remedies Before Filing § 1983 Claim

An Ohio appeals court rules that a Medicaid applicant who filed a § 1983 claim in state court was not required to exhaust her administrative remedies before filing the claim, but her claim is dismissed because the state did not violate her due process rights. Rodefer v. McCarthy (Ohio App. Ct., Dist. 2, No. 2015-CA-1, July 31, 2015).

Velma Rodefer transferred a life estate in property to her son for $22,000. When she applied for Medicaid, the state found that the life estate should have been valued at $117,012 and assessed a transfer penalty. Ms. Rodefer challenged the way the penalty period had been calculated and her appeal was denied (Rodefer v. Colbert, Ohio Ct. App., Dist. 2, No. 2014-CA-3, May 22, 2015). 

Ms. Rodefer appealed the decision assessing the penalty period and requested a hearing. At the hearing, the state informed her that her appeal had been dismissed and that the only issue being discussed was a hardship waiver. The state eventually agreed to hold a hearing on the original appeal, a hearing that affirmed the penalty period. Ms. Rodefer filed a claim under 42 U.S.C. § 1983, alleging a violation of due process, among other things. (Ms. Rodefer died while the trial court case was pending.) The trial court dismissed her claim, holding that she needed to exhaust her administrative rights and that the state did not violate due process. Ms. Rodefer’s estate appealed the trial court’s decision.

The Ohio Court of Appeals, 2nd District, affirms, holding that while Ms. Rodefer was not required to exhaust her administrative remedies before bringing a § 1983 claim, her claim for violation of due process should be dismissed. According to the court, “the existence of an administrative appeals system does not preclude [Ms. Rodefer’s] ability to bring her § 1983 claim in state court.” But the court also holds that “although the hearing officers might not have addressed her specific arguments in its decisions, the complaint reflects that [Ms.] Rodefer was provided adequate notices and opportunities to be heard.”

For the full text of this decision, go to: http://www.supremecourt.ohio.gov/rod/docs/pdf/2/2015/2015-Ohio-3052.pdf

Did you know that the ElderLawAnswers database now contains summaries of more than 2,000 fully searchable elder law decisions dating back to 1993?  To search the database, click here.  

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September 3

Wisconsin Has Rejected $550 Million in Federal Dollars for Health Care

With its new two-year budget in place, Wisconsin now has passed up more than $550 million in federal money available under the Affordable Care Act. The state previously rejected roughly $200 million in federal money available starting in January 2014, according to the Legislative Fiscal Bureau. The new budget turned away another $360 million — far more than the $250 million in cuts the same budget made to the University of Wisconsin System. Yet accepting the federal money was never seriously considered by the Republican-controlled Legislature. The state has remained committed to Gov. Scott Walker’s approach to the law. Walker is the only governor in the country who has used the law to expand access to health insurance while turning down the additional federal dollars available to pay for it. Most Republican governors have opted not to expand their Medicaid programs through the law. In contrast, Walker did expand Wisconsin’s Medicaid program, and 145,000 people have gained coverage as a result. The governor just did it in a way that costs state taxpayers — though not federal taxpayers — more money.

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August 24

Medicaid-Eligible Nursing Home Resident Is Stuck With Costs of Private-Pay Room

An Illinois appeals court rules that Medicaid does not cover a Medicaid-eligible nursing home resident who was in a private-pay room and that the nursing home was not required to move her to a Medicaid-certified bed earlier than it did, meaning that the resident could be discharged from the nursing home for nonpayment. Slepicka v. State (Ill. Ct. App., 4th Dist., No. 12MR743, July 7, 2015).

Mary Slepicka entered a nursing home as a Medicare patient. When her Medicare nursing home coverage ran out in April 2011, she became a private-pay resident.  At the time Ms. Slepicka signed the private-pay contract, money from the sale of her house was her main asset. The nursing home did not place Ms. Slepicka in a Medicaid-certified bed until March 2012. After visiting a financial planner, Ms. Slepicka put the assets from the sale of her house in an annuity and applied for Medicaid. The state granted her benefits retroactive to June 2011.

The nursing home claimed it could not bill Medicaid for the days Ms. Slepicka was not in a Medicaid-certified bed, so it billed Ms. Slepicka. Ms. Slepicka did not pay the nursing home, and the nursing home served Ms. Slepicka with a notice of discharge. Ms. Slepicka appealed the discharge, arguing that she could not be charged for the days Medicaid covered. The nursing home argued it did not put Ms. Slepicka in a Medicaid-certified bed right away because it believed she had assets that she needed to spend down. The trial court granted the nursing home summary judgment, and Ms. Slepicka appealed.

The Illinois Court of Appeals affirms, holding that Medicaid is not required to cover expenses incurred by private-pay residents even if the resident is eligible for Medicaid, and that the nursing home was not required to move Ms. Slepicka into a Medicaid-certified bed. According to the court, “just because a resident is financially eligible for Medicaid, it does not necessarily follow that Medicaid will cover every expense the resident incurs during the period of eligibility, regardless of where the resident incurs the expense.” In addition, the court holds that the nursing home did not know that Ms. Slepicka would qualify for Medicaid as soon as she did, so it was not required to move her into a Medicaid-certified bed any sooner.

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