Posts Tagged ‘California Advocates for Nursing Home Reform’

State Must Formally Adopt Its Medicaid Estate Recovery Rules


In our American system of government the legislature is in charge of making law and policy, and the administrative branch’s job is to interpret and implement those laws without imposing the bureaucrats’ own ideas on the legislature’s programs. That ideal conception, however, runs afoul of the reality of government. Because it is simply impossible to anticipate every variation of a problem, much of the actual administration looks like, and is, legislative in nature.

To keep the making and implementation of administrative policies as public and responsive as possible, most states have adopted laws requiring agencies to publish their planned regulations, submit them to public comment, and consider input from citizens. The law compelling these practices is usually called the Administrative Procedures Act (APA) or some similar name. Arizona has such a law, as does California.

Medi-Cal, California’s version of Medicaid, includes a provision requiring its administrative agency to seek reimbursement for Medi-Cal payments from the estates of at least some deceased Medi-Cal recipients. California law defines “estate” to include the deceased beneficiary’s probate estate, as is true in Arizona and every other state. But California goes further, and permits its estate recovery program to pursue any property that belonged to the deceased beneficiary at the time of death, including property held in joint tenancy or “other arrangement.” The problem: “other arrangement” is not defined in the California law.

Medi-Cal administrators decided that the law should apply to annuities and life estates in at least some circumstances. It first pursued, then decided not to pursue, annuities. In the case of life estate property, Medi-Cal decided to seek recovery if the Medi-Cal beneficiary had once owned the property and transferred it to another person, reserving both a life estate (that is, the right to live on the property for life) and a right to sell the property and retain the proceeds. Neither decision was made as part of a public rule-making process.

A non-profit group, California Advocates for Nursing Home Reform (CANHR) sued to force Medi-Cal to properly publish and adopt its rules. The State objected, and a trial judge dismissed CANHR’s complaint.

The California Court of Appeals has now reversed that decision, finding that there is at least some evidence of improper rule-making. CANHR will now be given a chance in court to prove its allegation that Medi-Cal relies on “underground guidelines and criteria” in pursuing estate recovery. CANHR v. Bonta, January 8, 2003.

Medicaid Liens in California

MARCH 14, 1994 VOLUME 1, NUMBER 17

A recent article in the Orange County Register indicated that many Medicaid recipients (and newspaper reporters) are likely to be surprised by the implementation of Medicaid estate recovery programs. The article (reprinted in the Arizona Republic as “Californians get surprise bills for care”) detailed the plights of several Californians whose spouses had died while receiving benefits from MediCal, California’s version of Medicaid.

Pursuant to August, 1993, changes in federal law, states are required to implement an aggressive program to recover assets from the estates of deceased recipients of Medicaid long-term care (known in Arizona as ALTCS). Among the measures already implemented in California is an automatic lien imposed on the residence of MediCal recipients, which may be collected upon the death of a surviving spouse or upon sale of the property.

Arizona has not yet complied with the new federal mandate, though changes are expected at any time. If California’s experience is any guide, seniors who seek ALTCS benefits for their spouses, and the children of ALTCS patients, are in for a surprise.

The Register article told of Edward F. Gunz, whose Parkinson’s disease required his nursing home placement in January, 1993. When he died in October, California authorities placed a $17,287.53 lien against his widow’s home.

Litigation Filed

Gunz’ widow is one of six plaintiffs in a class action seeking to invalidate the California lien program. Another plaintiff is Ralph Ainsworth, whose wife Virginia received $11,700 of MediCal care. When she died last September, Ainsworth received a form inquiring about assets and telling him there would be no lien against his home so long as he lived there. After the lien was filed, MediCal officials explained that he “got an old form” and that the new ones hadn’t been printed up at the time of her death.

Pat McGinnis, director of the California Advocates for Nursing Home Reform in San Francisco, is quoted as saying that “this is just a way to balance California’s budget on the backs of nursing-home residents and their families.” The article also notes that California’s share of long-term care costs is running about $1.5 billion per year. California has about 3 million citizens over age 65.

Other States

According to Linda DeRuvo-Keegan, vice president of American Health Care Association, other states are also taking advantage of the new federal mandate to collect money from estates. She indicates that she is unaware of any other lawsuits.

The California lawsuit alleges only that the surviving spouses were given inadequate notice of the liens, not that the liens are themselves illegal. California authorities are quick to point out that the liens will not be foreclosed so long as a surviving spouse resides in the home. Less clear is how the appreciation in real estate values between the deaths of the first and second spouse will be treated.


Arizona has not yet adopted an estate recovery program, although liens were extensively used by County eligibility offices prior to the enactment of ALTCS. One choice facing Arizona will be whether to use an expanded definition of “estate” authorized by federal law. If followed to the extreme, the new law might permit recovery against the families of patients who only owned a life estate–a right to use the property during the patient’s life.

ALTCS has not been quick to involve family members, lawyers or other advocates for the elderly or disabled in the planning process. We all eagerly await the final outcome.

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