Joyner v. North Carolina Department of Health & Human Services
214 N.C. App. 278
| N.C. Ct. App. | 2011Background
- Ms. Leola H. Joyner executed two promissory notes and two corresponding deeds of trust dated 1 March 2006, encumbering her residence to her son.
- Joyner had received Medicaid long-term care benefits since November 2005; on 26 June 2006 DSS terminated those benefits citing the 2006 notes and deeds.
- The estate challenged the denial through multiple agency steps; the Nash County Superior Court reversed the final agency decision on 7 January 2010.
- DHHS appealed; the Court of Appeals ultimately reversed and remanded for further agency proceedings consistent with the opinion.
- The court held the transactions constituted transfers/dispositions of assets under federal and state law, and remanded to determine whether the first transfer had fair market value.
- The court held the second transfer was an uncompensated transfer; the trial court’s award of attorney’s fees to the estate was reversed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the deeds of trust constituted a transfer/disposal of assets | Joyner argued no disposition under federal/state statutes | DHHS contended there was a transfer/disposal for less than fair market value | Transfers/disposals found; court reversed trial court |
| Whether the first note/deed of trust reflected fair market value | Expenditures were validly reimbursed under a prior agreement | Past expenditures lacked written agreement at time services were rendered; not fair value | Remand needed to determine if first transfer had fair market value |
| Whether the second note/deed of trust reflected fair market value | Agreement valued services; lump sum could reflect fair value | Lump sum for future services did not reflect fair market value | Second transfer constituted an uncompensated transfer; upheld against value |
| Attorney's fees awarded under N.C. Gen. Stat. § 6-19.1 | DHHS acted without substantial justification | Agency position had some rational basis and substantial justification | Fees reversed; agency position deemed reasonable enough to preclude § 6-19.1 recovery |
Key Cases Cited
- Sprouse v. North River Ins. Co., 81 N.C.App. 311, 344 S.E.2d 555 (1986) (deed of trust as security resulting in title in trustee)
- In re Foreclosure of Azalea Garden Bd. & Care, Inc., 140 N.C.App. 45, 535 S.E.2d 388 (2000) (trusts and security interests treated as transfers)
- Shannonhouse v. Wolfe, 191 N.C. 769, 133 S.E. 93 (1926) (power to dispose does not equal authority to mortgage)
- Okale v. N.C. Dept. of Health and Human Servs., 153 N.C.App. 475, 570 S.E.2d 741 (2002) (Medicaid Manual status and binding effect considerations)
- Turner v. Furniture Co., 217 N.C. 695, 9 S.E.2d 379 (1940) (fair market value for services based on value of work performed)
- Environmental Landscape Design v. Shields, 75 N.C.App. 304, 330 S.E.2d 627 (1985) (reasonableness of value for services rendered)
- Bedell v. Commissioner, 30 F.2d 622 (1929) (difficulty of valuing future promises of services; market value concerns)
- Crowell Constructors v. State ex rel. Cobey, 342 N.C. 838, 467 S.E.2d 675 (1996) (attorney's fees; substantial justification standard)
- D.B. v. Blue Ridge Ctr., 173 N.C.App. 401, 619 S.E.2d 418 (2005) (standard of review for agency decisions)
- Johnson v. United States, 529 U.S. 694 (2000) (plain meaning and interpretation of statutory language)