Simonsen v. Bremby
679 F. App'x 57
| 2d Cir. | 2017Background
- Dawn Simonsen applied for Connecticut Medicaid; DSS imposed a penalty making her ineligible, based on DSS’s view that two decanted "Predecessor Trusts" were available resources.
- DSS treated the trusts as "support trusts" under Connecticut law and therefore available to Simonsen to pay long-term care costs.
- Simonsen argued the trusts were not available under the federal SSI framework because the trust terms (including a spendthrift clause and trustee discretion) preclude her from converting corpus to cash or directing distributions.
- The district court granted a preliminary injunction preventing DSS from imposing the penalty, concluding DSS used a methodology more restrictive than SSI rules.
- On appeal, the Second Circuit reviewed only likelihood of success on the merits and affirmed, applying the Social Security Program Operations Manual System (POMS) and 20 C.F.R. § 416.1201 interpretations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Simonsen’s beneficial interest in the trusts is an "available resource" under SSI/POMS | Simonsen: Trust terms (spendthrift clause; trustee discretion) deny her power to liquidate or transfer interest, so not an available resource | Bremby/DSS: Trust language makes them support trusts under Connecticut law; thus beneficiary has a legal right to compel distributions and they are available resources | Held: Trust interest is not an available resource under SSI/POMS because Simonsen lacks authority to convert or transfer corpus and would be legally restricted from using funds except by trustee discretion |
| Whether Connecticut’s Medicaid methodology is impermissibly more restrictive than SSI | Simonsen: Connecticut cannot count resources that SSI would not count; DSS applied a more restrictive test | DSS: State law recognizing "support trusts" allows counting these trusts as available resources for Medicaid | Held: DSS impermissibly relied on a more restrictive approach; court affirmed preliminary injunction because SSI/POMS treatments control eligibility methodology |
| Whether beneficiary must litigate to obtain access making trust a resource | Simonsen: POMS forbids requiring litigation to access property; inability to compel distributions without suing means not a resource | DSS: Trustee owes duty to beneficiary; trust terms aimed at beneficiary support indicate availability | Held: POMS bars treating property as a resource when access would require litigation; thus trust is not a resource without legal ability to compel distributions |
Key Cases Cited
- Lopes v. Dep’t of Soc. Servs., 696 F.3d 180 (2d Cir.) (POMS entitled to substantial deference)
- Freedom Holdings, Inc. v. Spitzer, 408 F.3d 112 (2d Cir.) (appellate court may affirm on any ground supported by record)
- New York ex rel. Schneiderman v. Actavis PLC, 787 F.3d 638 (2d Cir.) (standard of appellate review for preliminary injunction)
- Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7 (U.S.) (preliminary injunction standard)
- Corcoran v. Dep’t of Soc. Servs., 271 Conn. 679 (Conn.) (Connecticut on treatment of support trusts)