In a case in which the State of Connecticut is trying to treat the income stream from a community spouse’s annuity as an available asset, the U.S. Department of Health and Human Services (HHS) has filed an amicus brief with the U.S. Court of Appeals for the Second Circuit that is highly favorable to the Medicaid applicant's position that the annuity is not an asset. Lopes v. Starkowski (2nd), appeal from Lopes v. Starkowski (U.S. Dist. Ct.,Dist.Conn., No. 3:10-CV-307, August 11, 2010).
Amelia Lopes purchased an annuity after her husband moved to a nursing home. She received a letter from the annuity company saying that no part of the annuity was assignable, including periodic payments. When Mr. Lopes applied for Medicaid, the state of Connecticut identified a potential buyer of the annuity's income stream and directed Mrs. Lopes to attempt to sell the annuity. Mrs. Lopes refused, and the state denied Medicaid benefits to Mr. Lopes.
Mr. Lopes appealed, and the U.S. District Court for the District of Connecticut granted his motion for summary judgment, holding that the annuity was non-assignable and could not be characterized as an asset. The court further found that even if the income stream were assignable, "it would be incongruent with the principles of [Medicaid law] to permit a state to characterize even an assignable income stream as an asset." The State appealed.
The Second Circuit Court of Appeals asked HHS to submit an amicus curiae brief and to answer two questions: 1. What does the law say? and 2. What are the policy implications of deciding in favor of Mr. Lopes or the State of Connecticut?
In its 19-page response, HHS says that “there is nothing on its face suspicious, illegal, or otherwise contrary to the policy expressed in the Medicaid provisions of the Social Security Act in treating an irrevocable and non-assignable annuity as the community spouse’s income rather than a resource attributable to the couple.” Commenting on the policy implications of a decision in favor of the community spouse, the agency notes that while Medicaid will undoubtedly pay more, this result is consistent with provisions of Medicaid statute designed to protect community spouses from impoverishment.
HHS concludes that “if the [Second Circuit] determines that Mrs. Lopes’ annuity is non-assignable, the district court’s decision should be affirmed.”
ElderLawAnswers member attorneys, Brendan Daly and Paul Czepiga are representing Mr. Lopes, along with longtime National Academy of Elder Law Attorneys member René H. Reixach, Jr.,. "This brief, to my knowledge, is the first time HHS has directly addressed this issue, at least as formally," Czepiga told ElderLawAnswers.
To read the full amicus brief, click here.
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