# Opposition Brief — Kokoska ex rel. Kokoska v. Bullen

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1997
- **Citation:** 519 U.S. 1057

## Text

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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 |

-

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386018_1727%3A2. Public record. Not legal advice.