Hutson v. Mosier
117020
| Kan. Ct. App. | Sep 8, 2017Background
- Marcia Hutson, age 72 and a nursing-home resident, transferred $59,528.42 to ARCare Trust II, an irrevocable pooled supplemental needs trust, in August 2015.
- The trust maintains a separate sub-account for Hutson; ARCare, a nonprofit trustee, has discretion to make disbursements for her supplemental needs and must repay the State from any remaining funds upon her death.
- Hutson applied for Medicaid long-term care; the agency approved benefits but imposed a 313-day transfer penalty based on the August 2015 transfer.
- Administrative review (ALJ and State Appeals Committee) upheld the penalty; the district court affirmed, finding Hutson did not receive fair market value.
- On appeal, the Kansas Court of Appeals held that applicants age 65+ who transfer assets into a §1396p(d)(4)(C) pooled trust may be subject to a transfer penalty if the transfer is for less than fair market value, but the factual question whether Hutson received fair market value must be remanded for an administrative hearing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether persons 65+ who transfer assets into a pooled §1396p(d)(4)(C) trust are immune from transfer-penalty rules | Hutson argued transfers to a pooled trust should not trigger penalty because she received benefit/value | KDHE argued federal law and regs allow penalty for transfers by persons 65+ if less than fair market value | Held: Transfers by persons 65+ to pooled trusts are subject to penalty if for less than fair market value (court of appeals affirmed as matter of law) |
| Whether ARCare Trust II meets statutory/regulatory requirements for a pooled supplemental trust | Hutson argued trust is a qualified pooled trust that should be excluded as a resource | KDHE did not dispute trust met pooled-trust structural requirements | Held: Trust satisfies federal and Kansas regulatory requirements to qualify as a pooled supplemental trust (affirmed) |
| Whether Hutson received fair market value for her transfer as a matter of law | Hutson contended she received value (equitable title, trustee services, future benefits) so no penalty should apply | KDHE asserted Hutson bears burden to show she received fair market value and that agency properly imposed penalty | Held: Determination of fair market value is a factual question; district court's legal finding that she did not receive fair market value is vacated and remanded for factfinding (Hutson bears burden on review) |
| Burden and remedy on remand | Hutson sought reversal and removal of penalty; requested attorney fees | KDHE sought deference to administrative decision | Held: Remand for administrative hearing to decide factual fair-market-value issue; Hutson has burden to prove agency action invalid; attorney fees denied |
Key Cases Cited
- Schweiker v. Hogan, 457 U.S. 569 (Sup. Ct.) (overview of Medicaid purpose and federal role)
- Alexander v. Choate, 469 U.S. 287 (Sup. Ct.) (state discretion in shaping Medicaid benefits)
- Lewis v. Alexander, 685 F.3d 325 (3d Cir.) (description and purpose of pooled special-needs trusts)
- Center for Special Needs Trust Admin., Inc. v. Olson, 676 F.3d 688 (8th Cir.) (holding that transfers into pooled trusts by beneficiaries 65+ may be subject to penalty)
- In re Pooled Advocate Trust, 813 N.W.2d 130 (S.D.) (state supreme court holding that transfers into pooled trusts by those 65+ are subject to penalty)
- Ramey v. Reinertson, 268 F.3d 955 (10th Cir.) (context on Medicaid’s purpose and limits)