Matter of Adele Y.

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[*1] Matter of Adele Y. 2012 NY Slip Op 50904(U) Decided on May 14, 2012 Supreme Court, Bronx County Hunter, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on May 14, 2012
Supreme Court, Bronx County

In the Matter of the Application of Mental Hygiene Legal Service, for a Protective Arrangement or Single Transaction Order to Manage the Property of Adele Y.



2745/12



Attorney for MHLS: Hannah Kim, Esq.

Attorney for NYCLU: Lisa J. Laplace, Esq.

Attorney General's Office by: Jennifer Principe, Esq.

Alexander W. Hunter Jr., J.



The application by order to show cause filed by Mental Hygiene Legal Service (MHLS) for an order approving a protective arrangement or single transaction order pursuant to Mental Hygiene Law §81.16, to manage the property of Adele Y., is granted with the consent of the Attorney General's office and the New York Civil Liberties Union (NYCLU) who submitted papers with respect to the application and stated their respective positions on the record before this court.

MHLS asserts that Adele Y. has been diagnosed with profound mental retardation. She resides at an intermediate care facility operated by the Institute of Applied Human Dynamics (IAHD) and licensed by the New York State Office for People with Developmental Disabilities (OPWDD). Adele Y. requires twenty-four (24) hour supervision and total assistance with her activities of daily living and she is unable to manage her financial affairs. IAHD has been appointed the representative payee of her SSA monthly income.

MHLS asserts that it was advised that IAHD received a substantial retroactive SSA payment on behalf of Adele Y. in November 2011. The approximate amount in her patient account in November 2011 was $126,845.00. IAHD was notified prior to July 2010 that Adele Y. would be receiving a substantial retroactive SSA payment. IAHD received said retroactive payment in multiple payments beginning July 2010 through November 2011. MHLS contends that IAHD used $25,472.00 of said retroactive payment to prepare a pre-needs burial account for Adele Y. Her social security and Medicaid benefits were discontinued in November 2011 because of a failure to establish a Supplemental Needs Trust (SNT) for this payment. According to MHLS, the current balance in Adele Y.'s account is believed to be $36,885.38.

MHLS requests that this court approve a protective arrangement or a single transaction order which would authorize the funding of a Medicaid qualifying SNT. This is required since [*2]Adele Y. is unable, by reason of her mental retardation, to marshal her bank account so that the funds can be expended for her personal needs and she is unable to place the funds in a Medicaid qualifying trust so that she can maintain her Medicaid eligibility.

MHLS contends that the court may order the placement of Adele Y.'s funds into a Medicaid qualifying pooled trust or a Medicaid qualifying "under 65" payback trust. MHLS asserts that pooled trusts are administered by not-for-profit charitable organizations and trust assets are pooled for purposes of investment and management. Each beneficiary has a separate account within the pooled trust. Pooled trusts typically permit the retention of the remainder by the organization, if any, on hand in a sub-account upon the death of the beneficiary. Retention of the reminder is designed to further the charitable purposes of the trust and is expressly permitted by federal and state law. MHLS further contends that a pooled trust is a suitable vehicle for the investment and management of Adele Y.'s funds given that the trustee will have the special expertise to meet the needs of the beneficiary through disbursements of trust assets while ensuring that such disbursements do not otherwise adversely impact Adele Y.'s eligibility for government assistance.

The alternative to a pooled trust is an "under 65" Medicaid qualifying SNT where an institutional trustee or attorney from the Part 36 list is appointed. MHLS contends that the rules pertaining to eligibility for Medicaid, SSI, food stamps and other programs of government assistance are complex and any trustee appointed on Adele Y.'s behalf must be familiar with the rules while administering the trust estate. MHLS asserts that there is no other person willing and able to provide the property management powers it requests for Adele Y. and in order to ensure that her assets are protected, the court can require the purchase of a bond and that an accounting be provided as often as annually to the court. MHLS further requests that it receive an annual accounting of Adele Y.'s trust to provide for independent monitoring of the trust account.

NYCLU filed a notice of appearance as well as papers in support of the application by MHLS. NYCLU asserts that Adele Y. is a Willowbrook class member who was admitted to Willowbrook State School. The NYCLU appears as plaintiffs' counsel in the Willowbrook class action still pending in the United States District Court for the Eastern District of New York before the Honorable Raymond J. Dearie. NYCLU states that it supports the petition filed by MHLS in order to preserve Adele Y.'s Medicaid eligibility. It also urges the court to appoint a guardian ad litem or mandate Adele Y.'s property guardian to investigate what entity or person failed to set up an SNT for Adele Y. prior to November 2011 when her social security and Medicaid benefits were discontinued.

The Attorney General's office also appeared on behalf of OPWDD in support of the application by MHLS. OPWDD is the district responsible for administering Medicaid to Adle Y. The Attorney General's office acknowledged that Adele Y. is a member of the Willowbrook class. The Attorney General's Office further asserts that the retroactive social security payment awarded to Adele Y. was paid to IAHD in payments beginning July 2010 and ending November 2011. IAHD did not create a Medicaid Exception Trust nor did it apply to the court for the [*3]creation of a Medicaid Exception Trust and the retroactive award was no longer exempt for Medicaid eligibility purposes. Thus, beginning on November 1, 2011 and ending on November 25, 2011, Adele Y. received incorrectly paid Medicaid from OPWDD in the amount of $14,172.14. Said incorrectly paid Medicaid must be repaid to OPWDD in the amount of $14,172.14 and OPWDD will allocate one half to the federal government and the other half will be placed in trust for Adele Y. pursuant to the 2007 Willowbrook Stipulation executed in the United States District Court for the Eastern District of New York. The Attorney General's Office further proposes additional language to be added to the trust if this court elects an "under 65" supplemental needs trust.

Mental Hygiene Law §81.16 provides that, "If the person alleged to be incapacitated is found to be incapacitated, the court without appointing a guardian...may authorize, direct, or ratify any contract, trust, or other transaction relating to the incapacitated person's property and financial affairs if the court determines that the transaction is necessary as a means of providing for personal needs and/or property management for the alleged incapacitated person."

After examination of the documents submitted by the petitioner as well as the other interested parties, the application by MHLS for a protective arrangement or single transaction order over Adele Y.'s property which would authorize the funding of a Medicaid qualifying supplemental needs trust, is granted. Adele Y.'s funds shall be placed in a pooled trust with New York State Association for Retarded Children, Inc. (NYSARC), a not-for-profit charitable organization, as the trustee. The order to be settled herein shall include a provision for the appointment of a court examiner as well.

Settle order on notice.

Date:May 14, 2012

J.S.C.

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