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MISSISSIPPI DEPARTMENT OF MEDICAID MAY NOT RECOVER STATUTORILY EXEMPT PROPERTY FROM DECEDENT'S ESTATE
3/8/2011 3:25:01 PM

So says the Mississippi Court of Appeals in a case handed down last week. In In re Estate of Darby, NO. 2010-CA-00335-COA, the Mississippi Court of Appeals was asked to decide whether the Department of Medicaid could exercise its statutory recovery rights for Medicaid payments made to Arlyn Darby. Mr. Darby resided in a nursing home at the time of his death, and had been receiving Medicaid benefits for his long term care. At the time of his death, Darby owned his house and a small amount of personal property not exceeding the statutory exemptions. The property was devised to his children and one grandchild. The Division

of Medicaid ("Medicaid") probated a claim against Mr. Darby’s estate for the total amount Medicaid expended for Darby’s medical care. The Executrix objected to the claim on the grounds that there was no non-exempt property in the estate with which to satisfy Medicaid’s claim. The Court of Appeals Agreed.

The Federal statute mandating recovery, 42 U.S.C. § 1396p(b)(4)(B), permits each state to specifically define what assets are included within an estate for purposes of Medicaid recovery. Some states have expanded the definition of estate for this purpose to allow recovery beyond probate assets. Other states permit a direct lien to be placed on real property even before the death of the recipient. Mississippi has not. In Mississippi, Medicaid must probate a claim against the estate. Section 43-13-317 of the Mississippi Code permitting estate recovery does not expand the definition of estate and provides that recovery is permitted in accordance with applicable federal law, which likewise does not provide for an augmented estate for recovery purposes.

Under Mississippi law, exempt property passes to spouse, children and grandchildren free of the decedent’s debts, and is not part of the estate to be administered. Therefore there were no assets from which Medicaid could recover.

Nevertheless, Medicaid argued that Darby had waived the exemption when he applied for benefits in order to become eligible for benefits. The Court of Appeals held that there was insufficient evidence to support Medicaid’s waiver argument–that Darby had any knowledge of the benefits a homestead exemption provided, nor that he intentionally waived his right to the benefit of that exemption.

We look for several things to come out of this case. First, you can bet Medicaid will appeal the case. It is likely that the Mississippi Supreme Court will grant certiorari. So, we have not heard the last of this case. Secondly, you can expect Medicaid to put more explicit waiver language in their benefits contracts. Third, we expect to see a bill before the Mississippi legislature next session to expand the definition of an estate for Medicaid recovery purposes, and perhaps even to grant Medicaid direct lien rights against real property even before the recipient passes away.


 

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