In the Matter of the ESTATE OF Melvin PETERSON, Deceased. Idaho Department of Health & Welfare, Petitioner-Respondent, v. Cathie Peterson, Respondent-Appellant.
No. 40615.
Supreme Court of Idaho.
Dec. 12, 2014.
340 P.3d 1143
Hon. Lawrence G. Wasden, Idaho Attorney General, Boise, for respondents. William C. Cartwright, Deputy Attorney General argued.
SUBSTITUTE OPINION, THE COURT‘S PRIOR OPINION DATED AUGUST 13, 2014 IS HEREBY WITHDRAWN.
BURDICK, Chief Justice.
This case arose out of the Department of Health and Welfare‘s (IDHW) attempt to recover Medicaid benefits from Melvin Peterson‘s estate that were paid during his lifetime. At issue is whether any part of a real estate transfer from Melvin Peterson to his daughter Cathie Peterson is subject to Medicaid recovery.
I. FACTUAL AND PROCEDURAL BACKGROUND
The relevant facts of this case are not in dispute. Melvin Peterson died on March 3, 2007, at the age of 83. Prior to his death, he was the owner of residential real property located in Boundary County. On December 6, 2001, Melvin Peterson executed a Gift Deed of his real property to his daughter, Cathie Peterson, retaining for himself a life estate in the property. Shortly thereafter, he applied for Medicaid and began receiving Medicaid benefits in March 2003. At the time of his death, Melvin Peterson had received a total of $171,386.94 in Medicaid benefits.
Cathie Peterson was appointed personal representative of her father‘s estate on July 26, 2007. IDHW filed a timely Claim Against Estate and later an Amended Claim Against Estate in the amount of $171,386.94. Cathie Peterson, in her capacity as personal representative, disallowed the claims without stating a reason. In response, IDHW filed a Petition for Allowance of Amended Claim. After a hearing on March 25, 2008, the court granted IDHW‘s petition.
After receiving no response to its claim against the estate, IDHW filed a Petition to Require Payment of Claim on May 5, 2008, setting forth its demand for payment of the value of Melvin Peterson‘s life estate. Using the Life Estate Remainder Table contained in
On appeal, the district court vacated the magistrate‘s August 11, 2009 Order and remanded the matter for additional findings of fact and conclusions of law. Shortly after the ruling on appeal was entered, Cathie Peterson, in her capacity as personal representative, sought permission from the magistrate court to sell the property, liquidate an escrow account, and pay counsel for the personal representative of the estate. On the same day, she also filed an Amended Personal Representative‘s Inventory assigning the life estate zero value.
On September 17, 2010, Attorney Brent Featherston filed a Demand for Notice and Special Appearance on behalf of “Cathie Peterson, individually,” stating that he was seeking to vacate and dismiss all orders entered by the magistrate court regarding her real property. IDHW responded by filing a petition to remove Cathie Peterson as personal representative of the estate, which the magistrate court granted.
Following a court trial, the magistrate court held that the life estate remainder interest was an estate asset of value for purposes of Medicaid reimbursement and that its value was to be determined in accordance with
II. ISSUES ON APPEAL
- Whether Cathie Peterson waived her appeal of the decision that Melvin Peterson‘s life estate was an asset subject to Medicaid recovery.
- Whether the court had subject matter jurisdiction to determine the issues before it.
- Whether the court had personal jurisdiction over Cathie Peterson individually.
- Whether any part of the gift transaction Melvin Peterson made to his daughter before applying for Medicaid benefits is subject to Medicaid recovery.
- Whether Cathie Peterson was entitled to offsets to the value of the real property based on improvements she made.
- Whether either party is entitled to attorney fees on appeal.
III. ANALYSIS
A. Standard of Review
“On appeal of a decision rendered by a district court while acting in its intermediate appellate capacity, this Court directly reviews the district court‘s decision.” Idaho Dep‘t Of Health & Welfare v. McCormick, 153 Idaho 468, 470, 283 P.3d 785, 787 (2012) (quoting In re Doe, 147 Idaho 243, 248, 207 P.3d 974, 979 (2009)). However, to determine whether the district court erred in affirming the magistrate court, we review the record before the magistrate court to determine whether substantial and competent evidence supports the magistrate‘s findings of fact. Pelayo v. Pelayo, 154 Idaho 855, 858, 303 P.3d 214, 217 (2013). We review questions of law such as statutory interpretation de novo. McCormick, 153 Idaho at 470, 283 P.3d at 787.
Interpretation of a statute begins with an examination of the statute‘s literal words. Where the language of a statute is plain and unambiguous, courts give effect to the statute as written, without engaging in statutory construction. Only where the language is ambiguous will this Court look to rules of construction for guidance and consider the reasonableness of proposed interpretations. Moreover, unless a contrary purpose is clearly indicated, ordinary words will be given their ordinary meaning when construing a statute. In construing a statute, this Court will not deal in any subtle refinements of the legislation, but will ascertain and give effect to the purpose and intent of the legislature, based on
In re Estate of Wiggins, 155 Idaho 116, 119, 306 P.3d 201, 204 (2013) (internal citations and quotation marks omitted).
B. Whether Cathie Peterson waived her appeal of the decision that Melvin Peterson‘s life estate was an asset subject to Medicaid recovery.
IDHW argues that because the June 12, 2008 Order was an appealable order that was not appealed within 42 days, it is no longer subject to challenge on appeal. The June 12, 2008 Order granted IDHW‘s Petition to Require Payment of Claim to the extent of available assets and ordered that Melvin Peterson‘s retained life estate be deemed an asset of his estate for Medicaid recovery purposes and that the personal representative assign an appropriate value to it in the estate‘s inventory. About a year later, IDHW filed a Petition to Compel Sale of Home, which the magistrate court granted on August 11, 2009. In her capacity as personal representative, Cathie Peterson timely appealed the August 11, 2009 Order. In this first appeal, IDHW argued that the June 12, 2008 Order was final and not timely appealed. The district court issued its Decision on Appeal on May 26, 2010, holding that the June 12, 2008 Order was interlocutory and not appealable, and further vacated the judgment and remanded the case for the trial court to set forth adequate findings of fact. IDHW now argues that the district court erred in holding that the June 12, 2008 Order was interlocutory and asks this Court to reverse that decision.
4. Against or in favor of setting apart property, or making an allowance for a widow or child.
5. Against or in favor of directing the partition, lease, mortgage, sale or conveyance of real property.
7. Refusing, allowing or directing the distribution or partition of an estate, or any part thereof, or the payment of a debt, claim, legacy or distributive share.
In its May 26, 2010 Decision on Appeal, the district court concluded that the June 12, 2008 Order was interlocutory because the trial court did not determine any value, nor distribute, nor set aside, nor partition the life estate in the order itself. The district court is correct that the June 12, 2008 Order was interlocutory. Thus, Cathie Peterson did not waive her challenges to the June 12, 2008 Order by failing to appeal it and this Court may review any challenges to that order on appeal under Idaho Appellate Rule 17(e). Matter of Estate of Keeven, 110 Idaho 452, 456-57, 716 P.2d 1224, 1228-29 (1986) (“If there is a final appealable order in a case and an appeal is properly taken from that order, then all other orders which would otherwise not be appealable may be considered by this Court.“).
C. Jurisdiction
Cathie Peterson contends that the court did not have subject matter jurisdiction to determine the title to her real property in a probate proceeding. She argues that she cannot be held personally liable except through a separate proceeding requiring process and acquisition of the court‘s jurisdiction, which did not occur in this case. She also contends that while she submitted to the court‘s jurisdiction as personal representative of the estate, the court lacks personal jurisdiction over her individually because IDHW failed to provide her with meaningful due process.
1. Subject Matter Jurisdiction
Both the magistrate court and the district court had subject matter jurisdiction to determine whether any part of Melvin Peterson‘s gift transaction of his residential property constituted a part of his estate. Cathie Peterson contends that such a decision is a question of title outside of a probate court‘s jurisdiction. Her argument is based on following language from this Court: “It is the general rule that where title to real
What Cathie Peterson overlooks is that Idaho adopted the Uniform Probate Code (Code) in 1971, fourteen years after In re Lundy was decided. In a more recent case, the petitioner made a similar mistake relying on Idaho case law from before the adoption of the Code that said the determination of whether an irrevocable contract exists was outside the realm of the probate court. Miller v. Estate of Prater, 141 Idaho 208, 213, 108 P.3d 355, 360 (2005). In Miller, this Court stated that the Code provides “the court handling a probate with wide ranging powers to determine contested matters, such as that involved in this case.” Id. We held that “it is clear that the court handling a probate has jurisdiction to determine the existence and enforcement of a contract to make a will or devise.” Id. This conclusion was based on consideration of the following Code provisions:
Id. Determining whether some or all of the property gift Cathie Peterson received from the decedent constitutes a part of the estate falls within the catch-all jurisdictional authority provided by
2. Personal Jurisdiction
Next, Cathie Peterson contends that the court lacked personal jurisdiction over her in her individual capacity. While she admits she submitted to the court‘s jurisdiction in her capacity as personal representative, she appears to contend that IDHW was required to serve her with process individually when it sought to sell her real property to satisfy its claim against Melvin Peterson‘s estate. Any contention that Cathie Peterson did not receive notice is without merit. IDHW filed its Petition to Compel Sale of Home on July 15, 2009. Cathie was not removed as personal representative of the estate until October 7, 2010. Moreover, IDHW‘s Petition indicates that Cathie Peterson was served with the Petition; thus, she had notice of IDHW‘s intent to compel the sale of the home. IDHW was not required to serve her a second time when she had not only been aware of the proceedings, but had been an active participant in them.
Subject to general rules concerning the proper location of civil litigation and jurisdiction of persons, the court may herein determine any other controversy concerning a succession or to which an estate, through a personal representative, may be a party. Persons notified are bound though less than all interested persons may have been given notice.
Therefore, both the magistrate court and the district court had personal jurisdiction over Cathie Peterson.
D. Whether any part of the gift transaction Melvin Peterson made to Cathie Peterson before applying for Medicaid benefits is subject to Medicaid recovery.
The Medicaid program is a “cooperative endeavor [with the States] in which
The Idaho counterpart of the federal Medicaid Law is
Except where exempted or waived in accordance with federal law medical assistance pursuant to this chapter paid on behalf of an individual who was fifty-five (55) years of age or older when the individual received such assistance may be recovered from the individual‘s estate, and the estate of the spouse, if any, for such aid paid to either or both....
This statute allows recovery of claims against the estate of a Medicaid recipient if the estate contains property or assets in which the Medicaid recipient had some legal title or interest at the time of his or her death. For the purposes of Medicaid recovery, Idaho has adopted an expanded definition of “estate,” which in addition to all of the assets included in the individual‘s estate under probate law, also includes:
Any other real and personal property and other assets in which the individual had any legal title or interest at the time of death, to the extent of such interest, including such assets conveyed to a survivor, heir, or assign of the deceased individual through joint tenancy, tenancy in common, survivorship, life estate, living trust or other arrangement.
This Court has recognized that the legislative purpose behind the Medicaid recovery statutes is to prevent individuals from transferring their assets to survivors, heirs, or assigns, while at the same time benefiting from taxpayer funds intended to assist the poor. See McCormick, 153 Idaho at 472, 283 P.3d at 789. Accordingly, in addition to allowing the State to recover Medicaid benefits from a decedent‘s estate,
Transfers of real or personal property, on or after the look-back dates defined in
42 U.S.C. 1396p , by recipients of such aid, or their spouses, without adequate consideration are voidable and may be set aside by an action in the district court.
The look-back period applicable in this case is 36 months from when Melvin Peterson applied for Medicaid benefits.
The lower court referred to the property interest to be valued as the life estate remainder interest. The correct interest to value for Medicaid recovery purposes is the property interest that was conveyed for less than fair market value, not the property interest retained. It is clear the magistrate court in the instant matter understood the property interest to be valued, as evidenced by his Order that reads, “The value of the estate‘s interest in the real property gift deeded to Cathie Peterson ... shall be that proportion of the fair market value of the entire fee interest in the real property....”
Cathie Peterson and IDHW both frame the main issue of this case as being whether a decedent‘s retained life estate is subject to Medicaid recovery under
According to
Any other real and personal property and other assets in which the individual had any legal title or interest at the time of death, to the extent of such interest, including such assets conveyed to a survivor, heir, or assign of the deceased individual through joint tenancy, tenancy in common, survivorship, life estate, living trust or other arrangement.
In its argument that Melvin Peterson‘s retained life estate constitutes a part of his estate under this statute, IDHW relies on the language, “including such assets conveyed to a survivor, heir, or assign of the deceased individual through ... life estate.” In contrast Cathie Peterson focuses on the language “legal title or interest at the time of death, to the extent of that interest.” The lower courts in this case relied on the catch-all phrase “or other arrangement” and this Court‘s decision in Idaho Department of Health & Welfare v. McCormick to conclude that the remainder interest gifted to Cathie was subject to Medicaid recovery. To determine the correct approach, it is necessary to look at our two most recent decisions addressing the extent to which a Medicaid recipient‘s estate is subject to recovery.
In McCormick, this Court was faced with determining whether assets that were once community property, but were transmuted so that the recipient spouse no longer held an interest at the time of his or her death, were available for recovery under
This Court found section 56-218(4)‘s expanded definition of “estate” to be “ambiguously inclusive.” Id. at 476, 283 P.3d at 793. Given the ambiguity of this provision, we looked to the surrounding provisions for proper context—specifically, the definition of “asset” within the federal statutory scheme
An even more recent decision from this Court also dealt with Medicaid recovery under
Cathie Peterson argues that
Overall, the ambiguously inclusive language in the definition of “estate“—purporting to extend recovery to assets transferred by “other arrangements“—coupled with the definition of “assets“—plainly including the resources of the recipient‘s spouse as well as assets the recipient disposed of before death—calls into question the Estate‘s strict reliance on the phrase “at the time of death.”
42 U.S.C. §§ 1396p(b)(4) ,1396p(h)(1) .
Id. at 477, 283 P.3d at 794. Melvin Peterson‘s conveyance included a “life estate” for himself with a “survivorship” interest or remainder interest for Cathie. While Melvin Peterson may not have had an interest in his life estate when he died, any interest he had in the property was transferred to Cathie at the time of his death making her interest in the property a fee simple rather than just a remainder interest. When assets of a Medicaid recipient are conveyed to a survivor, heir or assign by the termination of a “life estate,” the assets remain part of the recipient‘s “estate” pursuant to
The next question is whether the district court correctly held that the remainder interest Melvin Peterson gifted to Cathie Peterson in 2001 was subject to Medicaid recovery. Wiggins and McCormick are equally instructive on this question. While both Wiggins and McCormick dealt with recovering assets from a Medicaid recipient‘s spouse, the language those cases relied on is equally applicable to the case at hand. The definition of “asset” includes income and resources that an individual is entitled to but does not receive because of his or her own actions. See
In McCormick, this Court held that
However, the language of
42 U.S.C. § 1396p(b)(4)(B) does not lend itself to the definitive interpretation made by the Barg court. The court indicated that “other arrangement” could not include lifetime transfers because it comes at the end of a list of conveyances that occur at the time of death. However, a conveyance of a life estate does not necessarily occur at the time of death. Nor does a conveyance into a “living trust.” It would seem that a Medicaid recipient would make such conveyances prior to death and that “other arrangement” could include other lifetime conveyances. Indeed, the use of the word “conveyed” is more indicative of a lifetime transfer than one made in the context of a decedent‘s estate, where “devised,” “bequeathed,” or “devolved” would be more appropriate. Further, the language “any other real and personal property and other assets in which the individual had any legal title or interest at the time of death” is not entirely clear. For instance, one might wonder what “other assets” a person could own other than real and personal property. And, one could interpret the “in which” clause to apply just to “other assets” or to both those and real and personal property. Thus, while the Barg court seemed convinced that the language excluded lifetime transfers, we find it to be ambiguously inclusive.
Id. at 475-76, 283 P.3d at 792-93.
The remainder interest Cathie Peterson received through a gift deed from Melvin Peterson in 2001 is part of his “estate” under
IDHW sought recovery of only the retained life estate based on
E. Whether Cathie Peterson was entitled to offsets to the value of the real property based on improvements she made.
On appeal, Cathie Peterson argues that the magistrate court‘s findings as to her investment in the property are unsupported by the evidence and that “[i]nexplicably, the trial court disregarded Cathie‘s documented investment into the property.”
Neither the magistrate court nor the district court disregarded Cathie Peterson‘s evidence. To the contrary, the magistrate court found, and the district court affirmed, that Cathie Peterson did expend money on legitimate improvements to the house. However, both courts held that the measure for damages is the difference in fair market value of the property before and after the improvements were made. Thus, to receive an offset for the improvements she made, Cathie Peterson was required to show how these improvements increased the fair market value of the property. The district court affirmed the magistrate court‘s denial of Cathie Peterson‘s claim for offsets based on her failure to provide any evidence, not even her own opinion, as to how these improvements enhanced the property‘s value.
On appeal, Cathie Peterson fails to point to anywhere in the record where she provided evidence that her improvements enhanced the property‘s value. Therefore, she has failed to show that the district court‘s decision was unsupported by the evidence.
F. Attorney fees on appeal
IDHW asserts that it is entitled to attorney fees on appeal under
The question of whether a decedent‘s retained life estate may be included as an asset within the decedent‘s estate for the purposes of Medicaid recovery is one of first impression that presents a legitimate question for this Court to address. Therefore, we decline to award attorney fees on appeal.
IV. CONCLUSION
Both the magistrate court and the district court had subject matter jurisdiction over this case and personal jurisdiction over Cathie Peterson individually. We hold that the entire residential property that Cathie Peterson received from Melvin Peterson is an asset of his estate under
Justices EISMANN, J. JONES and HORTON concur.