Michigan Court Of Appeals Holds Medicaid Recovery Act Applies When Benefits Sought

On April 16, 2015, the Michigan Court of Appeals held in a civil case that Michigan's Medicaid estate recovery program applies when a person "seeks Medicaid eligibility" rather than when a person "enroll[s] in Medicaid."

In Dep't of Community Health v Estate of Esther Keys, Docket No. 320420, the Michigan Court of Appeals addressed the issue of when the state is allowed to seek recovery of Medicaid costs from an estate after a person uses Medicaid benefits and later dies.

The Court first recited the facts of the case.

In 2007, our Legislature amended the Michigan Social Welfare Act. 2007 PA 74. This amendment required the Department to establish a Medicaid estate recovery program, which would not be implemented until approved by the federal government. See MCL 400.112g(2) and (5). The federal government did not approve Michigan’s program until July 2011.

Esther Keyes was admitted to a nursing home in April 2010 and began receiving Medicaid benefits. In May 2012, Robert Keyes filled out a Medicaid application form and acknowledged that the estate was subject to Medicaid 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. MDCH will not make a claim against the estate while there is a legal surviving spouse or a legal surviving child who is under the age of 21, blind, or disabled living in the home. 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. . . .

Esther Keyes died in January 2013 and the Department sought recovery against her estate. When the estate disallowed the expense, the Department filed suit against the estate, seeking to recover about $110,000.

The estate moved for summary disposition under MCR 2.116(C)(10), contending that the Department could not recover because the Department did not notify Esther Keyes of the possibility of estate recovery when she enrolled in Medicaid. The trial court determined that the Department had failed to notify recipients “at the time of enrollment,” as the Act required. It also determined that this failure violated the estate’s due process rights. It therefore granted summary disposition in favor of the estate . . .

The Court's analysis of whether the state could recover from her estate the amount of Medicaid benefits extended to Ms. Keyes during her lifetime followed.

. . . In this case, the distinction between enrolling in Medicaid and seeking Medicaid eligibility is determinative. Esther Keyes enrolled in Medicaid in April 2010, which is after September 30, 2007. She did not receive notice of estate recovery because the federal government had not approved a notice pursuant to Subsection (3)(e). In May 2012, Robert Keyes filled a “MEDICAID APPLICATION Patient of Nursing Facility” form on Esther’s behalf. This form included a notice about estate recovery. Her previous enrollment did not change the fact that Robert Keyes sought medicaid eligibility on her behalf by filling out an application in 2012. And, as part of that application, the Department did provide written materials explaining and describing estate recovery and warning that some of Esther’s estate could be subject to estate recovery.

We conclude that the trial court erred because the Department sufficiently notified Esther that her estate could be subject to estate recovery. MCL 400.112g(7) allows the Department to engage in estate recovery when the individual has sought Medicaid benefits after being provided with a notice regarding estate recovery. In this case, Robert Keyes sought Medicaid benefits on Esther’s behalf in 2012, after the Department provided him with a proper notice regarding estate recovery. MCL 400.112g(3)(e) did not require the Department to provide this notice when Esther enrolled in Medicaid . . .