The U.S. Supreme Court has let stand a ruling by Minnesota's high court that the state violated federal Medicaid law when it tried to recover against assets that a Medicaid recipient had transferred to her husband prior to her death. (Vos v. Barg, Docket No. 08-603.) A petition for reconsideration is unlikely, according to an attorney involved in the case, because Minnesota has enacted new provisions specifically allowing recovery from assets passed to another's estate prior to a recipient's death. But these new provisions may also violate federal Medicaid law and will likely force survivors of deceased Medicaid recipients to relitigate the issues presented in Barg.
In In re Estate of Barg, the Supreme Court of Minnesota struck down a provision of the state's Medicaid estate recovery statute that allowed recovery from the estate of a surviving spouse for any assets jointly owned by the couple at any point during their marriage. In the case, Mrs. Barg transferred her partial interest in her home to her husband when she entered a nursing home. Mrs. Barg died without leaving a probate estate, followed shortly thereafter by Mr. Barg. The state then sought recovery against Mr. Barg's estate for his wife's medical expenses. The court determined that the state could recover only from assets that the Medicaid recipient had a legal interest in at the time of her death. Since Mrs. Barg had no legal interest in any property when she died, the Supreme Court of Minnesota ruled that the state had no way to seek recovery from Mr. Barg's estate.
Minnesota filed a writ of certiorari to the U.S. Supreme Court seeking to overturn this ruling. The United States submitted an amicus curiae brief opposing certiorari in the case, agreeing with the state supreme court that "[t]he federal Medicaid Act permits recovery of correctly paid benefits from the estate of the recipient's surviving spouse, but limits that recovery to the value of assets in which the recipient had a legal interest at the time of her death."
On June 29, 2009, the U.S. Supreme Court denied certiorari. Before this decision, the Minnesota Department of Human Services (DHS) sought to undo the Minnesota high court's decision by obtaining amendments to various provisions of the medical assistance estate recovery statute, Minn. Stat. 256B.15. These amendments, which took effect July 1, 2009, redefine the marital property rights of spouses where one or both receive Medicaid benefits, but only for purposes of estate recovery. In a comment on the amendments written prior to the U.S. Supreme Court's decision to deny cert, Julian J. Zweber, Legislative Coordinator for the Minnesota Bar's Elder Law Section, said they raise "serious practical and constitutional problems."
"These changes impair the separate property rights of all married individuals, because their property rights will be modified by operation of law if one or the other applies for medical assistance benefits," wrote Zweber, who served as an advisor to Thomas J. Meinz of Princeton, Minnesota, the attorney of record for the Barg estate. "This obviously discriminates against married individuals and their spouses on the basis of receipt of federally secured benefits. . . . In the Barg case, the Minnesota Supreme Court had to construe the federal medical assistance estate recovery statutes to reach its decision. The Minnesota Supreme Court held that the current state statutes are in conflict with the federal statutes. If the Barg case is ultimately sustained by the United States Supreme Court, these 2009 amendments are also likely to violate the federal medical assistance statutes, just as the prior statutes were found to be in violation. Pending final resolution of the Barg case, these new amendments appear intended to require re-litigation of the issues presented in the Barg case. Even if Barg is sustained, it will be necessary to disallow medical assistance estate recovery claims based on these new amendments and litigate the validity of them if the survivors of the deceased medical assistance recipient want to force the State to abide by federal law."
Zweber noted that the new provisions cannot be implemented without approval from the Centers for Medicare and Medicaid Services (CMS). Whether the Obama administration will follow the Bush administration's lead and rubber stamp such changes remains to be seen, Zweber said.
For Zweber's full summary and comment on the estate recovery amendments, click here.
For Zweber's legislative update on all 2009 amendments to Minnesota's medical assistance and estate recovery statutes passed by its legislature as part of the Omnibus Health and Human Services Finance Act of 2009, click here.
Our thanks to Julian Zweber for forwarding us his summary and comments, and also to Gene Coffey, staff attorney with the National Senior Citizens Law Center, for alerting us to these developments and putting us in touch with Mr. Zweber.
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