# Third District Court of Appeal State of Florida

Opinion filed May 22, 2024

. Not final until disposition of timely filed motion for rehearing.

________________ No. 3D23

- 0552 Lower Tribunal No. 15

- 580

________________ 

### Agency for Health Care Administration ,

Appellant,

vs. 

### In Re: Ryan Joseph Spence ,

Appellee.

An Appeal from the Circuit Court for Miami

- Dade County, Jose L. Fernandez , Judge.

Alexander R. Boler (Tallahassee) , for appellant. The Billbrough Firm , P.A., and G. Bart Billbrough , for appellee Michael Morrison

.

Before FERNANDEZ, SCALES and BOKOR , JJ. SCALES, J

.2

The Florida Agency for Health Care Administration (“AHCA”) appeal s a February 22, 2023 probate court final order that authorizes the trustee to

distribut e the trust assets of the Ryan Joseph Spence Special Needs Trust Agreement (“Trust”), without enforcing the Trust’s “payback” provision. The

Trust’s “p ayback” provision provides that , upon termination of the Trust, the

t rustee shall first distribute to AHCA “an amount equal to the total medical assistance paid on behalf of the Beneficiary by the Medicaid program.”

B ecause the Trust ’s “payback” provision is clear and une quivocal, we reverse the challenged order and remand with instructions for the probate

court to enforce the Trust’s “payback” provision in the event the t ru s tee

wish es to continue in his efforts to terminate the Trust.

I. RELEVANT FACTS AND PROCEDURAL BACKGROUND

A. Ryan’s adoption by Kathleen and subsequent creation of the Trust In September 2004, Kathleen Spence (“Kathleen”) adopted Ryan Joseph Spence (“Ryan”), who was born in 2002. As part of Ryan’s adoption,

Kathleen and the Florida Departm ent of Children and Families (“Department”) entered into an Adoption Assistance Agreement (“Adoption Agreement”), relating to subsidy payments and services. The Adoption Agreement provide d that the Department would provide a maintenance subsidy and a medi cal subsidy (Medica id benefits as provided under Article3

XIX of the Social Security Act) for Ryan’s benefit . Following Ryan’s adoption, Medicaid payments were made on Ryan’s behalf as contemplated by the Adoption Agreement.

After Kathleen ’s death in 2015 , Kathleen’s estate pursued a wrongful death action, which resulted in a settlement. Michael Morrison (“Morrison” ) and Ashley Nichole Spence (“Ashley”) (together, Petitioners) were appointed

as co - guardians of the person and property of Ryan and as co - trust ees of

Kathleen’s estate. In November 2015, the probate court entered an order approving the wrongful death settlement and allocating the settlement proceeds between Kathleen’s two, minor children, including Ryan. Further, because Ryan was a Medicaid beneficiary suffering a disability, the probate

court directed Morrison to establish a separate s pecial n eeds t rust for Ryan. As directed, on November 10, 2015, Morrison established the Trust , which was funded with those procee ds from Kathleen’s estate’s settlement

that were allocated to Ryan. The Trust was established in accordance with the Omnibus Budget Reconciliation Act of 1993, codified under 42 U.S.C. § 1396p(d)(4)(A) (§ 1917(d)(4)(A) of the Social Security Act); the Soc ial Security Programs Operations Manual System (POM) SI 01120.203 (“POM”); and in accordance with Florida law. As is clear from the Trust document, the purpose of the Trust was to ensure that , notwithstanding4

Ryan’s receipt of the settlement proceeds, Rya n would continue to be eligible for public subsidies. Specifically, the Trust states that the intention of the Trust is “to satisfy Medicaid and Supplemental Security Income

. . . program requirements so that its establishment and funding do not prejudice the Beneficiary’s eligibility for such public benefits.” The Trust further provides that it is irrevocable and not subject to amendment, except on application of an interested party with court approval, and any amendment must be consistent with the inten t of the

Trust. As relevant to this appeal, Article Seven, Section 1 of the Trust provides:

Section 1. Notice and Payback Provisions

It is the intent of this trust that the trust estate be exempt from being counted as an available resource to the Beneficiary under . . . the Medicaid provisions of the Omnibus Budget Reconciliation Act of 1993, §13611 (amending 42 United States Code §1396p(d)(4)(A)), and implementing Medicaid regulations. The Trustee shall therefore comply with the following provisi ons. A. Notices On the death of the Beneficiary, or the earlier termination of this Trust, the Trustee shall give notice to the Third Party Liability (sic) of the Florida Agency for Health Care Administration (“AHCA”). . . . B. Distribution and paymen ts On the death of the Beneficiary or earlier termination of this trust, the Trustee shall first distribute to the Florida Agency for5

Health Care Administration (hereinafter “AHCA”), then to any other appropriate State agency entitled to Medicaid reimburs ement from the remaining principal and income of this trust, up to the amount remaining in this trust, an amount equal to the total medical assistance paid on behalf of the Beneficiary by the Medicaid program. The Trustee shall instead contact AHCA to obt ain the dollar amount of medical assistance provided and then submit that amount, or amount remaining in this trust, whichever is less, to AHCA.

B. Petitioners seek to terminate the Trust and distribute its assets to Ryan In January 2023, after Ryan met the age of majority and no longer suffered from any disability, Morrison, as t rustee and co

- guardian, and Ashley, as co

- guardian , filed a p etition in the probat e court to Relinquish Restrictions and Distribute the Assets of the Trust to the Ward ( the “Petition”) . The Petition sought the termination of the guardianship and the Trust, and the distribution of all Trust assets to Ryan.

C. AHCA’s objection to the Petitio n and proceedings thereon AHCA, which is the agency responsible for Florida’s Medicaid Program, filed an objection to the Petition, claiming it is owed $50,281.73 for medical assistance p ayments made on behalf of Ryan . AHCA’s objection

asserted that , p ursuant to the Trust’s “ payback ” provision, the Trustee must

pay AHCA ’s reimbursement claim before distributing any Trust assets to Ryan.6

On February 21, 2023, the probate court conducted a hearing on the

Petition and AHCA’s objection. A t the hearing , P etitioners argued that the Trust should not be held responsible for any payments made on behalf of Ryan because the A doption A greement

– between Kathleen and the Department

– contained no provision requiring repayment of benefits the Department agreed to pay for Ryan’s disability. Petitioners further argued

that , following Kathleen’s death, Morrison took on the role of Ryan’s adoptive parent, raising Ryan to the age of majority . D ue to Morrison’s parenting, Ryan is no longer recei ving Medicaid and is no longer disabled ; thus, the assets in the Trust should be distributed to Ryan free of any claim by AHCA.

P etitioners requested that the trial court enter an order relinquishing

restrictions on the Trust and order that the assets in t he Trust be distributed to Ryan.

AHCA argued below , as it does here, that it i s owed $50,281.73 for amounts expended to provide medical assistance to Ryan . AHCA asserted that, because the Trust was established pursuant to applicable federal law

to allow Ryan t o maintain his eligibility for Medicaid , and because the Trust contained the “payback” provision that was required by federal law to maintain Ryan’s eligibility, the t rustee was required to comply with the Trust’s “payback” provision. See 42 U.S.C. § 1396p(d)(4)(A).7

Without elaborating at the hearing, and without elaborating in the resulting order on appeal, the probate court granted the Petition; den ied AHCA’s objection and its claim for $50,281.73; and authoriz ed the Trustee to distribute the Trust assets to Ryan without reimbursing AHCA. AHCA’s appeal timely followed. 1

II. ANALYSIS AHCA argues the trial court erred by authorizing the t rustee to

terminate the Trust without enforcing the Trust’s clear and unequivocal “payback” provision, that required, upon termination of the Trust, the repayment of the medical assistance benefits paid on Ryan’s behalf. Based

on our de novo review , 2 we agree with AHCA. The terms and intent of Ryan’s Trust are clear and unambiguous, and therefore, the language in the Trust

controls. See Nelson v. Nelson , 206 So. 3d 818, 819 (Fla. 2d DCA 2016) (noting t hat the trial court properly construed the trust settlor’s intent “from the plain and ordinary meaning of the terms set forth” in the trust instrument).

1 We have jurisdiction pursuant to Florida Rule of Appellate Procedure 9.170 (b) as the order under review rendered in this guardianship case determines the right or obligation of an interested person.

2 See Giller v. Grossman , 327 So. 3d 391, 393 (Fla. 3d DCA 2021) (“We review de novo a trial court’s construction of trust provisions , as well as its interpretation or application of controlling statutes, common law rules, or legal principles.”).8

A. The Trust’s purpose and its “payback” provision

T he Trust , which was established pursuant to, and auth orized under , 42 U.S.C. § 1396p(d)(4)(A), was funded with the settlement proceeds derived from Kathleen’s wrongful death claim . The primary benefit of t he

Trust was to ensure that , notwithstanding Ryan’s receipt of those settlement proceeds, Ryan r emain e ligible for government assistance, such as

Medicaid

. There is, though , a quid pro quo for this benefit : the Trust’s “payback” provision. U nder 42 U.S.C. § 1396p(d)(4)(A) , trust assets, held in a trust complying with federal law that is established for the benefit of a disabled person under the age of 65 , will not be counted for determining Medicaid eligibility “ if the State will receive all amounts remaining in the trust . . . up to an amount equal to the total medical assistance paid on behalf of the individual under a State plan

. . . .” ( e mphasis added). In conformity with 42 U.S.C. § 1396p(d)(4)(A) , the Trust included th is mandatory “payback” provision

. Per the “payback” provision, until AHCA is repaid for the total medical assistance paid on Ryan’s behalf by Medicaid , the remaining assets

in the Trust cannot be distributed to Ryan

. Further, the Trust was also established in accordance with POM . The exceptions addressed in POM are referred to a s the “Medicaid trust9

exceptions , ” and , in relevant part, they provide that , to qualify for the special needs trust exception under 42 U.S.C. § 1396p , “[t]he trust must provide payback for any State(s) that may have provided medical assistance under the State Medicaid plan(s) and not be limited to any particular State(s).”

P OMS SI 01120.203. Importantly, POM also provides that “Medicaid payback also ca nnot be limited to any particular period of time; for example, payback cannot be limited to the period after establishment of the trust.” Id. Ryan’s Trust was intentionally drafted to comply with these federal requirements which allowed Ryan to continue his Medicaid eligibility. H ad

the Trust not contained the clear and unambiguous “payback” provision, Ryan’s receipt of the wrongful death settlement proceeds may have precluded Ryan’s continued eligibility for Medicaid benefits.

B. The Adoption Agreement Petitioners argue that the Trust’s “payback” provision should not be enforced because the Adoption Agreement

– established years before the

Trust’s creation

– c ontains no provision requiring the reimbursement to the Department of benefits paid on Ryan’s behalf. Petitioners’ argument, though, misses the point. While t he Adoption Agreement no doubt incentivized Kathleen to adopt Ryan, it is of little, if any, relevance in determining

distribution of Trust assets. T he Trust was created over a decade after the10

Adoption Agreement and its purpose was to allow Ryan to receive settlement proceeds while continuing to qualify for Medicaid benefits. Moreover, paragraphs 18 and 19 of the Adoption Agreement undercut Petitioners’ argument. Th e se provision s expressly contemplate Ryan’s subsidies ceasing if his needs change

. 3 Again, if not for the Trust (including its “payback” provision) and its disposition of the settlement proceeds, then Ryan’s continued benefits could have been in jeopardy.

III. CONCLUSION Based on the above analysis, we revers e the order under review and , to the extent that Petitioners seek to terminate the Trust, remand with

instructions for the trial court to conduct those proceedings it deems necessary to enforce the Trust’s “payback” pr ovision.

Reversed and remanded.

3 Paragraphs 18 and 19 of the Adoption Agreement provide: 18. [Adoptive Parent] will notify the [D]epartment in the event that the child cea ses to be dependent upon us, or if there is any significant change of circumstances which would relate to our child’s continued need for subsidy. 19. Our child’s continued need for subsidy will be re

- evaluated annually and a new agreement will be present ed to us at least 45 days prior to the expiration of the 12 th month.