Estate Recovery in the Court of Appeals

Posted on: Tuesday, December 2nd, 2014

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For those who follow the “estate recovery” saga, you may be interested to know that there are two cases currently pending in the Court of Appeals. In Re Estate of Violet Clark comes out of Calhoun County, and the Estate is represented by the Battle Creek firm of Kreis, Enderle, Hudgins and Borsos, P.C.. In Re Estate of Esther Keyes comes out of Bay County, and the Estate is represented by the Bay City firm of Smith and Brooker, P.C.. Both cases were decided in favor of the estates on summary disposition. Both opinions are well reasoned: in Calhoun County by Judge Jaconette, and in Bay County by Judge Tighe. The issues are well briefed by the respective appellee’s counsel. Kudos to them all.

Clark is a pure notice case. It involves a case where the Medicaid beneficiary received no notice in the original application, but during the redetermination process signed an application that contained information about estate recovery. The trial court ruled in summary disposition that the State had no claim, finding that the lack of notice at the time of the original application precluded recovery and that the notice provided in the redetermination application was “inadequate” to allow for recovery from that date forward. While the outcome of this case is important in any event, the fact that the Trial Court held that the language that the State uses in its current application is inadequate notice is especially profound. Should the trial court’s decision be upheld, the result would presumably be that all long term care Medicaid beneficiaries, even those now entering the system, would be exempt from estate recovery.

Keyes is interesting in that the focus is squarely on the hardship exemption, whereby homes with a value of less than 50% of the average value of homes in their communities, are not subject to estate recovery. This issue has been under-litigated in cases I’ve seen for the reason that the “notice” issues have provided a stronger argument. Again, should the Court of Appeals uphold the trial court, and if the Court of Appeals directly addresses the manner in which the State has implemented the hardship requirements of the estate recovery statute, the implications could be significant.

Of course the State could prevail in either or both of these cases. To my knowledge, oral argument has not been scheduled in either. We will track their developments. Whatever the outcomes, they will have significant implications as to how these cases develop in the future.

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