A Minnesota court rules that the state Medicaid agency acted arbitrarily and capriciously when it imposed a transfer penalty on a 73-year-old Medicaid recipient after she funded a pooled trust with a personal injury settlement. The recipient was represented by an attorney with the ElderLawAnswers member firm of Long, Reher and Hanson. Peittersen v. Minnesota Department of Human Services (Minn. Dist. Ct., 1st. Dist., No. 19HA-CV-11-5630, Oct. 2, 2012).
In January 2011, Dawn Peittersen, a 73-year-old Medicaid recipient with disabilities who lives in a long-term care facility, received a $54,904 personal injury settlement. Ms. Peittersen spent some of the funds from the settlement and transferred the remainder into a pooled trust account that she established with Lutheran Social Services. The Minnesota Department of Human Services (DHS) imposed a 6.79-month transfer penalty that was split between Ms. Peittersen and her husband, who also receives Medicaid benefits. The state claimed that the transfer was improper because Medicaid recipients over the age of 65 cannot fund pooled trusts without penalty.
Ms. Peittersen appealed the state's initial decision, and although a DHS judge recommended overturning that decision, the final decision, written by a Co-Chief Judge, upheld the imposition of the penalty period. Ms. Peittersen appealed to the District Court, claiming that the DHS judge's opinion was arbitrary and capricious because the opinion did not state that the transfer into the pooled trust was actually for less than fair market value.
The Minnesota District Court, County of Dakota, First Judicial District, overturns the DHS judge's decision and lifts Ms. Peittersen’s portion of the penalty period. Quoting the judge whose recommendation was not adopted, the court finds that "[i]nasmuch as the value of assets in [the pooled trust sub-account] had an equal value of the assets transferred into the account, and the corpus of the trust as well as the income on the corpus may only be used to benefit [Ms. Peittersen], it cannot be determined that the transfer was for less than fair market value." The court finds that the "Commissioner's Order is therefore arbitrary and capricious and not supported by substantial evidence."
Attorney Laurie Hanson of the ElderLawAnswers member firm of Long, Reher & Hanson in Minneapolis represented Ms. Peittersen.
For the full text of this decision, go to: https://www.cejp.org/peiitersen.pdf
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