Opinion ID: 1224505
Heading Depth: 2
Heading Rank: 3

Heading: reimbursement of medicare and funding of the supplemental needs trust

Text: Under the provisions of 42 U.S.C. § 1396p(d)(4)(A) and Utah Code Ann. § 62A-5-110, a properly drafted discretionary trust, often referred to as a special needs or supplemental needs trust, may provide resources to a disabled person under sixty-five years of age for care beyond that which Medicaid supplies without defeating the recipient's Medicaid eligibility. By means of such a trust, the sufferer of a long-term disability may enjoy education, rehabilitation, transportation, and other advantages which Medicaid does not cover without losing Medicaid's basic medical benefits. Congress enacted the supplemental needs trust provision as an explicit exception to the general trend of the Omnibus Budget Reconciliation Act (OBRA) of 1993, which attempted to close loopholes that allowed wealthy elders to reap Medicaid benefits while still retaining their personal wealth and passing it on to the next generation. See generally Stewart Weisner, OBRA '93 and Medicaid: Asset Transfers, Trust Availability and Estate Recovery Statutory Analysis in Context, 19 Nova L.Rev. 679 (1995). The supplemental needs trust must be structured so that upon the death of the beneficiary, 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 beneficiary. Utah Code Ann. § 62A-5-110(1)(a)(vi). The conservators contend that this provision supersedes sections 26-19-5 and -7, which provide for reimbursement to the State when there has been an insurance recovery such as happened here. Thus the conservators argue that the State is not now entitled to reimbursement, but only after S.S.'s death. The State responds that Medicaid is designed to be the payor of last resort and the establishment of a supplemental needs trust does not change the fact that the mandatory assignment of benefits gives the State a lien on any third-party recovery to the extent of the State's expenditures. The State bolsters its argument with reference to 42 U.S.C. § 1396 (1993), under which the states are required to collect reimbursement for Medicaid assistance from liable third parties. Therefore, the State insists that S.S.'s insurance recoveries may be used to fund a supplemental needs trust only after the State has been reimbursed. The trial court noted that the specific provisions of the United States Code, the Federal regulations and State laws pertaining to supplemental needs trusts do not require reimbursement of pre-settlement assistance benefits from petitioners to the State of Utah. However, the Utah reimbursement provisions are found in the earlier enacted sections 26-19-5 and -7, and the legislature's failure to explicitly reaffirm an earlier statute when it later enacted section 62A-5-110 does not give rise to a presumption of preemption. Rather, a recently enacted statute will supersede an existing statute only in the instance of an irreconcilable conflict between the two. Though it is true ... that subsequently enacted statutes generally supersede prior existing ones on the same subject, statutes are not repealed by implication. Even when they seem to overlap in some areas, they should be so construed to give effect to both if possible; and the later statute neither supersedes nor repeals the prior one unless its terms are irreconcilable with the former statute. Pride Club v. Miller, 572 P.2d 385, 387 (Utah 1977) (citing McCoy v. Severson, 118 Utah 502, 222 P.2d 1058 (1950)). Likewise, a federal statute will preempt a state statute only in the case of an actual conflict unless the federal statute has been shown to preemptively occupy the field, which has not occurred here. We find no irreconcilable conflict here either on the federal or state level, or between the two, because the Medicaid recovery statutes deal with reimbursement, while the discretionary trust statutes address Medicaid eligibility. Thus we may conclude, without doing violence to either statute, that recoveries from third parties liable for the same expenses covered by Medicaid belong to the State, but any remaining balance not owed to the State may be used to fund a properly structured supplemental needs trust. Such a trust will permissibly expand the resources available for the disabled person's care beyond that which the Medicaid eligibility provisions would ordinarily allow without defeating eligibility. In the words of the Cricchio court: [T]here is no indication that the amendments were designed to alter the legal liability of any responsible third party to reimburse Medicaid for care, which is a cornerstone of the Medicaid program. Rather, the legislative history of the Acts authorizing the creation and favorable treatment of assets held in an SNT reveals that the amendments were prompted by the sole desire to encourage families to undertake long-term financial planning for loved-ones with family assets that were not otherwise earmarked to reimburse government assistance. Cricchio, 660 N.Y.S.2d 679, 683 N.E.2d at 305 (citing Bill Jacket, L.1993 c. 433, Mem. in Support.) [2] We therefore hold that repayment of the Medicaid lien from third party settlement funds must precede creation of the supplemental needs trust.