Court Opinion

ID: 9323626
Source: CourtListenerOpinion
Date Created: 2022-12-07 18:03:48.477575+00
Date Added: 2024-06-11T17:14:48.958313
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                 No. 21-1868
                           Filed December 7, 2022

IN THE MATTER OF THE ESTATE OF SUSAN I. RICE, Deceased,

METHODIST MANOR RETIREMENT COMMUNITY,
     Appellant.
________________________________________________________________

      Appeal from the Iowa District Court for Buena Vista County, Shayne Mayer,

Judge.

      A nursing home appeals the grant of summary judgment denying priority for

its claim in probate. AFFIRMED.

      John M. Murray of Murray & Murray, P.L.C., Storm Lake, for appellant.

      Thomas J. Miller, Attorney General, and Laura F. Kron, Assistant Attorney

General, for appellee.

      Considered by Ahlers, P.J., and Badding and Chicchelly, JJ.
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BADDING, Judge.

       Methodist Manor Retirement Community, where Susan Rice spent the last

years of her life, appeals from the district court’s denial of its attempt to jump in line

ahead of the Iowa Department of Health and Human Services1 as a creditor in her

estate. We affirm.

       Susan Rice bought a home in 1990. Years later, she became a resident of

Methodist Manor. She continued to maintain her home, which she claimed as her

homestead until her death in October 2020. During Rice’s time at Methodist

Manor, the department paid the nursing facility Medicaid benefits for her care. For

some of those years, Methodist Manor failed to collect Rice’s share for its services.

The facility accordingly obtained a judgment against her in 2015 for $32,759.80.

       Rice’s will was admitted to probate shortly after her death. She did not leave

a surviving spouse or children. The department soon filed a claim in probate

seeking to recover $395,612.12 in Medicaid payments made on Rice’s behalf. The

executor later filed a report and inventory showing the gross value of probate

assets was $51,016.20, with $45,000.00 of the value attributed to Rice’s home. In

March 2021, Methodist Manor filed a claim in probate seeking to recover its 2015

judgment against Rice. Methodist Manor and the department both filed motions

for summary judgment, with each arguing their claim had priority over the other.

After a hearing, the district court granted the department’s motion for summary

1  Beginning July 1, 2022, the Iowa Department of Human Services began
transitioning into the Iowa Department of Health and Human Services. See 2022
Iowa Acts ch. 1131, § 51.
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judgment and denied Methodist Manor’s, finding the department’s claim has higher

priority.

        We review Methodist Manor’s appeal from the district court’s ruling on

summary judgment for the correction of errors at law. In re Est. of Renwanz, 561

N.W.2d 43, 44 (Iowa 1997). “We will uphold a summary judgment order when the

movant shows there are no genuine issues of material fact and it is entitled to

judgment as a matter of law.” Id. Methodist Manor concedes there are no material

facts at issue, making the matter before us solely a question of law. See Plowman

v. Fort Madison Cmty. Hosp., 896 N.W.2d 393, 398 (Iowa 2017) (“Summary

judgment is appropriate if the only conflict concerns the legal consequences of

undisputed facts.” (citation omitted)).

        Iowa Code section 633.425 (2020) controls the priority of probate claims.

See In re Est. of Lau, 442 N.W.2d 109, 111 (Iowa 1989).           Methodist Manor

acknowledges that its claim, if unsecured, is a lower priority than the department’s

Medicaid-reimbursement claim. See Iowa Code § 633.425(7), (10). But the facility

argues it has a secured lien, which is not subject to the preference provisions of

section 633.425. See id. § 633.423 (providing a procedure for secured claims in

probate); Lau, 442 N.W.2d at 111–12 (“[C]laimant’s [secured] liens have priority

over the debts and charges listed in section 633.425.”). To get to that conclusion,

Methodist Manor relies on Iowa Code sections 624.23 and 561.21.

        Starting with those statutes, we observe that judgments like the one

Methodist Manor obtained against Rice in 2015 typically create “liens upon the real

estate owned by the defendant.” Iowa Code § 624.23(1). That is not the case,
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however, for land used and occupied as a homestead, against which judgment

liens generally do not attach. Id. § 624.23(2)(a).

        Recognizing the protections afforded to homesteads, Methodist Manor

makes a two-pronged argument for why it nevertheless has a judgment lien

secured by Rice’s home that is entitled to payment ahead of the department’s

Medicaid-reimbursement claim. For the first prong, Methodist Manor relies on

Iowa Code section 561.21(4) in arguing the homestead exemption does not apply

to Rice’s home after her death. Section 561.21(4) states, “The homestead may be

sold to satisfy debts . . . [i]f there is no survivor or issue, for the payment of any

debts to which it might at that time be subjected if it had never been held as a

homestead.”        Since Rice left “no survivor or issue,” the facility argues that

section 561.21(4) lifted the homestead protection from her home upon her death.

From that premise, Methodist Manor contends in the second prong of its argument

that its judgment lien attached to Rice’s home after her death without the protection

of the homestead exemption. See Id. § 554.9203(1) (“A security interest attaches

to collateral when it becomes enforceable against the debtor with respect to the

collateral . . . .”).

        We need not decide the first prong because, even if Methodist Manor’s

judgment lien could attach to Rice’s home, attachment cannot occur before Rice’s

death. See Brown v. Vonnahme, 343 N.W.2d 445, 446 (Iowa 1984) (“[A] judgment

lien does not attach to property used and occupied as a homestead.”). And it is

that point in time we are concerned with when examining the priority of these

dueling claims. To understand why, we look to Iowa Code section 249A.53, which

controls the department’s Medicaid-reimbursement claim.           See In re Est. of
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Laughead, 696 N.W.2d 312, 317 (Iowa 2005) (stating current section 249A.53, and

not the probate code, “control[s] the determination of assets includable in a

recipient’s estate for purposes of satisfying a Medicaid debt”).

       The Medicaid benefits the department provided to Rice while she was at

Methodist Manor “create[d] a debt due the department from the individual’s estate

for all medical assistance provided on the individual’s behalf, upon the individual’s

death.” Iowa Code § 249A.53(2) (emphasis added). When identifying a Medicaid

recipient’s estate for reimbursement, the estate “includes any real property . . . in

which the recipient . . . had any legal title or interest at the time of the recipient’s . . .

death.” Id. § 249A.53(2)(c) (emphasis added). This definition of “estate” does not

exclude realty protected by the homestead exemption, which tracks the

legislature’s intent to “broadly” define the estate under section 249A.53. In re

Barkema Tr., 690 N.W.2d 50, 55 (Iowa 2004). Importantly, the estate is measured

at “the time immediately before the Medicaid recipient’s death” for purposes of

section 249A.53, and not “at the precise moment” the recipient dies or some later

point, as Method Manor seems to argue. Id. at 56.

       Putting the various code sections and case law together, the department

may recover Medicaid payments from Rice’s estate as her estate existed

immediately before her death, including her home with the homestead exemption

still in effect. See Iowa Code § 249A.53(2)(c). Assuming Methodist Manor’s

judgment lien could attach to Rice’s home, that would not happen until after her

death and after identification of her estate for Medicaid-reimbursement purposes.

See Brown, 343 N.W.2d at 446. Therefore, Rice’s home was not encumbered by

any judgment lien for purposes of the department’s Medicaid-reimbursement
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claim.    We affirm the district court’s grant of summary judgment finding the

department’s Medicaid-reimbursement claim was entitled to payment before

Methodist Manor’s claim.

         AFFIRMED.