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And So It Ends - Perhaps: Ketchum and Estate Recovery

By Douglas G. Chalgian posted 03-03-2016 14:05

  

Ketchum v DHHS was just released by the Michigan Court of Appeals. This case arises in the context of a series of cases that have been decided by the COA since Michigan first adopted an “estate recovery” law in 2007. Each case has addressed the proper interpretation of that statute.  In each case the position of the Department of Community Health has been upheld.  The same is true in Ketchum.

Whereas prior cases focused on the issue of proper notice to impose an estate recovery claim, Ketchum is the first case to address the so-called “home of modest value” exemption; which purports to exempt an amount from estate recovery, which amount is equal to 50% of the average home value in the county in which the house is situated. The issue is whether this exemption is as simple as the statute suggests, or whether the home value is only one factor in determining whether this “hardship waiver” is available.

Specifically, Michigan’s estate recovery law, MCL 400.112g, says:

(3) The department of community health shall seek appropriate changes to the Michigan medicaid state plan and shall apply for any necessary waivers and approvals from the federal centers for medicare and medicaid services to implement the Michigan Medicaid estate recovery program. The department of community health shall seek approval from the federal centers for medicare and medicaid regarding all of the following:

  1. An exemption for the portion of the value of the medical assistance recipient’s homestead that is equal to or less than 50% of the average price of a home in the county in which the medicaid recipient’s homestead is located as of the date of the medical assistance recipient’s death.

The subsequently adopted policy, as set forth in BAM 120, at pages 8-9. characterizes this exception as a hardship waiver, and establishes almost unachievable thresholds to qualifying.  The policy goes well beyond the plain language of the statute, and essentially eviscerates the protections the legislature presumably intended when it was passed.

The issue is whether this exemption is as simple as the statute suggests, or whether the home value is only one factor in determining whether this “hardship waiver” is available. 

In Ketchum, the decision of he COA turns on the unusual fact that after the death of the Medicaid beneficiary, the house was sold. Accordingly, it could be argued that the case does not foreclose the possibility that situations in which the house is retained would not be controlled by this decision.  But the dicta of the case suggests otherwise.  The COA takes pains in its decision to equate this case to prior estate recovery decisions, and specifically to the provisions of the statute that allow DCH to negotiate terms and conditions regarding Michigan’s estate recovery program, and to include additional requirements not specifically addressed in the law.

While there remain legal theories that could continue this battle, it is uncertain whether anyone will have the time or inclination to pursue those avenues. In the meantime, this appears to be the end.

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