James Thomas Gheen and Edward Dale Gheen v. State of Wyoming, Ex Rel., Department of Health, Division of Healthcare Financing/Equalitycare, 326 P.3d 918

Background

Peggy Gheen received Medicaid benefits in the last three months of her life; the Department of Health (Department) later sought reimbursement and recorded liens against two Goshen County properties owned in part by Mrs. Gheen.
Mrs. Gheen had executed notarized quitclaim deeds in 2006 conveying her interests in a residence and a farm to her sons, James and Edward, but she did not inform them, deliver the deeds, or record them; the sons discovered and recorded the deeds after her death in 2011.
James listed the properties as his mother’s assets on a 2010 Medicaid application; Mrs. Gheen received $10,508.54 in benefits and died August 1, 2010.
The Department filed liens in May 2011. The Gheen sons petitioned to remove the lien under the false-lien statute and amended to quiet title; the district court granted summary judgment for the Department as to the residence and Mrs. Gheen’s one-half interest in the farm but quieted the sons’ undivided one-half farm interest inherited from their father.
The central legal question was whether the 2006 quitclaim deeds were effective transfers (i.e., delivered during Mrs. Gheen’s life) such that the Department could not lien the property as part of her ‘‘estate’’ under Wyoming Medicaid statutes.

Issues

Issue	Plaintiff's Argument (Gheen sons)	Defendant's Argument (Department)	Held
Validity of 2006 quitclaim deeds (delivery)	Deeds were effective upon execution in 2006; delivery may be presumed or constructively occurred	Deeds were not delivered during grantor’s lifetime and thus did not transfer title before death	Court: Delivery is required; deeds were not delivered and therefore ineffective to transfer before death
Department standing to challenge deeds	§ 34-1-127 limits who may challenge defeasible conveyances; Department lacked standing to contest delivery	Department has statutory interest in defining the recipient’s "estate" and may challenge whether property was in the estate at death	Court: Department has standing to contest the deeds because it must determine assets in the statutory estate
Due process / procedural requirements to void deeds	Dept. should have filed a separate action to void the deeds under § 42-4-207(h); failing that denied due process	Department provided notice by recording a lien and litigated deed validity in its summary judgment defense	Court: No due process violation; issue was joined and fully litigated despite Department not filing a separate voiding action
Application of false-lien statute (Wyo. Stat. § 29-1-601)	Lien was groundless or contained material misstatements; statutory damages and fees should apply	Medicaid lien was authorized by statute and not groundless as to estate interests	Court: Given lien valid as to residence and decedent’s 1/2 farm interest, petitioners are not entitled to relief under § 29-1-601 for those portions; statute need not be further addressed

Key Cases Cited

Michael’s Construction, Inc. v. American National Bank, 278 P.3d 701 (Wyo. 2012) (summary judgment de novo review)
Grynberg v. L & R Exploration Venture, 261 P.3d 731 (Wyo. 2011) (summary judgment standards)
Arkansas Dept. of Health & Human Servs. v. Ahlborn, 547 U.S. 268 (U.S. 2006) (Medicaid as payer of last resort principles)
State ex rel. Dep’t of Health, Div. of Healthcare Financing v. Dairyland Insurance Co., 11 P.3d 348 (Wyo. 2000) (Medicaid reimbursement framework)
Lenhart v. Desmond, 705 P.2d 338 (Wyo. 1985) (deed must be executed and delivered to effect conveyance)
Hein v. Lee, 549 P.2d 286 (Wyo. 1976) (delivery required for conveyance)
B-T Ltd. v. Blakeman, 705 P.2d 307 (Wyo. 1985) (elements of delivery and acceptance)
Forbes v. Volk, 358 P.2d 942 (Wyo. 1961) (presumption of delivery when grantee possesses and records deed)
Estate of Marusich v. State ex rel. Dep’t of Health, 313 P.3d 1272 (Wyo. 2013) (statutory definition of "estate" for Medicaid recovery)