Opinion

in Re Clark Estate

Court: Michigan Court of Appeals
Filed: May 28, 2015
Status: Unpublished
Cited by: 0 cases
Authority: More cited than 34.5%

The opinion

STATE OF MICHIGAN

COURT OF APPEALS

In re Estate of CLARK.

DEPARTMENT OF COMMUNITY HEALTH, UNPUBLISHED

May 28, 2015

Appellant,

v No. 320720

Calhoun Probate Court

ESTATE OF VIOLET M. CLARK, by Personal LC No. 2013-000599-CZ

Representative LARRY ALLEN WYKLE,

Appellee.

Before: Boonstra, P.J., and Saad and MURRAY, JJ.

PER CURIAM.

Plaintiff Department of Community Health (“DCH” or “the Department”) appeals the

trial court’s order that granted summary disposition to defendant Estate of Violet Clark. For the

reasons stated below, we reverse and remand for entry of an order granting summary disposition

to the Department.

I. FACTS AND PROCEDURAL HISTORY

This case involves the Medicaid estate recovery program, which allows state

governments to recover certain medical expenses paid for by Medicaid upon the death of

recipients aged 55 years or older. West Virginia v Thompson, 475 F3d 204, 207–208 (CA 4,

2007). As our Court recently explained, the Michigan Legislature, in 2007, designated DCH as

the state entity responsible for recovering Medicaid benefits from the estates of deceased

beneficiaries, through a new set of provisions contained at MCL 400.112g, et seq. In re Estate of

Keyes, ___ Mich App ___; ___ NW2d ___ (2015), 2015 WL 1737621, slip op at *1. If a

decedent’s estate is of modest value, the decedents’ heirs or representatives may apply for a

hardship exemption from estate recovery. Id., slip op at *3.

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Defendant Larry Wykle enrolled his mother,1 decedent Violet Clark, in Medicaid on June

15, 2012, to help pay for Clark’s stay in a nursing home. Clark was over 55 years old at the

time. As part of the enrollment application, Wykle received a list of “acknowledgements” that

explained the conditions under which Medicaid would provide benefits to his mother. These

enumerated conditions included a section on “estate recovery,” which informed Wykle that, upon

Clark’s death, DCH might seek to recover the expenses it incurred for her care by seizing assets

from her estate. In relevant part, the acknowledgement stated:

Estate Recovery. I understand that upon my death the Michigan Department of

Community Health has the legal right to seek recovery from my estate for services

paid by Medicaid. . . . An estate consists of real and personal property. Estate

Recovery only applies to certain Medicaid recipients who received Medicaid

services after the Implementation date of the program. MDCH may agree not to

pursue recovery if an undue hardship exists. For further information regarding

Estate Recovery, call 1-877-791-0435. [Emphasis added.]

Wykle signed the application form, and, in so doing, admitted that he had “received and

reviewed a copy of the Acknowledgements that explains additional information about applying

for and receiving Medicaid”—i.e., that he was aware the state could recover the cost of his

mother’s medical care by seizing assets from her estate. Medicaid began to pay for Violet

Clark’s nursing-home expenses in June 2012, and did so until her death on November 9, 2012.

Over this five-month period, Medicaid paid Clark’s nursing home $13,360.18.

After his mother’s death, Wykle became the personal representative of her estate. The

only substantial asset in Clark’s estate was her Battle Creek home, which was valued, under the

state evaluation method, at $40,806 at the time of Clark’s death. Using the same evaluation

method, the average price of a home in Calhoun County in 2012 was $43,325.23. As such,

according to the State Plan, Clark’s home, upon application by Wykle, was likely eligible for a

“hardship exemption” from estate recovery.

On December 28, 2012, DCH sent a Notice of Intent to Wykle’s home informing him

that it intended to recover some or all of the $13,360.18 in Medicaid expenses from Clark’s

estate.2 The notice explained that DCH might waive the estate recovery in the event of

“hardship,” and detailed the application process as follows:

If no statutory exemptions apply, but an heir or beneficiary can demonstrate that

recovery would result in an undue hardship, then MDCH may waive its claim

against an estate. To apply for a hardship waiver, please contact our office at the

address or phone number listed below. You must submit a completed Hardship

Waiver Application within 60 days of the date of [the Notice of Intent.] Failure to

Wykle served as Clark’s authorized representative for his mother’s Medicaid application.

It is not disputed that Clark’s nursing home expenses are recoverable expenses under MCL

400.112g, et seq.

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timely submit a Hardship Waiver Application will result in denial of the Hardship

Waiver Request, and MDCH will continue its recovery efforts. If you apply for a

Hardship Waiver and are denied, you may appeal the decision under the

Administrative Procedures Act, MCL 24.201-24.328, within 60 days of receiving

the notice of denial. [Emphasis added.]

Strangely, Wykle never applied for a hardship waiver within 60 days of December 28,

2012. Instead, almost 15 months after receiving notice of the possibility DCH might seek to

recover expenses from his mother’s estate, his attorneys sent DCH a letter on March 26, 2013, in

which they explained that Wykle would not permit DCH to recover assets from Violet Clark’s

estate. The letter noted that Clark’s estate included one asset, her Battle Creek home, which was

of insufficient value to permit DCH to recover Medicaid expenses from the estate. In April

2013, DCH brought suit against Clark’s estate to recover the $13,860.18 it made in Medicaid

payments during Clark’s five-month stay in the nursing home.

Wykle filed a motion for summary disposition under MCR 2.116(C)(8) and (C)(10).

Among other things, he claimed that MCL 400.112g prohibited DCH from recovering assets

from his mother’s estate because: (1) MCL 400.112g(3)(e)(i) created a blanket exemption from

recovery for homes that are valued at “equal to or less than 50% of the average price of a home

in the county in which the Medicaid recipient’s homestead is located as of the date of the

medical assistance recipient’s death”; and (2) MCL 400.112g(7) and MCL 400.112g(3)(e)(i)

required DCH, at the time Clark enrolled in Medicaid, to notify Wykle (a) that it might seek

recovery against his mother’s estate, and (b) provide him materials explaining how to seek an

exemption from estate recovery for “undue hardship.”

In response, DCH moved for summary disposition under MCR 2.116(I)(2). It noted that

Wykle had never applied for a hardship waiver from estate recovery, and argued that Wykle’s

statutory arguments misinterpreted the Social Welfare Act. DCH claimed that MCL

400.112g(3)(e)(i) did not actually create a statutory mandate that prohibited estate recovery

against low-valued homes, nor did it require DCH to provide Wykle with information on the

hardship-waiver application process when he enrolled his mother in Medicaid. Moreover, DCH

said it complied with the notice provisions of MCL 400.112g(7) when, upon Clark’s enrollment

in Medicaid, it gave Wykle notice that Clark’s Medicaid benefits were subject to recovery from

her estate.

The trial judge held a motion hearing and issued its opinion from the bench in January

2014. It granted summary disposition to Wykle and the estate under MCR 2.116(C)(10), and

held that DCH could not recover from Clark’s estate because: (1) Clark’s estate consisted solely

of a “modest homestead” within MCL 400.112g(3)(e)(i); and (2) DCH failed to comply with the

notice provisions of MCL 400.112g(3)(e)(i), which required it to provide materials to Wykle on

how to apply for a hardship waiver when he enrolled his mother in Medicaid in June 2012. The

trial court did not address whether Wykle’s failure to apply for a hardship waiver from estate

recovery made his defenses against DCH’s action irrelevant.

DCH appealed the trial court’s decision in March 2014, and makes the same arguments

here as it did at the motion hearing. Wykle asks us to uphold the ruling of the trial court.

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III. STANDARD OF REVIEW

A trial court’s decision to grant summary disposition is reviewed de novo. Karaus v

Bank of New York Mellon, 300 Mich App 9, 16; 831 NW2d 897 (2012). “Summary disposition

pursuant to MCR 2.116(C)(10) tests the factual support for a claim based on the affidavits,

pleadings, depositions, admissions, and other evidence submitted by the parties. The evidence is

viewed in the light most favorable to the nonmoving party.” Id. (citations omitted).

Matters of statutory interpretation, which include the construction of administrative rules

and interpretations, are also reviewed de novo. United Parcel Service, Inc v Bureau of Safety

and Regulation, 277 Mich App 192, 201–202; 745 NW2d 125 (2007).

IV. ANALYSIS

A court’s objective when interpreting statutory language is to give effect to the

Legislature’s intent by focusing on the statute’s plain language. Madugula v Taub, 496 Mich

685, 696; 853 NW2d 75 (2014). “A court does not construe the meaning of statutory terms in a

vacuum.” Manuel v Gill, 481 Mich 637, 650; 753 NW2d 48 (2008). Rather, “words and phrases

used in an act should be read in context with the entire act and assigned such meanings as to

harmonize with the act as a whole, and a word or phrase should be given meaning by its context

or setting.” Hannay v Dept of Transp, 497 Mich 45, 57; 860 NW2d 67 (2014). “A statute must

be read in conjunction with other relevant statutes to ensure that the legislative intent is correctly

ascertained.” In re MKK, 286 Mich App 546, 556; 781 NW2d 132 (2009).

“The Legislature is presumed to be familiar with the rules of statutory construction and,

when promulgating new laws, to be aware of the consequences of its use or omission of statutory

language.” Id. Principles of statutory interpretation apply to the construction of administrative

rules and interpretations. City of Romulus v Mich Dept of Environmental Quality, 260 Mich App

54, 65; 678 NW2d 444 (2003).

Here, Wykle’s arguments raise three issues, namely whether: (1) his failure to apply for a

waiver from the estate recovery program is dispositive in favor of DCH’s claims against his

mother’s estate; (2) MCL 400.112g(3) prohibits DCH from pursuing estate recovery against low-

valued homes; and (3) DCH complied with the notice requirements of MCL 400.112g(7) and

MCL 400.112g(3). We address each issue in turn.

A. WYKLE’S FAILURE TO APPLY FOR A HARDSHIP WAIVER3

Though DCH did not raise Wykle’s failure to apply for a hardship waiver in its initial brief on

appeal—however, DCH did raise the issue it in its reply brief—the issue is essential to the

disposition of this case. As it is not disputed that Wykle did not apply for a hardship waiver, we

may review the issue as “all the facts necessary for its resolution are before the Court.”

Henderson v Dept of Treasury, 307 Mich App 1, 8; 858 NW2d 733 (2014).

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MCL 400.112g and the Michigan Medicaid State Plan (the “State Plan”)4 imply that a

beneficiary’s survivors must apply for a waiver from estate recovery, and demonstrate that

recovery would cause them undue hardship. MCL 400.112g(3) states:

(3) The department of community health shall seek appropriate changes to the

Michigan medicaid state plan and shall apply for any necessary waivers and

approvals from the federal centers for medicare and medicaid services to

implement the Michigan medicaid estate recovery program. The department of

community health shall seek approval from the federal centers for medicare and

medicaid regarding all of the following:

***

(e) Under what circumstances the estates of medical assistance recipients will be

exempt from the Michigan medicaid estate recovery program because of a

hardship. At the time an individual enrolls in medicaid for long-term care

services, the department of community health shall provide to the individual

written materials explaining the process for applying for a waiver from estate

recovery due to hardship. [Emphasis added.]

Likewise, the July 2010 State Plan implies that a Medicaid beneficiary must apply for a

hardship waiver to be exempt from estate recovery:

The following standards and procedures are used by the State for waiving estate

recoveries when recovery would cause an undue hardship, or when recovery is

not cost-effective.

Review of hardship waivers begins with the State’s vendor. The vendor, in

accordance with its contract with the State, reviews all incoming waiver

applications and makes an initial recommendation to accept or deny and sends it

to the Estate Recovery Specialist. [July 2010 State Plan, 4.17(5) (emphasis

added).]

In its explanation of the notices it sends to next of kin after the death of a Medicaid

recipient, the July 2010 State Plan further explains:

The NOI [notice of intent] provides the State’s definition of an undue hardship

along with a contact phone number and address to request an undue hardship

application. . . . Lastly, the NOI states that adverse decisions may be appealed

under the Administrative Procedures Act, (MCL 24.201-24.328) within 60 days

The Michigan Medicaid State Plan is an administrative document that outlines the benefits

received by Michigan Medicaid beneficiaries, and the terms under which the beneficiaries accept

those benefits.

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of receiving notice of the State’s final decision. [July 2010 State Plan, 4.17(7);

emphasis added.]

In sum, to receive a hardship waiver from estate recovery under the State Plan, a

Medicaid recipient (or their representative) must: (1) apply for a hardship waiver; and (2) meet

the definition of “undue hardship” provided by the State Plan.

At the trial court, DCH stated that Wykle never applied for a hardship waiver—an

accusation that Wykle, notably, did not address in the motion hearing and does not address on

appeal. In fact, at oral argument, Wykle’s attorney admitted that his client had never applied for

a hardship waiver.

Again, Wykle received a letter from DCH dated December 28, 2012, which clearly

informed him of DCH’s intent to recover money from Violet Clark’s estate for her nursing-home

expenses. The letter told Wykle that he could apply for a hardship waiver and explained how to

do so.5 But Wykle—despite the fact that his mother’s estate almost certainly would have

qualified for a hardship waiver—did not apply for a hardship waiver. He cannot now attempt to

avail himself of the waiver’s benefits without having followed the procedural rules necessary to

claim the benefit. For this reason alone, the trial court erred when it granted summary

disposition to Wykle, and was required by law to grant summary disposition to DCH.

B. MCL 400.112G(3)(E)(I): THE HARDSHIP EXEMPTION