Kindt, Matter of, C9-95-1622

• Decision Date: 16 January 1996
• Docket Number: No. C9-95-1622,C9-95-1622
• Citation: 542 N.W.2d 391
• Parties: In the Matter of Keith W. KINDT.
• Court: Minnesota Court of Appeals

Page 391

542 N.W.2d 391

49 Soc.Sec.Rep.Ser. 871

In the Matter of Keith W. KINDT.

No. C9-95-1622.

Court of Appeals of Minnesota.

Jan. 16, 1996.

Syllabus by the Court

Pursuant to 42 U.S.C. § 1396a(k), an incompetent individual's trust is a Medicaid qualifying trust if it is funded by assets that are intended to settle the individual's tort claims and that become the property of the individual's heirs upon his or her death. The amount of trust assets deemed available to the individual includes that which the trustee could, in its discretion, distribute to the individual in the absence of medical assistance benefits.

Mark W. Haigh, Davenport, Evans, Hurwitz & Smith, Sioux Falls, for Appellant Keith W. Kindt.

Hubert H. Humphrey, III, Attorney General, William H. Mondale, Assistant Attorney General, St. Paul, for Respondent Commissioner of Human Services.

James O'Neill, Pipestone County Attorney, Timothy K. Anderson, Assistant County Attorney, Pipestone, for Respondent Pipestone County Family Services.

Considered and decided by PETERSON, P.J., and RANDALL and SHORT, JJ.

OPINION

SHORT, Judge.

This matter involves a determination that Keith Kindt is financially ineligible for medical assistance (MA) due to the availability of trust assets. On appeal, Keith Kindt's former spouse and guardian, Kim Kindt (Kindt), argues the Commissioner of Human Services erred as a matter of law in concluding (1) the county's benefit termination letter complied with the notice requirements of the Due Process Clause, and (2) Keith Kindt's trust is an available asset for purposes of determining MA eligibility.

FACTS

On August 6, 1987, while watching a church-sponsored softball game in South Dakota, Keith Kindt was struck in the head by a baseball bat. As a result of internal hemorrhaging, part of his brain tissue died. He has undergone over a dozen surgeries, but remains incompetent to manage his affairs, suffers from behavioral problems, and requires medical attention 24 hours a day.

After her appointment as guardian of Keith Kindt's person and property, Kindt filed an action against the City of Sioux Falls, the church, and three individuals. In November 1991, Kindt settled her own claims, as well as those of her children and Keith Kindt. Under the terms of the settlement agreement, Kindt received $400,000 personally and another $300,000 as guardian of the Kindts' two children. Additionally, as Keith Kindt's guardian, she received a net settlement of approximately $262,000. Pursuant to S.D. Codified Laws Ann. § 30-29-43, Kindt petitioned for, and received, a South Dakota state court's permission to execute the settlement agreement in favor of her wards.

In accordance with Kindt's petition, the South Dakota court, as "grantor," executed an agreement creating an irrevocable trust:

[T]o provide KEITH W. KINDT extra and supplemental medical, health, and nursing care, * * * support, maintenance, education, rehabilitation, therapies, devices, recreation, social opportunities * * * over and above the benefits he otherwise receives as a result of his disabilities from any local, county, state or federal governmental agency * * *. It is the express purpose of the parties to use the trust estate only to supplement other benefits received by or on behalf of KEITH W. KINDT. * * * Nothing herein shall preclude the Trustee from purchasing those services and items which promote KEITH W. KINDT's happiness, welfare, and development * * * provided that the furnishing of such goods or services shall not be paid by the Trustee if in the judgment of the Trustee such payments will jeopardize the financial assistance * * * it being the intent of all parties hereto that the trust be considered as a supplement to the benefits provided from [public and private] sources.

Prior to the settlement, Keith Kindt was moved from South Dakota to his parents' residence in Minnesota. Initially, Keith Kindt qualified for MA in Pipestone County. However, in March 1992, Kindt received a notice that, as of April 1, Keith Kindt would become ineligible for MA because Kindt had not provided the documentation required to assess continued eligibility for the program. On March 24, Kindt provided the desired information to Pipestone County. However, pending the review's outcome, the county terminated Keith Kindt's MA benefits as of April 1.

When Kindt checked on the review's status in May 1992, the county informed her in writing that the matter remained unresolved because the Attorney General's Office had assumed responsibility for the evaluation of Keith Kindt's settlement and had not completed its analysis. Later, in October 1992, Kindt received a notice from the county, informing her that:

KEITH W. KINDT'S Medical Assistance benefits will stop on April 1, 1992 because: [His] personal or real property is more than the medical assistance limits.

The front of the notice urged Kindt to seek advice if she did not understand its contents. The back of the notice, which she did not examine, listed an appeals period of 30 days, or 90 days with good cause.

Although Kindt consulted her attorney regarding this letter, she made no formal attempt to appeal the county's action until May 1993. On July 6, 1993, an appeals referee heard the matter and advised Kindt to reapply for MA because this would partially preserve Keith Kindt's rights on the merits if the Commissioner of Human Services ruled the appeal of the 1992 decision untimely. Following this advice, Kindt reapplied for benefits, which the county denied pending the outcome of the original appeal. The Commissioner treated Kindt's action as an appeal from both the 1992 termination of benefits and the denial of Kindt's second application.

In January 1994, the Commissioner adopted the referee's proposed order and affirmed the county's actions, holding Kindt's appeal of the original benefit termination letter untimely and determining Keith Kindt ineligible for MA under the 1993 application because his trust constituted an available asset. Pursuant to Minn.Stat. § 256.045, subd. 7, Kindt sought judicial review. The district court affirmed the Commissioner's decision.

ISSUES

I. Did the October 1992 benefit termination letter conform to the notice requirements of the Due Process Clause, thus binding Kindt's interests and obliging her to bring a timely appeal?

II. Is a trust established pursuant to a judicially-approved settlement agreement an available asset for purposes of determining Medicaid eligibility when the beneficiary's heirs are entitled to the remainder and the trustee enjoys the discretion to distribute the trust's corpus in the absence of medical assistance benefits?

ANALYSIS

In reviewing MA eligibility determinations, we examine de novo the agency's decision for constitutional violations and other errors of law. In re Leona Carlisle Trust Created Under the Trust Agreement Dated Feb. 9, 1985, 498 N.W.2d 260, 263 (Minn.App.1993) (reviewing de novo legal questions surrounding an individual's MA eligibility); In re Welfare of Sayles, 407 N.W.2d 414, 416-18 (Minn.App.1987) (reviewing an agency's MA eligibility decision for constitutional violations and other errors of law), aff'd, 427 N.W.2d 653 (Minn.1988). This case requires us to decide (1) whether the original benefit termination letter violated the notice requirements of the Due Process Clause, and (2) whether Keith Kindt's trust is an available asset under 42 U.S.C. § 1396a(k) (1988).

I.

Kindt argues the October notice was ineffective to start the running of the statutory appeals period because it failed to inform her of the interest involved or the basis for the termination of benefits. See Schulte v. Transportation Unlimited, Inc., 354 N.W.2d 830, 832, 835 (Minn.1984) (remanding for de novo consideration of the claimant's reemployment insurance eligibility, despite his untimely appeal, because the agency violated the Due Process Clause by not informing him of the consequences of a proposed adverse action); Anderson v. Moberg Rodlund Sheet Metal Co., 316 N.W.2d 286, 288 (Minn.1982) ("[T]he requirements of a fair hearing include notice of the claims of the opposing party * * * ." (quoting Federal Trade Comm'n v. National Lead Co., 352 U.S. 419, 427, 77 S.Ct. 502, 508, 1 L.Ed.2d 438 (1957))). Taken out of context, an October 1992 notice that MA benefits "will stop on April 1, 1992 " might appear to be an unclear statement of the interest involved. However, Keith Kindt's benefits had already been suspended on April 1 and would resume only upon a favorable resolution of questions surrounding his eligibility. Prior to October 1992, Kindt understood this matter was not yet closed and had inquired into its status in May 1992. The October 1992 notice stated the exact consequence of the county's final eligibility determination: Keith Kindt would receive no benefits for an open-ended period beginning April 1, 1992. This case manifests none of the evils discussed in Schulte: the county disclosed the magnitude of the proposed benefit reduction (total) and informed Kindt of the full range of negative consequences of its decision (no further benefits from the date of initial suspension). See Schulte, 354 N.W.2d at 835 (treating an agency's failure to inform a person of the amount of proposed reductions or the full range of negative consequences as insufficient notice and, thus, a violation of the Due Process Clause). Indeed, had the county not specified the April 1 benefit termination date, it could have been accused of failing to notify Kindt of the full extent of negative consequences resulting from its action.

The October 1992 notice also cited "your personal or real property is more than the medical assistance limits" as the reason for the termination of benefits. Under the facts and circumstances of this case, we conclude that this constitutes sufficient notice of the basis for the county's action. As Kindt testified, Keith Kindt had no assets other than...