Recent Cases Involving Estate Recovery Issues

JUNE 19, 1995 VOLUME 2, NUMBER 50

Two recent cases from other states illustrate some of the trends in Medicaid financing. In one,Estate of Budney, a Wisconsin Circuit Court case from February, 1995, the state sought to recover Medicaid expenses from the patient’s husband after his death. In the other, Coye v. Hope, a California Court of Appeals case also from February, the state sought to recover Medicaid benefits from the patient’s revocable trust after her death.

Grace Budney received Medicaid benefits prior to her September, 1993, death. Her husband Paul died six months later. Although no estate recovery proceeding was commenced after Grace’s death (all the assets presumably went to Paul), Minnesota’s Department of Health and Human Services made a claim against Paul Budney’s estate for $54,000. DHHS cited a Minnesota statute that appears to permit the recovery. The Circuit Court ruled that federal law controls, and that recovery against spouses’ estates is not permitted. Minnesota’s statute was invalid.

Ed. note: Arizona does not have a similar statute, so the controversy should not arise here. Unless, that is, the Arizona legislature chooses to follow the lead of Minnesota and Oregon, which have adopted such statutes.

In the California case, Myrtle Hope had signed a revocable living trust prior to going into the nursing home. After her death, the California Department of Health Services filed a claim against her trust, noting that the claim would have been permitted if her estate had gone through the probate process. Her trustee objected, pointing out that there were no probate proceedings; that is the nature of trusts.

The Court of Appeals ruled that the state could recover Medicaid benefits from Ms. Hope’s trust. Although there is no clear state statute permitting the action, the Court reads the federal law to permit the action, noting that “the purposes of the act will be better achieved” thereby.

Ed. note: Arizona has expressly defined “estate” for estate recovery purposes to include only the probate estate, so this case should not directly apply. Still, changes may be in the works.

Abandonment of Spouse Leads to Criminal Charges

Wallace Johnson suffered from Parkinson’s disease; his wife provided care in their home. In November of 1993, Mr. Johnson fell in the home and called out for help. Mrs. Johnson first ignored his calls, then punched and kicked her husband and ultimately left the house without summoning help. Mr. Johnson was able to call 911, but died three months later.

Mrs. Johnson was charged with assault and neglect. Her attorney argued that she was not her husband’s guardian, and could not legally “neglect” him. The Iowa Supreme Court disagreed, holding that the law applied whenever one “may be charged with the care and control of another.”

Ed. note: Arizona law already specifically creates a duty of spouses to provide support. A.R.S. §§13-3610 and 13-3611 make it a Class 6 Felony to fail to provide for a spouse’s personal or medical needs.

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