State Properly Ignored Its Regulation in Calculating Value of Transferred Life Estate

An Ohio appeals court rules that the state properly used the State Medicaid Manual's method for calculating the value of a transferred life estate instead of a state regulation because the regulation was wrong and could not be applied as written. Rodefer v. Colbert (Ohio Ct. App., Dist. 2, No. 2014-CA-3, May 22, 2015).

Velma Rodefer transferred a life estate in property to her son for $22,000. Less than five years later, she applied for Medicaid. The state found that the life estate should have been valued at $117,012 and assessed a transfer penalty.

Ms. Rodefer appealed, arguing that the state's methodology for calculating the value of the life estate was incorrect. In making her calculation, Ms. Rodefer had followed state regulations. The state contended that the regulation was incorrect and used the valuation table in the State Medicaid Manual. The trial court agreed with the state's calculation, and Ms. Rodefer appealed, arguing that the state had to use the methodology in the regulation. 

The Ohio Court of Appeals affirms, holding that the state regulation could not be applied, so the state properly used the methodology in the State Medicaid Manual instead. According to the court, the state regulation is incorrect because it refers to "a table that does not exist in the referenced regulation, and it refers to a calculation method that is different from the federal regulation (i.e., no reference to an interest rate adjustment)."

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