Opposition Brief — Kokoska ex rel. Kokoska v. Bullen

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: NEC § 1996

No. 96-700

IN THE

Supreme Court of the United States

OCTOBER TERM, 1996

JANIS KOKOSKA, BY HER GUARDIAN JOHN KOKOSKA,

Petitioner,

V.

BRUCE M. BULLEN, COMMISSIONER OF THE DIVISION OF

MEDICAL ASSISTANCE,

Respondent.

ON PETITION FOR WRIT OF CERTIORARI

TO THE SUPREME JUDICIAL COURT OF MASSACHUSETTS

RESPONDENT’S BRIEF IN OPPOSITION

SCOTT HARSHBARGER

Attorney General

of Massachusetts

AMY SPECTOR*

Assistant Attorney General

1 Ashburton Place, Room 2019

Boston, Massachusetts 02108

(617) 727-2200, ext. 2076

*Counsel of Record

Questions Presented

1. Whether the Massachusetts Division of Medical

Assistance (“Division”) correctly determined that a trust was a

“Medicaid qualifying trust” pursuant to 42 U.S.C. § 1396a(k)

(1986) (the “Medicaid qualifying trust statute” or “MQT”

Statute), where the trust was established by the trust beneficiary

acting through a conservator, with funds owned by the

beneficiary, and where the trustee in certain circumstances had

discretion to disburse the entire trust assets to the beneficiary?

2. Whether the Division correctly determined, pursuant

to the MQT statute, that the full amount of assets in a Medicaid

qualifying trust were available to the trust beneficiary, for the

purposes of determining the beneficiary’s eligibility for

Medicaid benefits, where the trustee’s discretion to disburse the

trust assets was limited only to the extent that such disbursement

would render the beneficiary ineligible for Medicaid benefits,

and where the trustee otherwise had complete discretion to

disburse the entire trust assets on behalf of the beneficiary?

Parties to the Proceeding.

The parties to the proceeding in the Massachusetts Supreme

Judicial Court are as follows:

Janis Kokoska, by her guardian John Kokoska, plaintiff-

appellant in the Supreme Judicial Court, is the petitioner in this

Court. The defendant-appellee in the Massachusetts Supreme

Judicial Court is Bruce M. Bullen, the Commissioner of the

Massachusetts Division of Medical Assistance, the respondent

in this Court.

The Kokoska case and three other cases presenting similar

issues concerning application of the Medicaid qualifying trust

Statute were argued jointly in the Supreme Judicial Court, and

that court rendered one decision governing all four cases. The

cases were never consolidated, however, and the parties to the

other three cases therefore are not identified here.

Table of Contents.

TABLE OF AUTHORITIES

DECISION BELOW

JURISDICTION

RELEVANT STATUTES

STATEMENT OF THE CASE

REASONS FOR DENYING THE WRIT

E.

THE SUPREME JUDICIAL COURT’S HOLDING

THAT A TRUST ESTABLISHED BY A CONSERVATOR

IS A MEDICAID QUALIFYING TRUST IS NOT IN

CONFLICT WITH ANY DECISIONS OF OTHER

STATE COURTS OF LAST RESORT OR DECISIONS

OF THE UNITED STATES COURTS OF APPEALS.

THE SUPREME JUDICIAL COURT’S HOLDING

THAT ALL OF THE TRUST ASSETS WERE

AVAILABLE FOR THE PURPOSES OF DETERMINING

MEDICAID ELIGIBILITY IS CONSISTENT WITH

BOTH THE LANGUAGE AND PURPOSE OF 42

U.S.C. § 1396a(k), AND A 1993 AMENDMENT TO

THE STATUTE MAKES THE ISSUE PRESENTED IN

THE PETITION ONE OF LIMITED APPLICABILITY.

CONCLUSION

APPENDIX

12

20

A-1

Table of Authorities.

Cases.

Barham v. Rubin, 72 Haw. 308,

816 P.2d 965 (1991) 8

Chevron U.S.A. v. Natural Resources

Defense Council,

467 U.S. 837 (1984) 15, 16

Forsyth v. Rowe, 226 Conn. 818,

629 A.2d 379 (1993) 8, 9, 11-12

Forsyth v. Rowe, 1995 WL 152124

(Conn. Super. 1995) 19

Frerks v. Shalala, 52 F.3d 412

(2d Cir. 1995) 11 n.3

Hatcher v. Department of Health &

Rehabilitative Servs., 545 So. 2d 400,

(Fla. Dist. Ct. App. 1989) 19

Helvering v. N.Y. Trust Co.,

292 U.S. 455 (1934) 17-18 n.8

Hughes v. Physicians Hospital,

149 Misc.2d 661,

566 N.Y.S.2d 496 (Super. Ct. 1991) ll n.3

In re Woods,

143 U.S. 202 (1892) 6

ili

Kegel v. State, 113 N.M. 646,

830 P.2d 563 (Ct. App. 1992) | 10

Matter of Kindt, 542 N.W.2d 391

(Minn. Ct. App. 1996) 8, 9, 10, 18-19

Miller v. Ibarra, 746 F. Supp. 19

(D. Colo. 1990) 5,9

Mills v. Durst, 156 Misc. 2d 676,

594 N.Y.S.2d 537 (Sup. Ct. 1993) 11

Navarro v. Sullivan, 751 F. Supp. 349

(E.D.N.Y. 1990) 11 n.3

Romo v. Kirschner, 181 Ariz. 239,

889 P.2d 32 (Ct. App. 1995) 8

Ronney v. Department of Social Servs..,

210 Mich. App. 312,

532 N.W.2d 910 (1985) 19

Thomas v. Arkansas Dep’t of Human Servs.,

319 Ark. 782, 894 S.W.2d 584

(1995) 8

Trust Co. v. State ex rel. Dep’t of

Human Servs, 825 P.2d 1295

(Okla. 1991), cert. denied,

506 U.S. 906 (1992) 5, 10

iv

Williams v. Kansas Dep’t of Social &

Rehabilitation Servs., 258 Kan. 161,

899 P.2d 452 (1995) 8, 10, 12, 19

Young v. Department of Pub. Welfare,

416 Mass. 629, 624 N.E.2d 110 (1993) 4

Statutes, Regulations and Court Rules.

28 U.S.C. § 1257 2

28 U.S.C. § 1257(a) 2

28 U.S.C. § 1257(1) | 2

42 U.S.C. § 1396a(k) (1986) 2-3, 7, 11-12

42 U.S.C. § 1396a(k)(1) 13-14

42 U.S.C. § 1396a(k)(2) 7-8, 12

42 U.S.C. § 1396a(k)(3B) 13-14, 140.4

42 U.S.C. § 1396a(k)(4) 18 n.9

42 U.S.C. § 1396p(d) (1993) 6-7

42 U.S.C. § 1396p(d)(3)(B) 17 0.8

106 C.M.R. § 505.160(K)(2) (1991) 5 n.1

130 C.M.R. § 505.160(J)(3) (1995) 5 n.1

Vv

130 C.M.R. §§ 506.600-506.620 (1994)

Supreme Court Rule 10

Supreme Court Rule 10(b)

Supreme Court Rule 10(c)

Supreme Court Rule 15

Miscellaneous.

Health Care Financing Administration,

Department of Health and Human

Services, State Medicaid Manual

(May 1989)

House Committee on Energy and Commerce,

H.R. Rep. No. 265, 99th Cong., Ist Sess.,

pt. 1 (1985)

2B Norman J. Singer, Sutherland Statutory

Construction (Sth ed. 1992)

Robert L. Stern et al., Supreme Court Practice,

(7th ed. 1993)

12

16-17

15

5-6 n.l

No. 96-700

IN THE

Supreme Court of the United States

OCTOBER TERM, 1996

JANIS KOKOSKA, BY HER GUARDIAN JOHN KOKOSKA,

Petitioner,

V.

BRUCE M. BULLEN, COMMISSIONER OF THE DIVISION OF

MEDICAL ASSISTANCE,

Respondent.

ON PETITION FOR WRIT OF CERTIORARI

TO THE SUPREME JUDICIAL COURT OF MASSACHUSETTS

RESPONDENT’S BRIEF IN OPPOSITION

Pursuant to Supreme Court Rule 15, the respondent

Commissioner of the Massachusetts Division of Medical

Assistance (“Commissioner”) submits this brief in Opposition to

the petition for writ of certiorari (“Pet.”) filed by the

petitioner-beneficiary Janis Kokoska (“beneficiary”).

nn

2

Decision Below

The opinion of the Massachusetts Supreme Judicial

Court, reproduced at pages App.1-App.40 of the appendix to

the petition (“Pet. App.”), is reported at 423 Mass. 399, 668

N.E.2d 769 (1996).

Jurisdiction

The Commissioner does not contest this Court’s

jurisdiction pursuant to 28 U.S.C. § 1257, but notes that

jurisdiction lies under 28 U.S.C. § 1257(a), rather than 28

U.S.C. § 1257(1) as asserted at page 1 of the petition.

Contrary to the statement of jurisdiction in the petition,

the reasons set forth in Supreme Court Rule 10(b) for granting

review on a writ of certiorari do not apply here, as there is no

conflict between the decision of the Massachusetts Supreme

Judicial Court and the decision of another state court of last

resort or a United States court of appeals. |

Relevant Statutes

The Medicaid qualifying trust statute, 42 U.S.C. §

1396a(k) (1986), provides:

oat See

(1) In the case of a medicaid qualifying trust (described

in paragraph (2)), the amounts from the trust deemed

available to a grantor, for purposes of subsection

(a)(17), is the maximum amount of payments that may

be permitted under the terms of the trust to be

distributed to the grantor, assuming the full exercise of i

discretion by the trustee or trustees for the distribution |

of the maximum amount to the grantor. For purposes of

ne ee

PAE ppm oe > —_

3

the previous sentence, the term “ grantor” means the

individual referred to in paragraph (2).

(2) For purposes of this subsection, a “medicaid

qualifying trust” is a trust, or similar legal device,

established (other than by will) by an individual (or an

individual’s spouse) under which the individual may be

the beneficiary of all or part of the payments from the

trust and the distribution of such payments is determined

by one or more trustees who are permitted to exercise

any discretion with respect to the distribution to the

individual.

(3) This subsection shall apply without regard to--

(A) whether or not the medicaid qualifying trust is

irrevocable or is established for purposes other than to

enable a grantor to qualify for medical assistance under

this title; or

(B) whether or not the discretion described in paragraph

(2) is actually exercised.

Statement of the Case

This case arises from the use of inter vivos trusts by

certain persons seeking to preserve their assets for their (or their

heirs’) future use while at the Same time ensuring their

eligibility for Medicaid benefits. In response, Congress in 1985

enacted the MQT statute, intending thereby to eliminate the

practice of using such trusts to ensure Medicaid eligibility, by

providing that the assets in such “Medicaid qualifying trusts” be

deemed “available” resources for the purposes of determining

eligibility for benefits. Following enactment of the MQT

Statute, the Division discontinued the beneficiary’s Medicaid

nn ne ne ee ee

4

benefits on the basis that the trust of which she was a

beneficiary was a Medicaid qualifying trust and that the assets

available to her under the trust exceeded the limits for Medicaid

eligibility.

An accurate statement of the case appears in the opinion

of the Supreme Judicial Court of Massachusetts at App. pp. 4-

13 and 33-36. However, the petition is inaccurate in several

respects.

1. The beneficiary places undue emphasis on language

in the trust purporting to limit the trustee’s discretion, citing a

decision by the Massachusetts Probate and Family Court

(“Probate Court”) instructing that the trustee had no discretion

to make payments that would render the beneficiary ineligible

for Medicaid benefits. Pet. pp. 3-4. But as the beneficiary

herself concedes, and as the Supreme Judicial Court explicitly

noted both in this case and in the appeal of the determination of

the Probate Court, see Young v. Department of Pub. Welfare,

416 Mass. 629, 634, 624 N.E.2d 110, 113 (1993), the Probate

Court’s decision was not determinative of the issue of Medicaid

eligibility, and the Division of Medical Assistance (“Division”)

was not bound by the Probate Court judgment. Pet. App. p. :

36.

Moreover, as the Supreme Judicial Court noted, the

terms of the trust gave the trustee broad discretion to pay both

trust income and principal to the beneficiary for a wide range of |

purposes, “limiting that discretion only to assure Kokoska’s

eligibility for public assistance in spite of the resources

otherwise available to her.” Pet. App. p. 36. Because the

trustee had discretion to disburse the entire trust assets to the

beneficiary in the circumstances in which her eligibility for

benefits was not assumed, the Supreme Judicial Court correctly

SS aT TCT NNN Mer |

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determined that the entire trust assets should be considered

available under the MQT statute.

2. The petition mischaracterizes the opinion of the

Supreme Judicial Court, stating that the opinion “acknowledged

the split among the states on the issue presented in this petition,

citing Arizona, Arkansas, Connecticut, Hawaii, Kansas and

Minnesota as holding that conservator-established court-

authorized trusts are Medicaid Qualifying Trusts (MQTs), but

acknowledged that Oklahoma, Colorado (United States District

Court opinion), New Mexico and New York had ruled that such

trusts are not MQTs.” Pet. p. 6. In fact the Supreme Judicial

Court cited decisions from courts in all of the foregoing

jurisdictions, but referred to only two of those decisions as

comparing unfavorably with the Supreme Judicial Court’s

conclusion that a trust established by a beneficiary acting

through a conservator may be a Medicaid qualifying trust. Both

of those decisions, Miller v. Ibarra, 746 F. Supp. 19, 33-34 (D.

Colo. 1990), and Trust Co. v. State ex rel. Dep’t of Human

Servs., 825 P.2d 1295, 1302-1303 & n.31 (Okla. 1991), cert.

denied, 506 U.S. 906 (1992), are distinguishable, as are all of

the other cases cited in the petition as “conflicting.” See

Argument Section I."

' The petition notes the Division’s determination that the

beneficiary was not a resident of an intermediate care facility

for the mentally retarded and therefore did not qualify for an

exception from the state regulations governing Medicaid

qualifying trusts pursuant to 106 C.M.R. § 505.160(K)(2)

(1991). Pet. p. 5. That regulation, now set forth at 130

C.M.R. § 505.160(J)(3) (1995), provides that trusts established

prior to April 7, 1986 solely for the benefit of a resident of an

intermediate care facility for the mentally retarded are excluded

6

Reasons for Denying the Writ

“Review on a writ of certiorari is not a matter of right,

but of judicial discretion.” Supreme Court Rule 10. Such a

writ is to be granted “only for compelling reasons.” Jd. The

purpose of certiorari jurisdiction is to permit the Court to select

cases of “such gravity and general importance” as to warrant

plenary review. In re Woods, 143 U.S. 202, 206 (1892).

Contrary to petitioner’s assertion, the Supreme Judicial

Court has not decided an important federal question “in a way

that conflicts with the decision of another state court of last

resort or of a United States court of appeals.” Supreme Court

Rule 10(b). The state court decisions cited in the petition do not

conilict with the decision of the Supreme Judicial Court but

rather are distinguishable, as is a federal case cited in the

petition as conflicting and which, in any event, was decided by

a district court and not by a court of appeals.

Moreover, in 1993 Congress amended the Social

Security Act by repealing the MQT statute and adding new trust

from the regulations implementing the MQT statute. While the

petition appears to take issue with that determination, it is not

discussed in the Argument section of the petition. The

beneficiary similarly did not properly present that issue in her

brief below (mentioning it only in passing in a footnote), and

the opinion of the Supreme Judicial Court does not address it.

For that reason (and because the issue is one of state law only),

this Court lacks jurisdiction to consider the issue. See generally

Robert L. Stern et al., Supreme Court Practice § 3.17, at 122

(7th ed. 1993) (collecting authorities).

|

7

provisions to 42 U.S.C. § 1396p(d) (1993). The amendment,

which governs trusts established after August 10, 1993,

“resolves in favor of the Commonwealth [i.e., the

Commissioner] beyond any possibility of argument the issue

presented in these cases: if, in any circumstances any amount

of money might be paid to a beneficiary, the maximum of such

amount is deemed to be available to the beneficiary.” Pet. App.

pp. 12-13. Thus, the question presented in the petition,

concerning the proper interpretation of the 1986 MQT statute

(which now governs only those trusts established on or before

August 10, 1993), involves an issue of limited applicability and

of diminishing importance as time passes.

As the petition does not satisfy the traditional criteria

which guide the Court’s discretionary review, it should be

den:.2d.

» THE SUPREME JUDICIAL COURT’S HOLDING

THAT A TRUST ESTABLISHED BY A CONSERVATOR

IS A MEDICAID QUALIFYING TRUST IS NOT IN

CONFLICT WITH ANY DECISIONS OF OTHER

STATE COURTS OF LAST RESORT OR DECISIONS

OF THE UNITED STATES COURTS OF APPEALS.

The petition seeks certiorari review on the ground that

the Supreme Judicial Court’s decision conflicts with other

decisions concerning whether a trust established by a

conservator is a Medicaid qualifying trust under 42 U.S.C. §

1396a(k). Because the Supreme Judicial Court’s decision is not

in conflict with any of the decisions cited in the petition, review

by this Court is not warranted.

1. Section 1396a(k)(2) of the Medicaid qualifying trust

Statute defines a Medicaid qualifying trust as a trust established

8

by an individual or spouse under which the individual may be

the beneficiary of all or part of the payments from the trust.

Pet. App. p. 36. The beneficiary reiterates her argument that

the statute does not apply to her trust since it was not her, but

her conservator, who established the trust, doing so pursuant to

a decree of the Probate Court. Pet. pp. 8-10; Pet. App. pp. 36-

37. The Supreme Judicial Court correctly rejected the

argument, noting decisions in other jurisdictions that have

treated trusts established by a conservator or guardian as MQTs.

Pet. App. p. 37 (citing Romo v. Kirschner, 181 Ariz. 239, 241-

243, 889 P.2d 32, 34-35 (Ct. App. 1995) (trust established by

conservator and approved by court using proceeds from

personal injury action held to be MQT); Thomas v. Arkansas

Dep’t of Human Servs., 319 Ark. 782, 789, 894 S.W.2d 584,

589 (1995) (trust established by guardian using settlement

proceeds from workers’ compensation claim held to be in

violation of state statute prohibiting MQTs); Forsyth v. Rowe,

226 Conn. 818, 826-828, 629 A.2d 379, 384-385 (1993) (trust

established by individual acting through conservator held to be

MQT); Barham v. Rubin, 72 Haw. 308, 309-313, 816 P.2d

965, 966-967 (1991) (trust established by probate court using

settlement proceeds from personal injury action on behalf of

plaintiff held to be MQT); Williams v. Kansas Dep’t of Social

& Rehabilitation Servs. , 258 Kan. 161, 166-172, 899 P.2d 452,

456-459 (1995) (trust established by guardian on behalf of

beneficiary, using settlement proceeds from personal injury

action, held to be MQT); Matter of Kindt, 542 N.W.2d 391,

396-399 (Minn. Ct. App. 1996) (trust established by guardian

on behalf of incompetent individual from proceeds of personal

injury settlement held to be MQT)).

Moreover, the only cases cited in the petition as

conflicting with the Supreme Judicial Court’s decision are

distinguishable from it. Miller v. Ibarra, 746 F. Supp. 19 (D.

9

Colo. 1990), a district court decision, held that trusts approved

by Colorado probaée courts in favor of four elderly, mentally

incompetent nursing home patients were not MQTs because they

were not created by the Medicaid beneficiary. Miller is

distinguishable because of the fact that assets remaining after the

death of the beneficiaries would be transferred to the Colorado

Department of Social Services, not to the beneficiaries’ heirs,

demonstrating that the trusts in Miller were not designed to

frustrate the purpose of the MQT statute. 746 F. Supp. at 33-

34. See Forsyth v. Rowe, 226 Conn. at 826-827 n.12, 629 A.2d

at 384-385 n.12 (noting that holding in Miller rested on trusts’

remainder provisions designating public agency rather than

private heirs as residual beneficiaries); Matter of Kindt, 542

N.W.2d at 397 (noting that Miller involved exceptional

circumstances in that trusts preserved remainder of trust assets

for the state). * In contrast, under the terms of the beneficiary’s

2 Miller also is distinguishable in that the holding was

“premised on [the] unfairness of Colorado’s ‘Utah Gap’ rule

..” Pet. App. p. 37 n.26. The “Utah Gap” refers to the

disqualification of the Miller beneficiaries from eligibility for

Medicaid payments for nursing home expenses even when their

expenses far exceeded their assets. 746 F. Supp. at 20. As the

Supreme Judicial Court noted, Massachusetts (unlike Colorado),

participates in a federal program that provides funds to bridge

the “Utah Gap,” under which the medically needy are not

totally disqualified from medicaid benefits if their income and

assets exceed the eligibility limit. Pet. App. at pp. 37-38 n. 26.

Rather, they become eligible when they incur expenses that

reduce their income to the eligibility level. 130 C.M.R. §§

506.600-506.620 (1994). Finally, in Miller the trustees’

discretion to disburse trust assets was limited to an amount

$20.00 less than the Colorado Medicaid income eligibility level,

10

trust, the remainder of the trust would go the beneficiary’s heirs

not to the state. North Chelmsford Trust, Article 4 (reproduced

at Opp. App. pp. A-1 through A-2).

Trust Co. Of Oklahoma v. State ex rel. Dep’t of Human

Servs., 825 P.2d 1295, 1302-1303 n.31 (1991), cert. denied,

506 U.S. 906 (1992), merely noted in a footnote, without any

analysis, that the trust in question was not an MQT because the

grantor of the trust was the tortfeasor rather than the

beneficiary, and the court on that basis distinguished its holding

from other cases finding trusts to be MQTs. Trust Co. in any

event is of limited precedential value due to its cursory

treatment of the issue. See, e.g., Matter of Kindt, 542 N.W.2d

at 397 (the holding in Trust Co. “resulted from what appears to

have been a casual statement regarding a collateral issue”);

Williams v. Kansas Dep’t of Social Servs. & Rehabilitation, 258

Kan. at 171, 899 P.2d at 458-459 (failure of Trust Co. to

address MQT issue more extensively limits its persuasiveness).

The remaining cases characterized in the petition as

“conflicting” with the Supreme Judicial Court’s decision also

are distinguishable. See Kegel v. State, 113 N.M. 646, 830

P.2d 563 (Ct. App. 1992) (seven year old beneficiary never had

unrestricted legal or equitable title to proceeds of tort settlement

because settlement was paid to parents and child jointly, with no

distinction as to which portion of settlement belonged to whom;

trust therefore would not be considered MQT because record

was insufficient to determine that child was person who

746 F. Supp. at 27, so that even if the trusts were found to be

MOQTs, the applicants would still have been eligible for

Medicaid. In contrast, the trustee in the instant case had

discretion to disburse the entire trust assets. Pet. App. p. 36.

11

established trust); Mills v. Durst, 156 Misc. 2d 676, 594

N.Y.S. 2d 537 (Sup. Ct. 1993) (where child never had legal

right to settlement funds before they were placed in trust, trust

would not be considered self-settled under state law). Here, in

contrast, the proceeds of the beneficiary’s malpractice

settlement “were plainly her assets in that they were used for

her support for approximately eighteen years before being

placed in trust. ...” Pet. App. p. 38. Moreover, the trust

itself refers to the beneficiary as the settlor, acting “by her

conservator.” Pet. App. pp. 38-39.°

2. The Supreme Judicial Court’s conclusion that a trust

established by a conservator acting on behalf of a beneficiary is

a MQT is consistent with the purpose of the MQT statute. As

the court in Forsyth v. Rowe explained,

It is clear . . . from the purpose and history behind §

1396a(k) that a medicaid qualifying trust may also be

“established . . . by an individual” when that individual,

> Mills v. Durst does not conflict with Frerks v. Shalala, 52

F.3d 412 (2d Cir. 1995), as asserted at Pet. pp. 9-10 n.1. In

Frerks the court rejected the plaintiffs’ request to transfer

settlement assets to a trust and noted that trust funds would in

any event be available under the MQT statute. Navarro v.

Sullivan, 751 F. Supp. 349 (E.D.N.Y. 1990) and Hughes v.

Physicians Hospital, 149 Misc. 2d 661, 566 N.Y.S.2d 496

(Super. Ct. 1991) also cited in the petition, at Pet. p. 8, are not

on point. Navarro and Hughes both involved a determination

of eligibility for Supplemental Security Income benefits under

the analogous regulations adopted by the Social Security

Administration governing available “resources,” but neither

decision addressed or analyzed the MQT statute.

12

acting through his conservator, provides the

consideration for the trust. .. . It would be anomalous

to construe the statute to allow a medicaid applicant to

accomplish through a conservator or guardian acting on

his behalf what the law prevents that applicant from

doing on his own.

226 Conn. at 827-828, 629 A.2d at 384-385. See also Williams

v. Kansas Dep’t of Social and Rehabilitation Servs. , 258 Kan.

at 166, 899 P.2d at 456 ( implicit in the term “individual” as it

appears in § 1396a(k)(2) is a person acting as the individual’s

legal representative where the individual is incapable of acting

on his or her own); see also Health Care Financing

Administration, Department of Health and Human Services,

State Medicaid Manual, § 3215.1 (May 1989) (“A trust that is

established by an individual’s guardian or legal representative

acting on the individual’s behalf, falls under the definition of a

Medicaid qualifying trust”), cited at Pet. App. p. 38.

Il. THE SUPREME JUDICIAL COURT’S HOLDING THAT

ALL OF THE TRUST ASSETS WERE AVAILABLE

FOR THE PURPOSES OF DETERMINING MEDICAID

ELIGIBILITY IS CONSISTENT WITH BOTH THE

LANGUAGE AND PURPOSE OF 42 U.S.C. §

1396a(k), AND A 1993 AMENDMENT TO THE

STATUTE MAKES THE ISSUE PRESENTED IN THE

PETITION ONE OF LIMITED APPLICABILITY.

The petition does not assert any conflict between

decisions of other state or federal courts and the Supreme

Judicial Court’s holding that all of the beneficiary’s trust assets

were available for the purpose of determining Medicaid

eligibility. Nor does this issue involve “an important question

of federal law that has not been, but should be, settled by this

13

Court,” Supreme Court Rule 10(c). As noted above, a 1993

amendment to the MQT statute (applicable to all trusts

established after August 10, 1993) clarified Congress’ intention

that limitations on a trustee’s discretion to disburse trust assets

be disregarded for purposes of determining Medicaid eligibility.

Pet. App. pp. 12-13. The issue presented in the petition

concerning the proper interpretation of the 1986 MQT statute

(applicable only to trusts established on or before August 10,

1993) with respect to the amount of a trust beneficiary’s

resources deemed “available” thus is of limited applicability

and does not present an important question of national

significance warranting this Court’s review.

1. The petition asserts that the Supreme Judicial Court’s

decision does not comport with the plain language of the

Medicaid qualifying trust statute. Pet. pp. 11-15. The petition

does not provide any persuasive authority in support of this

assertion, however, but instead merely repeats the language of

the statute and concludes that, because under the terms of the

trust the trustee has no discretion to pay monies that would

make the beneficiary ineligible for benefits, the trust assets are

not “available” to the beneficiary for the purpose of assessing

her eligibility. Pet. pp. 11-15. This argument, which ignores

that the federal MQT statute (not the trust language) governs the

determination of Medicaid eligibility, is not consistent with the

plain language of the statute or its purpose.

Under the statute, the Division was required, in

determining the beneficiary’s “available” resources, to consider:

the maximum amount of payments that may be permitted

under the terms of the trust to be distributed to the

grantor, assuming the full exercise of discretion by the

trustee or trustees for the distribution of the maximum

14

amount to the grantor. . . . whether or not the

[trustees’] discretion . . . is actually exercised ....

42 U.S.C. § 1396a(k)(1) and (3)(B) (emphasis added). The

foregoing language is read most naturally as the Supreme

Judicial Court read it, i.e., that the amount of assets deemed

available is “the greatest amount that the trustees in any set of

circumstances might have discretion to pay out to the

beneficiary. Thus, if there is a peppercorn of discretion, then

whatever is the most the beneficiary might under any state of

affairs receive in the full exercise of that discretion is the

amount that is counted as available for Medicaid eligibility.”

Pet. App. p. 23.4 Applying that language to the terms of the

beneficiary’s trust, the trustee clearly had discretion to distribute

the entire trust assets on the beneficiary’s behalf in the

circumstances in which she was not Medicaid-eligible. Pet.

App. pp. 33-35.° In other words, because the limit on the

* As noted above, under the MQT statute it is the existence

of the trustee’s discretion rather than the exercise of that

discretion that is relevant to the determination of “available”

assets. See 42 U.S.C. § 1396a(k)(3B).

° The Probate Court determined that under the terms of the

trust “the trustee’s discretion is limited to making distributions

which are supplemental to benefits, including Medicaid benefits,

to which Kokoska is entitled . . . that the trustee is not

permitted to exercise any discretion if that exercise of discretion

would render Kokoska ineligible to receive such benefits; and

that, if Kokoska is ineligible to receive benefits for reasons

other than the exercise of the trustee’s discretion to make

payments, then the trustee may make such payments for

Kokoska’s supplemental care and welfare.” Pet. App. p. 35.

ae er en te

15

trustee’s discretion was predicated on an assumption of

Medicaid eligibility, and because the trustee otherwise had

discretion to disburse the trust assets in their entirety, the

Division properly concluded that the amount of the trust deemed

“available” was the entire trust assets. Pet. App. p. 36.°

The interpretation of the statute given by the Health Care

Financing Administration (“HCFA”), the agency within the

United States Department of Health and Human Services that is

charged with administration of the Medicaid program, also

supports the Supreme Judicial Court’s decision. In response to

an inquiry from the Division, the HCFA sent a letter, dated July

11, 1991, explaining that “exculpatory clauses” (clauses of

MOQTS that limit “the authority of a trustee to distribute funds

from a trust if such distribution would jeopardize eligibility for

government programs, including Medicaid”) should be

disregarded for purpose of determining Medicaid eligibility.

Pet. App. p. 18 n.17. This administrative interpretation of the

MOT statute, although not embodied in a regulation, see Pet.

App. p. 19-20 n.18, nevertheless is entitled to some deference.

See 2B Norman J. Singer, Sutherland Statutory Construction,

§ 49.05 at 17-18, 20; § 49.06 at 59 (Sth ed.1992). See also

Chevron U.S.A. v. Natural Resources Defense Council, 467

U.S. 837, 844-845 (1984) (agency’s reasonable interpretation of

° The fact that the exercise (or even the existence) of the

trustee’s discretion is made contingent on the beneficiary’s

ineligibility for Medicaid does not mean that, for the logically

prior purpose of determining Medicaid eligibility, the trustee

does not possess discretion or that such discretion must be

ignored. A contrary holding would, in effect, allow grantors of

trusts to make their own Medicaid eligibility rules.

16

statute is entitled to deference).’

2. This reading of the statute is consistent with its

purpose and history. See Chevron U.S.A. v. Natural Resources

Defense Council, 467 U.S. at 842-843 (when construing a

statute, court must give effect to clear Congressional intent). In

enacting the MQT statute, Congress intended to eliminate the

practice whereby Medicaid applicants sought to use inter vivos

trusts to shield their assets and qualify for Medicaid benefits.

The House Committee on Energy and Commerce,

recommending passage of the bill containing the MQT statute,

stated:

The Committee feels compelled to state the obvious.

Medicaid is, and always has been, a program to provide

basic health coverage to people who do not have

sufficient income or resources to provide for themselves.

When affluent individuals use Medicaid qualifying trusts

and similar “techniques” to qualify for the program,

they are diverting scarce Federal and State resources

from low-income elderly and disabled individuals, and

poor women and children. This is unacceptable to the

7 The beneficiary erroneously suggests that the Division

agreed with her interpretation of the statute for several years

after its enactment in 1985, since it continued to find her

eligible to receive benefits until 1991. Pet. p. 13. Rather,

following enactment of the MQT statute, the Division undertook

a review of all Medicaid recipient cases to redetermine

eligibility based on changes in the law. As part of that review,

the Division became aware of the beneficiary’s trust and

thereafter determined that the trust assets were available to her

for purposes of the statute. Pet. App. p. 35.

17

Committee.

House Committee on Energy and Commerce, H.R. Rep. No.

265, 99th Cong., Ist Sess., pt. 1, at 71-72 (1985). See also

Pet. App. pp. 6-8 (Supreme Judicial Court noted use of trust

device by which a person would “place his or her assets in trust

so that those assets would provide for that person’s comfort and

well being, maybe even leaving something over to pass on his

or her death, while creating eligibility for public assistance,”

and discussing legislative response to this practice by enactment

of MQT statute).®

® The petition erroneously asserts that the Supreme Judicial

Court ignored the plain language of the statute and placed too

much reliance on legislative history, in particular the Committee

Report. Pet. pp. 15-16. In fact the Supreme Judicial Court

emphasized that its decision was based on the text of the statute,

see Pet. App. p. 20 (“It is the text of the statute itself that leads

to the conclusion that the grantors in all of these cases cannot

render themselves eligible for Medicaid assistance by these

devices. ”)

Moreover, in considering the legislative history of the 1986

MOT statute the Supreme Judicial Court found inconclusive the

1993 amendment clarifying that “if there are any circumstances

under which payment from the trust could be made to or for the

benefit of the individual,” the portion of trust corpus or income

from which payment could be made “shall be considered

resources available to the individual... .” 42 U.S.C. §

1396p(d)(3)(B); Pet. App. pp. 12-13. But while the Supreme

Judicial Court declined to rely on the 1993 amendment as

evidence of Congress’ intent underlying the 1986 statute, the

1993 amendment merely clarified what was already existing

18

The beneficiary incorrectly suggests that the statute was

directed only at wealthy individuals and should not be applied

to disabled persons. Pet. pp. 16-17. But the petition points to

nothing in the statute indicating a legislative intent to limit the

reach of the statute in this manner. See Matter of Kindt, 542

N.W.2d at 398 (“while Congress felt particular animosity

towards prosperous individuals who engaged in this practice

{sheltering assets for the potential benefits of heirs], it enacted

the 1986 law to prevent anyone, regardless of affluence, from

gaining [medical assistance] benefits by placing assets into a

trust that might eventually fall to the settlor’s heirs.”) (emphasis

in original)?

3. Courts in other jurisdictions that have addressed the

determination of “available” resources under the MQT statute

similarly have held that for purposes of determining Medicaid

eligibility, trust assets are available to grantors where the trustee

has discretion to use the assets for the beneficiary in

circumstances where the beneficiary is not eligible for Medicaid

benefits. Matter of Kindt, 542 N.W.2d at 399 (assets of MQT

available to beneficiary insofar as trustee had discretion to

law, and thus supports the Supreme Judicial Court’s conclusion.

See Helvering v. N.Y. Trust Co. , 292 U.S. 455, 468-469 (1934)

(“Mere change of language does not necessarily indicate

intention to change the law. The purpose of the variation may

be to clarify what was doubtful and so to safeguard against

misapprehension as to existing law.”).

° The 1986 statute provided that states “may” waive the

application of the statute with respect to an individual based on

undue hardship, see 42 U.S.C. § 1396a(k)(4), but

Massachusetts did not adopt such a hardship exception.

|

19

| distribute trust assets in absence of beneficiary’s eligibility for

medical assistance benefits); Williams v. Kansas Dep’t of Social

& Rehabilitation Servs. , 258 Kan. at 172-173, 899 P.2d at 460

| (trust assets deemed available under MQT statute because

trustee had discretion to pay amounts for beneficiary’s support

in circumstances where beneficiary was ineligible for

Medicaid); Ronney v. Department of Social Servs, 210 Mich.

App. 312 , 321, 532 N.W.2d 910, 914 (1985) (affirming

agency’s determination that value of MQT was countable asset

in determining applicant’s eligibility for Medicaid); Hatcher v.

Department of Health & Rehabilitative Servs., 545 So. 2d 400,

402 (Fla. Dist. Ct. App. 1989) (assets in MQT were properly

considered for purposes of determining Medicaid eligibility

notwithstanding trust purpose of supplementing public

assistance); Forsyth v. Rowe, 1995 WL 152124 (Conn. Super.

1995) (upon remand from Connecticut Supreme Court, superior

court held that entire trust assets were availiable for purpose of

determining Medicaid eligibility, notwithstanding trust language

providing that trust be used only to supplement public benefits).

20

CONCLUSION

For the foregoing

reasons, the Commissioner

respectfully requests that the Court deny the petition for writ of

certiorari.

Dated: December 5, 1996

Respectfully submitted,

BRUCE M. BULLEN,

COMMISSIONER OF THE

DIVISION OF MEDICAL

ASSISTANCE,

By his attorneys,

SCOTT HARSHBARGER

Attorney General

of Massachusetts

AMY SPECTOR*

Assistant Attorney General

1 Ashburton Place, Room 2019

Boston, Massachusetts 02108

(617) 727-2200, ext. 2076

*Counsel of Record

Ae bade Reais Np al Rit AR SAA i PN ACO GE ————E = coda

APPENDIX TO BRIEF IN OPPOSITION

A-1l

North Chelmsford Trust, Article 4

ARTICLE FOUR

TERMINATION OF TRUST

Upon the death of the Primary Beneficiary, if

termination of this Trust has not previously occurred, this Trust

shall terminate, and the Trustee shall pay the reasonable funeral

and burial expenses of the Primary Beneficiary, if they have not

otherwise been provided for, and shall distribute the balance of

such property to such person or persons in such amounts and

manner as the Primary Beneficiary may appoint by her will,

making specific reference to the power contained in this

instrument.

To the extent that the Primary Beneficiary fails to

exercise this power of appointment, the Trustee shall distribute

such property to those persons who would inherit the Primary

Beneficiary’s property if he or she had died intestate, domiciled

in Massachusetts, free of all debts, and possessed only of such

unappointed Trust property.

Notwithstanding any other provisions in this Instrument,

the Trustee may at any time terminate this Trust whenever he

determines that it is not in the Primary Beneficiary’s best

interests to continue the Trust, whether because it would be

uneconomical to so continue or for any other reason. In such

event, the Trustee shall distribute the remaining principal and

income of the Trust in his discretion to the guardian or

conservator legally appointed for the Primary Beneficiary, or if

there is no guardian or conservator, to the presiding judge of a

probate court with personal jurisdiction over the Primary

A-2

Beneficiary, or directly to the Primary Beneficiary.

This Trust shall in no event be terminated at the request

of the Primary Beneficiary, but only in the discretion of the

Trustee.

Upon the termination of this Trust during the life of the

Primary Beneficiary, the Trustee shall notify in writing the

Massachusetts Department of Mental Health and the

superintendent or director of any facility or program operated

by the Department of Mental Health or under its control or

supervision in which the Primary Beneficiary then resides or

participates.

. . . . ae tee en nye rae —

om NA eer yarn, * ’ r