In re the Estate of Jean E. Newman v. Schlotter

• Decision Date: 11 September 2001
• Docket Number: WD58906
• Citation: 58 S.W.3d 640
• Parties: In re the Estate of Jean E. Newman, Deceased, Missouri Department of Social Services, Division of Medical Services, Appellant, v. Betty Schlotter, Personal Representative, Respondent. WD58906 Missouri Court of Appeals Western District 0
• Court: Missouri Court of Appeals

In re the Estate of Jean E. Newman, Deceased, Missouri Department of Social Services, Division of Medical Services, Appellant v Betty Schlotter, Personal Representative, Respondent

WD58906

Missouri Court of Appeals Western District

09/11/2001

Appeal From: Circuit Court of Miller County, Hon. Kenneth L. Oswald

Counsel for Appellant: Jennifer L. Barth

Counsel for Respondent: David A. Yarger

Opinion Summary:

The Missouri Department of Social Services (department), Division of Medical Services (division), appeals from the probate court's judgment for the respondent, Betty Schlotter, in her capacity as the personal representative of the Estate of Jean E. Newman, on its claim against the estate filed pursuant to section 473.398.1 and section 473.399.2 for reimbursement of Medicaid assistance funds, which were expended on behalf of the decedent and her husband, Joseph W. Newman, who predeceased her.

The division raises two points on appeal. In Point I, it claims that the probate court erred in excluding from evidence, as inadmissible hearsay, Exhibits 2, 3, 4 and 5, consisting of the computer-generated records of the division, reflecting, inter alia, the Medicaid assistance funds that were expended on behalf of the Newmans, because in doing so the court erroneously declared and applied the law as to the foundation required for the admissibility of hearsay records under the business records exception to the hearsay rule found in section 490.680. In Point II, the division claims that the probate court erred in finding for Schlotter and against the division on its claim because the court's judgment was against the weight of the evidence in that, but for the court's erroneous exclusion of Exhibits 2, 3, 4 and 5, as claimed in Point I, the division made a prima facie case for recovery on its claim.

Division I holds: As to Point I, sections 473.398 and 473.399 allow the department to recover Medicaid payments from the estate of a deceased recipient. As proof of funds paid, the division chose to use Medicaid billing and payment records, Exhibits 2-5. Schlotter objected to their admission on the basis that they were inadmissible hearsay. The division argued that they were admissible under the business records exception to the hearsay rule, section 490.680. The court sustained the objection.

Section 490.680 sets out three foundational requirements for the admission of a business record under the business records exception: (1) the custodian or other qualified witness testifies to its identity and the mode of its preparation; (2) the custodian or other qualified witness testifies that it was made in the regular course of business, at or near the time of the act, condition or event; and (3) in the opinion of the court, the sources of information, method and time of preparation justified its admission.

As to the first foundational showing, we find that the qualified witness does not have to be employed at the time the electronic entries comprising the record were made or have personal knowledge of their origins. Thus, to the extent the trial court relied on the fact that Lake was not employed by the appellant when certain of the entries comprising the exhibits were made or did not have personal knowledge of their origins, it erred.

As to the second foundational showing, all that is required is that the entries comprising the printouts of the records were made in the regular course of business, at or near the time of the act. The record reflects that Lake testified to that fact. Thus, the trial court's exclusion of the appellant's exhibits on the basis that this foundational requirement was not met was error.

As to the third foundational showing, there is nothing in the record to suggest that the records, with respect to the source of the information contained therein and their preparation, were not trustworthy. Thus, if the trial court relied on the division's purported failure to satisfy the third foundational requirement for admission of business records in excluding the division's exhibits, it erred.

As to Point II, we decline to hold that the division is entitled to a judgment of this court approving its claim. Rather, because Schlotter was never allowed to rebut the appellant's prima facie case, the cause is remanded to the probate court for the sole purpose of conducting a further hearing to allow Schlotter an opportunity to rebut the division's case.

Smart and Howard, JJ., concur.

Edwin H. Smith, Presiding Judge

The Missouri Department of Social Services (DSS), Division of Medical Services (DMS), appeals from the judgment of the Probate Division of the Circuit Court of Miller County for the respondent, Betty Schlotter, in her capacity as the personal representative of the Estate of Jean E. Newman, on its claim against the estate filed pursuant to section 473.398.1¹ and section 473.399.2 for reimbursement of Medicaid assistance funds, which were expended on behalf of the decedent and her husband, Joseph W. Newman, who predeceased her.

The appellant raises two points on appeal. In Point I, it claims that the probate court erred in excluding from evidence, as inadmissible hearsay, Exhibits 2, 3, 4 and 5, consisting of the computer-generated records of the appellant, reflecting, inter alia, the Medicaid assistance funds that were expended on behalf of the Newmans, because in doing so the court erroneously declared and applied the law as to the foundation required for the admission of hearsay records under the business records exception to the hearsay rule found in section 490.680. In Point II, it claims that the probate court erred in finding for the respondent and against it on its claim because the court's judgment was against the weight of the evidence in that, but for the court's erroneous exclusion of Exhibits 2, 3, 4 and 5, as claimed in Point I, the appellant made a prima facie case for recovery on its claim.

We reverse and remand.Facts

Mrs. Newman died intestate on August 20, 1999. Letters of administration were granted by the Probate Division of the Circuit Court of Miller County, appointing the respondent the personal representative of the estate. On December 29, 1999, the appellant filed a claim against the estate, pursuant to section 473.398 and section 473.399, seeking reimbursement of $40,625.09 in Medicaid assistance funds allegedly expended on behalf of the decedent and her husband. The estate contested the claim.

The appellant's claim was heard on July 18, 2000. Marsha Hickey, an employee of the DSS who was employed as an income maintenance supervisor for the Miller County Division of Family Services, was called by the DSS to testify. She testified that a recipient of public funds is identified in the agency's system by a departmental client number (DCN), as were the decedent and her husband. She further testified that the DCN tracks an individual from the Medicaid application process through approval and that it is uniformly used throughout the system and does not change. She also testified as to the procedure for applying for and receiving benefits; that she was the custodian of the records with respect thereto, which were kept in the normal course of the agency's business; and that she was familiar with the agency's record keeping procedures. Additionally, she explained that the information contained in the records was entered at or near the time it was received. As to the Newmans, she testified that they were approved for benefits and that their application documentation was included in Appellant's Exhibit 1, which was admitted into evidence.

James Lake, a cost recovery analyst for the DSS, was also called to testify on behalf of the appellant. He testified that he was responsible for putting together claim documentation for the recovery from estates of public assistance funds expended by the state. He brought with him to the hearing the claim documentation for both Mr. and Mrs. Newman, which consisted of billing statements, remittance advices, and check registers. Lake testified that he had reviewed the claim documentation for accuracy, including verifying the Newmans' DCNs to insure that the information collected related only to their accounts, and that he was familiar with the Medicaid process from the time a claim was filed to when it was paid. He also testified that he was the custodian of the estate recovery records and claim documentation, which were electronically maintained in a computer according to the clients' DCNs, to which system he had access. Lake, after describing how Medicaid funds are paid to providers and that he had engaged in substantial training to understand the Medicaid claims process, testified as to the processing of such claims. He also testified that he was aware of how the claim documentation was prepared and the records were kept and that the information in the records was recorded at or near the time it was received.

Lake was asked to identify Appellant's Exhibit 2, which he identified as the claim documentation for Mrs. Newman. He testified that the billing statement contained in the exhibit was computer-generated from a secured computer system. When he was asked whether or not the information obtained from the system was entered at or near the time it was received, the respondent objected on the basis that Lake had no personal knowledge of the entries since he was not employed by the claimant at the time of their entry. The objection was sustained. Lake also testified as to the check register contained in the exhibit, explaining that it reflected the provider's name, number, and the checks issued to it for the specified pay period and that the check register can be cross-referenced with the remittance advice number. Exhibit 2 was then offered for admission, to which the respondent objected on the basis that Lake was not a custodian for the record because he had no personal knowledge of the information contained in the documents and,...