Source: https://elderlaw.info/
Timestamp: 2019-04-25 00:17:03+00:00

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Nothing on this blog should be considered to be legal advice or tax advice.
At this time last year, when a MassHealth application included a trust, the application was usually denied, yet the applicant was not provided with any clue as to the reasons why until the administrative fair hearing appeal had actually begun. Obviously, without knowing what was supposedly wrong with the trust, the denied MassHealth applicant was unable to prepare for the hearing. The MassHealth eligibility worker who had issued the denial would often state that the reasons were protected by attorney-client privilege until the time of the hearing. At the hearing, the secret was unleashed; either a MassHealth lawyer would appear to argue or a pre-prepared memorandum written by a lawyer would be entered by the MassHealth eligibility worker into the hearing record. Despite protests from the elder law bar, the Director of the Board of Hearings and all of the hearing officers allowed this unfair process to take place. In some cases, the hearing officer just closed the record on the day of the hearing.
On January 16, 2018, I filed a lawsuit against the MassHealth agency to attempt to obtain judicial action to stop some of its intentional due process failures, then on February 6, 2018, I filed an amended complaint that added a class action count. On March 16, 2018, Attorney Nicholas Kaltsas filed a similar lawsuit that was quickly consolidated with my case. On June 22, 2018, Justice Douglas Wilkins of the Suffolk Superior Court issued a Declaratory Judgment that the denial notices issued by the MassHealth agency in trust cases did not comply with the federal Medicaid law requirement at 42 C.F.R. § 431.210 to provide “a clear statement of the specific reasons” for the denial.
They fail … to give any “reason” – let alone a clear statement of a specific reason — for the most essential determination of all: why the Office deemed the asset (trust) countable. Even less does the Office’s notice give a “clear statement” or “specific reasons” for counting a trust’s assets as the applicant’s assets for Medicaid purposes. Stating what, but not why, falls short of 42 C.F.R. § 431.210 requirements. Without the notice required by the regulation, an applicant lacks the information required “to permit adequate preparation of the case.” 130 Code Mass. Regs. 610.046(A).
42 C.F.R. § 431.210 specifically applies to the notice that the agency must give the applicant “[a]t at the time the agency denies an individual’s claim for eligibility, benefits or services …” 42 C.F.R. § 431.206(c)(2). Notice given at a later time falls outside that clear command. Moreover, 42 C.F.R. § 431.210 requires that the notice itself contain the clear statement of the specific reasons for agency action. Information provided outside the notice, at a much later time, violates that command.
For one thing, a clear statement of specific reasons promotes the statutory requirement that Medicaid applications be handled “with reasonable promptness.” 42 U.S.C. § 1396a(a)(8). See G.L. c. 118E, § 48 (“the referee shall render and issue a decision without forty-five days after the date of filing of said appeal”). It reduces the prospect of delays and continuances attributable to the applicant’s efforts to learn the Office’s specific reasons. 42 C.F.R. § 431.210(b). These kinds of time-consuming efforts are precisely what the Office suggests in response to uncertainties inherent in an inadequate notice. Def. Mem. at 12-13 (suggesting clarification of the issues through prehearing conference, pre-hearing briefing or keeping the record open, all of which take time), citing 130 Code Mass. Regs. § 610.065(B)(3), (11). Since the agency knows (or should know) the reasons for its staff’s decision, delay caused by the Office’s proposal to give notice through subsequent iterative processes is not “reasonable.” The subsequent cure argument assumes that delay caused by delay in learning the agency’s reasons, is of no consequence under Medicaid law. That is not so. Unnecessary delay – ­attributable to efforts to discover what the agency already knows — is exactly what the law seeks to avoid. See 42 U.S.C. § 1396a(a)(8); G.L. c. 118E, § 48.
Ironically, the Office will actually save resources if a clear statement of specific reasons actually convinces the applicant or counsel that the denial was correct. In such cases, there is no need to request a fair hearing and expend agency resources on an unnecessary appeal. Only if the initial determination is wrong or debatable would public resources be expended on an administrative hearing if the initial notice is sufficient. Giving adequate notice that will avoid protective appeals, filed to preserve rights until the Office’s reasons are known, thus operates “in a manner consistent with simplicity of administration and the best interests of the recipients.” 42 U.S.C. § 1396a(a)(l9); 42 C.F.R. 435.902; G.L. c. 118E, § 12.
The Court DECLARES that, in cases where the defendants count trust assets for Medicaid eligibility purposes, the defendants’ standard notices of denial of eligibility violate 42 C.F .R. § 431.210(b) by failing to provide a clear statement of the specific reasons supporting the intended action.
The court … exercises its discretion to declare the parties’ rights only with respect to notices that treat trusts as countable assets for MassHealth purposes. That is not to say that the Office’s obligation to provide a clear statement of specific reasons is limited to the trust situation. Obviously, it is not. The Office may well adopt a solution for trusts that affects other contexts as well. If not, the court may need to consider a broader declaration.
[T]he regulations prevent the agency from using its superior knowledge to the detriment of the citizen. Having reviewed the application at the staff level, the Office undoubtedly knows the clear and specific reasons why it denied the application. There is no reason why it should withhold this information, except for unfair tactical advantage. Whether intentional or not, this tactic also operates as leverage in forcing a vulnerable applicant to negotiate a quick resolution even if the Office is in the wrong. The regulation prevents the government from disadvantaging its citizens in these ways. It also serves the interest of transparency. The regulation dictates that the Office, as a government agency supported by public funds and serving the Commonwealth’s citizens, must not proceed in secret or with indecipherable code, but owes a fair explanation of its decisions to the applicants whose lives it affects, often at a time when the applicant is in a very vulnerable position.
[T]he regulation provides discipline, structures agency decision making and promotes compliance with the law. It is easy to deny an application with an opaque explanation and leave matters for an appeal. On the other hand, to give a clear and specific statement of reasons, the staff must review the application with some care. In many contexts, the courts have acknowledged the discipline that a statement of reasons imposes upon decision-making, which ensures adherence to the law and checks arbitrariness. See generally Motor Vehicle Mfrs. Assn. of United States, Inc. v. State Farm Mut. Automobile Ins. Co., 463 U.S. 29, 48-49 (1983) and cases cited. McDonough, Administrative Law and Procedure, 38 Mass. Practice Series,§ 10.37, pp. 607-608 (2016 Ed.) (“In addition to facilitating and effectuating the function of judicial review, a statement of reasons constitutes a substantial check upon the misuse of agency power because a final decision based upon a statement of reasons is far less likely than otherwise to be the product of arbitrary, capricious or unreasonable agency consideration.”). That goal is particularly important in a trust assets case like this one, where “Medicaid law is ‘almost unintelligible to the uninitiated,'” and the Office has taken many inconsistent and sometimes contradictory positions on treatment of trusts for purposes of calculating assets under the Medicaid laws. The regulation leaves less room for hidden inconsistency and whim by requiring the Office to state its reasons for denying an application clearly and specifically.
In case they are of interest or help to someone, here are the Plaintiffs’ brief along with Exhibits A-F and Exhibits H-N and Exhibits O-P. Exhibit G contained affidavits from many elder law attorneys, and I again thank all of them for their support. In addition, here is the MassHealth agency’s brief, written and filed by the Office of the Attorney General.
As should have been expected after the Declaratory Judgment was issued, the MassHealth agency’s lawyers who had concocted this rigged process in the first place then proceeded to do the absolute bare minimum to take care of the due process problems for which Justice Wilkins had severely criticized them. The agency did absolutely nothing to provide better and more informative denial notices on non-trust issues such as disqualifying transfers and missing verifications. (As we had pointed out to Justice Wilkins, my office has been told by MassHealth eligibility workers, who are the MassHealth agency employees who actually issue the denial notices, that they are provided with no space at all to provide the denied MassHealth applicant with any specifics about the reasons for the denial.) In the only non-trust lawsuit that I know of that was filed after the Maas/Hirvi Declaratory Judgment, the agency quickly backed down and issued a new denial notice providing the reasons for the denial to Attorney Kaltsas in a missing verifications case, so the Declaratory Judgment issued by Justice Wilkins may well have broad applicability.
Because the Office must set forth “a clear statement of the specific reasons supporting the intended action,” a violation of both the regulation and this court’s declaration has occurred if the Office only provides an incomplete statement, but not all of the “reasons” “supporting the intended action.” The plain meaning of the phrase, “the specific reasons” – in the plural – is inclusive. It does not mean “some of the reasons.” Where more than one reason exists, providing a single reason squarely violates the regulatory choice to use the plural. While it might technically be possible to argue that providing two reasons satisfies the use of the plural even if three or more reasons exist, the defendants wisely do not make such an argument. That construction would non-sensical. There is no linguistic or regulatory-policy reason to construe the regulation as imposing an “at least two reasons” minimum. Indeed, withholding any of the “reasons supporting the intended action” would squarely defeat the regulatory purposes, discussed on pp. 8-12 of the June Order. The only reasonable interpretation of the regulation’s plain language is that the Office’s notice of denial must include each of the “specific reasons supporting the intended action,” at least when based upon including of trust assets.
Clarification of this point is particularly important, because there appears to be some residual confusion. In particular, the defendants … assert that “once MassHealth identifies in its denial notice a single circumstance (or circumstances) under which trust assets may be payable to or for the benefit of the applicant, it has explained why the assets are countable.” One reason may well be enough to support a denial. But if that is the reason why the Office includes the “but not limited to” language in the notice, then it is a non-sequitur. The fact that the Office’s notice identifies “a single circumstance (or circumstances)” warranting denial does not mean that it has given a “statement of the specific reasons supporting the intended action” if it also relies upon unstated reasons to support its denial (Emphasis added). Supplying one or two reasons among many is not the same as stating “the reasons.” The defendants do not explain how their “single circumstance” argument can be squared with the use of the plural. If a reason “support[s] the intended action” it must be included in the notice. The court so clarifies the Declaration.
At this point, it seems that all MassHealth denials involving trusts are receiving the extra notice that provides reasons for the denial, yet the game-playing against Massachusetts citizens by MassHealth lawyers continue. Even though Justice Wilkins had cited “the statutory requirement that Medicaid applications be handled “with reasonable promptness.” 42 U.S.C. § 1396a(a)(8),” and had pointed out that “[u]nnecessary delay­ … is exactly what the law seeks to avoid,” the MassHealth lawyers now appear at the fair hearing to make their arguments, then request a month or so to write their brief (which then means that the appellant’s lawyer needs time after finally seeing it to file a written response). Where the agency is required to provide all of the reasons for the denial on the denial notice, there seems to be no good reason for the MassHealth lawyer to be unprepared at the time of the fair hearing, and intentionally creating procedural delays seems unreasonable.
As I see it, if the Board of Hearings is actually independent and doing its job, these MassHealth lawyers should not be allowed to get away with creating a new procedure that is not part of the law or regulations, and every appellant should appear at the fair hearing with the appellant’s written memorandum in response to the reasons provided on the denial notice, then demand that the record be closed on that day. After all, having MassHealth lawyers behave that way intentionally slows down the hearing process, and they and the Board of Hearings undoubtedly are aware of the requirement not only in the fourth paragraph of Massachusetts General Laws, Chapter 118E, Section 48, but also in the Board of Hearings’ own regulation at 130 CMR 610.015(D)(1)(a), that a written decision be issued within forty-five (45) days after the Board of Hearings receives the denied MassHealth applicant’s request for a fair hearing.
If the Board of Hearings cares about being independent and prompt, it will reject the MassHealth lawyers’ latest scheme to stretch out the fair hearing appeal process when trusts are involved. That, however, may be wishful thinking, since if the Board of Hearings were actually independent and fulfilling its proper role, the Maas and Hirvi cases would not have even been needed for MassHealth appellants to receive due process.
Spousal refusal may in some cases be a better move than purchasing a single premium immediate annuity, especially where there is a chance that Congress will change the federal Medicaid law that allows such annuity payouts to belong completely to the community spouse and instead begin treating one-half of the annuity as the institutionalized spouse’s income.
In a Suffolk Superior Court case that I filed in January, 2018, which later was consolidated with a similar case filed Attorney Nicholas G. Kaltsas in March of 2018, we have attempted to stop ongoing due process violations by the Office of Medicaid, which is part of the Executive Office of Health and Human Services. To show the Court that we are not alone in our concerns about what the agency has been doing for years, we asked for help from the elder law bar, and we thank the following persons (almost all of whom are Massachusetts lawyers) for the following affidavits, all of which have been filed with the Court.
In the 2017 case of Ajemian v. Yahoo!, Inc. the Supreme Judicial Court of Massachusetts (“SJC”) has decided that federal law does not prohibit an internet service provider from voluntarily disclosing the contents of a decedent’s e-mail account to the Personal Representative of the decedent’s estate.
Unfortunately, the SJC chose to sidestep the issue of whether the Terms of Service agreement (i.e., that take-it-or-leave-it agreement we all have to accept when opening an email account) could by itself allow an internet service provider to prevent an estate from having access to a decedent’s email account. The SJC remanded the issue back down to the Probate Court. That means the SJC wrote a lot of words but accomplished very little, and the successful plaintiffs in Ajemian have to continue to spend funds in the Probate Court litigating the sidestepped issue. There is a lot of time and expense put into a case before it gets to the SJC, and it is a shame when the SJC chooses to do the bare minimum.
Note that, as mentioned in Ajemian, Massachusetts General Laws, Chapter 190B, Section 3-709 could allow the Personal Representative of an estate to have access to the decedent’s assets, but also note that the law begins with “[e]xcept as otherwise provided by a decedent’s will.” Thus, it is possible that a decedent’s will could deny access to email accounts and other such digital assets. If you have something in your online history that you don’t want to be seen after you are gone, you may want to add a provision into your will that not only denies access to the account but also directs the destruction of the email account or other digital assets.
When Can the Trustee of a Revocable Trust in Massachusetts Make Distributions to the Beneficiaries without Incurring Personal Liability to the Deceased Settlor’s Creditors?
An impatient trust beneficiary is one of my cases began demanding distributions from the decedent’s revocable trust within a month of the settlor’s death. The Trustee has no problem making the earliest possible distributions, as long as the Trustee can have no personal liability for doing so. Other than unpaid income tax liabilities of the decedent, the only major problem that should be of concern to the Trustee could be a lawsuit against the trust by one of the decedent’s creditors. Thus, the question is when, under current Massachusetts law, can a Trustee end up being personally liable to then-unknown creditors after making distributions to the beneficiaries of the trust.
The Massachusetts Uniform Trust Code (“MUTC”), which took effect in 2012, allows creditor claims against revocable trusts; see (a)(3) in Massachusetts General Laws, Chapter 203E, Section 505. The MUTC is otherwise silent about what that means. The Massachusetts Uniform Probate Code, at Massachusetts General Laws, Chapter 190B, Section 3-803, states in (a) that creditors are out of luck unless they file a lawsuit against an estate within one year of the decedent’s death; and states in (b) that a Trustee is treated the same as the estate’s Personal Representative. Thus, a revocable trust is treated the same as an estate, which has a period for creditor claims of one year after the decedent’s death, and the Trustee of a revocable trust therefore can, without being liable to unknown creditors, safely make distributions twelve months and a day after the settlor’s death. Note, however, that this analysis applies only to normal creditors, not the decedent’s unpaid income tax liabilities, for which the Trustee would remain personally liable.

References: § 431
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