Worst Medicaid Case Ever gets Published

By Doug Chalgian on May 21, 2023

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It’s hard to imagine what the lawyer who handled this appeal was thinking.

Facts are: In February, Deborah created an irrevocable trust.  The terms of the trust provided she retained no rights to any of the trust property.  She then transferred her assets, including funds she withdrew from her IRA, into this irrevocable trust.  Then, two months after creating and funding this trust, Deborah applied for long term care Medicaid benefits.

To the surprise of no one who knows anything about Medicaid planning, Deborah was assessed a divestment penalty on the value of the assets transferred into the irrevocable trust.  That is, she was told that she would not be eligible for Medicaid benefits for about two years because she put her property into an irrevocable trust the terms of which make it the equivalent of giving her assets away; conduct which Medicaid policy refers to as “divestment” and which triggers a period of ineligibility.

A Shocking Theory

It seems that Deborah’s attorney decided that the imposition of a divestment penalty was a mistake on the part of the Department.  As a result, the Department’s decision was contested in an administrative hearing.  Then, after losing at the administrative level, this appeal was filed with the Michigan Court of Appeals.

And what’s really shocking is that …

… wait for it…

… in this appeal, the Appellant’s only legal reasoning for contesting the Department’s decision to impose a divestment penalty is the proposition that the 2019 Michigan Supreme Court case of Hegadorn v DHS effectively abolished divestment.

You heard me right.

The Appellant’s position is that Hegadorn abolished divestment.

I won’t even try to explain how the Appellant supports this position.  Suffice it to say that the Court of Appeals quickly resolved the issue by pointing out that Hegadorn was a case about the availability of assets transferred to a “Solely for the Benefit” Trust and not about divestment at all.

And this case is published.


You hate to see the Attorney General win one of these cases. When they do, you hate hate to see it get published.  And to give the AG a published win in a Medicaid case over something so meritless … it’s maddening… it’s disheartening … it’s … well …

I guess that’s all I’ll say.

If you want to read this debacle, click here:  Henderson v Department of Health and Human Services.



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mm By: Doug Chalgian
Doug Chalgian

2 thoughts on “Worst Medicaid Case Ever gets Published

  1. What’s the problem? As long as future cases aren’t brought on the theory that “The moon is made of green cheese” theories, what harm does a case saying that moon is not made of green cheese do? I should think that any future gift penalty cases with any merit at all should have no problem distinguishing their facts and theories from Henderson.

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