Mississippi Division of Medicaid v. Linda Darby Stinson
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IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI
NO. 2010-CA-00335-COA
IN THE MATTER OF THE ESTATE OF ARLYN
E. DARBY, DECEASED: OFFICE OF THE
GOVERNOR, MISSISSIPPI DIVISION OF
MEDICAID, AND STATE OF MISSISSIPPI
APPELLANTS
v.
LINDA DARBY STINSON, EXECUTRIX
DATE OF JUDGMENT:
TRIAL JUDGE:
COURT FROM WHICH APPEALED:
ATTORNEYS FOR APPELLANTS:
ATTORNEYS FOR APPELLEE:
NATURE OF THE CASE:
TRIAL COURT DISPOSITION:
DISPOSITION:
APPELLEE
01/26/2010
HON. MITCHELL M. LUNDY JR.
DESOTO COUNTY CHANCERY COURT
WILLIAM HARRIS MOUNGER JR.
CHARLES PALMER QUARTERMAN
RALPH EDWIN CHAPMAN
JOSEPH HARLAND WEBSTER
ROBERT LAWSON HOLLADAY
CIVIL - STATE BOARDS AND AGENCIES
GRANTED MOTION FOR SUMMARY
JUDGMENT IN FAVOR OF LINDA DARBY
STINSON, EXECUTRIX; DENIED
MEDICAID’S CLAIM AS CREDITOR OF
THE ESTATE
AFFIRMED: 02/22/2011
EN BANC.
KING, C.J., FOR THE COURT:
¶1.
The DeSoto County Chancery Court granted summary judgment in favor of Linda
Darby Stinson, executrix of the estate of Arlyn Darby, denying the Division of Medicaid’s
claim against the estate. The chancellor determined that the estate was composed of exempt
property, which descended outside of the probate estate, free and clear of any debts and
claims of the Division of Medicaid or any other creditor. Medicaid raises three issues: (1)
whether Medicaid is entitled to reimbursement from Darby’s estate, (2) whether exempt
property is included within Darby’s estate for purposes of the Medicaid estate recovery
program, and (3) whether Darby’s execution of the contract for Medicaid benefits waived his
right to claim exemptions.
¶2.
We find no error and affirm.
FACTS
¶3.
Arlyn E. Darby was a resident of the Sardis Community Nursing Home at the time of
his death on May 20, 2009. Darby had been receiving Medicaid benefits while he was a
resident of the nursing home. At the time of his death, Darby owned his house and a small
amount of personal property. The value of his homestead did not exceed $75,000 and the
value of his personal property did not exceed $10,000. The property was devised to his
children and one grandchild.
¶4.
The Division of Medicaid filed a probate claim against the estate pursuant to the
provisions of Title 42 of the United States Code section 1396p(b) (2006) and Mississippi
Code Annotated section 43-13-317 (Rev. 2009). The claim of $123,716.13, represented the
total amount Medicaid expended for Darby’s medical care after he reached the age of fiftyfive.
¶5.
Linda Darby Stinson, Darby’s daughter and executrix of the estate 1 , filed an objection
to the probated claim asserting that the property Darby owned was exempt property and not
subject to Medicaid’s claim. Stinson relied on Mississippi’s homestead exemption statute
1
Darby’s wife predeceased him.
2
to support her objection. The relevant portion of the statute reads “a householder shall be
entitled to hold exempt from seizure or sale, under execution or attachment, the land and
buildings owned and occupied as a residence.” Miss. Code Ann. § 85-3-21 (Rev. 1999).
Medicaid responded to the objection arguing that the real property was not exempt property
because none of Darby’s heirs were living in the home and declaring it as their homestead.
¶6.
Stinson filed a motion for summary judgment requesting the court to determine that
Medicaid’s claim was not valid against Darby’s property. Stinson alleged that because the
property was exempt, it passed outside of the estate and therefore, was not subject to
Medicaid’s claim.
In response to Stinson’s argument that the property was exempt,
Medicaid argued that even if the property were exempt, Stinson contractually waived the
exemption when she submitted the application for Medicaid benefits on behalf of Darby.
The court granted summary judgment in favor of Stinson. Medicaid then timely filed its
notice of appeal.
ANALYSIS
¶7.
"This Court reviews summary judgments de novo.” Point S. Land Trust v. Gutierrez,
997 So. 2d 967, 975 (¶18) (Miss. Ct. App. 2008) (quoting Stallworth v. Sanford, 921 So. 2d
340, 341 (¶ 5) (Miss. 2006)).
Summary judgment is proper where "the pleadings,
depositions, answers to interrogatories and admissions on file, together with the affidavits,
if any, show there is no genuine issue as to any material fact and the moving party is entitled
to a judgment as a matter of law." M.R.C.P. 56(c). In determining whether the trial court
properly granted summary judgment, we view the evidence in the light most favorable to the
non-moving party. Gutierrez, 997 So. 2d at 975 (¶18) (citing Moss v. Batesville Casket Co.,
3
935 So. 2d 393, 399 (¶17) (Miss. 2006)).
1. Entitlement to Reimbursement
¶8.
There is no dispute of Medicaid’s right to recover its expenses from the property of
a recipient’s estate. The Omnibus Budget Reconciliation Act of 1993 2 included a provision
requiring states to seek recovery of nursing home services, home and community- based
services and related hospital and prescription drug services from the estate of a deceased
Medicaid recipient who was fifty-five years of age or older when the assistance was received.
42 U.S.C. §1396p(b). Effective July 1, 1994, pursuant to Mississippi Code Annotated
section 43-13-317, Mississippi implemented its estate recovery program.3
¶9.
The governing statute is as follows:
(1) The division shall be noticed as an identified creditor against the estate of
any deceased Medicaid recipient under Section 91-7-145.
(2) In accordance with applicable federal law and rules and regulations,
including those under Title XIX of the federal Social Security Act, the division
may seek recovery of payments for nursing facility services, home- and
community-based services and related hospital and prescription drug services
from the estate of a deceased Medicaid recipient who was fifty-five (55) years
of age or older when he or she received the assistance. The claim shall be
waived by the division (a) if there is a surviving spouse; or (b) if there is a
surviving dependent who is under the age of twenty-one (21) years or who is
blind or disabled; or (c) as provided by federal law and regulation, if it is
determined by the division or by court order that there is undue hardship.
Miss. Code Ann. § 43-13-317.
2. Exempt Property
2
42 U.S.C. §1396p.
3
Currently, all fifty states and the District of Columbia have implemented estate
recovery programs. Michigan was the last state in 2007. Mich. Comp. Laws Ann. 400.112g.
4
¶10.
Even though it appears that Medicaid has the right to recover from Darby’s estate, the
more difficult task is determining what property is included within that estate. The Omnibus
Budget Reconciliation Act defines the estate as follows: “For purposes of this subsection, the
term ‘estate,’ with respect to a deceased individual– (A) shall include all real and personal
property and other assets included within the individual’s estate, as defined for purposes of
State probate law. . . .” 42 U.S.C. § 1396p(b)(4)(A) (emphasis added).
¶11.
However, the next subsection of the Act grants each state the option of expanding the
definition of estate to include,
“any other real and personal property and other assets in which
the individual had any legal title or interest at the time of death
(to the extent of such interest), including such assets conveyed
to a survivor, heir, or assign of the deceased individual through
joint tenancy, tenancy in common, survivorship, life estate,
living trust, or other arrangement.”
42 U.S.C. § 1396p(b)(4)(B).
¶12.
The federal statute clearly permits each state to specifically define what assets are
included within an estate for purposes of Medicaid recovery. The State Medicaid Manual,
provided by the Centers for Medicare & Medicaid Services, which is the Medicare and
Medicaid governing agency within the United States Department of Health and Human
Services, instructs each state to “Specify in your State plan the definition of estate that will
apply.” State Medicaid Manual, § 3810 B.4
4
Transmittal 75, or § 3810 (B) of the State Medicaid Manual, United States
Department of Health and Human Services, Health Care Financing and Administration,
(January 2001), provides policy clarification on mandatory and optional recovery measures
to for Medicare and Medicaid Services.
5
A.
¶13.
Definition of Estate
Pursuant to 42 U.S.C. section 1396p(b)(4)(B), a number of states have expanded the
definition of estate to allow recovery beyond probate assets. Following the direction of the
state medicaid manual, some states have incorporated a broad definition of estate for
Medicaid expense recovery programs to include, but not limited to; living trusts 5 , joint
property and accounts6 , life insurance proceeds7 , non-probate assets8 , and the entirety of both
a beneficiary’s and his or her spouse’s estates.9 Not only are states permitted to expand the
assets included in a beneficiary’s estate, but many states allow liens, authorized by the Tax
Equity and Fiscal Responsibility Act of 1982 10, to be placed on real property even before the
death of the Medicaid recipient11 . Currently, there are very few states that limit estate
recovery until after the beneficiary’s death while also limiting recovery from assets within
the probate estate; Mississippi is a member of this category 12 .
5
Maine (Me. Rev. Stat. Ann. tit. 22, § 14.)
6
Washington (Wash. Rev. Code Ann. § 43.20B.080.)
7
Missouri (Mo. Rev. State. § 473.398.)
8
Utah (Utah Code Ann. §§ 26-19-2.); Iowa (Iowa Code Ann.§ 249A.5.)
9
Idaho (Idaho Code Ann. § 56-218.); Kansas (Kan. Stat. Ann. § 39-709.); New York
(N.Y. Soc. Serv. Law § 369.)
10
42 U.S.C. § 1395.
11
Alabama (Ala. Admin. Code r. 560-x-33-.03.); Georgia (Ga. Comp. R. & Regs.
111-3-8-.07.)
12
Mississippi, along with Arkansas, Michigan, New Mexico, North Carolina,
Pennsylvania, South Carolina, Texas, Vermont, and West Virginia, limit recovery until after
the beneficiary’s death and from the assets of the estate.
6
¶14.
The Mississippi statute permitting estate recovery does not expand the definition of
estate and provides that recovery is permitted “[i]n accordance with applicable federal law.
. . .” Miss. Code Ann. § 43-13-317. The applicable federal statute permits Medicaid to
recover from those assets of Darby’s that pass through probate according to Mississippi law.
42 U.S.C. § 1396p(b)(4)(A).
B.
¶15.
Mississippi’s Probate Laws
Neither party disputes that Darby’s real property qualified as his homestead exemption
pursuant to Mississippi Code Annotated section 85-3-21 (Rev. 1999). The Mississippi
Supreme Court has held exempt property is not part of the estate to be administered and
descends directly by statute; and this is true whether the estate is solvent or insolvent De
Baum v. Hulett Undertaking Co., 169 Miss. 488, 494-95, 153 So. 513, 515 (1934) (citations
omitted). The descent of exempt property is governed by Mississippi Code Annotated
section 91-1-19 (Rev. 2004), which states, “The property, real and personal, exempted by law
from sale under execution or attachment shall, on the death of the husband or wife owning
it, descend to the survivor of them and the children and grandchildren of the decedent. . . .”
The supreme court has interpreted this statute to allow those entitled, including spouse,
children and grandchildren, to inherit the exempt property in fee simple free of the decedent’s
debts. See Weaver v. Blackburn, 294 So. 2d 786 (Miss. 1974).
¶16.
Mississippi Code Annotated section 91-1-21 provides that exempt property is not
liable for the debt of the decedent if there is a surviving spouse, children or grandchildren.
The supreme court has held that the specific language of section 91-1-21 continues a
decedent’s homestead exemption for a surviving spouse, children or grandchildren. Mem’l
7
Hosp. at Gulfport v. Franzke, 634 So. 2d 117, 118 (Miss. 1994). Therefore, Darby’s children
and grandchild are entitled to inherit the exempt property free of his debts.
¶17.
Medicaid raises an argument that the broad homestead exemption descent statute
coupled with a narrow definition of estate will limit the effectiveness of the estate recovery
act. It is true that the Mississippi homestead exemption descent statute places no limitation
on the age of the surviving children or grandchildren, nor does it impose occupancy
restrictions.13 However, the statutes concerning the homestead, and its descent, are plain and
unambiguous. This Court will not engage in statutory interpretation if a statute is plain and
unambiguous. In re Guardianship of Duckett, 991 So. 2d 1165, 1181 (¶37) (Miss. 2008)
(citation omitted).
¶18.
Darby predeceased his children and a grandchild to whom he devised all of his
property. Pursuant to the unambiguous language of the statutes, coupled with case law, the
homestead, with its exemption, passed from Darby to his children and grandchildren free of
his debts. Thus, Medicaid is not entitled to pursue a claim against the exempted property as
it is not a part of the estate. We find this issue without merit.
3. Waiver
¶19.
Medicaid claims that Stinson waived the exemption when she entered into a
contractual relationship with Medicaid on behalf of Darby in order to become eligible for
13
In 2005, the Texas Legislature addressed this very issue and amended its probate
code in order to clearly provide that the descent of the homestead exemption passed only to
the spouse and minor children. Previously, the language was ambiguous in regard to adult
children. Tex. Prob. Code Ann. §271. The Colorado Legislature requires occupancy for the
homestead exemption to extend to heirs. Colo. Rev. Stat. Ann. 38-41-203.
8
benefits. Medicaid argues that waiver is found in the following language of the contract,
which states:
I (We) understand that upon my/our death, the Division of Medicaid has the
legal right to seek recovery from my estate for services paid by Medicaid in
the absence of a legal surviving spouse or a legal surviving dependent.
Consideration will be made for hardship cases. An estate consists of real &
personal property. Estate recovery applies to nursing homes, home and
community based waiver clients age 55 or older.
¶20.
Medicaid suggests that the language “an estate consists of real & personal property,”
waives Darby’s right to claim his homestead exemption. A waiver is defined as a voluntary
surrender or relinquishment of some known right, benefit or advantage. Sentinel Indus.
Contracting Corp. v. Kimmins Indus. Serv. Corp., 743 So. 2d 954, 964 (Miss. 1999) (citation
omitted).
There is a general presumption against the finding of a waiver, and the party
asserting the waiver bears a heavy burden of proof. Walker v. J.C. Bradfrord & Co., 938 F.
2d 575, 577 (5th Cir. 1991) (citations omitted).
¶21.
This Court has further explained the necessary requirements for a valid waiver,
saying:
Under Mississippi law, a “waiver” presupposes a full knowledge of a right
existing, and an intentional surrender or relinquishment of that right. It
contemplates something done designedly or knowingly, which modifies or
changes existing rights, or varies or changes the terms and conditions of a
contract. It is the voluntary surrender of a right. To establish a waiver, there
must be shown an act or omission on the part of the one charged with the
waiver fairly evidencing an intention permanently to surrender the right
alleged to have been waived.
Taranto Amusement Co., Inc., v. Mitchell Assocs., Inc. 820 So. 2d 726, 729 (¶13) (Miss.
Ct. App. 2002).
A.
Knowledge of Waiver
9
¶22.
The record does not support the idea that Darby had any knowledge of the benefits
a homestead exemption provided, nor that he intentionally waived his right to the benefit of
that exemption. The contract does not provide any information pertaining to, or even
mention, the significance of any exemption.
¶23.
The purpose of homestead exemption is to protect families from financial misfortune
by preventing creditors from using a family’s home to satisfy debts. Biggs v. Roberts, 237
Miss. 406, 411, 115 So. 2d 151, 153 (1959). “This has been the law and the recognized
public policy of this state for many years.” Id. As valuable as the homestead exemption is,
a party must be informed in order to waive the right. Many states have implemented laws
governing the procedure in which a waiver of the homestead exemption may be
accomplished, and at least two states have implemented laws governing the specific language
that must be contained within a contract to effectuate a valid waiver.14 In this case, there is
no substantial evidence to support the suggestion that Darby had any knowledge of the
existence or significance of his right to waive his homestead exemption.
B.
¶24.
Intent to Waive Exemption
There is no evidence of Darby’s intent to waive any of his rights. In determining a
party’s intent within a contract, the court must look to the express language of the contract.
Cherokee Ins. Co. v. Babin, 37 So. 3d 45, 48 (¶8) (Miss. 2010). In this case, the alleged
14
Both Iowa and North Dakota require the following text within the contract in order
to accomplish a valid waiver: “I understand that homestead property is in many cases
protected from the claims of creditors and exempt from judicial sale and that, by signing this
contract, I voluntarily give up my right to this protection for this property with respect to
claims based upon this contract.” N.D. Cent. Code. § 47-18-05.1 and Iowa Code Ann. §
561.22.
10
waiver clause merely provides a general definition of “estate.” This general definition of
estate does nothing to state, or even suggest, that it takes precedence over the homestead
exemption statute nor does the language within the contract adopt the specific language of
the federal statute to affirmatively include non-probate assets within the estate.
¶25.
If a contract is clear and unambiguous, then it must be interpreted as written. Architex
Ass’n, Inc. v. Scottsdale Ins. Co., 27 So. 3d 1148, 1157 (¶20) (Miss. 2010) (citation omitted).
The clause is clear and unambiguous in explaining to a Medicaid applicant that in exchange
for services, Medicaid is entitled to assert a claim against the real and personal property
comprising the recipient’s estate. By entering into the contract, Darby merely acknowledged
Medicaid as a creditor of his estate. Unfortunately, Darby’s estate has no property against
which Medicaid may recover. Considering the general presumption against the finding of
a waiver coupled with the lack of evidence that Darby knew the significance or intended to
waive his right to an exemption, we find this issue without merit.
¶26. THE JUDGMENT OF THE DESOTO COUNTY CHANCERY COURT IS
AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE
APPELLANTS.
LEE AND MYERS, P.JJ., GRIFFIS, BARNES, ISHEE, ROBERTS, CARLTON
AND MAXWELL, JJ., CONCUR. IRVING, J., DISSENTS WITH SEPARATE
WRITTEN OPINION.
IRVING, J., DISSENTING:
¶27.
With respect, I dissent from the majority’s holding that this case should be affirmed.
I would reverse and render the chancery court’s judgment, which found that Stinson had not
waived her right to a homestead exemption for Darby’s property.
I believe that the
application that Stinson submitted for Medicaid benefits effectively waived Stinson’s right
11
to assert a homestead exemption.
¶28.
For clarity’s sake, I also quote the relevant portion of Darby’s Medicaid application:
I (We) understand that upon my/our death, the Division of Medicaid has the
legal right to seek recovery from my estate for services paid by Medicaid in
the absence of a legal surviving spouse or a legal surviving dependent.
Consideration will be made for hardship cases. An estate consists of real &
personal property. Estate recovery applies to nursing homes, home and
community based waiver clients age 55 or older.
I would find that this plain language constitutes a waiver of Darby’s homestead exemption.
In the statement, Darby (or Stinson on his behalf) acknowledged that the Division of
Medicaid could “seek recovery” from his estate. There was no limitation stated on the
recovery other than that “[c]onsideration will be made for hardship cases.” In my opinion,
a reasonable person reading this statement would understand that he was allowing the
Division of Medicaid to recover from his estate, regardless of any existing homestead
exemption.
¶29.
Therefore, I would reverse and render.
12
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