Court Opinion

ID: 9795492
Source: CourtListenerOpinion
Date Created: 2023-08-31 03:30:08.689753+00
Date Added: 2024-06-11T08:30:09.569150
License: Public Domain

Davis, J.,
dissenting: I respectfully disagree with the majority’s conclusions that the full value of the stock is available and attributable to Brewer, that the district court was unable to estimate attorney fees for a partition action, that Brewer must seek to partition the property under state and federal law, and that Kansas regulations control over federal statutes or regulations concerning eligibility.
In my opinion, the transfer of the stock vested an undivided one-third interest in Brewer and an undivided one-third interest in each of her nieces. Moreover, if, as the majority opines, Brewer must partition, which I do not think the law requires, the value of her share is one-third.
I agree with the district court’s determination based on available evidence that the cost of a partition in this case would exceed Brewer’s one-third interest. I would therefore affirm the decision of the district court on its determination that the fees would consume Brewer’s interest in the stock and for other reasons stated below. See Drake v. Kansas Dept. of Revenue, 272 Kan. 231, 239, 32 P.3d 705 (2001) (reason given by the trial court for its ruling is immaterial if the result is correct for any reason).
The majority concludes that a partial transfer of an asset occurring outside the 3-year look-back period does not make the stock an unavailable resource to Brewer. It bases its decision on K.A.R. 30-6-56, which defines “transfer of assets” as “any act . . . which partially or totally passes the use, control, or ownership of assets of an applicant or recipient to another person,” and upon the Kansas Economic and Employment Support Manual (KEESM) 5720 which suggests that when personal property is partially transferred “the full value of jointly owned personal property is still considered available to each owner.” (Emphasis added.)
I agree that the concepts of transfer and availability of assets are not mutually exclusive. However, I disagree that the full value of *750the transferred stock was available to Brewer under either federal or state law.
The directives of the Centers for Medicare and Medicaid Services’ (CMS) State Medicaid Manual are the “officialinterpretations of the law and regulations, and, as such are binding on Medicaid State agencies.” CMS State Medicaid Manual, Foreward. Section 3258.7 provides:
“[I]f placing another person’s name on the account or asset actually limits the individual’s right to sell or otherwise dispose of the asset (e.g., the addition of another person’s name requires that the person agree to the sale or disposal of the asset where no such agreement was necessary before), such placement constitutes a transfer of assets.”
A close examination of this definition and the nature of the transfer in this case demonstrates that Brewer transferred her stock to herself and her nieces in joint tenancy, acquiring an undivided one-third of the stock only. Before the transfer, Brewer had the right to sell or otherwise dispose of the stock; after the transfer Brewer could not sell or otherwise dispose of the stock unless her nieces joined in the sale. Thus, placing the nieces’ names on the stock constitutes a “transfer of assets.”
It is important to consider the nature of the transfer in question. This is not a joint bank account where placing additional names on the account does not necessarily limit the transferor’s control over all the property. See Walnut Valley State Bank v. Stovall, 223 Kan. 459, 574 P.2d 1382 (1978). In order to transfer the stock, Brewer had to contact an attorney or broker, bring her original stock certificate to the broker, and make the request to the company issuing the stock that the new stock be vested in herself and her two nieces. The original certificate of her stock, together with her request, is then sent to the company. The company destroys the original certificate and issues a new certificate of stock with all three names entered on the face of the new certificate. Never again will Brewer alone be able to sell the certificate or realize anything but one-third of the proceeds from the sale or disposition of the stock.
It is also important to note that this transfer took place 7 years ago and not for the purpose of removing assets from her estate so that she would be eligible for Medicaid benefits. There is no evi*751dence of fraud in this case. The 3-year look-back provision of federal law is designed to provide the federal government protection against transfers made within 3 years of an application for benefits. I interpret KEESM 5720 as either relating to transfers within the 3-year period or as dealing with partial transfers under local law where the transferor partially transfers his or her interest in personal property but retains control.
In this case, Brewer transferred an undivided two-thirds of the stock she received from her husband’s estate. Finding that the whole amount of the stock was available to Brewer ignores the fact that Brewer no longer has control over an undivided two-thirds of the stock in that she retains only an undivided one-third interest in the stock. Her ability to realize her one-third interest is dependent upon her nieces or a partition suit.
In this same vein, the majority opinion attributes the entire value of the stock to Brewer when under federal and state law Brewer is vested with only one-third of the value of the stock. Kansas law is clear, as the majority recognizes that “[tjhere is a rebuttable presumption for equal ownership between tenants of joint tenancy property.” See Walnut Valley State Bank, 223 Kan. 459, Syl. ¶ 2. This same presumption exists upon partition.
Applying a deferential standard of review, the majority found substantial competent evidence supported the Kansas Department of Social and Rehabilitation Services (SRS) conclusion that the full value of the stock was attributable to Brewer because her nieces had not contributed to the equity and Brewer had failed to establish that the stock was a gift to the nieces. However, SRS is the moving party in this case and sought to establish that there was unequal ownership. Thus, SRS must overcome the rebuttable presumption. The evidence relied upon by SRS is that Brewer owned all the stock prior to the transfer and did not gift the property to her nieces but sought to avoid probate. Nevertheless, the evidence established that the nieces claimed their one-third interest in the stock, based on their services rendered or simply because their aunt gave them a one-third interest in stock.
While Kansas law allows for partition of jointly held property, in such a lawsuit Brewer would be claiming only a one-third interest. *752Her request would be consistent with the existing rebuttable presumption, and the court would grant her such an interest. See K.S.A. 60-1003; Miller v. Miller, 222 Kan. 317, 320, 564 P.2d 524 (1977). If SRS were joined in the partition suit claiming that Brewer had an interest in all of the stock, it is more than likely that a court would acknowledge the nieces’ interest some 7 years after the transfer, especially since there is no allegation of incompetency. However, as the trial judge noted, based upon a suit involving SRS, the nieces, and Brewer, a partition suit would be prolonged and complicated. Thus, Brewer would expend more in fees than the one-third value of the stock.
I disagree with the majority’s conclusion that the district court substituted its judgment for that of the administrative tribunal in this case. Rather, after considering the evidence in the administrative hearing and giving consideration to Kansas and federal law, the nature of the transfer of stock vesting only a one-third interest in Brewer, the time-lapse between the transfer and eligibility determination, the determined attitude of the nieces concerning the property, and the lack of any substantial rebuttable evidence by SRS, the district court determined that Brewer’s interest in the stock was an undivided one-third and partition would consume such interest.
The district court is an expert in the area of attorney fees and can draw on and apply its own knowledge and expertise in evaluating the amount of fees consistent with the evidence. See Davis v. Miller, 269 Kan. 732, Syl. ¶ 6, 7 P.3d 1223 (2000). Both determinations by the district court are supported by the evidence and certainly reflect Brewer’s transfer of interest and the cost of fees in partition. The court made its determination of fees based upon the only available evidence. In my opinion, its decision should be affirmed.
Federal law and policy support the alternative conclusion that the stock in question should not be considered an asset for purposes of determining Brewer’s eligibility for assistance. We deal with federal funds administered by the State of Kansas. Federal law and policy suggest a result different than the majority opinion, *753yet, the majority bases its decision almost exclusively upon K.A.R. 30-6-106(c)(1), which provides:
“(c)(1) Resources shall be considered available both when actually available and when the applicant or recipient has the legal ability to make them available. A resource shall be considered unavailable when there is a legal impediment that precludes the disposal of the resource. The applicant or recipient shall pursue reasonable steps to overcome the legal impediment unless it is determined that the cost of pursuing legal action would exceed the resource value of the property, or that it is unlikely the applicant or recipient would succeed in the legal action.”
If federal law and policy were given some sway in interpreting state law, the result in this opinion would be different. The following federal law and policy concerning eligibility for federal Medicaid funds was virtually ignored by SRS in the hearing below and should be applied to affirm the district court.
The federal Medicaid Act was enacted as a cooperative federal/ state program to provide health care to certain individuals.
"While a state is not required to participate in Medicaid, once it elects to do so, it must comply-with the Medicaid statute and the regulations promulgated by the Secretaiy of the United States Department of Health and Human Services (Secretary of HHS). In determining eligibility, states may take into account only those resources deemed available by the Secretary of HHS." (Emphasis added.) Martin v. Kansas Dept of SRS, 26 Kan. App. 2d 511, 512, 988 P.2d 1217 (1999) (citing Himes v. Shalala, 999 F.2d 684, 686 [2d Cir. 1993], and Williams v. Kansas Dept. of SRS, 258 Kan. 161, 164-65, 899 P.2d 452 [1995]).
“A state, in administering its Medicaid program, must set reasonable standards for assessing an individual’s income and resources in determining eligibility for, and the extent of, medical assistance under the program. Those standards must take into account only such income and resources as are available to the applicant or recipient as determined in accordance with standards prescribed by the Secretary of Health and Human Service. 42 U.S.C. § 1396a(a)(17)(B) (1988).” (Emphasis added.) Ussery v. Kansas Dept. of SRS, 258 Kan. 187, Syl. ¶ 1, 899 P.2d 461 (1995).
The United States Code relating to grants to states for medical assistance programs further limits consideration to such income and resources as would not be disregarded in determining an applicant’s eligibility for other programs, including Supplemental Security Income (SSI). See 42 U.S.C.A. § 1396a(a)(17)(B) (Supp. 2004); Social Security Administration’s Program Operation Manual System (POMS) SI 01120.001.
*754Federal regulations relating to social security administration define resources as “cash or other liquid assets or any real or personal property that an individual (or spouse, if any) owns and could convert to cash to be used for his or her support and maintenance.” (Emphasis added.) 20 C.F.R. § 416.1201(a). Subsection (a)(1) provides that “[i]f the individual has the right, authority or power to liquidate the property or his share of the property, it is considered a resource. If a property right cannot be liquidated, the property will not be considered a resource.” (Emphasis added.) 20 C.F.R. § 416.1201(a)(1).
POMS are important guidelines actually used though not required to be used in determining eligibility for Medicaid. They are required to be used in determining eligibility for SSI. Note the similarity between the two applications; one involves Medicaid funds and the other involves supplemental security income. While the majority rejects POMS because they are not regulations, there is no disagreement that the POMS are used often in determining Medicaid eligibility. POMS provide persuasive authority of the agency’s intended application of the governing law and its views on what the law means. See 70A Am. Jur. 2d, Social Security and Medicare § 17.
POMS SI 01120.010 provides that “[wjhen there is a legal bar to sale of property (e.g., if a co-owner legally blocks sale of jointly-owned property), we do not require an individual to undertake litigation in order to accomplish sale or access.” (Emphasis added.) In my opinion, the POMS guidelines, coupled with the other federal statutes and regulations above, clearly demonstrate that the Secretary of Health and Human Services would not consider Brewer’s interest in the stock a bar to her eligibility for Medicaid funds. A partition suit would not be required under federal law and policy. At the very least, given federal law and policy on this subject, more emphasis should be given to federal law and policy instead of focusing almost exclusively on a Kansas regulation, K.A.R. 30-6-106(c)(l), for the conclusion that the whole value of the stock is attributable to Brewer. This conclusion is a bit of a strain in reaching a result that fails to reflect Brewer’s ability to *755convert the stock into cash and is only able to do so by a partition suit.
My concern is, as indicated above, that the majority decision forces Brewer to liquidate through a difficult and tedious lawsuit in partition in order that she may realize less than $2,000 from her actual interest of $11,000, a fact the court said would cost more than her interest in the stock. Brewer cannot sell the stock, but she is forced to liquidate and pay fees that in all likelihood would consume the actual interest in the asset.
Based upon the above analysis, I would conclude that under federal law and state law interpreted in light of the federal law and policy, Brewer’s interest should not be counted as a resource in determining her eligibility for Medicaid. Alternatively, if Brewer is forced to liquidate her interest in the stock through partition, the evidence of record establishes that her fees would exceed her interest.
I would affirm the district court.