Case Title: Executive Office of Health & Human Services v. Mondor

Citation: 

Docket Number: SJC-13179

State: massachusetts

Court: Massachusetts Supreme Court

Date: 2023-01-27T00:00:00Z

Document:
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SJC-13179 
 
EXECUTIVE OFFICE OF HEALTH AND HUMAN SERVICES  vs.  LINDA MARIE 
MONDOR & others1 (and a consolidated case2). 
 
 
January 27, 2023. 
 
 
Medicaid.  MassHealth.  Annuity.  Federal Preemption.  Statute, 
Construction, Federal preemption. 
 
 
The parties to these consolidated cases seek a judgment 
declaring their respective rights to the remainder proceeds of 
two annuity contracts, each of which names the Commonwealth as 
primary remainder beneficiary and the individual defendants as 
contingent remainder beneficiaries.  In each case, the 
plaintiff, the Executive Office of Health and Human Services 
(Commonwealth), only claims entitlement to remainder proceeds up 
to the amount of medical assistance paid on behalf of an 
"institutionalized spouse"3 whose eligibility for Medicaid long-
term care benefits was achieved by the purchase of the annuity 
during the relevant "look-back" period as defined by Federal 
statute.  See 42 U.S.C. § 1396p(c).  For the reasons discussed 
infra, we remand the consolidated cases for entry of a 
declaratory judgment in favor of the Commonwealth. 
 
 
1 Michelle Mogan and Cathy Ann Mondor. 
 
 
2 Executive Office of Health and Human Services  vs.  
Kathleen Ann Bristow & others. 
 
 
3 The term "institutionalized spouse" means "an individual 
who . . . is in a medical institution or nursing facility . . . 
[and] is married to a spouse who is not in a medical institution 
or nursing facility."  42 U.S.C. § 1396r-5(h)(1).  The term 
"community spouse" means "the spouse of an institutionalized 
spouse."  42 U.S.C. § 1396r-5(h)(2). 
2 
 
 
Background.  1.  Facts.  We recite the facts as set forth 
in the parties' statement of agreed material facts pursuant to 
Mass. R. Civ. P. 64, as amended, 423 Mass. 1410 (1996). 
 
a.  Mondor annuity.  Defendants Linda Marie Mondor, 
Michelle Mogan, and Cathy Ann Mondor (collectively, Mondor 
beneficiaries) are the daughters of Elda Mondor and Edward J. 
Mondor.4  Edward was Elda's spouse.  Elda was admitted to a 
skilled nursing facility for long-term care in March 2018, at 
the age of eighty-four. 
 
In April 2018, Edward purchased an annuity contract (Mondor 
annuity) issued by Standard Insurance Company (Standard).  
Edward paid a premium of $191,215.28 for the Mondor annuity 
using funds held in a traditional individual retirement account 
(IRA) for Edward.  The Mondor annuity named Edward as the sole 
annuitant and owner.  The Mondor annuity provided that Edward, 
as annuitant, would receive monthly payments in the amount of 
$4,065, commencing June 3, 2018, and continuing for a four-year 
term.  Edward named the "Commonwealth of Massachusetts" as the 
primary remainder beneficiary of the Mondor annuity, and he 
named the Mondor beneficiaries as the contingent remainder 
beneficiaries.  The Mondor annuity is nontransferable, 
nonforfeitable, nonassignable, noncommutable, and irrevocable. 
 
In June 2018, Elda submitted an application for MassHealth5 
long-term care benefits.  But for Edward's purchase of the 
Mondor annuity, Edward and Elda's joint assets would have 
exceeded the allowable limit for Elda to be deemed eligible for 
MassHealth long-term care benefits.  Elda's application for 
MassHealth benefits disclosed the Mondor annuity, as required by 
 
 
4 For convenience, we hereinafter refer to Elda and Edward 
Mondor by their first names. 
 
 
5 MassHealth refers to the State program by which the 
Commonwealth participates in Medicaid, "a cooperative Federal 
and State program that provides medical assistance to low income 
persons based on financial need" (quotation and citation 
omitted).  Fournier v. Secretary of the Executive Office of 
Health & Human Servs., 488 Mass. 43, 45 (2021).  The plaintiff, 
the Executive Office of Health and Human Services 
(Commonwealth), is the State agency responsible for 
administering MassHealth.  See Daley v. Secretary of the 
Executive Office of Health & Human Servs., 477 Mass. 188, 190 
(2017). 
3 
 
42 U.S.C. § 1396p(e), and Elda also provided MassHealth with a 
completed Notice of Preferred Remainder Beneficiary, known as an 
"ANN-3" form.  The completed ANN-3 form, signed by Edward as 
Elda's authorized representative, identified the Mondor annuity 
and stated in relevant part: 
 
"The [Commonwealth] has determined that, pursuant to 
MassHealth regulations at 130 [Code Mass. Regs. 
§] 520.007(J) and [F]ederal law at 42 U.S.C. [§] 1396p(e), 
the Commonwealth of Massachusetts must be named as a 
preferred remainder beneficiary in the first position 
(primary beneficiary) if there is no community spouse or 
minor or disabled child . . . .  The Commonwealth may 
collect up to the total amount of medical assistance paid 
on behalf of the individual if there is no community spouse 
or minor or disabled child.  In accordance with [F]ederal 
law 42 U.S.C. [§] 1396p(e), the Commonwealth must notify 
the annuity issuing company of its interest as a preferred 
remainder beneficiary under the annuity and will do so by 
way of sending the company a copy of this form." 
 
The Commonwealth provided Standard with a copy of the completed 
ANN-3 form regarding the Mondor annuity. 
 
Before approving Elda's MassHealth application, MassHealth 
requested additional documentation, including a current 
statement from the Mondor annuity "with Commonwealth of Mass[.] 
as beneficiary."  After the additional documentation was 
provided, MassHealth approved Elda's application, deeming her 
eligible for long-term care benefits retroactive to May 1, 2018.  
At the time of the filing of the complaint, Elda continued to 
reside in a skilled nursing facility and receive MassHealth 
benefits for her long-term care. 
 
Edward died on April 11, 2020.  At the time of his death, 
$97,720.28 in annuity payments remained to be paid on the Mondor 
annuity.  The Commonwealth made a claim on the proceeds of the 
Mondor annuity up to the total amount of medical assistance paid 
on behalf of Elda.  The Commonwealth asserted that as of July 
29, 2020, it had paid $146,903.57 in medical assistance on 
Elda's behalf.  The Mondor beneficiaries also made a claim to 
all remaining proceeds of the Mondor annuity. 
 
As of March 31, 2021, MassHealth had paid $191,865.61 in 
medical assistance on behalf of Elda.  Edward never applied for 
or received Medicaid or MassHealth benefits during his lifetime.  
4 
 
Standard remains in possession of all the remainder proceeds 
from the Mondor annuity. 
 
b.  Castle annuity.  Defendants Kathleen Anne Bristow, 
Marianne Schwenzfeier, and John Francis Castle (collectively, 
Castle beneficiaries) are the children of Carol A. Castle and 
James W. Castle.6  James was Carol's spouse.  Carol was admitted 
to a skilled nursing facility for long-term care in August 2018, 
at the age of seventy-eight. 
 
In November 2018, James purchased an annuity contract 
(Castle annuity) issued by Standard.  James paid a premium of 
$176,859.75 for the Castle annuity, using funds held in a 
traditional IRA for James.  The Castle annuity named James as 
the sole annuitant and owner.  The Castle annuity provided that 
James, as annuitant, would receive monthly payments in the 
amount of $3,031.93, beginning on November 19, 2018, and 
continuing for a five-year term.  James named the "Commonwealth 
of Massachusetts" as the primary remainder beneficiary of the 
Castle annuity, and he named the Castle beneficiaries as the 
contingent remainder beneficiaries.  The Castle annuity is 
nontransferable, nonforfeitable, nonassignable, noncommutable, 
and irrevocable. 
 
In December 2018, Carol submitted an application for 
MassHealth long-term care benefits.  But for James's purchase of 
the Castle annuity, James and Carol's joint assets would have 
exceeded the allowable limit for Carol to be deemed eligible for 
MassHealth long-term care benefits.  Carol's application for 
MassHealth benefits disclosed the Castle annuity, per 42 U.S.C. 
§ 1396p(e), and Carol also provided MassHealth with a completed 
ANN-3 form, signed by James as Carol's authorized 
representative, which identified the Castle annuity and 
contained language identical to that quoted supra from the ANN-3 
form in connection with the Mondor annuity.  The Commonwealth 
later provided a copy of the ANN-3 form to Standard. 
 
MassHealth approved Carol's application, deeming her 
eligible for long-term care benefits retroactive to November 12, 
2018.  Carol died on April 23, 2020.  As of that date, 
MassHealth had paid $123,413.51 in medical assistance on Carol's 
behalf. 
 
 
 
6 For convenience, we hereinafter refer to Carol and James 
Castle by their first names. 
5 
 
James died on October 1, 2020.  At the time of his death, 
approximately $110,000 in annuity proceeds remained to be paid 
on the Castle annuity.  James never applied for or received 
Medicaid or MassHealth benefits during his lifetime. 
 
The Commonwealth made a claim on the proceeds of the Castle 
annuity up to the total amount of medical assistance paid on 
behalf of Carol, which was identified as $123,413.51.  In or 
around February 2021, the Castle beneficiaries also made a claim 
to the remaining proceeds of the Castle annuity. 
 
Standard initially made payments to the Commonwealth in 
response to its claim as primary remainder beneficiary, but then 
ceased making payments in response to the competing claims of 
the Castle beneficiaries.  As of February 19, 2021, Standard had 
made payments to the Commonwealth for a total of $15,159.65.  
Standard remains in possession of the balance of the Castle 
annuity proceeds. 
 
2.  Prior proceedings.  The cases before us were commenced 
by Standard, at least in part as interpleader actions, to 
resolve the competing claims to the proceeds of the Mondor and 
Castle annuities.  In each case, the parties filed cross motions 
for declaratory judgment, and then stipulated to Standard's 
dismissal from the case.  The cases were consolidated in the 
Superior Court, and the parties jointly moved to report the 
cases to the Appeals Court without decision on a statement of 
agreed material facts pursuant to Mass. R. Civ. P. 64.  A judge 
in the Superior Court allowed the motion, and after the cases 
were entered in the Appeals Court, this court granted the 
parties' joint motion for direct appellate review. 
 
3.  Discussion.  The consolidated cases are governed in all 
material respects by our decision today in Dermody v. Executive 
Office of Health & Human Servs., 491 Mass.     (2023).  In 
Dermody, we concluded that under the Federal Medicaid Act, 42 
U.S.C. §§ 1396 et seq., in order to avoid a determination of 
ineligibility or the imposition of a disqualifying transfer 
penalty under 42 U.S.C. § 1396p(c) with respect to annuity 
transactions occurring after February 8, 2006, any annuity 
purchased by a community spouse for Medicaid planning purposes 
in order to achieve the Medicaid eligibility of an 
institutionalized spouse and designated for the "sole benefit" 
of the community spouse under § 1396p(c)(2) must also satisfy 
the beneficiary naming requirement of § 1396p(c)(1)(F)(i).  We 
also concluded in Dermody that to the extent that the State 
Medicaid estate recovery statute, G. L. c. 118E, § 31 (b) (1), 
6 
 
would prevent the Commonwealth from collecting annuity proceeds 
it is designated to receive as the primary remainder 
beneficiary, the State statute is preempted by the Medicaid Act. 
 
On the facts presented here, in order for the Medicaid 
applications of the institutionalized spouses, Elda and Carol, 
to be approved without the imposition of a transfer penalty, the 
Mondor and Castle annuities were required to, and did, name the 
Commonwealth as primary remainder beneficiary pursuant to 
§ 1396p(c)(1)(F)(i).  Further, on the deaths of the annuitants, 
the Commonwealth became entitled to remainder proceeds from the 
annuities to the extent of benefits paid by the Commonwealth on 
behalf of the "institutionalized individual[s]" pursuant to 
§ 1396p(c)(1)(F)(i).  In accordance with our opinion in Dermody, 
the relevant "institutionalized individual[s]" for purposes of 
§ 1396p(c)(1)(F)(i) are the individuals whose eligibility for 
Medicaid long-term benefits was made possible by the purchase of 
the annuities and whose eligibility for Medicaid long-term care 
benefits turned on the proper disclosure and treatment of the 
annuities in accordance with the Medicaid Act, see 42 U.S.C. § 
1396p(c)(1)(F)(i), (e).  Here, the relevant "institutionalized 
individual[s]" of the Mondor and Castle annuities are Elda and 
Carol, respectively. 
 
The consolidated cases are remanded to the Superior Court 
for entry of a declaratory judgment in favor of the Commonwealth 
and for any further proceedings necessary to permit Standard to 
disburse the remainder proceeds from the Mondor and Castle 
annuities in a manner consistent with this opinion.7 
 
 
 
 
 
 
 
 
So ordered. 
 
 
Jesse M. Boodoo, Assistant Attorney General, for Executive 
Office of Health and Human Services. 
Brian E. Barreira for Lisa Marie Mondor & others. 
Patricia Keane Martin, Clarence D. Richardson, Jr., & 
C. Alex Hahn, for Massachusetts Chapter of the National Academy 
of Elder Law Attorneys, amicus curiae, submitted a brief. 
 
 
7 To the extent that the Mondor and Castle beneficiaries 
raise issues not explicitly addressed in this opinion, we have 
not overlooked them.  Rather, we find them without merit and 
decline to discuss them.