Assets Transferred Before Medicaid Recipient Died Cannot be Recovered by State

An Idaho district court ruled that the state cannot recover assets from the estate of a Medicaid recipient’s spouse since those assets were transferred by the Medicaid recipient to her husband prior to her death.

In Re: Estate of Perry (Idaho Dist. Ct., 4th Dist., No. CV-IE-2009-05214, March 16, 2011).

Facts.  Mr. and Mrs. Perry owned joint property, which was transferred to Mr. Perry individually when Mrs. Perry moved into a nursing home.  Soon thereafter, Mrs. Perry applied for and began receiving Medicaid benefits.  Mr. Perry predeceased Mrs. Perry and, upon his death, the property was sold as a part of his estate.  The state then filed a claim against Mr. Perry’s estate in an attempt to recover over $100,000 in Medicaid benefits paid on behalf of Mrs. Perry.

Since Mrs. Perry had an interest in the property at one time during the marriage (before she applied for Medicaid benefits), the state argued that it could recover the portion of the property from Mr. Perry’s estate that represented her prior ownership interest.  In response, the personal representative of the estate asserted that the state could recover no more than the amount equal to Mrs. Perry’s interest in the home at the time of her death, which was nothing.

Procedural History.  The magistrate division of Idaho’s fourth judicial district determined that the state’s authority to recover Medicaid benefits paid on behalf of Mrs. Perry was limited only to those assets that were transferred to Mr. Perry upon her death.  The state could not recover lifetime gifts made by Mrs. Perry to her husband.  The state appealed this decision and, while the appeal was pending, Mrs. Perry passed away.

Court’s Ruling.  The Idaho District Court affirmed the fourth judicial district, holding that the definition of “estate” in federal Medicaid law does not permit the state to claim reimbursement from property interests that Mrs. Perry transferred before her death.  Although the state argued that its laws allowed the recovery of property transferred to a spouse during life (if that property was previously community property), the Court disagreed and determined that, since there was a conflict between federal law and Idaho’s law, federal law must prevail over state law.