State's Recovery from Spouse's Annuity Not Limited to Amount of Benefits Provided Before Spouse's Death

An Arizona federal district court finds that if a Medicaid recipient's community spouse dies before the end of an annuity, the state may recover from the annuity for the total amount of benefits provided to the institutionalized spouse, not just for benefits provided before the community spouse's death. Hutcherson v. Arizona Health Care Cost Cont. Syst. Adm. (U.S. Dist. Ct., D. Ariz., No. CV 09-898-PHX-JAT, May 13, 2010).

Betty Hutcherson, an Arizona resident, entered a nursing home. In order to qualify for Medicaid, she and her husband, John, had to spend down their assets. Mr. Hutcherson purchased an annuity that listed the state as primary beneficiary and the Hutcherson's daughter, Rebecca Hutcherson, as secondary beneficiary. Under 42 U.S.C. § 1396p(c)(1)(F) an annuity is not a transfer of an asset for below-market value if the annuity names the state as primary remainder beneficiary "for at least the total amount of medical assistance paid on behalf of the institutionalized individual." Mr. Hutcherson died with $75,000 left in the annuity. At the time of his death, the state had paid $23,840.51 for Mrs. Hutcherson's care.

Rebecca filed a claim in federal court in Arizona, asking the court to declare that the state's recovery from the annuity was limited to the amount the state had already paid. She argued that the word "paid" as used in § 1396p(c)(1)(F) meant paid by the state as of the date of the annuitant's death. Both Rebecca and the state asked for summary judgment.

The U.S. District Court for the District of Arizona grants the state summary judgment. The court looks at the plain meaning of the statute and the legislative history and holds that the word "paid" in the statute "means any amounts paid by the state for the benefit of the institutionalized individual over the life of the institutionalized individual."

For the full text of this decision, click here.

Did you know that the ElderLawAnswers database now contains summaries of more than 1,600 fully searchable elder law decisions dating back to 1993? To search the database, click here.