Gulick v. Department of Health and Rehabilitative Services, 91-3826

• Decision Date: 02 March 1993
• Docket Number: No. 91-3826,91-3826
• Citation: 615 So.2d 192
• Parties: 18 Fla. L. Week. D634, 40 Soc.Sec.Rep.Ser. 510, Medicare&Medicaid Guide P 41,311 Wilhelmina GULICK, Appellant, v. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, Appellee.
• Court: Florida District Court of Appeals

Page 192

615 So.2d 192

18 Fla. L. Week. D634, 40 Soc.Sec.Rep.Ser. 510,

Medicare&Medicaid Guide P 41,311

Wilhelmina GULICK, Appellant, v. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, Appellee.

No. 91-3826.

District Court of Appeal of Florida First District.

March 2, 1993.

Rehearing Denied April 6, 1993.

Kathleen Holbrook Cold of Blalock, Holbrook & Akel, P.A., Jacksonville, for appellant.

Scott D. Leemis and Charlene J. Peterson, Asst. Dist. Legal Counsel, Dept. of Health and Rehabilitative Services, Jacksonville, for appellee.

WOLF, Judge.

Wilhelmina Gulick appeals from an final order of the Department of Health and Rehabilitative Services (department), upholding a denial of Medicaid benefits. The benefits were denied based upon the department's determination that the assets of a certain trust were available to the appellant because the trust qualified as a Medicaid qualifying trust (MQT) as defined in 42 U.S.C.A. Sec. 1396a(k)(2), and 10C-8.012, Florida Administrative Code. Appellant asserts that (1) the trust which was established by her husband did not meet the requirements of a Medicaid qualifying trust, and (2) the principal of the trust cannot be treated as a resource available to appellant's husband for assessing the Medicaid eligibility of appellant. We reject these contentions and affirm.

The appellant, an 82-year-old woman, was admitted to a nursing home for institutional care in September 1989. She then applied to the department for medical assistance (Medicaid) under the Institutional Care Program. Her application was denied on July 11, 1991, on the ground that her assets exceeded the Medicaid asset limit. The overwhelming portion of the value of the assets attributed to the applicant was the principal of a trust created by appellant's husband, Gordon W. Gulick, on June 24, 1988.

The trust was an irrevocable trust which named appellant and her husband as beneficiaries, and named their son as trustee. The pertinent language in the disposition clause provided that the trustee shall dispose of the corpus and income of the trust, if any, as follows:

a) For so long as the Grantor and the Grantor's wife, WILHELMINA GULICK reside elsewhere than at a skilled nursing facility, nursing home, or other like facility, and are not eligible for and receiving long term health care at home as defined in paragraphs "2(b)" and "2(c)" of this Trust Agreement, the Trustee shall pay to or for the benefit of the Grantor and the Grantor's wife, WILHELMINA GULICK, all of the net income of the trust, if any, in such proportion and in such amounts as the Trustee, in his sole and absolute discretion, deems necessary to maintain the present standard of living of the Grantor and of the Grantor's wife, WILHELMINA GULICK, together with such sums from the trust principal as the Trustee, in his sole and absolute discretion, deems appropriate for such purposes.

b) Upon the admission of the Grantor or of the Grantor's wife, WILHELMINA GULICK, as a permanent or chronic care resident or patient in a skilled nursing facility, nursing home, or other like facility, or upon the Grantor or of the Grantor's wife, WILHELMINA GULICK, being eligible for and receiving health care at home on a planned, on-going and permanent basis where the Grantor or the Grantor's wife, WILHELMINA GULICK, would otherwise be eligible for nursing home placement, all distributions of income and principal to said Grantor or said Grantor's wife, WILHELMINA GULICK, shall cease and said Grantor or said Grantor's wife, WILHELMINA GULICK, shall have no further legal or beneficial interest in this trust. Payments as aforesaid, however, shall continue to the spouse who is not a permanent or chronic care resident or patient in a skilled nursing facility, nursing home, or other like facility, and is not eligible for and receiving health care at home on a planned, on-going and permanent basis, until such time as said spouse either becomes a permanent or chronic care resident or patient in a skilled nursing facility, nursing home, or other like facility, or becomes eligible for and receives health care at home on a planned, on-going and permanent basis where the said spouse would otherwise be eligible for nursing home placement, or dies, whichever shall first occur, at which time this trust shall terminate and the principal and accumulated income distributed as hereinafter provided.

The trust also provided for distribution of trust assets to remaindermen upon termination, and contained a spendthrift provision to protect the trust assets from the beneficiaries' creditors.

The appellant appeals from the department's determination that the assets of this trust may be utilized in determining appellant's eligibility for Medicaid. The treatment of potential payments from an MQT and the definition of an MQT are provided in 42 U.S.C.A. Sec. 1396a(k) (West Supp.1991), which states in pertinent part as follows:

(1) In the case of a medicaid qualifying trust (described in paragraph (2)), the amounts from the trust deemed available to a grantor, for purposes of subsection (a)(17) of this section, is the maximum amount of payments that may be permitted under the terms of the trust to be distributed to the grantor, assuming the full exercise of discretion by the trustee or trustees for the distribution of the maximum amount to the grantor. For purposes of the previous sentence, the term "grantor" means the individual referred to in paragraph (2).

(2) For purposes of this subsection, a "medicaid qualifying trust" is a trust, or similar legal device, established (other than by will) by an individual (or an individual's spouse) under which the individual may be the beneficiary of all or part of the payments from the trust and the distribution of such payments is determined by one or more trustees who are permitted to exercise any discretion with respect to the distribution to the individual.

(3) This subsection shall apply without regard to--

(A) whether or not the medicaid qualifying trust is irrevocable or is established

for purposes other than to enable a grantor to qualify for medical assistance under this subchapter; or

(B) whether or not the discretion described in paragraph (2) is actually exercised.

(Emphasis added).

The department adopted a similar definition in rule 10C-8.012(22), Florida Administrative Code, which states:

Medicaid Qualifying Trust: A trust or similar legal device established, other than through a will, by an individual or his spouse, under which the individual is the beneficiary of all or part of the payments from the trust. The distribution of trust payments is determined by the trustee who has discretion with regard to amounts to be distributed to the individual.

In addition, rule 10C-8.0182(1), Florida Administrative Code, provides:

If any individual who applies for or is receiving Medicaid assistance, or the spouse of such an individual, established or establishes a revocable or irrevocable trust, the trust is counted as an asset and as income available to the beneficiary. If the trust value combined with other income or assets exceeds the established income and asset levels, the individual is not eligible for Medicaid. This provision applies to trusts in existence regardless of the purpose and reasons for the establishment of the trust.

Both the federal and Florida definitions of "MQT" address who creates the trust, who is the beneficiary of the trust, and the extent of discretion which may be exercised by the trustee. The definitions provide that the trust may be created by a community or institutionalized spouse. ¹

Appellant first argues that the institutionalized spouse must be the beneficiary for the trust to be an MQT. Appellant points out that the specific language of section 2b of the trust document terminated appellant's rights as a beneficiary upon her admission to institutional care and prior to the determination of eligibility for Medicaid; therefore, the appellant was not a beneficiary at the time of the determination of eligibility. The department responds, however, that in light of federal statutes and state regulations, a trust which is created by either the community or institutionalized spouse, and names the community spouse as a beneficiary, may qualify as an MQT; therefore, under the definition of an MQT, the assets are deemed to be available to Mr. Gulick.

Although neither side cites any case law which directly addresses the issue of whether a trust which names the community spouse as a beneficiary may be treated as an MQT, ² the department, as well as arguing the statutory definition of "MQT," asserts that the resources of the community spouse are attributable to the institutionalized spouse pursuant to 42 U.S.C.A. Sec. 1396r-5(c)(2):

(2) Attribution of resources at time of initial...