Federal Medicaid law allows states to place a
lien on real estate that is not sold during the Medicaid application process.
The state
Medicaid agency has the right to recoup what it spent on the Medicaid
recipient if the real estate is sold during the Medicaid recipient’s lifetime,
and that is the point of the lien. Even if a person applying for MassHealth in
Massachusetts has a less than full ownership interest, such as a life estate,
the MassHealth agency can place a lien on that ownership interest, with the
understanding that, under Section (d) of Massachusetts General Laws, Chapter 118E, Section 31, the agency can
collect what is owed to it as of the date of sale. After the MassHealth
recipient’s death, however, the provisions of Sections (b) and (c) apply, and
the agency is required to file an estate recovery claim against the decedent’s
probate estate in order to collect this debt. The actual procedures for making
the estate recovery claim are laid out in great detail in Massachusetts General Laws, Chapter 118E, Section 32,
and no reference is even made to the lifetime lien.
It is my understanding that the MassHealth agency
has recently claimed in court cases that the lien survives the Medicaid
recipient’s death, but has glossed over the distinction between the lifetime
lien and the post-death creditor claim which is filed against the deceased
Medicaid recipient’s probate estate.
The MassHealth agency, which is part of the
Executive Office of Health and Human Services of the Commonwealth of
Massachusetts, is required to implement federal Medicaid law, and is answerable
to the federal government under the funding scheme of Medicaid known as cooperative
federalism. The federal agency that directly oversees the MassHealth agency in
the federal-state structure, the Centers for Medicare and Medicaid Services, is
a part of the U.S. Department of Health and Human Services. As the “single
state agency” designated to deal with the federal government, the MassHealth
agency is charged with ensuring that all federal laws that govern the Medicaid
program are followed. The state agency cannot do anything that is contrary to
the directions it has received from the federal government, and cannot take any
actions that go beyond the Massachusetts laws that have implemented federal
Medicaid law. Thus, in determining whether the lifetime lien survives the death
of the Medicaid recipient, we need to look first and foremost at federal law,
regulations and guidance, followed by state law establishing the MassHealth
agency’s powers and duties, followed last by MassHealth regulations.
In memoranda of law filed at fair hearings, the
MassHealth agency has often acknowledged its proper role in the federal-state
hierarchy. For example, in the MassHealth memorandum filed in Appeal 1408932,
the agency wrote:
[T]he Agency is bound by federal Medicaid law and its
sub-regulatory guidance reflected in MassHealth regulations, and relevant
Medicaid case law. Medicaid is a statutory program and not a program in equity.
See generally Nissan Motor Corp. v. Comm ‘r of Revenue, 407 Mass. 153, 162
(1990) (there is no equity where a statute expresses a clear rule of law) … The
state Medicaid statute and regulations are to be construed as showing a primary
intent that the MassHealth agency comply with federal law in order to receive
federal financial reimbursement. Youville Hospital v. Commonwealth, 416 Mass.
142, 146 (1993); Cruz v. Commissioner of Public Welfare, 395 Mass. 107, 112
(1985); see also G.L. c. 118E, § 11; 130 CMR 515.002(B). The MassHealth
regulations themselves make this point. “These regulations are intended to
conform to all applicable federal and state laws and will be interpreted
accordingly.” 130 CMR 515.002(B). See also 130 CMR 520.018; 130 CMR 520.021. In
particular, federal law provides that the federal agency administering Medicaid
can deny some of the federal funding to a state if the state commits
eligibility errors that exceed a specified threshold. 42 U.S.C. §1396b(u). As
the single state agency, MassHealth is charged with ensuring that all federal
and state laws that govern the Medicaid program are followed. See generally …
G.L. c. 6A, § 16 (designating the Agency as the state Medicaid entity charged
with developing policies and programs to implement shared federal-state
program); G.L. c. 118E, §§ 1, 2, 7(g), 7(h). … Since Medicaid is a statutory
program, it cannot be trumped by common law, state law or equitable principles.
Before reviewing federal and state law on the
issue of whether a lifetime lien terminates upon the MassHealth recipient’s
death, it is important to note that the U.S. Department of Health and Human
Services commissioned and published a 2005 report entitled Medicaid Liens and Estate Recovery in Massachusetts. Here is some of what
the 2005 federal report found about our Massachusetts lifetime lien and estate
recovery laws and procedures:
Passage of the Tax Equity and Fiscal Responsibility
Act (TEFRA 1982) gave states the option of placing a TEFRA or pre-death lien on
the real property of permanently institutionalized Medicaid recipients to
prevent them from giving away a home in which they no longer reside before the
equity in that home can be used to offset long-term care expenses paid on their
behalf. In Massachusetts, TEFRA liens are referred to as living liens because
they cannot be placed on the property of a MassHealth member once he or she has
died. They give the State authority to recover Medicaid payments for a member’s
long-term care expenses if his or her property is sold while the member is
alive. … The lien gives the State authority to recover Medicaid
payments that have been made if the property is sold while the member is alive.
It is important to note that, although Medicaid gives
states authority to place post-death liens, in Massachusetts a lien is only
filed while the member is still alive. A lien is never placed on any kind of
property – real or personal – once the member has died. After the member’s
death, the Estate Recovery Unit will recover MassHealth costs from the member’s
probate estate. A probate estate includes property that a person possesses at
the time of death and that descends to the heirs (with or without a will)
subject to the payment of debts and claims. The probate estate may include real
property on which a living lien was filed. However, the lien is no
longer valid after the member’s death and must be released upon the
request of the administrator/executor.
Massachusetts uses the living lien to prevent
MassHealth members from giving away the home in which they no longer reside
before its equity can be used to offset long-term care expenses paid on their
behalf.
Upon payment, both the claim and any living lien that
had been placed on the member’s real property are released. If there
was a living lien on the member’s real property, the Estate Recovery Unit must
release it after they have received notification of the member’s death and a
copy of the death certificate. Generally the lien and the Notice of
Claim are released at the same time. If an attorney representing the member’s
estate requests release of the lien prior to settlement of the estate, the
Estate Recovery Unit releases it, since a living lien is no longer
valid when the member is deceased. However, in the absence of such a
request, the lien is not released until the Estate Recovery Unit determines
whether the member’s estate will be probated. If the estate is not probated
within 1 year after the member’s death, the Estate Recovery Unit will forward a
request to probate the estate to the Public Administrator in the county where
the deceased member lived.
Since the time of the 2005 report, there was one
change in federal estate recovery law, where estate recovery against annuities
became mandatory rather than a state option, but otherwise there have been no
federal Medicaid changes affecting estate recovery. If this report was not
brought to the attention of the judges that the MassHealth agency was arguing
before in recent cases, that seems like a significant omission, especially
where the agency has the twin duties of candor to tribunals and administrative
consistency, and this was a federal report not only about what Massachusetts
law is but also how Massachusetts has implemented the federal law.
The MassHealth agency cannot go beyond what the
Massachusetts legislature has specifically authorized the agency to do. Where
there are specific provisions in Massachusetts General Laws, Chapter 118E,
Sections 31 and 32 governing estate recovery, the agency is limited to these
provisions of law. One provision in Section 31 explains that the point of the
lifetime lien is to allow recovery during the MassHealth recipient’s lifetime,
and no provision anywhere states that the lien is meant to survive the
MassHealth recipient’s death. In fact, Section (f) of Massachusetts General Laws, Chapter 190B, Section 3-803
(part of the Massachusetts Uniform Probate Code), the most recent Massachusetts
legislation that makes reference to estate recovery, may make the point even
clearer that the estate recovery claim against the probate estate is the
exclusive method for estate recovery by the MassHealth agency after a
MassHealth recipient’s death:
If a deceased received medical assistance under
chapter 118E when such deceased was 55 years of age or older or while an
inpatient in a nursing facility or other medical institution, section
32 of chapter 118E shall govern the notice to be given to the division
of medical assistance and such division’s claim for recovery under
section 31 of said chapter 118E if the division so chooses.
The lifetime lien on real estate of a MassHealth
recipient is the creature of a narrowly-drawn statute with a narrow purpose,
and where there are specific provisions detailing what the agency must do after
the MassHealth recipient’s death, the MassHealth agency has no authority to
enforce the lien unless such action is taken during MassHealth recipient’s
lifetime.
A
Plymouth-based practitioner, Brian specializes in legal issues involving death,
taxation and disability; including estate planning, probate, trusts, estate and
gift taxation, MassHealth applications and appeals, guardianship,
conservatorship, contested trusts and estates, special needs & elder law. Brian can be contacted at brian@elderlaw.info.
