1

IN THE SUPREME COURT OF THE STATE OF IDAHO 

Docket No. 40615

IN THE MATTER OF THE ESTATE OF 

MELVIN PETERSON, DECEASED.

--------------------------------------------------------

IDAHO DEPARTMENT OF HEALTH & 

WELFARE,

 Petitioner-Respondent,

v.

CATHIE PETERSON,

 Respondent-Appellant.

)

)

)

)

)

)

)

)

)

)

)

)

)

)

Coeur d’Alene, April 2014

2014 Opinion No. 132

Filed: December 12 2014

Stephen W. Kenyon, Clerk

SUBSTITUTE OPINION, THE

COURT’S PRIOR OPINION 

DATED AUGUST 13, 2014 IS

HEREBY WITHDRAWN.

Appeal from the District Court of the First Judicial District, State of Idaho, 

Boundary County. Hon. Jeff M. Brudie, District Judge.

District court decision affirming magistrate court’s decision on Medicaid 

recovery, affirmed in part and remanded for proceedings consistent with this 

opinion.

Featherston Law Firm, Chtd. Sandpoint, for appellants. Brent C. Featherston 

argued.

Hon. Lawrence G. Wasden, Idaho Attorney General, Boise, for respondents. 

William C. Cartwright, Deputy Attorney General argued. 

_________________________________

BURDICK, Chief Justice

This case arose out of the Department of Health and Welfare’s (IDHW) attempt to 

recover Medicaid benefits from Melvin Peterson’s estate that were paid during his lifetime. At 

issue is whether any part of a real estate transfer from Melvin Peterson to his daughter Cathie 

Peterson is subject to Medicaid recovery. 

I. FACTUAL AND PROCEDURAL BACKGROUND

The relevant facts of this case are not in dispute. Melvin Peterson died on March 3, 2007, 

at the age of 83. Prior to his death, he was the owner of residential real property located in 
2

Boundary County. On December 6, 2001, Melvin Peterson executed a Gift Deed of his real 

property to his daughter, Cathie Peterson, retaining for himself a life estate in the property. 

Shortly thereafter, he applied for Medicaid and began receiving Medicaid benefits in March 

2003. At the time of his death, Melvin Peterson had received a total of $171,386.94 in Medicaid 

benefits. 

Cathie Peterson was appointed personal representative of her father’s estate on July 26, 

2007. IDHW filed a timely Claim Against Estate and later an Amended Claim Against Estate in

the amount of $171,386.94. Cathie Peterson, in her capacity as personal representative,

disallowed the claims without stating a reason. In response, IDHW filed a Petition for Allowance 

of Amended Claim. After a hearing on March 25, 2008, the court granted IDHW’s petition.

After receiving no response to its claim against the estate, IDHW filed a Petition to 

Require Payment of Claim on May 5, 2008, setting forth its demand for payment of the value of 

Melvin Peterson’s life estate. Using the Life Estate Remainder Table contained in IDAPA

16.03.05.837 and Melvin Peterson’s age at the time of his death, IDHW valued the life estate at 

$41,444. After a hearing, the magistrate court entered an order requiring payment of IDHW’s 

claim on June 12, 2008. This June 12, 2008 Order held that the life estate was an asset of the 

estate for purposes of Medicaid recovery and ordered the personal representative to add the life 

estate interest to the estate’s inventory and assign it an appropriate value. However, the personal 

representative instead filed and was granted a motion to hire an appraiser to determine the fee 

simple value of the residential real property. After the personal representative failed to file an 

appraisal, IDHW filed various motions relative to the appraisal, sale of the property, and 

payment of its claim. On August 11, 2009, the magistrate court granted IDHW’s motions to 

compel appraisal, sale of the property, and payment of the Medicaid claim, which the personal 

representative subsequently appealed.

On appeal, the district court vacated the magistrate’s August 11, 2009 Order and 

remanded the matter for additional findings of fact and conclusions of law. Shortly after the 

ruling on appeal was entered, Cathie Peterson, in her capacity as personal representative, sought 

permission from the magistrate court to sell the property, liquidate an escrow account, and pay 

counsel for the personal representative of the estate. On the same day, she also filed an Amended 

Personal Representative’s Inventory assigning the life estate zero value. 
3

On September 17, 2010, Attorney Brent Featherston filed a Demand for Notice and

Special Appearance on behalf of “Cathie Peterson, individually,” stating that he was seeking to 

vacate and dismiss all orders entered by the magistrate court regarding her real property. IDHW

responded by filing a petition to remove Cathie Peterson as personal representative of the estate, 

which the magistrate court granted. 

Following a court trial, the magistrate court held that the life estate remainder interest 

was an estate asset of value for purposes of Medicaid reimbursement and that its value was to be 

determined in accordance with IDAPA 16.03.05.837.01. On appeal, the district court affirmed 

the magistrate court in its November 16, 2012 Opinion. Cathie Peterson then timely appealed to 

this Court on December 27, 2012. 

II. ISSUES ON APPEAL

1. Whether Cathie Peterson waived her appeal of the decision that Melvin Peterson’s life 

estate was an asset subject to Medicaid recovery. 

2. Whether the court had subject matter jurisdiction to determine the issues before it.

3. Whether the court had personal jurisdiction over Cathie Peterson individually. 

4. Whether any part of the gift transaction Melvin Peterson made to his daughter before 

applying for Medicaid benefits is subject to Medicaid recovery.

5. Whether Cathie Peterson was entitled to offsets to the value of the real property based on 

improvements she made. 

6. Whether either party is entitled to attorney fees on appeal.

III. ANALYSIS

A. Standard of Review

“On appeal of a decision rendered by a district court while acting in its intermediate 

appellate capacity, this Court directly reviews the district court’s decision.” Idaho Dep’t Of 

Health & Welfare v. McCormick, 153 Idaho 468, 470, 283 P.3d 785, 787 (2012) (quoting In re 

Doe, 147 Idaho 243, 248, 207 P.3d 974, 979 (2009)). However, to determine whether the district 

court erred in affirming the magistrate court, we review the record before the magistrate court to 

determine whether substantial and competent evidence supports the magistrate’s findings of fact. 

Pelayo v. Pelayo, 154 Idaho 855, 858, 303 P.3d 214, 217 (2013). We review questions of law 

such as statutory interpretation de novo. McCormick, 153 Idaho at 470, 283 P.3d at 787.

Interpretation of a statute begins with an examination of the statute’s literal 

words. Where the language of a statute is plain and unambiguous, courts give 

effect to the statute as written, without engaging in statutory construction. Only 
4

where the language is ambiguous will this Court look to rules of construction for 

guidance and consider the reasonableness of proposed interpretations. Moreover, 

unless a contrary purpose is clearly indicated, ordinary words will be given their 

ordinary meaning when construing a statute. In construing a statute, this Court 

will not deal in any subtle refinements of the legislation, but will ascertain and 

give effect to the purpose and intent of the legislature, based on the whole act and 

every word therein, lending substance and meaning to the provisions. 

In re Estate of Wiggins, 155 Idaho 116, 119, 306 P.3d 201, 204 (2013) (internal citations and 

quotation marks omitted). 

B. Whether Cathie Peterson waived her appeal of the decision that Melvin Peterson’s life 

estate was an asset subject to Medicaid recovery. 

IDHW argues that because the June 12, 2008 Order was an appealable order that was not 

appealed within 42 days, it is no longer subject to challenge on appeal. The June 12, 2008 Order 

granted IDHW’s Petition to Require Payment of Claim to the extent of available assets and 

ordered that Melvin Peterson’s retained life estate be deemed an asset of his estate for Medicaid 

recovery purposes and that the personal representative assign an appropriate value to it in the 

estate’s inventory. About a year later, IDHW filed a Petition to Compel Sale of Home, which the 

magistrate court granted on August 11, 2009. In her capacity as personal representative, Cathie 

Peterson timely appealed the August 11, 2009 Order. In this first appeal, IDHW argued that the 

June 12, 2008 Order was final and not timely appealed. The district court issued its Decision on 

Appeal on May 26, 2010, holding that the June 12, 2008 Order was interlocutory and not 

appealable, and further vacated the judgment and remanded the case for the trial court to set forth 

adequate findings of fact. IDHW now argues that the district court erred in holding that the June 

12, 2008 Order was interlocutory and asks this Court to reverse that decision.

Idaho Code section 17-201 allows appeals from a judgment or order of the magistrate 

division to the district court in eight different probate matters, three of which IDHW argues

apply to the June 12, 2008 Order:

4. Against or in favor of setting apart property, or making an allowance for a 

widow or child.

5. Against or in favor of directing the partition, lease, mortgage, sale or 

conveyance of real property.

7. Refusing, allowing or directing the distribution or partition of an estate, or any 

part thereof, or the payment of a debt, claim, legacy or distributive share.

I.C. § 17-201. 
5

In its May 26, 2010 Decision on Appeal, the district court concluded that the June 12, 

2008 Order was interlocutory because the trial court did not determine any value, nor distribute, 

nor set aside, nor partition the life estate in the order itself. The district court is correct that the 

June 12, 2008 Order was interlocutory. Thus, Cathie Peterson did not waive her challenges to the 

June 12, 2008 Order by failing to appeal it and this Court may review any challenges to that 

order on appeal under Idaho Appellate Rule 17(e). Matter of Estate of Keeven, 110 Idaho 452, 

456–57, 716 P.2d 1224, 1228–29 (1986) (“If there is a final appealable order in a case and an 

appeal is properly taken from that order, then all other orders which would otherwise not be 

appealable may be considered by this Court.”). 

C. Jurisdiction 

Cathie Peterson contends that the court did not have subject matter jurisdiction to 

determine the title to her real property in a probate proceeding. She argues that she cannot be 

held personally liable except through a separate proceeding requiring process and acquisition of 

the court’s jurisdiction, which did not occur in this case. She also contends that while she 

submitted to the court’s jurisdiction as personal representative of the estate, the court lacks 

personal jurisdiction over her individually because IDHW failed to provide her with meaningful 

due process. 

1. Subject Matter Jurisdiction

Both the magistrate court and the district court had subject matter jurisdiction to 

determine whether any part of Melvin Peterson’s gift transaction of his residential property 

constituted a part of his estate. Cathie Peterson contends that such a decision is a question of title 

outside of a probate court’s jurisdiction. Her argument is based on following language from this 

Court: “It is the general rule that where title to real property is in issue between an estate and its 

heirs and a third person, such issue must be tried in an independent action brought for that 

purpose in a competent tribunal and cannot be tried by the probate court.” In re Lundy’s Estate, 

79 Idaho 185, 193, 312 P.2d 1028, 1032 (1957).

What Cathie Peterson overlooks is that Idaho adopted the Uniform Probate Code (Code) 

in 1971, fourteen years after In re Lundy was decided. In a more recent case, the petitioner made 

a similar mistake relying on Idaho case law from before the adoption of the Code that said the 

determination of whether an irrevocable contract exists was outside the realm of the probate 

court. Miller v. Estate of Prater, 141 Idaho 208, 213, 108 P.3d 355, 360 (2005). In Miller, this 
6

Court stated that the Code provides “the court handling a probate with wide ranging powers to 

determine contested matters, such as that involved in this case.” Id. We held that “it is clear that 

the court handling a probate has jurisdiction to determine the existence and enforcement of a 

contract to make a will or devise.” Id. This conclusion was based on consideration of the 

following Code provisions:

I.C. § 15-3-104 provides that, “No proceeding to enforce a claim against the estate 

of a decedent or his successors may be revived or commenced before the 

appointment of a personal representative.” I.C. § 15-1-201(5) defines “claims” to 

include liabilities of the decedent “whether arising in contract, in tort or otherwise 

...” As pointed out by the Estate, I.C. § 15-3-105 provides the “court” with 

exclusive jurisdiction of “formal proceedings” to determine how decedent’s 

estates are to be “expended and distributed.” According to I.C. § 15-1-201, formal 

proceedings are those conducted before a judge with notice to interested persons. 

I.C. § 15-3-106 provides catch-all authority for the court to determine any other 

controversy to which an estate may be a party, covering any matters not addressed 

in I.C. §§ 15-3-104 and 105. Necessarily included in such matters are contracts to 

make a will or devise, which are specifically addressed in I.C. § 15-2-701.

Id. Determining whether some or all of the property gift Cathie Peterson received from the 

decedent constitutes a part of the estate falls within the catch-all jurisdictional authority provided 

by Idaho Code section 15-3-106. Therefore, both the district court and the magistrate court had 

subject matter jurisdiction in this case. 

2. Personal Jurisdiction

Next, Cathie Peterson contends that the court lacked personal jurisdiction over her in her 

individual capacity. While she admits she submitted to the court’s jurisdiction in her capacity as 

personal representative, she appears to contend that IDHW was required to serve her with 

process individually when it sought to sell her real property to satisfy its claim against Melvin 

Peterson’s estate. Any contention that Cathie Peterson did not receive notice is without merit. 

IDHW filed its Petition to Compel Sale of Home on July 15, 2009. Cathie was not removed as 

personal representative of the estate until October 7, 2010. Moreover, IDHW’s Petition indicates 

that Cathie Peterson was served with the Petition; thus, she had notice of IDHW’s intent to 

compel the sale of the home. IDHW was not required to serve her a second time when she had 

not only been aware of the proceedings, but had been an active participant in them. Idaho Code 

section 15-3-106 states: 

Subject to general rules concerning the proper location of civil litigation and 

jurisdiction of persons, the court may herein determine any other controversy 

concerning a succession or to which an estate, through a personal representative, 
7

may be a party. Persons notified are bound though less than all interested persons 

may have been given notice.

Therefore, both the magistrate court and the district court had personal jurisdiction over 

Cathie Peterson. 

D. Whether any part of the gift transaction Melvin Peterson made to Cathie Peterson

before applying for Medicaid benefits is subject to Medicaid recovery. 

The Medicaid program is a “cooperative endeavor [with the States] in which the Federal 

Government provides financial assistance to participating States to aid them in furnishing health 

care to needy persons.” Harris v. McRae, 448 U.S. 297, 308 (1980). The States receive federal 

payments for the program, but such payments are conditioned on various federal rules governing 

when and to what extent payments may be recovered from individuals. 42 U.S.C. § 1396p. In the 

Medicaid recovery context, Congress has stated the general rule that “[n]o adjustment or 

recovery of any medical assistance correctly paid on behalf of an individual under the State plan 

may be made,” and then specifies certain exceptions to that rule. 42 U.S.C. § 1396p(b)(1). 

However, more broadly, Medicaid has always been intended to be “the payer of last resort.” 

Arkansas Dep’t of Health and Human Servs. v. Ahlborn, 547 U.S. 268, 291 (2006) (quoting 

S.Rep. No. 99–146, at 313 (1985)). Accordingly, excess resources saved by virtue of Medicaid 

funds are meant to be tracked and recovered. Idaho Dep’t of Health & Welfare v. McCormick, 

153 Idaho 468, 471–72, 283 P.3d 785, 788–89 (2012).

The Idaho counterpart of the federal Medicaid Law is Idaho Code section 56-218, which

provides for the recovery of certain assistance provided by Medicaid:

Except where exempted or waived in accordance with federal law medical 

assistance pursuant to this chapter paid on behalf of an individual who was fiftyfive (55) years of age or older when the individual received such assistance may 

be recovered from the individual’s estate, and the estate of the spouse, if any, for 

such aid paid to either or both . . . .

This statute allows recovery of claims against the estate of a Medicaid recipient if the estate 

contains property or assets in which the Medicaid recipient had some legal title or interest at the 

time of his or her death. For the purposes of Medicaid recovery, Idaho has adopted an expanded 

definition of “estate,” which in addition to all of the assets included in the individual’s estate 

under probate law, also includes: 

Any other real and personal property and other assets in which the individual had 

any legal title or interest at the time of death, to the extent of such interest, 

including such assets conveyed to a survivor, heir, or assign of the deceased 
8

individual through joint tenancy, tenancy in common, survivorship, life estate, 

living trust or other arrangement.

I.C. § 56-218(4)(b). 

This Court has recognized that the legislative purpose behind the Medicaid recovery 

statutes is to prevent individuals from transferring their assets to survivors, heirs, or assigns, 

while at the same time benefiting from taxpayer funds intended to assist the poor. See 

McCormick, 153 Idaho at 472, 283 P.3d at 789. Accordingly, in addition to allowing the State to 

recover Medicaid benefits from a decedent’s estate, Idaho Code section 56-218 also allows the 

State to file an action to void gratuitous transfers of property made within a specified time of the 

recipient receiving Medicaid benefits: 

Transfers of real or personal property, on or after the look-back dates defined in 

42 U.S.C. 1396p, by recipients of such aid, or their spouses, without adequate 

consideration are voidable and may be set aside by an action in the district court.

I.C. § 56-218(2). 

The look-back period applicable in this case is 36 months from when Melvin Peterson 

applied for Medicaid benefits. 42 U.S.C. § 1396p(c)(1). The parties do not dispute that Melvin 

Peterson transferred his residential estate, subject to a retained life estate, to Cathie Peterson for 

no consideration within the applicable look-back period. Instead of attempting to void this 

transaction under Idaho Code section 56-218(2), IDHW sought to have Melvin Peterson’s 

retained life estate included as an asset of his estate under Idaho Code section 56-218(4)(b)’s 

expanded definition of “estate.” However, the magistrate court held that the remainder interest 

that was gifted to Cathie, not the retained life estate interest, was subject to Medicaid recovery 

under Idaho Code section 56-218(4)(b). The district court agreed with the magistrate court’s 

reasoning and affirmed its order. Indeed, after noting that the parties “consistently referred to the 

life estate as the property to be valued,” the district court attempted to clarify what was subject to 

recovery:

The lower court referred to the property interest to be valued as the life estate 

remainder interest. The correct interest to value for Medicaid recovery purposes is 

the property interest that was conveyed for less than fair market value, not the 

property interest retained. It is clear the magistrate court in the instant matter 

understood the property interest to be valued, as evidenced by his Order that 

reads, “The value of the estate’s interest in the real property gift deeded to Cathie 

Peterson...shall be that proportion of the fair market value of the entire fee 

interest in the real property....” 
9

Cathie Peterson and IDHW both frame the main issue of this case as being whether a 

decedent’s retained life estate is subject to Medicaid recovery under Idaho Code section 56-

218(4)(b) despite both lower courts holding that the remainder interest Melvin Peterson gifted to 

Cathie in 2001 was the interest subject to recovery. The district court held that because Melvin 

Peterson conveyed his residential real property to Cathie, subject to his life estate interest, during 

the look-back period free of cost, the transfer of the remainder interest to Cathie constituted an 

“other arrangement” under Idaho Code section 56-218(4)(b), and so, was part of Melvin 

Peterson’s estate subject to Medicaid recovery. Therefore, the question on appeal is whether any

part of the real property transfer from Melvin Peterson to Cathie Peterson is subject to Medicaid 

recovery. 

According to 42 U.S.C. § 1396p, States “shall” define the estate for recovery purposes to 

include all property included in the probate estate, but “may” also define estate to include 

property that passes outside of the probate estate. 42 U.S.C. § 1396p(b)(4)(A) and (B). The Idaho 

legislature has chosen to include property that passes outside of probate and adopted the optional 

language from 42 U.S.C. § 1396p(b)(4)(B):

Any other real and personal property and other assets in which the individual had 

any legal title or interest at the time of death, to the extent of such interest, 

including such assets conveyed to a survivor, heir, or assign of the deceased 

individual through joint tenancy, tenancy in common, survivorship, life estate, 

living trust or other arrangement.

I.C. § 56-218(4)(b). 

In its argument that Melvin Peterson’s retained life estate constitutes a part of his estate 

under this statute, IDHW relies on the language, “including such assets conveyed to a survivor, 

heir, or assign of the deceased individual through . . . life estate.” In contrast Cathie Peterson 

focuses on the language “legal title or interest at the time of death, to the extent of that interest.”

The lower courts in this case relied on the catch-all phrase “or other arrangement” and this 

Court’s decision in Idaho Department of Health & Welfare v. McCormick to conclude that that 

the remainder interest gifted to Cathie was subject to Medicaid recovery. To determine the 

correct approach, it is necessary to look at our two most recent decisions addressing the extent to 

which a Medicaid recipient’s estate is subject to recovery. 

In McCormick, this Court was faced with determining whether assets that were once 

community property, but were transmuted so that the recipient spouse no longer held an interest 

at the time of his or her death, were available for recovery under Idaho Code section 56-
10

218(4)(b). At issue was a married couple’s residence that was jointly held until the wife 

transferred the property to her husband by quitclaim deed in order to qualify for Medicaid 

benefits. McCormick, 153 Idaho at 469, 283 P.3d at 786. The husband, who was not a Medicaid 

recipient, predeceased his wife and IDHW sought to recover the benefits paid to his wife from 

his estate. IDHW claimed entitlement under Idaho Code section 56-218 to “any property or 

estate which, at any time, had been the community property of the decedent and decedent’s 

spouse, or which had been the property of decedent’s spouse.” Id. at 470, 283 P.3d at 787. 

This Court found section 56-218(4)’s expanded definition of “estate” to be “ambiguously 

inclusive.” Id. at 476, 283 P.3d at 793. Given the ambiguity of this provision, we looked to the 

surrounding provisions for proper context—specifically, the definition of “asset” within the 

federal statutory scheme on which Idaho’s Medicaid recovery statute is based. Id. at 473, 283 

P.3d at 790. The federal definition of “estate” refers to “assets” of the individual, a term that is 

specifically defined in 42 U.S.C. § 1396p(h)(1) as “all income and resources of the individual 

and of the individual’s spouse, including any income or resources which the individual or such 

individual’s spouse is entitled to but does not receive because of action . . . by the individual or 

such individual’s spouse.” We noted that this definition of assets “seems to specifically address 

resources in which the recipient had an interest at one time but disposed of through her own 

actions or those of her spouse—such as a lifetime transfer of a home.” Id. at 476, 283 P.3d at

793. This definition of asset coupled with “the ambiguously inclusive language in the definition 

of ‘estate’—purporting to extend recovery to assets transferred by ‘other arrangements’”— made 

this Court question the Estate’s strict reliance on Idaho Code section 56-218(1)’s phrase at “at 

the time of death.” Id. at 477, 283 P.3d at 794. We then looked to the overall purpose of the 

statute for guidance, agreeing with the North Dakota Supreme Court’s conclusion that 

“consideration of all the relevant statutory provisions, in light of the Congressional purpose to 

provide medical care for the needy, reveals a legislative intention to allow states to trace the 

assets of recipients of medical assistance and recover the benefits paid when the recipient’s 

surviving spouse dies.” Id. (quoting In re Estate of Wirtz, 607 N.W.2d 882, 885 (N.D. 2000)). 

Accordingly, we concluded that Idaho Code section 56-218(1) supports recovery from the estate 

of both spouses, including assets that were once community property, but were transmuted so 

that the recipient spouse no longer held an interest at the time of his or her death. Id.
11

An even more recent decision from this Court also dealt with Medicaid recovery under 

Idaho Code section 56-218 from the estate of a Medicaid recipient’s spouse. In re Estate of 

Wiggins, 155 Idaho 116, 121, 306 P.3d 201, 206 (2013). In Wiggins, this Court looked at 

whether a Medicaid applicant’s transfer of community property from his or her estate for 

Medicaid eligibility by way of a marriage settlement agreement (“MSA”) also removes the 

community property from the estate for purposes of Medicaid recovery. Id. at 122, 306 P.3d at 

207. To answer this question we again looked to the federal definition of “asset”: “an item to 

which the recipient would be entitled but for the actions of the recipient or the recipient’s 

spouse.” Id. (emphasis in the original). We held that property transmuted for Medicaid eligibility 

fell within this definition of “asset” and that the actual transmutation fell within the “other 

arrangement” language of Idaho Code section 56-218(4)(B)’s definition of estate. Id. Noting that 

this interpretation of asset was consistent with the policy behind Medicaid, we held that 

removing a Medicaid applicant’s community property from his or her estate for Medicaid 

eligibility by way of an MSA does not have the effect of removing the community property from 

the estate for purposes of Medicaid recovery. Id.

Cathie Peterson argues that Idaho Code section 56-218(4)(b)’s “interest at the time of 

death” language does not allow IDHW to recover Melvin Peterson’s life estate interest because 

he had no interest in the life estate or property at the time of his death. IDHW argues that the 

transfer of Melvin Peterson’s life estate interest at his death is one of the forms of conveyance 

specifically named in Idaho Code section 56-218(4)(b)—“conveyed to a survivor, heir, or assign 

of the deceased individual through joint tenancy, tenancy in common, survivorship, life estate,

living trust or other arrangement.” Cathie is correct that at common law a life estate terminates at 

the time of death. However, this Court has previously found Idaho Code section 56-218(4)(b) to 

be ambiguous based on the tension between the “interest at the time of death” language and the 

broad definition of “asset.” McCormick, 153 Idaho at 475–76, 283 P.3d at 792–93. In 

McCormick, the Estate also relied on this language in its argument that a lifetime transfer of 

community property was not included within the definition of “estate,” but the Court found this 

reliance to be misplaced holding that Idaho Code section 56-218(4)(b)’s definition of “estate” 

could include a life time transfer. As far as the weight to be given to the “at time of death 

language,” the Court stated: 
12

Overall, the ambiguously inclusive language in the definition of “estate”—

purporting to extend recovery to assets transferred by “other arrangements”—

coupled with the definition of “assets”—plainly including the resources of the 

recipient’s spouse as well as assets the recipient disposed of before death—calls 

into question the Estate’s strict reliance on the phrase “at the time of death.” 42 

U.S.C. §§ 1396p(b)(4), 1396p(h)(1).

Id. at 477, 283 P.3d at 794. Melvin Peterson’s conveyance included a “life estate” for himself 

with a “survivorship” interest or remainder interest for Cathie. While Melvin Peterson may not 

have had an interest in his life estate when he died, any interest he had in the property was 

transferred to Cathie at the time of his death making her interest in the property a fee simple 

rather than just a remainder interest. When assets of a Medicaid recipient are conveyed to a 

survivor, heir or assign by the termination of a “life estate,” the assets remain part of the 

recipient’s “estate” pursuant to 42 U.S.C. § 1396p(b)(4)(B) and Idaho Code section 56-

218(4)(b). Therefore, Melvin Peterson’s life estate interest was subject to Medicaid recovery 

under Idaho Code section 56-218(4)(b). 

The next question is whether the district court correctly held that the remainder interest 

Melvin Peterson gifted to Cathie Peterson in 2001 was subject to Medicaid recovery. Wiggins

and McCormick are equally instructive on this question. While both Wiggins and McCormick

dealt with recovering assets from a Medicaid recipient’s spouse, the language those cases relied 

on is equally applicable to the case at hand. The definition of “asset” includes income and 

resources that an individual is entitled to but does not receive because of his or her own actions. 

See 42 U.S.C. § 1396p(h)(1). In this case, as in Wiggins and McCormick, Melvin Peterson 

transferred his property in order to qualify for Medicaid assistance. Although Melvin Peterson 

transferred his property to his daughter rather than his spouse, the property is still recoverable 

under Idaho Code section 56-218(4)(b). 

In McCormick, this Court held that Idaho Code section 56-218(4)(b) was ambiguous and 

declined to adopt the Minnesota Supreme Court’s conclusion in In re Estate of Barg, 752 

N.W.2d 52 (Minn. 2008) that the plain meaning of this section excluded lifetime transfers of 

property. 153 Idaho at 475, 283 P.3d at 792. In relevant part this Court stated: 

However, the language of 42 U.S.C. § 1396p(b)(4)(B) does not lend itself 

to the definitive interpretation made by the Barg court. The court indicated that 

“other arrangement” could not include lifetime transfers because it comes at the 

end of a list of conveyances that occur at the time of death. However, a 

conveyance of a life estate does not necessarily occur at the time of death. Nor 

does a conveyance into a “living trust.” It would seem that a Medicaid recipient 
13

would make such conveyances prior to death and that “other arrangement” could 

include other lifetime conveyances. Indeed, the use of the word “conveyed” is 

more indicative of a lifetime transfer than one made in the context of a decedent’s 

estate, where “devised,” “bequeathed,” or “devolved” would be more appropriate. 

Further, the language “any other real and personal property and other assets in 

which the individual had any legal title or interest at the time of death” is not 

entirely clear. For instance, one might wonder what “other assets” a person could 

own other than real and personal property. And, one could interpret the “in 

which” clause to apply just to “other assets” or to both those and real and personal 

property. Thus, while the Barg court seemed convinced that the language 

excluded lifetime transfers, we find it to be ambiguously inclusive.

Id. at 475–76, 283 P.3d at 792–93. 

The remainder interest Cathie Peterson received through a gift deed from Melvin 

Peterson in 2001 is part of his “estate” under Idaho Code section 56-218(4)(b). The retention of a 

life estate in his property while gifting the remainder interest to his daughter was simply a means 

of transferring the property to his heirs while avoiding probate. Rather than make an outright 

bequest of his property, Melvin Peterson made a lifetime transfer of a remainder interest in the 

property to Cathie Peterson during the relevant look-back period. But for the transfer of the 

remainder interest in his estate to his daughter in 2001, this interest would have been part of his 

estate and subject to Medicaid recovery. Therefore, the remainder interest constitutes an asset 

under 42 U.S.C. § 1396p(h)(1), just as community property transmuted through an MSA 

constitutes an asset. This type of transfer of property falls within Idaho Code section 56-

218(4)(b)’s “other arrangement” language. Accordingly, the entire residential property that 

Cathie Peterson ultimately received from Melvin Peterson is subject to Medicaid recovery under 

Idaho Code section 56-218(4)(b). This conclusion is also consistent with Congress’s intent to 

allow participating states broad authority to seek recovery of Medicaid benefits.

1

IDHW sought recovery of only the retained life estate based on Idaho Code section 56-

218(4)(b)’s language that assets conveyed by “life estate” were included within the definition of 

estate. IDHW argued that the value of Melvin’s life estate should be calculated based on its value 

right before his death using the Life Estate Remainder Table contained in IDAPA 16.03.05.837 

(Rule 837). Rule 837 is entitled “Life Estate as Asset Transfer” and provides a table for 

determining the value of a remainder interest that is transferred during the look back period for 

the purpose of determining the appropriate transfer penalty. The transfer penalty involves 

 1 During oral argument, IDHW agreed it had waived any claim to Peterson’s remainder interest. Because of that 

agreement and stipulation at oral argument, this opinion has no effect on that agreement between these parties.
14

restricted or delayed coverage for a Medicaid applicant or participant, and thus its use is 

contemplated during the lifetime of a Medicaid recipient. IDAPA 16.03.05.832. Cathie Peterson 

argued that this strained interpretation and unconventional use of the life estate table in Rule 837 

was inappropriate. Although we no longer need to decide this issue, we note that for purposes of 

determining the value of a life estate for recovery from a Medicaid recipient’s estate, the 

valuations in Rule 837 are not dispositive—parties may present evidence of alternative 

valuations. 

E. Whether Cathie Peterson was entitled to offsets to the value of the real property based 

on improvements she made. 

On appeal, Cathie Peterson argues that the magistrate court’s findings as to her 

investment in the property are unsupported by the evidence and that “[i]nexplicably, the trial 

court disregarded Cathie’s documented investment into the property.”

Neither the magistrate court nor the district court disregarded Cathie Peterson’s evidence. 

To the contrary, the magistrate court found, and the district court affirmed, that Cathie Peterson 

did expend money on legitimate improvements to the house. However, both courts held that the 

measure for damages is the difference in fair market value of the property before and after the 

improvements were made. Thus, to receive an offset for the improvements she made, Cathie 

Peterson was required to show how these improvements increased the fair market value of the 

property. The district court affirmed the magistrate court’s denial of Cathie Peterson’s claim for 

offsets based on her failure to provide any evidence, not even her own opinion, as to how these 

improvements enhanced the property’s value. 

On appeal, Cathie Peterson fails to point to anywhere in the record where she provided 

evidence that her improvements enhanced the property’s value. Therefore, she has failed to show 

that the district court’s decision was unsupported by the evidence. 

F. Attorney fees on appeal

IDHW asserts that it is entitled to attorney fees on appeal under Idaho Code section 12-

117 as the prevailing party. Under subsection (1) of that statute, upon appeal from any 

administrative proceeding involving as adverse parties a state agency and a person, the court 

“shall award the prevailing party reasonable attorney’s fees . . . if it finds that the nonprevailing 

party acted without a reasonable basis in fact or law.” I.C. § 12-117. Thus, this Court will not 

award fees against a party that presents a “legitimate question for this Court to address.” KeplerFleenor v. Fremont Cnty., 152 Idaho 207, 213, 268 P.3d 1159, 1165 (2012).
15

The question of whether a decedent’s retained life estate may be included as an asset 

within the decedent’s estate for the purposes of Medicaid recovery is one of first impression that 

presents a legitimate question for this Court to address. Therefore, we decline to award attorney 

fees on appeal.

IV. CONCLUSION

Both the magistrate court and the district court had subject matter jurisdiction over this 

case and personal jurisdiction over Cathie Peterson individually. We hold that the entire 

residential property that Cathie Peterson received from Melvin Peterson is an asset of his estate 

under Idaho Code section 56-218(4)(b) and subject to Medicaid recovery; thus, the district court 

erred to the extent it held that only the remainder interest in the estate was subject to Medicaid 

recovery. We also hold that Cathie Peterson failed to show that the district court’s decision 

denying her claim for offsets was unsupported by the evidence. No attorney fees are awarded. 

Costs to IDHW. 

Justices EISMANN, J. JONES and HORTON, CONCUR.