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Court Decides Validity of Social Services Claim


A New York Probate Lawyer said that, this is a proceeding brought by the executor of the estate of her father, to determine the validity of a claim made by the Nassau County Department of Social Services against the estate for public assistance rendered to wife of the decedent, from June 10, 1996 to October 3, 2002, while he was still alive. The couples had two children, who is mentally retarded. On August 11, 1972, the decedent was shot four times in what the executor described as a “bungled mob” assassination attempt. According to newspaper articles, the gunman mistook the decedent and three others for the mobsters he intended to kill. The decedent suffered serious injuries that left him unable to work for the remainder of his life. He began receiving Social Security disability benefits in January 1976 and, also received a Worker’s Compensation award.

A New York Will Lawyer said that the, wife was diagnosed with Alzheimer’s disease in 1992. On December 22, 1995, the decedent, as attorney-in-fact for his wife, executed an “Assignment to Petition the Court for Support Pursuant to 18 NYCRR 360-3.2.” It states that, in consideration of the medical assistance and care provided and to be provided to the wife by the New York State and Nassau County Departments of Social Services, she assigned to the Nassau County Department of Social Services (DSS) “so much of her right, title and interest to petition the court for support from my legally responsible spouse.” The decedent as the wife’s spouse, executed a “Declaration of the Legally Responsible Relative” on January 4, 1996. It states, “I, declare that I refuse to make my income and/or resources available for the cost of necessary medical care and services for the Medicaid applicant/recipient listed above.”

A Staten Island Probate Lawyer said the wife began receiving Medicaid on June 10, 1996 when she was placed in a nursing home. The record before the court includes a “Medical Assistance Institutionalized Spouse Budget Worksheet,” which was signed on March 11, 1997 by a representative of DSS. The worksheet bears the date of March 12, 1997 and lists the date of application as April 18, 1996.

A Nassau Probate Lawyer said that, on or about June 9, 2003, DSS filed the subject claim for $386,382.77 for public assistance provided to the wife from June 10, 1996 to October 3, 2002, claiming preferred creditor status pursuant to Social Services Law §104 (1); the claim was rejected by the estate on September 5, 2003. The decedent’s will was admitted to probate by decree of this court on February 24, 2004. The will created a supplemental needs trust for the wife to be funded with the decedent’s residuary estate. Upon the wife’s death, her supplemental needs trust was to be distributed in accordance with the terms of the decedent’s will, which contained bequests to his son of $15,000 in a supplemental needs trust, $15,000 outright to a niece, $5,000 to Putnam ARC, and the rest to the executor.

A Nassau Estate Litigation Lawyer said that, the executor commenced the instant proceeding on December 1, 2005, asking the court to determine that DSS’s claim is invalid and should be disallowed. The petition alleges that the decedent’s gross taxable estate is approximately $566,000 and the net probate estate is approximately $350,625. Along with the petition, she filed an affidavit, sworn to on November 1, 2005, in which she states, but supplies no proof, that the decedent “continuously made the monthly spousal income contributions requested by the Department of Social Services.” On the return date of the citation, DSS failed to appear or interpose any objection to the relief requested.

A Nassau Probate Lawyer said that, DSS filed its verified answer to the petition on September 14, 2006, after the court issued Dec. No. 405 on August 16, 2006 giving DSS thirty days from the date of the decision and order to do so. The DSS asserts that the claim is valid under a theory of an “implied contract” between it and the decedent.

The issue in this case is whether the estate of the decedent is invalid.

The petitioner asserts that the claim against the estate is invalid on the following grounds: (1) both federal and New York State law preclude the recovery of properly paid medical assistance, except in certain circumstances not applicable in this case; (2) DSS cannot recover against the estate of a Medicaid recipient’s spouse; (3) DSS cannot recover against the estate of a Medicaid recipient’s predeceased spouse; (4) recovery of a claim is prohibited where the Medicaid recipient is survived by a permanently disabled child; (5) DSS failed to meet its burden of proving “sufficient ability” on Leon’s part at the time Medicaid assistance was rendered to the wife; and (6) the claim is barred by the equitable defense of laches. DSS counters that the claim is properly recoverable from the decedent’s estate.

Briefly, Medicaid is a “co-operative Federal-State program operated under State direction, but subject to Federal statutory and regulatory guidelines”. Enacted by Congress in 1965, Medicaid “was intended to provide partial federal funding of the cost of providing medical care to the disadvantaged”. States are not required to participate in the Medicaid program; however, if a state participates, it is required by federal law to enact a “statutory plan detailing the extent of coverage and comporting with Federal law”. The numerous required provisions of a state Medicaid plan are governed by 42 USC § 1396a (a). State programs are required to comply with 42 USC § 1396p “with respect to liens, adjustments and recoveries of medical assistance correctly paid”. Section 1396p (b) (1) permits a state to recover for medical assistance properly paid only in limited circumstances: (A) In the case of an individual described in subsection (a)(1)(B) of this section, the State shall seek adjustment or recovery from the individual’s estate or upon sale of the property subject to a lien imposed on account of medical assistance paid on behalf of the individual. (B) In the case of an individual who was 55 years of age or older when the individual received such medical assistance, the State shall seek adjustment or recovery from the individual’s estate, but only for medical assistance consisting of (i) nursing facility services, home and community-based services, and related hospital and prescription drug services, or (ii) at the option of the State, any items or services under the State plan.

A Queens Probate Attorney said New York State began participating in the Medicaid program in 1966. Sections 363 through 369 of Article 5, title 11 of the Social Services Law govern New York State’s medical assistance implementation. Federal and New York State law generally prohibit “recovery from the property of the recipient”. Social Services Law § 366 (3) (a) is of particular significance to the determination of this proceeding. It states: Medical assistance shall be furnished to applicants in cases where, although such applicant has a responsible relative with sufficient income and resources to provide medical assistance as determined by the regulations of the department, the income and resources of the responsible relative are not available to such applicant because of the absence of such relative or the refusal or failure of such relative to provide the necessary care and assistance. In such cases, however, the furnishing of such assistance shall create an implied contract with such relative, and the cost thereof may be recovered from such relative in accordance with title six of article three and other applicable provisions of law.

The executor acknowledges that an implied contract is created between the Department of Social Security and the spouse of the recipient if the spouse has sufficient ability to contribute to the recipient’s care, but refuses to do so. However, she argues that DSS has failed to allege or prove that there was an implied contract between it and the decent and that Leon had the “sufficient ability” to pay at the time the wife was receiving Medicaid.

There is no question that Leon refused to contribute his resources and income to care. His declaration to that effect is attached as Exhibit 3 to DSS’s answer. Further, the Budget Worksheet, which the executor entirely ignores, shows that the decedent had excess income and resources at the time that the wife was receiving Medicaid that he could have contributed toward her care. Thus, the court concludes that an implied contract was created between the decedent and DSS.

The second difference between these two cases is that in 1993 case, the community spouse post-deceased the recipient spouse whereas in this proceeding, the community spouse, the decedent predeceased the recipient spouse. The executor argues that this forecloses any right of recovery DSS may have had against the decedent or his estate. In support of her position, the executor asserts that (1) a “claim against the estate of a predeceased community spouse while the Medicaid recipient continues to receive benefits would require forestalling the closing of the community spouse’s estate until the recipient spouse was also deceased;” and (2) since a claim could not be asserted until after the recipient’s death, the claim amount would continue to accrue and its value would only be known at the time of death of the recipient.”

For purposes of Medicaid, the community spouse is chargeable with the recipient spouse’s support only until the time of the community spouse’s death. Indeed, although the wife continued to receive Medicaid until her death on December 3, 2003, the end date of the claim by DSS is October 3, 2002, the date of Leon’s death. The court can discern no reason why happenstance, that Leon predeceased rather than post-deceased the wife, should vitiate the implied contract between him and DSS. The executor correctly points out that there is no New York State authority directly on point.

However, this is not the first time a New York State court has been faced with the situation where the Department of Social Services has asserted a claim against the estate of a predeceased community spouse for Medicaid payments provided, during the community spouse’s life, to the institutionalized spouse. Notably, the fact that the community spouse died before the institutionalized spouse did not even enter into the Court’s discussion.

Relying also on case law and the fact that, in appropriate situations, courts are permitted to “depart from the literal letter of a statute in order to sustain the legislative objective of the statutory scheme”. The Second Department affirmed the Surrogate, concluding that “a contrary result would undoubtedly undermine the purpose of the statutory scheme since the only recipient of the $28,801.88 windfall to the estate would be the petitioner who is not an intended beneficiary of the restrictive recoupment provision”. In this proceeding, the decedent left $15,000, to be placed in a supplemental needs trust, to his permanently disabled son. There is no evidence that the son was financially dependent on the decedent. Thus, this court finds, that repayment of DSS’s claim is not precluded by Social Services Law § 369 (1) (b). However, since the decedent bequeathed to his son $15,000 to be placed in a supplemental needs trust for his benefit, he is to receive that amount prior to the payment of the claim.

Finally, the executor argues that DSS’s claim is barred by the equitable defense of laches. She claims that DSS should have brought suit against Leon during his lifetime because, having not done so, the decedent “reasonably concluded that because of his unique personal situation the Department of Social Services had acknowledged by its failure to act that he was not sufficiently able to contribute to his wife’s care during his lifetime and therefore would not seek financial contribution from him.”

The court is unpersuaded by the executor’s argument that federal law forecloses payment of the claim from the decedent’s estate. She bases her assertion on 42 USC § 1396p (b) (1), which limits recovery to the recipient’s estate for medical assistance correctly paid, when the recipient was over the age of fifty-five at the time he or she was receiving benefits. In support of her position, she has asked the court to consider the 2005 case where the Appellate Court of Illinois determined that the Department of Public Aid could not recover from the estate of the recipient’s spouse for Medicaid benefits paid to the recipient. The court stated, “Because federal law does not provide an exception to the general rule prohibiting recovery of medical assistance payments that would permit recovery from the estate of the surviving spouse of the recipient, Illinois law to the contrary exceeds the authority granted under federal law.

This court has reviewed the case and finds itself in agreement with the dissenting justice, who stated that the majority’s conclusion “ignores the federal mandate that the State shall seek adjustment or recovery of any medical assistance correctly paid on behalf of an individual’ at the appropriate time prescribed by statute.

If you are involved in a similar probate proceeding, seek the help of a Nassau Probate Attorney and Nassau Estate Litigation Attorney at Stephen Bilkis and Associates.

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