Estate Not Automatically Entitled to Hardship Waiver Because of Home Value

A Michigan appeals court reverses a lower court's decision in a Medicaid estate recovery action that a Medicaid recipient's estate was entitled to a hardship waiver as a matter of law because of the low value of the recipient's home. In re Estate of Klein (Mich. Ct. App., No. 329715, July 19, 2016).

Medicaid recipient Catherine Klein died, leaving a house valued at $45,521.77. The state filed a claim against the estate for $133,768.90 to recover Medicaid benefits paid on Ms. Klein's behalf. The estate disallowed the claim, arguing that the home was exempt from the Medicaid claim because of its value.

The state filed suit against the estate and asked for summary judgment, arguing that by failing to apply for a hardship waiver, the estate forfeited any right to that waiver. The estate also moved for summary judgment, arguing that under state law, the estate was entitled to hardship waiver as a matter of law. The state law authorizing the state to seek approval for its Medicaid plan provides that the definition of hardship must include an exemption for the value of the Medicaid recipient’s home that is equal to or less than 50 percent of the average price of a home in the county in which the Medicaid recipient lived. The trial court granted summary judgment to the estate, and the state appealed.

The Michigan Court of Appeals reverses, holding that the state is entitled to summary judgment because the estate is not statutorily entitled to a hardship waiver. According to the court, the state law at issue does not explicitly prohibit the state from pursuing claims against estates with low-home values; rather it merely instructs the state to seek approval from the federal government for its provisions.

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