Geyen v. Comm'r of Minn. Dep't of Human Servs.

• Decision Date: 12 July 2021
• Docket Number: A20-1300
• Parties: In re the Matter of: Dorothy Geyen, Respondent, v. Commissioner of Minnesota Department of Human Services, Appellant, Carver County Health and Human Services, Respondent below.
• Court: Minnesota Court of Appeals

In re the Matter of: Dorothy Geyen, Respondent,
v.
Commissioner of Minnesota Department of Human Services, Appellant,
Carver County Health and Human Services, Respondent below.

A20-1300

STATE OF MINNESOTA IN COURT OF APPEALS

July 12, 2021

Affirmed and remanded
Cochran, Judge

Carver County District Court
File No. 10-CV-19-1076

John B. Waldron, Waldron Law Offices, Ltd., Wayzata, Minnesota (for respondent Dorothy Geyen)

Keith Ellison, Attorney General, Michael N. Leonard, Assistant Attorney General, St. Paul, Minnesota (for appellant Commissioner of Minnesota Department of Human Services)

Mark Metz, Carver County Attorney, Daniel M. Ryan, Assistant County Attorney, Chaska, Minnesota (for respondent-below Carver County Health and Human Services)

Considered and decided by Ross, Presiding Judge; Cochran, Judge; and Frisch, Judge.

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SYLLABUS

Minn. Stat. § 501C.1206(b) (2020), which provides that certain irrevocable trusts become revocable "for the sole purpose" of determining eligibility for medical assistance for long-term-care services, is preempted by federal law.

OPINION

COCHRAN, Judge

Appellant Commissioner of the Minnesota Department of Human Services challenges a district court order reversing the commissioner's determination that respondent Dorothy Geyen was ineligible for medical assistance for long-term care (MA-LTC). The commissioner denied Geyen's application for MA-LTC based on the commissioner's determination that assets in two irrevocable trusts established by Geyen were available to her under applicable eligibility standards, and as a result, Geyen's assets exceeded the MA-LTC eligibility limit. On appeal, the commissioner seeks reversal of the district court's order on alternative grounds. The commissioner first argues that the district court lacked jurisdiction to decide Geyen's appeal of the commissioner's decision. The commissioner next argues that the administrative determination of ineligibility was correct on the merits.

We conclude that the district court had jurisdiction over Geyen's appeal of the commissioner's decision. We further conclude, as the district court did, that the commissioner erred as a matter of law by determining that the irrevocable trust assets were available to Geyen for purposes of determining Geyen's eligibility for MA-LTC. Specifically, we conclude that the assets in the irrevocable trusts were not available to

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Geyen under the federal law governing medical assistance, and that the state statute purporting to make the assets available is preempted by federal law. We therefore affirm.

FACTS

The facts are undisputed. In July 2011, Geyen created two irrevocable trusts, Trust A and Trust B. The trust agreements were identical but for their names. Each trust agreement provided that Geyen was the grantor and two of her children were the trustees. The beneficiaries of the trusts were Geyen's children and grandchildren.

The trust agreements indicated that Geyen had or would "irrevocably" transfer cash or other property to each trust. The trust agreements also empowered the trustees with "full power and authority to control" trust assets, except that the trustees were specifically precluded from loaning any assets to Geyen or making any gifts to her. In August 2011, each trust purchased $25,000 in annuities, which became assets of the trusts.

In February 2019, Geyen applied for MA-LTC with elderly waiver, a type of Medicaid benefits available through Minnesota's medical-assistance plan. She submitted her application to respondent-below Carver County Health and Human Services (the county).¹ The county concluded that Geyen's "total counted assets" were slightly over $73,300. In counting Geyen's total assets, the county included the trust assets because it determined that the irrevocable trusts became revocable when Geyen applied for MA-LTC by operation of Minn. Stat. § 501C.1206 (2020). And, because Geyen's assets were higher than the program limit of $3,000, the county sent Geyen an asset-reduction form explaining

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that she would have to reduce her assets to $3,000 to qualify for MA-LTC. Accordingly, the county denied Geyen's application.

In April 2019, Geyen appealed the county's denial of her MA-LTC application to the commissioner. Geyen challenged the county's decision to treat the irrevocable trusts as revocable based on Minn. Stat. § 501C.1206, arguing that the state statute conflicts with federal law. A human-services judge, appointed by the commissioner, heard Geyen's appeal and recommended that the commissioner affirm the county's decision on different grounds. Instead of concluding that the trusts became revocable under Minn. Stat. § 501C.1206, the human-services judge concluded that the irrevocable trust assets were available to Geyen under 42 U.S.C. § 1396p(d)(3)(B) (2018), the federal law governing the treatment of irrevocable trusts for Medicaid-eligibility purposes. By an order dated October 7, 2019, the commissioner adopted the recommended decision of the human-services judge. Geyen submitted a request for reconsideration to the commissioner, which was denied. In November 2019, Geyen appealed the commissioner's decision to district court pursuant to Minn. Stat. § 256.045, subd. 7 (2018).

At the time that the appeal was filed, Geyen resided at a care facility and was behind on her payments to the facility. In early December 2019, Geyen's daughter received a letter from the care facility stating that Geyen would be discharged later that month unless her outstanding bill was paid in full. To avoid her mother being discharged, Geyen's daughter—one of the two trustees—began liquidating the trust assets. After liquidating the assets, Geyen's daughter deposited the funds into Geyen's personal checking account. Geyen's daughter, a signer (with power of attorney) but not a joint owner of the account,

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then paid the care facility from Geyen's checking account. Geyen became eligible for MA-LTC after payment of the funds from the trusts to the care facility. In an affidavit submitted to the district court, Geyen's daughter asserted that she believed that her liquidation of the trust funds to pay the care-facility bill violated the trust agreements, but she felt that she had no other choice.

In briefing to the district court, the commissioner first argued that Geyen's appeal was moot because Geyen ultimately received MA-LTC. The commissioner then made alternative arguments to support her contention that she properly considered the trust assets in determining Geyen's eligibility for MA-LTC. First, the commissioner argued that the trust assets were available under federal law because the assets could be used to benefit Geyen. Second, the commissioner argued that the trust assets were available under state law, specifically Minn. Stat. § 501C.1206(b), because the trusts "became revocable when [Geyen] applied for MA-LTC." And, in response to an argument raised by Geyen, the commissioner argued that Minn. Stat. § 501C.1206(b) was not preempted by federal law.

At oral argument before the district court, counsel for the commissioner told the district court that Geyen had passed away not long ago. Counsel went on to argue: "So not only are there mootness issues, there may be some standing issues as well in this case, as no one has [been] substituted . . . for Ms. Geyen."

In August 2020, the district court issued its order reversing the commissioner's decision. At the outset of its order, the district court acknowledged that Geyen had died. But the district court declined to address the commissioner's "standing" argument because "Geyen was alive at all relevant times pertaining to this action, the action was begun before

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her death, and her [e]state would step into her shoes regardless." And the district court declined to "address the mootness argument raised" by the commissioner because "[i]f the assets of the Trusts did not need to be depleted . . . the Trusts would have most likely remained funded and the beneficiaries . . . would have assets to draw from. Damages were sustained in this case."

On the merits, the district court determined that the commissioner's decision was "unsupported by substantial evidence" and "affected by an error of law." The district court rejected the commissioner's conclusion that the trust assets were available to Geyen for purposes of determining MA-LTC eligibility. Relying on "the applicable federal law," the district court concluded that the irrevocable trusts "should not be viewed as assets in determining" Geyen's MA-LTC eligibility. In reaching this conclusion, the district court emphasized that the irrevocable trust agreements "specifically precluded" the trustees from loaning or gifting any trust assets to Geyen, who the district court found was "not a beneficiary under the Trusts."

The district court also determined that the trust assets did not become available to Geyen by virtue of Minn. Stat. § 501C.1206(b), as argued by the commissioner. The district court concluded that this state statute is preempted by 42 U.S.C. § 1396p(d)(3)(B) because the trust assets would be available under state law but unavailable under federal law for purposes of determining eligibility for MA-LTC. The commissioner now appeals the district court's decision.

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ISSUES

I. Did the district court have jurisdiction over Geyen's appeal?

II. Was the commissioner's determination that Geyen was ineligible for medical assistance affected by an error of law?

ANALYSIS

This case involves Medicaid, which is known as medical assistance in Minnesota,² and the application of federal Medicaid requirements to Geyen's MA-LTC application. We first provide an overview of Medicaid. We then turn to the specific issues raised by this appeal.

In 1965, Congress enacted Medicaid as Title XIX of the Social Security Act. Atkins v. Rivera, 477 U.S. 154, 156, 106 S. Ct. 2456, 2458 (1986); see 42 U.S.C. §§ 1396-1396w-5 (2018) (current version of Medicaid).³ Medicaid is "designed to...