Matter of John Charles Giacometto
2017 MT 162
| Mont. | 2017Background
- Debtor John Charles Giacometto filed Chapter 11 on Jan. 22, 2016; case converted to Chapter 7 and Trustee appointed.
- Debtor listed a Bank of America Health Savings Account (HSA) with $14,319.61 and claimed it exempt on bankruptcy Schedule C under Mont. Code Ann. § 25-13-608(1)(d) or (f).
- Trustee objected to the exemption; Debtor responded and represented that withdrawals to date were used exclusively for qualified medical expenses.
- Bankruptcy Court certified the legal question to the Montana Supreme Court: whether an HSA is exempt under § 25-13-608(1)(d) or (f), MCA, given Montana’s requirement to liberally construe exemptions.
- The Montana Supreme Court considered federal and state law recognizing HSAs and Montana precedent interpreting “benefits” earmarked for medical care.
- The Legislature subsequently passed SB 216 (2017) adding medical savings account contributions to the exemption list; the Court interpreted the pre-amendment statute for the present case.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an HSA is exempt under § 25-13-608(1)(f), MCA | HSA funds are a “benefit” earmarked to pay medical, surgical, or hospital care and thus exempt to the extent used or to be used for care | Trustee: funds are not expressly earmarked for the sole purpose of medical care (citing Archer); account-holder may withdraw for any purpose, so funds aren’t exempt | Yes. Court holds § 25-13-608(1)(f) applies to HSAs to the extent funds are used or will be used to pay for medical care; nonmedical uses disqualify exemption and Trustee may recover those funds. |
Key Cases Cited
- In re Zimmerman, 309 Mont. 337, 46 P.3d 599 (Mont. 2002) (State may opt out of federal bankruptcy exemptions; Montana exemptions construed liberally)
- In re Archer, 332 Mont. 1, 136 P.3d 563 (Mont. 2006) ("benefits" interpreted as payments expressly earmarked for the sole purpose of medical care)
- MacDonald v. Mercill, 220 Mont. 146, 714 P.2d 132 (Mont. 1986) (liberal construction allowed nonobvious items to qualify under specific exemptions)
- Ferguson v. Speith, 13 Mont. 487, 34 P. 1020 (Mont. 1893) (historical articulation of Montana’s liberal, humane policy toward exemptions)
- In re Golz, 381 Mont. 385, 360 P.3d 1142 (Mont. 2015) (statutory construction limits judicial insertion of omitted legislative provisions)