Dep't of Health & Human Servs. v. Rasmer (In re Estate of Rasmer)

• Decision Date: 31 July 2017
• Docket Number: Docket No. 153371, Docket No. 153370,Calendar No. 2,Docket No. 153356, Docket No. 153373, Docket No. 153372
• Parties: IN RE ESTATE OF Olive RASMER. Department of Health and Human Services, Plaintiff–Appellee, v. Richard Rasmer, Personal Representative of the Estate of Olive Rasmer, Defendant–Appellant. In re Estate of Irene Gorney. Department of Health and Human Services, Plaintiff–Appellant, v. Estate of Irene Gorney, Defendant–Appellee. In re Estate of William B. French. Department of Health and Human Services, Plaintiff–Appellant, v. Daniel Gene French, Personal Representative of the Estate of William B. French, Defendant–Appellee. In re Estate of Wilma Ketchum. Department of Health and Human Services, Plaintiff–Appellant, v. Estate of Wilma Ketchum, Defendant–Appellee. In re Estate of Olive Rasmer. Department of Health and Human Services, Plaintiff–Appellant, v. Richard Rasmer, Personal Representative of the Estate of Olive Rasmer, Defendant–Appellee.
• Court: Michigan Supreme Court

501 Mich. 18

903 N.W.2d 800

IN RE ESTATE OF Olive RASMER.

Department of Health and Human Services, Plaintiff–Appellee,

v.Richard Rasmer, Personal Representative of the Estate of Olive Rasmer, Defendant–Appellant.

In re Estate of Irene Gorney.

Department of Health and Human Services, Plaintiff–Appellant,

v.Estate of Irene Gorney, Defendant–Appellee.

In re Estate of William B. French.

Department of Health and Human Services, Plaintiff–Appellant,

v.Daniel Gene French, Personal Representative of the Estate of William B. French, Defendant–Appellee.

In re Estate of Wilma Ketchum.

Department of Health and Human Services, Plaintiff–Appellant,

v.Estate of Wilma Ketchum, Defendant–Appellee.

In re Estate of Olive Rasmer.

Department of Health and Human Services, Plaintiff–Appellant,

v.Richard Rasmer, Personal Representative of the Estate of Olive Rasmer, Defendant–Appellee.

Docket No. 153356

Docket No. 153370

Docket No. 153371

Docket No. 153372

Docket No. 153373

Calendar No. 2

Supreme Court of Michigan.

Argued January 12, 2017

Decided July 31, 2017

Larsen, J.

At issue in these companion cases is whether the Michigan Department of Health and Human Services (DHHS) may recover from beneficiaries' estates an amount equivalent to certain Medicaid benefits paid to, or on behalf of, those beneficiaries during their lifetimes. Pursuant to the Michigan Medicaid estate-recovery program (MMERP), DHHS asserted creditor claims in the amount of those benefits against the estates of four deceased beneficiaries: Ms. Olive Rasmer, Ms. Irene Gorney, Mr. William B. French, and Ms. Wilma Ketchum. In each case, the estate prevailed in the probate court and DHHS appealed. The Court of Appeals consolidated the appeals and reversed in part, concluding that DHHS could pursue its claims for amounts paid after MMERP's July 1, 2011 implementation date, but not for amounts paid between that date and the program's effective date, July 1, 2010. One estate applied to this Court for leave to appeal, asserting that due process barred DHHS from recovering any amount paid before 2013, when the agency had directly notified the estate's decedent of MMERP. DHHS applied for leave to appeal in all four cases, arguing that the Court of Appeals had erred in concluding that the agency was not entitled to recover the amounts paid between July 1, 2010, and July 1, 2011. We granted leave in both applications. Having considered the parties' written and oral arguments, we conclude that DHHS is not barred from pursuing estate recovery for amounts paid after July 1, 2010. We, therefore, affirm in part, reverse in part, and remand the cases to the probate courts for further proceedings.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

In 1965, Congress created the Medicaid insurance program,¹ which provides "federal financial assistance to States that choose to reimburse certain costs of medical treatment for needy persons." Schweiker v. Gray Panthers, 453 U.S. 34, 36, 101 S.Ct. 2633, 69 L.Ed.2d 460 (1981) (quotation marks omitted). States that choose to participate in Medicaid "must comply with [federal] requirements." Id. at 37, 101 S.Ct. 2633. In 1993, Congress required states to enact and carry out estate-recovery programs that would seek to recover the costs of certain Medicaid benefits from the beneficiaries' estates. See 42 USC 1396p(b)(1).² In 2007, the Michigan Legislature responded by enacting MMERP's enabling legislation, MCL 400.112g to MCL 400.112k, as enacted by 2007 PA 74 (the MMERP Act). The MMERP Act required DHHS³ to seek the federal government's approval of certain aspects of MMERP, see MCL 400.112g(3) ; only after getting that approval could DHHS "implement" the program, MCL 400.112g(5). DHHS sought federal approval in September 2010. The federal Centers for Medicare and Medicaid Services (CMS) granted approval in May 2011 and, in accordance with federal regulations, gave the amendments an "effective date" of July 1, 2010.⁴

DHHS began estate-recovery efforts on July 1, 2011, explaining in a June 1, 2011 bulletin that federal law required it to "implement" MMERP.⁵ The bulletin explained that, in accordance with MMERP, DHHS would "attempt to recover the expenses paid on behalf of a Medicaid beneficiaryfrom their estate." It further detailed which estates and property would be subject to recovery:

Medicaid beneficiaries who receive nursing facility care, MI Choice home and community based waiver services, home health, home help, and hospital or prescription drug services on or after July 1, 2010, and after they have reached the age of 55 years, will be subject to recovery upon their death or the death of a spouse.

Funds will be recovered from the beneficiary's estate which is defined as including all property and assets which are subject to probate, with several exceptions. The state will attempt to recover the estate when the beneficiary dies, if they were single, or when the surviving spouse dies, if they had a qualifying spouse.

The five appeals here stem from DHHS's implementing MMERP by seeking to recover from four estates. The agency's efforts were rejected in the probate courts. On appeal, the Court of Appeals reversed the probate courts in part and affirmed in part, holding that DHHS could recover from the estates but only for Medicaid benefits paid after MMERP's implementation date, July 1, 2011. In re Gorney Estate, 314 Mich.App. 281, 300, 886 N.W.2d 894 (2016). Although DHHS has appealed in this Court in all four cases, the estate of Ms. Olive Rasmer is the only estate to have appealed in this Court.

Ms. Rasmer applied for Medicaid benefits in October 2008 and began receiving them in 2009. As with all applicants for Medicaid benefits, Ms. Rasmer was required to submit an eligibility determination form, DHS–4574, both when she applied and periodically thereafter to redetermine benefits eligibility. When she applied in 2008, form DHS–4574 said nothing about estate recovery or MMERP. In September 2013, when her patient representative sought a redetermination of Ms. Rasmer's eligibility, the form contained the following acknowledgment about MMERP:

12. Estate Recovery. I understand that upon my death, [DHHS] has the legal right to seek recovery from my estate for services paid by Medicaid. [DHHS] will not make a claim against the estate while there is a legal surviving spouse or a legal surviving child who is under the age of 21, blind, or disabled living in the home. An estate consists of real and personal property. Estate Recovery only applies to certain Medicaid recipients who received Medicaid services after the implementation date of the program. [DHHS] may agree not to pursue recovery if an undue hardship exists. For further information regarding Estate Recovery, call 1-877-791-0435.

Ms. Rasmer began receiving benefits in 2009 and received them until she died, on March 16, 2014. DHHS sought to recover from her estate an amount equal to the benefits paid by Medicaid on her behalf from July 1, 2010, until her death, but Ms. Rasmer's estate rejected the claim. DHHS then sued the estate in the Bay County Probate Court, asserting a right to collect the amount of medical benefits paid on Ms. Rasmer's behalf. The estate asserted, as an affirmative defense, that it was not subject to MMERP because Ms. Rasmer had not been notified of the program when she initially applied for benefits in 2008 and because recovery would violate due process.

Both parties moved for summary disposition under MCR 2.116(C)(10). The probate court granted the estate's motion and denied DHHS's motion, reasoning that DHHS could not recover from the estate because, in its view, the agency had not given Ms. Rasmer notice of the program in accordance with MCL 400.112g. The probate court also denied DHHS's motion for reconsideration.

DHHS appealed, arguing that Ms. Rasmer had received all the notice and process to which she was entitled.

As in Ms. Rasmer's case, in each of the other three cases, the decedent "began receiving medicaid long-term care services after [September 30, 2007]," MCL 400.112k, when the Legislature enacted the MMERP Act. After DHHS implemented MMERP in July 2011, the decedent's patient representative signed a statement acknowledging an understanding of DHHS's "legal right to seek recovery from [the decedent's] estate for services paid by Medicaid." After the decedent's death, DHHS sought recovery from the decedent's estate for amounts disbursed after the July 1, 2010 effective date of the plan. The estate rejected the claim, and DHHS sued in probate court. After DHHS's claim was dismissed, DHHS appealed, arguing that the estate had received sufficient notice to satisfy both the governing statute, MCL 400.112g(7), and due process.

On DHHS's motion, the Court of Appeals consolidated the four cases for oral argument, and, in a split decision, affirmed in part, reversed in part, and remanded to the four probate courts for further proceedings. See Gorney, 314 Mich.App. at 300, 886 N.W.2d 894. The panel majority determined that it was bound by In re Keyes Estate, 310 Mich.App. 266, 871 N.W.2d 388 (2015), which had concluded that the acknowledgment signed by the patient representative met the requirement of MCL 400.112g(7) to "provide written information" and that the probate proceedings complied with due process. Gorney, 314 Mich.App. at 294–295, 886 N.W.2d 894. But Keyes had not addressed whether DHHS could "recover costs expended between July 1, 2010 and plan implementation [i.e., July 1, 2011]," and the Court of Appeals determined that DHHS could not do so without "violat[ing] the decedents' rights to due process." Id. at 300, 886 N.W.2d 894. It further determined that the Ketchum estate could argue on remand that DHHS, by pursuing estate recovery, had violated MCL 400.112g(4), which provides that DHHS "shall not seek Medicaid estate recovery if the costs of recovery exceed the amount of recovery available or if the recovery is not in the best economic interest of the state."⁶ See id. at 293–294...