Chenot v. Bordeleau, 88-173-M

• Decision Date: 12 July 1989
• Docket Number: No. 88-173-M,88-173-M
• Citation: 561 A.2d 891
• Court: Rhode Island Supreme Court
• Parties: , Medicare & Medicaid Guide P 37,966 Edward A. CHENOT v. Nancy BORDELEAU, Director of Rhode Island Department of Human Services. P.

Page 891

561 A.2d 891

58 USLW 2107, Medicare & Medicaid Guide P 37,966

Edward A. CHENOT v. Nancy BORDELEAU, Director of Rhode Island Department of Human Services.

No. 88-173-M.P.

Supreme Court of Rhode Island.

July 12, 1989.

Anthony R. Mignanelli, Lauren E. Jones, Jones & Aisenberg, Providence, for plaintiff.

James E. O'Neil, Atty. Gen., Terence J. Tierney, Asst. Atty. Gen., Providence, for defendant.

OPINION

KELLEHER, Justice.

The issue raised by this administrative appeal is whether the interest of Edward A. Chenot (Edward) in a trust was properly considered a resource by the Department of Human Services (DHS) for the purpose of administering its medical-assistance program. The uncontroverted facts are substantially as follows.

Edward is a mildly retarded adult. In 1977 his father, Albert J. Chenot (the father), executed a last will and testament that left the majority of his estate, including the family residence, in trust. The will named the Pawtucket Trust Company as trustee and provided in pertinent portion that

"[t]he trustee may at any time or times pay all or any portion of the net income or principal or both net income and principal of the trust to or for the benefit of my son, Edward A. Chenot, as the said trustee, in its sole and uncontrolled discretion, shall deem necessary or advisable for his comfort, support and welfare. Upon the death of my son, Edward A. Chenot, the trustee shall provide for and pay for all necessary funeral expenses out of the trust estate and the remainder after the payment of said expenses shall be divided equally among my children, * * * share and share alike.

"It is my intention that the trustee shall exercise its discretion primarily for the benefit of Edward A. Chenot because of his special needs and circumstances."

After the father's death in late 1977 Edward and his sister continued to reside in the family residence. However, in 1985 the sister realized that she was incapable of both maintaining the home and providing Edward with the care he required. Consequently the decisions were made that the home would be sold and Edward would be admitted to a facility where he would be taught the skills necessary for independent living.

On May 1, 1985, Edward was admitted to the Intermediate Care Facility for the Mentally Retarded operated by the Blackstone Valley section of the Rhode Island Association for Retarded Citizens (the facility). From this date until August 16, 1985, DHS considered Edward eligible for its medical-assistance program and paid the entire cost of the care provided by the facility. However, on this later date DHS's opinion regarding Edward's eligibility for medical benefits changed dramatically. This change occurred because on August 16, 1985, the family residence was sold. When the proceeds of the sale were placed in the trust, it contained over $42,000 of liquid assets. Upon learning of the trust's enhanced status, DHS immediately terminated Edward's medical-assistance benefits. The rationale for this termination relied on a portion of DHS's manual that provides that disabled applicants for medical assistance are ineligible if they possess resources in excess of $4,000. The DHS considered the trust assets Edward's resources and terminated his benefits. ¹

Soon after this termination occurred, Edward requested and received an administrative hearing. The DHS appeals officer sustained the termination on the ground that "the funds in the trust, * * * are available to be utilized for the comfort, support and welfare of [Edward]." Following this decision, Edward sought Superior Court review pursuant to G.L.1956 (1988 Reenactment) § 42-35-15. The Superior Court justice considered many factors, including the circumstances surrounding the creation of the trust, the intent of the father, and the expected duration of Edward's hospitalization and reversed the appeals officer's holding. The DHS, acting pursuant to § 42-35-16, petitioned this court for a writ of certiorari. The petition was granted on September 8, 1988.

The issue of whether DHS can consider the assets of the instant trust as Edward's resources is a question of law. Although this court may "not substitute its judgment for that of the agency in regard to the credibility of witnesses or the weight of the evidence concerning questions of fact," we may freely review questions of law " 'to determine what the law is and its applicability to the facts.' " Carmody v. Rhode Island Conflict of Interest Comm'n, 509 A.2d 453, 458 (R.I.1986). Even though we have never decided whether a beneficial interest in a trust can properly be considered a resource in determining eligibility for medical-assistance benefits, similar issues have been decided in other jurisdictions. See Hoelzer v. Blum, 93 A.D.2d 605, 462 N.Y.S.2d 684 (1983); Lineback by Hutchens v. Stout, 79 N.C.App. 292, 339 S.E.2d 103 (1986); Lang v. Commonwealth Dept. of Public Welfare, 515 Pa. 428, 528 A.2d 1335 (1987). These courts have based their decisions primarily upon the variety of the trust being considered.

The two varieties of trusts commonly encountered in the above-cited cases are the support trust and the discretionary trust. When a court decides that the benefit applicant is the beneficiary of a support trust, the trust assets are considered resources of the applicant. In Re Will of Cooper, 76 Misc.2d 166, 349 N.Y.S.2d 613 (1973); ...