Court Opinion

ID: 5167189
Source: CourtListenerOpinion
Date Created: 2022-01-02 03:47:43.513138+00
Date Added: 2024-06-11T08:25:54.753506
License: Public Domain

DURHAM, Associate Chief Justice,
dissenting:
The majority holds that the State may enforce a statutory lien for past Medicaid benefits on settlement proceeds designated (by court order) for a supplemental needs trust created pursuant to section 62A-5-109(2). I respectfully dissent; that result is contrary to both federal and state law.
Both Congress and the Utah Legislature have enacted provisions explicitly authorizing the sheltering of assets to be used for the care of disabled individuals from execution by the State for past, present, or future Medicaid benefits until after the death of the disabled individual. Those provisions, detailed hereafter, were enacted subsequent to, and separately from, the general provisions contained in OBRA ’93 and Utah’s Medical Benefits Recovery Act. The explicit protections designed for these sources of support for disabled persons supersede and take precedence over the generic collection schemes otherwise applicable to Medicaid reimbursements. All of the third-party reimbursement provisions on which the State relies in this case are part of the general collection scheme to which the supplemental need trusts provisions are a later, and explicit, exception.
The majority finds “no irreconcilable conflict” between the general reimbursement statutes and the subsequently enacted exceptions for supplemental needs trusts because “the Medicaid recovery statutes deal with reimbursement, while the discretionary trust statutes address Medicaid eligibility.” This assertion is not entirely accurate, and certainly not dispositive. The federal exemption language appears in 42 U.S.C. § 1396p(d)(4). Subsection (d) does indeed refer to determining an individual’s eligibility for benefits. But subsection (d) is itself a subsection of section 1396p, entitled “Liens, adjustments and recoveries, and transfers of assets.” It has five subsections: “(a) Imposition of lien against property of individual on account of medical assistance rendered to him under State plan ...; (b) Adjustment or recovery of medical assistance correctly paid under State plan ...; (c) Taking into account certain transfers of assets ...; (d) Treatment of trust amounts ...; and (e) Definitions.” The lien restrictions specified in subsection (a) clearly apply to all of the subsequent paragraphs, some of which also deal with eligibility requirements, but all of which deal with property to which the state can properly look for reimbursement of medical assistance amounts paid or to be paid.
In reading section 1396p in its entirety, it is plain that the entire section was designed by Congress to ensure protection of certain types of property in certain circumstances from attachment by the state during the lifetimes of disabled individuals. The lien prohibitions in subsection (a) are as applicable to subsections (b), (c), and (d) as are the definitions in subsection (e). Critically, those definitions specifically describe the type of assets at issue in this case — settlement proceeds. For section 1396p purposes,
(1) The term “assets”, with respect to an individual, includes all income and resources of the individual ..., including any income or resources which the individual is entitled to but does not receive because of action....
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(B) by a person, including a court or administrative body, with legal authority to *445act in place of or on behalf of the individual....
Id. § 1369p(e)(l). The settlement proceeds in this case have been ordered by the district court to be placed in a supplemental needs trust established by the properly appointed guardians of S.S. Congress intended such funds to be exempt from attachment during S.S.’s lifetime.
Likewise, it is not the case, as suggested by the majority, that the state statute governing supplemental needs trusts is limited to “eligibility” considerations. Section 62A-5-110 specifically states:
(3) A discretionary trust for a person with disabilities is not liable for reimbursement or 'payment to the state or any state agency, for financial aid or services provided to that individual....
(4) Property, goods and services that are purchased or owned by a discretionary trust for a person with disabilities and that are used or consumed by a disabled beneficiary shall not be considered trust property that is distributed to or under the control of the beneficiary.
(5) The benefits that a person with disabilities is otherwise legally entitled to may not be reduced, impaired, or diminished in any way because of contribution to a discretionary trust for that person.
Utah Code Ann. § 62A-5-110(3), (4), & (5) (emphasis added). Only subsection (6) of section 62A-5-110 speaks to eligibility. The foregoing provisions, read cumulatively as they must be, reveal an expansive view of the property to be shielded from any form of lifetime attachment by the State for medical assistance.
The discretionary trust in question in this case was properly created, and the transfer of settlement proceeds duly ordered by the district court. There is no question of S.S.’s eligibility as a beneficiary of such a trust, nor of the propriety of placing personal injury settlement funds in it. There is also, in my view, no question of the intent of the federal provisions and the parallel state statutes to shield whatever assets are properly placed in that trust from reimbursement liens by the State during S.S.’s lifetime. The third-party recovery scheme relied on by the State here is part of the overarching scheme for recovery of medical assistance payments paid in the ordinary case. The supplemental needs of trusts provisions are and were intended to be an explicit, specific, and narrow .exception available to persons who are totally disabled — the extraordinary case. It would have been a relatively easy matter for Congress or the State legislature to specify that the recovery exemptions in 42 U.S.C. § 1396p(d) and Utah Code Ann. § 62A-5-110 did not include exemption from the third-party recovery provisions in 42 U.S.C. § 1382 and Utah Code Ann. § 26-19-5. Instead, the exemptions in both the federal and state statutes are blanket exceptions covering all forms of reimbursement, diminution of benefits, liens, or any other process designed to accomplish collection. Once S.S.’s recovery from the persons liable for his injuries was contributed to a properly created supplemental needs trust, the State had no power to attach it until his death, just as is true of any other funds contributed to that trust. The majority agrees with the analysis of the New York Court of Appeals in Cricchio v. Penni-siy 90 N.Y.2d 296, 660 N.Y.S.2d 679, 683 N.E.2d 301, 305 (N.Y.1997), that “there is no indication that the amendments [creating supplemental needs trusts] were designed to alter” the third-party reimbursement provisions. I think there is ample indication that the amendments were intended to shelter supplemental needs trust funds from all of the repayment, reimbursement, and mandatory assignment provisions contained in the earlier statute.
I would therefore affirm the district court.
Justice STEWART concurs in Associate Chief Justice DURHAM’S dissenting opinion.