In re Estate of Jones

• Decision Date: 13 January 2009
• Docket Number: No. WD 69310.,WD 69310.
• Citation: In re Estate of Jones, 280 S.W.3d 647 (Mo. App. 2009)
• Parties: In the ESTATE OF Wallace G. JONES, Deceased. State of Missouri, Department of Social Services, MO HealthNet Division, Respondent, v. Violet J. Knight and Tommy Jones, Appellants.
• Court: Missouri Court of Appeals

280 S.W.3d 647

In the ESTATE OF Wallace G. JONES, Deceased State of Missouri, Department of Social Services, MO HealthNet Division, Respondent, v. Violet J. Knight and Tommy Jones, Appellants.

No. WD 69310.

Missouri Court of Appeals, Western District.

January 13, 2009.

Motion for Rehearing and/or Transfer to Supreme Court Denied March 3, 2009.

Application for Transfer Denied May 5, 2009.

Amany Hacking, St. Louis, MO, for Appellants.

Paul Harper, Jefferson City, MO, for Respondent.

Before HAROLD L. LOWENSTEIN, P.J., PAUL M. SPINDEN, Judge and VICTOR C. HOWARD, Judge.

VICTOR C. HOWARD, Judge.

Violet J. Knight and Tommy Jones appeal the judgment of the probate court allowing a petition brought by the State of Missouri, Department of Social Services, MO HealthNet Division ("State") for an accounting under section 461.300¹ to recover Medicaid benefits provided on behalf of Wallace G. Jones ("Decedent"). On appeal, Knight and Jones claim the probate court erred in allowing the petition for accounting because: (1) the State has not amended the definition of "estate" in the Medicaid estate recovery statutes, sections 473.398 and 473.399,² to include nonprobate transfers, (2) the State is not a creditor under section 461.300, (3) even if the State is a creditor, it was required to amend its Medicaid State Plan or promulgate a rule regarding its interpretation of section 461.300, and (4) the State failed to notify Decedent that it would pursue nonprobate assets outside the definition of "estate" found in section 473.398. Knight and Jones's four points are denied, and the judgment of the probate court is affirmed.

Factual and Procedural Background

This appeal pertains to a petition brought by the State for an accounting under section 461.300 of a nonprobate asset transferred by Decedent to his children, Violet J. Knight and Tommy Jones. Decedent, who was a resident of Boone County, Missouri, died on November 9, 2003, at the age of 92. Upon Decedent's death, his home passed to Knight and Jones via a beneficiary deed Decedent had filed with the Boone County Recorder of Deeds on January 7, 2000. Because Decedent's home was his only asset, no estate was opened.

During his lifetime, Decedent received Medicaid nursing home benefits from the State. The application for benefits signed by Knight on behalf of Decedent stated, "I/We UNDERSTAND that the State of Missouri may file a claim against my/our estate to recover any assistance received." In order to recover the payments it made on behalf of Decedent, the State filed an Application of Interested Party for an Order to Require Supervised Administration with the probate court on October 19, 2004, requesting that a probate estate be opened. At that time, the State claimed that Decedent's estate owed the State $17,056.75 for Medicaid benefits it provided on behalf of Decedent. Because the probate court found there were no assets in Decedent's estate subject to administration, it denied the State's application.

The State then filed a writ of mandamus with this court, which ruled that an estate had to be opened prior to a determination of whether there were assets subject to administration. Letters of Administration for supervised administration were issued to Knight on October 4, 2005. With the consent of Jones, Letters of Administration were re-issued on October 11, 2005, allowing independent administration, and naming Knight as personal representative of Decedent's estate. On October 5, 2005, the State sent a letter to Knight's attorney requesting that she initiate an action for accounting under section 461.300. After Knight refused to initiate the action for accounting, the State filed a petition for accounting with the probate court on November 10, 2005, seeking recovery of Medicaid benefits paid on behalf of Decedent in the amount of $22,226.24. The parties later stipulated that the value of the property at the time of transfer was $24,000.

On December 17, 2007, the probate court entered its judgment allowing the State's petition for accounting and its claim in the amount of $22,226.24, stating that Knight and Jones were liable to the estate. Knight and Jones filed this timely appeal.

Standard of Review

Generally, the appellate court will affirm the judgment of the trial court unless there is no substantial evidence to support it, it is against the weight of the evidence, it erroneously declares the law, or it erroneously applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). However, because statutory construction is a question of law, the appellate court's review is de novo, and it gives no deference to the trial court's determination of law. Mo. Highway & Transp. Comm'n v. Merritt, 204 S.W.3d 278, 281 (Mo.App. E.D.2006).

Point I

In their first point on appeal, Knight and Jones contend that the probate court erred in allowing the State's claim because there were no assets in Decedent's estate in that his only asset, his home, passed to Knight and Jones via a beneficiary deed. Knight and Jones further argue that because the State has not amended the definition of "estate" in section 473.398.1 to include nonprobate transfers, the State cannot recover its Medicaid benefits from a nonprobate transfer. Because Knight and Jones's first point on appeal deals with the structure of both the federal Medicaid Act and Missouri's Medicaid estate recovery program, we will first describe the interaction between these programs.

Medicaid is a cooperative federal-state program that "seeks to provide medical assistance to low-income individuals who are unable to meet the costs of their medical care." Hutchings ex rel. Hutchings v. Roling, 193 S.W.3d 334, 340 (Mo.App. E.D.2006). If a state chooses to participate in the Medicaid program, the federal government will supply financial assistance to aid that state in providing health care. Id. Once a state chooses to participate in the Medicaid program, "the state must comply with all federal statutory and regulatory requirements." Id. at 340-41. Missouri has chosen to participate in the Medicaid program, codifying its state program at section 208.001, RSMo Cum. Supp. 2008, et seq. The MO HealthNet Division within the Department of Social Services is authorized to promulgate rules and implement the provisions of Missouri's Medicaid program under section 208.001.3.

In compliance with federal law, Missouri has established an estate recovery program in order to recover the value of Medicaid benefits paid by the State from the estate of a deceased Medicaid recipient. See 42 U.S.C. § 1396p(b);³ § 473.398-.399.⁴ According to section 1396p(b)(4)(A), a state's definition of "estate" must include at a minimum "all real and personal property and other assets included within the individual's estate, as defined for purposes of State probate law." Additionally, a state's definition of "estate" "may include, at the option of the State . . . any other real and personal property and other assets in which the individual had any legal title or interest at the time of death (to the extent of such interest), including such assets conveyed to a survivor, heir, or assign of the deceased individual through joint tenancy, tenancy in common, survivorship, life estate, living trust, or other arrangement." § 1396p(b)(4)(B). The State Medicaid Manual, provided by Centers for Medicare & Medicaid Services (CMS), instructs the state to "Specify in your State plan the definition of estate that will apply." State Medicaid Manual, § 3810 B.

Missouri's probate code defines "estate" as "the real and personal property of the decedent or ward, as from time to time changed in form by sale, reinvestment or otherwise, and augmented by any accretions and additions thereto and substitutions therefor, and diminished by any decreases and distributions therefrom." § 472.010(11), RSMo 2007. The definition of "estate" found in section 472.010(11) is also used in Missouri's Medicaid State Plan. Mo. State Plan, § 4.17, Attach. 4.17-A-3. Missouri's State Plan further notes that "Missouri's Medicaid estate recovery program is authorized by State law in the probate code. The State must pursue its claims against Medicaid decedent estates following the processes established by statute." Mo. State Plan, § 4.17, Attach. 4.17-A-5.

It is clear that Decedent's beneficiary deed was effective to transfer his home to Knight and Jones and that this nonprobate transfer disposed of Decedent's only asset. See §§ 461.025, 461.005(2), (7), RSMo 2007. Accordingly, Knight and Jones argue that because Missouri has not chosen to use the expanded definition of "estate," the State has no authority to make a claim against the nonprobate transfer. In its brief, the State admits that Missouri has not expanded the definition of "estate" to include nonprobate transfers and that the definition of "estate" in section 472.010(11) applies to this action, "as it does for all other creditors under § 461.300."

Additionally, Knight and Jones rely on two recent decisions from Missouri appellate courts, arguing that these decisions hold that the State cannot recover against certain property because it does not fall within the section 472.010(11) definition of "estate." See In re Estate of Bruce, 260 S.W.3d 398 (Mo.App. W.D.2008); In re Estate of Shuh, 248 S.W.3d 82 (Mo.App. E.D.2008). In the context of spousal recovery under the Medicaid Act, Bruce and Shuh both held that Missouri has not adopted the broader definition of "estate" allowed by section 1396p(b)(4)(B). See Bruce, 260 S.W.3d at 403; Shuh, 248 S.W.3d at 89. However, each of these cases has additional analysis pertaining to whether the State can recover Medicaid benefits under section 461.300, which is what the State seeks to do in this case. Therefore, the relevant issue is not whether Missouri has expanded its definition of "estate" for estate recovery purposes, but whether Missouri's estate recovery statutes allow the State to proceed...