State v. Wiggins (In re Estate)

• Decision Date: 09 August 2013
• Docket Number: No. 39129.,39129.
• Citation: 306 P.3d 201,155 Idaho 116
• Parties: In the Matter of the ESTATE OF Vivian WIGGINS and Emerson D. Wiggins, Deceased. State of Idaho, Department of Health & Welfare, Petitioner–Appellant–Cross Respondent, v. Lynn Wiggins, personal representative of the Estate of Vivian Wiggins and Emerson D. Wiggins, Respondent–Cross Appellant.
• Court: Idaho Supreme Court

155 Idaho 116

306 P.3d 201

In the Matter of the ESTATE OF Vivian WIGGINS and Emerson D. Wiggins, Deceased.

State of Idaho, Department of Health & Welfare, Petitioner–Appellant–Cross Respondent,

v.Lynn Wiggins, personal representative of the Estate of Vivian Wiggins and Emerson D. Wiggins, Respondent–Cross Appellant.

No. 39129.

Supreme Court of Idaho, Boise, June 2013 Term.

Aug. 9, 2013.

Hon. Lawrence G. Wasden, Idaho Attorney General, Boise, attorneys for Appellant. W. Corey Cartwright argued.

R. Brad Masingill, Weiser, attorney for Respondent.

W. JONES, Justice.

I. NATURE OF THE CASE

This is an appeal from an order disallowing the Idaho Department of Health and Welfare's ("the Department") attempt to recover assets in a probate proceeding as authorized by I.C. § 56–218. The Department seeks to recover assets of a deceased Medicaid recipient, Vivian Wiggins ("Vivian"), from the estate of Vivian's deceased spouse, Emerson Wiggins ("Emerson"), for medical assistance payments made on Vivian's behalf. The magistrate court held that the Department could not reach the separate property of Emerson, a decision which was affirmed by the district court. The Department appeals to this Court.

II. FACTUAL AND PROCEDURAL BACKGROUND

Vivian and Emerson Wiggins were a married couple. Vivian passed away on January 30, 2009, and Emerson passed away on February 9, 2009. In June 2002, at the age of 90, Vivian was admitted to a nursing home. On November 18, 2002, Vivian and Emerson applied for medical assistance to help pay for Vivian's medical care. They applied again on August 27, 2003. On September 1, 2003, Vivian became eligible for Medicaid, and the Department paid at least $272,134 for Vivian's care. The Department received a voluntary payment of $7,460 in April of 2008.

On May 21, 2009, a joint probate estate for Vivian and Emerson ("the Estate") was opened. The inventory of the Estate showed assets of $78,659. The Department, on November 23, 2009, filed a claim against the Estate for medical assistance paid on Vivian's behalf in the amount of $264,674. On November 30, 2009, the personal representative of the Estate filed a Notice of Disallowance of claim. The trial court heard the Department's petition on February 3, 2010. In open court, the parties stipulated that the Department treated Vivian as though she had entered into a Marriage Settlement Agreement ("MSA") with Emerson for the purpose of Medicaid eligibility. The admitted purpose of the MSA, though the document was never found, was to transfer any assets over $3,000 that Vivian held as community property with Emerson to Emerson as his separate property so Vivian would be eligible for Medicaid. The trial court found that the assets of the Estate were Emerson's separate property on the basis that the MSA transmuted Vivian and Emerson's community property except for $3,000 into the separate property of Emerson. The trial court found that Emerson had no legal obligation to repay the Department from his "separate property" for Vivian's care. The trial court filed its decision on March 30, 2010. On April 7, 2010, the Department filed its notice of Appeal to the district court.

On July 20, 2011, the district court entered its decision on appeal. The district court affirmed the trial court. The district court held that the ultimate issue was whether I.C. § 56–218 and 42 U.S.C. § 1396p defined the Medicaid recipient's estate to include the transmuted separate property of a surviving spouse. The district court held that Idaho has not defined an individual's estate to include the separate property of a surviving spouse because Idaho permits the transmutation of property for Medicaid eligibility and Idaho's community property laws provide that the separate property of a spouse is not subject to the debts of the community. Therefore, the district court held that the Department was required to take action to void the MSA before it could seek to recover from Emerson's separate property. The Department filed a notice of appeal with this Court on August 25, 2011.

III. ISSUES ON APPEAL

1. Whether the district court erred when it concluded that I.C. § 56–218(1) and 42 U.S.C. § 1396p prohibited the Department from recovering from Vivian's community property when that property was transmuted to Emerson as separate property for purposes of making Vivian eligible for Medicaid.

2. Whether the Estate is entitled to an award of attorney fees and costs below pursuant to I.C. § 12–117 or I.C. § 12–121.

3. Whether the Estate is entitled to attorney fees on appeal pursuant to I.C. § 12–117 or I.C. § 12–121.

IV. STANDARD OF REVIEW

The interpretation of a statute is a question of law over which this Court exercises free review. Curlee v. Kootenai Cnty. Fire & Rescue, 148 Idaho 391, 398, 224 P.3d 458, 465 (2008).

V. ANALYSIS

A. The district court erred when it concluded that I.C. § 56–218(1) and 42 U.S.C. § 1396p did not permit the Department from recovering from Vivian's community property when that property was transmuted to Emerson as his separate property for the purpose of making Vivian eligible for Medicaid without the Department first setting aside the MSA.

The Department argues that I.C. § 56–218 permits it to recover from either the estate of the Medicaid recipient or the estate of the recipient's surviving spouse regardless of whether the property is community or separate. The Department also argues that the district court erred when it concluded that IDAPA 16.03.09.905.05 —which specifically provides that an MSA will not preclude recovery—was deleted in 2010 because this rule was not deleted, just renumbered. The Department argues that permitting such recovery is consistent with federal law because 42 U.S.C. § 1396p(h)(1) expanded the scope of recovery by expanding the definition of "assets" to include assets that were shifted away from the recipient spouse so said spouse could be eligible for Medicaid.

The Estate argues that I.C. § 56–218 does not permit the recovery of separate property of a recipient's surviving spouse. The Estate acknowledges that I.C. § 56–218(1) permits recovery against the recipient's spouse but argues that the definition is lacking because it does not define what is included in the estate. The Estate contends that the legislature only contemplated recovery against the community property of the recipient's surviving spouse; particularly, the Estate argues that there is no distinction between what was always the separate property of the surviving spouse and what was once community property. Finally, the Estate argues that federal law does not resolve this issue because it permits the States to expand the definition of what constitutes an asset for purposes of recovery, but Idaho was not explicit in allowing recovery against the surviving spouse's separate property.

The magistrate court rejected the Department's interpretation that all property transferred to the spouse after the look-back period can be recovered. The magistrate court rejected the Department's argument that any arrangement or transfer occurring after the look-back date constituted an asset provided for by statute. Finally, the magistrate court concluded that the legislature intended to permit parties to use an MSA to "avoid repayment." Since, those agreements are not effective on death, they are not included within assets recoverable as defined by statute.

On appeal to the district court, the district court ultimately concluded the issue was whether the transmuted property was included in the "estate" under Idaho and federal law. The district court noted that federal law permits States to broaden the "estate" for the purposes of recovery to include assets in which the recipient had an interest at the time of death. The district court likewise concluded that an "asset" likely includes property transmuted by an MSA. However, the district court held that because Idaho Dep't of Health & Welfare v. Jackman, 132 Idaho 213, 970 P.2d 6 (1998), does not directly address this issue, and because Idaho community property laws provide that the separate property of a spouse is not subject to the community debt, the Department should be required to void the MSA before seeking recovery from the separate property of Emerson.

The interpretation of a statute is a question of law over which this Court exercises free review. State v. Hart, 135 Idaho 827, 829, 25 P.3d 850, 852 (2001). Interpretation of a statute begins with an examination of the statute's literal words. State v. Burnight, 132 Idaho 654, 659, 978 P.2d 214, 219 (1999). Where the language of a statute is plain and unambiguous, courts give effect to the statute as written, without engaging in statutory construction. State v. Rhode, 133 Idaho 459, 462, 988 P.2d 685, 688 (1999). Only where the language is ambiguous will this Court look to rules of construction for guidance and consider the reasonableness of proposed interpretations. Albee v. Judy, 136 Idaho 226, 231, 31 P.3d 248, 253 (2001). Idaho Conservation League, Inc. v. Idaho State Dep't of Agric., 143 Idaho 366, 368, 146 P.3d 632, 634 (2006). "Moreover, unless a contrary purpose is clearly indicated, ordinary words will be given their ordinary meaning when construing a statute." Corp. of Presiding Bishop of Church of Jesus Christ of Latter–Day Saints, 123 Idaho [410] at 415, 849 P.2d [83] at 88 [ (1993) ] (citing Bunt v. City of Garden City, 118 Idaho 427, 430, 797 P.2d 135, 138 (1990) ). In construing a statute, this Court will not deal in any subtle refinements of the legislation, but will ascertain and give effect to the purpose and intent of the legislature, based on the whole act and every word therein, lending substance and meaning to the provisions. George W. Watkins Family v. Messenger, 118 Idaho 537, 539–40, 797 P.2d 1385, 1387–88 (1990).

Curlee v. Kootenai Cnty. Fire & Rescue, 148 Idaho 391, 398, 224 P.3d 458, 465 (2008).

The Medicaid program is a "cooperative endeavor [with the States] in which the...