Daley v. Secretary of the Executive Office of Health and Human Services
477 Mass. 188
| Mass. | 2017Background
- Two Massachusetts plaintiffs (Nadeau and Daley) transferred their primary residences to irrevocable trusts but retained lifetime occupancy rights (Nadeau: fee title to trust with right of use and occupancy; Daley: retained a life estate and transferred remainder to trust).
- Both applied for MassHealth long-term care (Medicaid) benefits; MassHealth denied benefits, treating the home equity held by the trusts as a "countable asset" that pushed applicants over the $2,000 asset limit.
- MassHealth relied on its regulation treating a home in an irrevocable trust "available according to the terms of the trust" as countable, and HCFA/CMS guidance (State Medicaid Manual, Transmittal 64) that a right of use/occupancy can be a form of "payment."
- Hearing officers upheld MassHealth's denials but found trustee authority to pay tax liabilities from principal implicated the federal "any circumstances" test and required remand to quantify any countable portion.
- The Supreme Judicial Court reviewed whether retaining use/occupancy or a life estate makes trust-held home equity a countable asset under 42 U.S.C. § 1396p(d)(3).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a retained right of use/occupancy in a trust-owned home makes the trust's home equity a countable asset under § 1396p(d)(3) | Nadeau: Right to live in the home does not permit access to corpus; equity is not "available" and thus not countable | MassHealth: Use/occupancy constitutes a "payment" (including imputed rental value) making the home available and countable | Right of use/occupancy may be imputed as income (rental value) but does not make the trust principal (home equity) a countable asset absent trustee power to access or distribute corpus |
| Whether a retained life estate in the home makes the remainder interest (owned by the trust) a countable asset | Daley: Life estate is the grantor's own property interest; remainder in trust is not available to grantor and not countable | MassHealth: Continued residence by life tenant renders trust remainder "available" | Retained life estate is an asset of the life tenant; because the trust held only the remainder, the remainder is not "available" to the life tenant and is not countable on that basis |
| Whether HCFA/CMS Transmittal 64 supports treating use/occupancy as "payment from the trust" for purposes of availability | Plaintiffs: Transmittal cannot be stretched to render corpus available; use/occupancy is income-equivalent only | MassHealth: Transmittal authorizes treating noncash benefits (use/occupancy) as payments making asset available | Court: Transmittal correctly treats use/occupancy as imputed income (rental value), but that produces income, not corpus availability; Transmittal persuasive but MassHealth misapplied it to count principal |
| Whether other trust provisions (e.g., trustee discretion to appoint property to charities or to pay tax liabilities from corpus) trigger the "any circumstances" test and make parts of the corpus countable | Plaintiffs: Such narrow exceptions do not necessarily render corpus available in amount attributed | MassHealth: Such provisions may create circumstances under which corpus could be paid and should be evaluated under § 1396p(d)(3) | Court: Remanded for MassHealth to determine whether charitable appointment or payment of tax liabilities from corpus create a countable portion of corpus and, if so, to quantify it |
Key Cases Cited
- Arkansas Dep't of Health & Human Servs. v. Ahlborn, 547 U.S. 268 (discusses Medicaid and recovery limitations)
- Cohen v. Commissioner of the Div. of Med. Assistance, 423 Mass. 399 (trust principal deemed available where trustee retained discretion to pay principal)
- Guerriero v. Commissioner of the Div. of Med. Assistance, 433 Mass. 628 (trust income/payments treated as income; lack of legal discretion to pay principal means corpus not available)
- Heckler v. Turner, 470 U.S. 184 (actual availability principle prevents imputing fictional resources)
- Wos v. E.M.A. ex rel. Johnson, 133 S. Ct. 1391 (agency manuals and policy statements lack Chevron deference but may be persuasive)
- Hinckley v. Clarkson, 331 Mass. 453 (use/occupancy confers right to income of property for life)
- Langlois v. Langlois, 326 Mass. 85 (rights and incidents of use/occupancy/life interests)