In a closely watched estate recovery case, the Nevada Supreme Court has ruled that liens may be imposed on the homes of the surviving spouses of Medicaid recipients, but that the liens must be lifted if the surviving spouse wishes to sell the home or engage in any other legitimate transaction. Nevada Dep't of Human Resources v. Ullmer (Nev., No. 40143, April 1, 2004).
States are required by federal law to make efforts to recover from the estates of Medicaid recipients. However, the federal government does not wish to see the spouses of Medicaid recipients become homeless and impoverished, so it does not permit states to seize a home if the Medicaid recipient's surviving spouse (or disabled child or child under 21) is still living there. But to protect their future interest, some states impose liens on homes before the surviving spouse has died.
This happened to Nevada resident Agnes Ullmer. Mrs. Ullmer's husband, Harold, received Medicaid benefits to pay for his nursing home care from 1997 until his death in 2001. Following Mr. Ullmer's death, Agnes received a letter by certified mail from the Nevada attorney general notifying her that the state was seeking to impose a lien on her home. The letter stated: 'PLEASE DO NOT BE ALARMED . . . A LIEN WILL NOT CHANGE OWNERSHIP OF THE PROPERTY; YOU WILL NOT BE ASKED TO LEAVE THE HOME.' [capitalization in original] The proposed lien was for $144,476 on a home then valued at about $120,000.
Needless to say, Mrs. Ullmer, who was in her mid-80s at the time, was indeed alarmed. Because of her declining ability to care for herself, Mrs. Ullmer wished to sell her home and use the proceeds to help pay the cost of an assisted living facility. A lien would effectively trap her in a home she could no longer safely live in. If she chose to move anyway, payment of the lien would effectively strip her of her life savings.
Elder law attorneys took on Mrs. Ullmer's case and she became the lead plaintiff in a class action lawsuit charging that Nevada's practice of placing liens on the homes of the surviving spouses of Medicaid recipients violates federal law. Mrs. Ullmer's attorneys argued that placing a lien on a home constitutes "recovery" of Medicaid costs, which federal law does not allow until after the surviving spouse has died.
The state district court agreed with Mrs. Ullmer and issued an injunction blocking the state from imposing liens on the homes of deceased Medicaid recipients. The state Department of Human Resources, which administers Nevada's Medicaid program, appealed.
On April 1, the Nevada Supreme Court ruled that the state is allowed to place liens on the homes of surviving spouses of Medicaid recipients. "While we are aware that the procedure for establishing a governmental interest in a deceased recipient's estate can be frightening and intimidating to the surviving spouse," the court wrote, "there is nothing in the congressional record to indicate that imposing a post-death lien is an impermissible "recovery."
However, the court made two important qualifications: the state's lien had to make it clear that it applies only on the Medicaid recipient's half of the property, and the lien had to plainly state that it would be released at the request of the surviving spouse if he or she wished to sell the property, refinance it, obtain a reverse mortgage, or engage in any other bona fide transaction.
The ruling only applies in Nevada, but it suggests how courts in other jurisdictions might rule. It also emphasizes the need for couples to do some planning with the help of an elder law attorney so that they are not in a position to have a lien placed on their home in the first place.
To read the full opinion in the case, go to: http://www.leg.state.nv.us/scd/120NevAdvOpNo16.html