Exec. Office of Health & Human Servs. v. Mondor

Decision Date27 January 2023
Docket NumberSJC-13179
Citation491 Mass. 1015,201 N.E.3d 281
Parties EXECUTIVE OFFICE OF HEALTH AND HUMAN SERVICES v. Linda Marie MONDOR & others (and a consolidated case ).
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court

Jesse M. Boodoo, Assistant Attorney General, for Executive Office of Health and Human Services.

Brian E. Barreira, Plymouth, for Lisa Marie Mondor & others.

Patricia Keane Martin, Wellesley, Clarence D. Richardson, Jr., & C. Alex Hahn, for Massachusetts Chapter of the National Academy of Elder Law Attorneys, amicus curiae, submitted a brief.

RESCRIPT

The parties to these consolidated cases seek a judgment declaring their respective rights to the remainder proceeds of two annuity contracts, each of which names the Commonwealth as primary remainder beneficiary and the individual defendants as contingent remainder beneficiaries. In each case, the plaintiff, the Executive Office of Health and Human Services (Commonwealth), only claims entitlement to remainder proceeds up to the amount of medical assistance paid on behalf of an "institutionalized spouse"3 whose eligibility for Medicaid long-term care benefits was achieved by the purchase of the annuity during the relevant "look-back" period as defined by Federal statute. See 42 U.S.C. § 1396p(c). For the reasons discussed infra, we remand the consolidated cases for entry of a declaratory judgment in favor of the Commonwealth.

Background. 1. Facts. We recite the facts as set forth in the parties’ statement of agreed material facts pursuant to Mass. R. Civ. P. 64, as amended, 423 Mass. 1410 (1996).

a. Mondor annuity. Defendants Linda Marie Mondor, Michelle Mogan, and Cathy Ann Mondor (collectively, Mondor beneficiaries) are the daughters of Elda Mondor and Edward J. Mondor.4 Edward was Elda's spouse. Elda was admitted to a skilled nursing facility for long-term care in March 2018, at the age of eighty-four.

In April 2018, Edward purchased an annuity contract (Mondor annuity) issued by Standard Insurance Company (Standard). Edward paid a premium of $191,215.28 for the Mondor annuity using funds held in a traditional individual retirement account (IRA) for Edward. The Mondor annuity named Edward as the sole annuitant and owner. The Mondor annuity provided that Edward, as annuitant, would receive monthly payments in the amount of $4,065, commencing June 3, 2018, and continuing for a four-year term. Edward named the "Commonwealth of Massachusetts" as the primary remainder beneficiary of the Mondor annuity, and he named the Mondor beneficiaries as the contingent remainder beneficiaries. The Mondor annuity is nontransferable, nonforfeitable, nonassignable, noncommutable, and irrevocable.

In June 2018, Elda submitted an application for MassHealth5 long-term care benefits. But for Edward's purchase of the Mondor annuity, Edward and Elda's joint assets would have exceeded the allowable limit for Elda to be deemed eligible for MassHealth long-term care benefits.

Elda's application for MassHealth benefits disclosed the Mondor annuity, as required by 42 U.S.C. § 1396p(e), and Elda also provided MassHealth with a completed Notice of Preferred Remainder Beneficiary, known as an "ANN-3" form. The completed ANN-3 form, signed by Edward as Elda's authorized representative, identified the Mondor annuity and stated in relevant part:

"The [Commonwealth] has determined that, pursuant to MassHealth regulations at 130 [Code Mass. Regs. §] 520.007(J) and [F]ederal law at 42 U.S.C. [§] 1396p(e), the Commonwealth of Massachusetts must be named as a preferred remainder beneficiary in the first position (primary beneficiary) if there is no community spouse or minor or disabled child .... The Commonwealth may collect up to the total amount of medical assistance paid on behalf of the individual if there is no community spouse or minor or disabled child. In accordance with [F]ederal law 42 U.S.C. [§] 1396p(e), the Commonwealth must notify the annuity issuing company of its interest as a preferred remainder beneficiary under the annuity and will do so by way of sending the company a copy of this form."

The Commonwealth provided Standard with a copy of the completed ANN-3 form regarding the Mondor annuity.

Before approving Elda's MassHealth application, MassHealth requested additional documentation, including a current statement from the Mondor annuity "with Commonwealth of Mass[.] as beneficiary." After the additional documentation was provided, MassHealth approved Elda's application, deeming her eligible for long-term care benefits retroactive to May 1, 2018. At the time of the filing of the complaint, Elda continued to reside in a skilled nursing facility and receive MassHealth benefits for her long-term care.

Edward died on April 11, 2020. At the time of his death, $97,720.28 in annuity payments remained to be paid on the Mondor annuity. The Commonwealth made a claim on the proceeds of the Mondor annuity up to the total amount of medical assistance paid on behalf of Elda. The Commonwealth asserted that as of July 29, 2020, it had paid $146,903.57 in medical assistance on Elda's behalf. The Mondor beneficiaries also made a claim to all remaining proceeds of the Mondor annuity.

As of March 31, 2021, MassHealth had paid $191,865.61 in medical assistance on behalf of Elda. Edward never applied for or received Medicaid or MassHealth benefits during his lifetime. Standard remains in possession of all the remainder proceeds from the Mondor annuity.

b. Castle annuity. Defendants Kathleen Anne Bristow, Marianne Schwenzfeier, and John Francis Castle (collectively, Castle beneficiaries) are the children of Carol A. Castle and James W. Castle.6 James was Carol's spouse. Carol was admitted to a skilled nursing facility for long-term care in August 2018, at the age of seventy-eight.

In November 2018, James purchased an annuity contract (Castle annuity) issued by Standard. James paid a premium of $176,859.75 for the Castle annuity, using funds held in a traditional IRA for James. The Castle annuity named James as the sole annuitant and owner. The Castle annuity provided that James, as annuitant, would receive monthly payments in the amount of $3,031.93, beginning on November 19, 2018, and continuing for a five-year term. James named the "Commonwealth of Massachusetts" as the primary remainder beneficiary of the Castle annuity, and he named the Castle beneficiaries as the contingent remainder beneficiaries. The Castle annuity is nontransferable, nonforfeitable, nonassignable, noncommutable, and irrevocable.

In December 2018, Carol submitted an application for MassHealth long-term care benefits. But for James's purchase of the Castle annuity, James and Carol's joint assets would have exceeded the allowable limit for Carol to be deemed eligible for MassHealth long-term care benefits. Carol's application for MassHealth benefits disclosed the Castle annuity, per 42 U.S.C. § 1396p(e), and Carol also provided MassHealth with a completed ANN-3 form, signed by James as Carol's authorized representative, which identified the Castle annuity and contained language identical to that quoted supra from the ANN-3 form in connection with the Mondor annuity. The Commonwealth later provided a copy of the ANN-3 form to Standard.

MassHealth approved Carol's application, deeming her eligible for long-term care benefits retroactive to November 12, 2018. Carol died on April 23, 2020. As of that date, MassHealth had paid $123,413.51 in medical assistance on Carol's behalf.

James died on October 1, 2020. At the time of his death, approximately $110,000 in annuity proceeds remained to be paid on the Castle annuity. James never applied for or received Medicaid or MassHealth benefits during his lifetime.

The Commonwealth made a claim on the proceeds of the Castle annuity up to the total amount of medical...

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