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Winslow v. State ex. rel. Peterson

Supreme Court of Nebraska

May 3, 2019

LaVeta Winslow, by and through her designated authorized representative the evangelical lutheran Good Samaritan Society - Superior, appellant,
State of Nebraska ex rel. Douglas Peterson, Attorney General, and Department of Health and Human Services, appellees.

         1. Administrative Law: Judgments: Appeal and Error. A judgment or final order rendered by a district court in a judicial review pursuant to the Administrative Procedure Act may be reversed, vacated, or modified by an appellate court for errors appearing on the record.

         2. _:_: _ . When reviewing an order of a district court under the Administrative Procedure Act for errors appearing on the record, the inquiry is whether the decision conforms to the law, is supported by competent evidence, and is neither arbitrary, capricious, nor unreasonable.

         3. Judgments: Appeal and Error. Whether a decision conforms to law is by definition a question of law, in connection with which an appellate court reaches a conclusion independent of that reached by the lower court.

         4. Medical Assistance: Federal Acts: States. The Medicaid program provides joint federal and state funding of medical care for individuals whose resources are insufficient to meet the cost of necessary medical care.

         5. _:_:_.A state is not obligated to participate in the Medicaid program; however, once a state has voluntarily elected to participate, it must comply with standards and requirements imposed by federal statutes and regulations.

         6. Medical Assistance: Federal Acts: Real Estate. If a Medicaid applicant is determined to possess real property that is not subject to the home exemption and is considered an available resource, the Nebraska [303 Neb. 25] Department of Health and Human Services is required to make available an "Agreement to Sell Real Estate and Repay Assistance" form to the applicant provided that (1) the applicant has authority to liquidate the property and (2) the applicant would be under the available resource limit if the property is excluded from consideration.

         7. Medical Assistance: Federal Acts: Trusts. For Medicaid eligibility purposes, available resources can include assets held by trusts if a person establishes that trust with his or her assets and the individual is able to benefit from the corpus of the trust or the income derived therefrom.

         8. Administrative Law: Presumptions: Proof. When challenging the decision of an administrative agency, the presumption under Nebraska law is that the agency's decision was correct, with the burden of proof upon the party challenging the agency's actions.

          Appeal from the District Court for Lancaster County: John A. Colborn, Judge.

          Cameron E. Guenzel, of Johnson, Flodman, Guenzel & Widger, for appellant.

          Douglas J. Peterson, Attorney General, and James D. Smith for appellees.

          Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ.

          FUNKE, J.

         LaVeta Winslow, by and through her designated authorized representative The Evangelical Lutheran Good Samaritan Society - Superior (Evangelical), appeals the Lancaster County District Court's order affirming the denial of Winslow's September 2016 application for Medicaid benefits. Winslow claims Nebraska's Department of Health and Human Services (DHHS), Division of Medicaid and Long-Term Care, improperly determined she was ineligible for Medicaid due to excess resources, namely a house which was owned by a revocable trust. Winslow further claims DHHS failed to provide her a necessary form so the property could be excluded from her available resources pending sale. For the reasons set forth herein, we affirm.

         [303 Neb. 26] I. BACKGROUND

         Winslow is a current resident of Evangelical, a skilled nursing facility located in Nuckolls County, Nebraska. Prior to moving to Evangelical, Winslow lived in a house in Mankato, Kansas, until she was hospitalized in September 2015. On October 1, 2015, she went from the hospital to Evangelical to receive additional living assistance. Although she was unable to return to the Mankato house beyond occasional visits, she maintained ownership of the home with the goal of her eventual return. While she resided at Evangelical, no one else lived in the house, she did not rent the house to anyone else, and she continued to store personal property there.

         The record owner of the Mankato house was the LaVeta Winslow Living Trust dated April 27, 2004, and restated January 8, 2015. The trust identified Winslow as the "'Trustmaker'" and Winslow and her daughter Vycke Garman as trustees. As to the Mankato house and other property held by the trust, § 1.03 thereof required that the trustees administer and dispose of all trust property for Winslow's benefit and the benefit of her beneficiaries. Additionally, § 1.04 provided, in relevant part:

During my lifetime, I shall retain the powers set forth in this Section in addition to any powers that I reserve in other provisions of this agreement.
(a) Action on Behalf of My Trust During any period that I am serving as a Trustee of my trust, I may act for and conduct business on behalf of my trust without the consent of any other Trustee.
(b) Amendment, Restatement or Revocation I have the absolute right, at any time and from time to time, to amend, restate, or revoke any term or provision of this agreement in whole or in part. Any amendment, restatement, or revocation must be in a written instrument signed by me.
My agent acting under a valid power of attorney executed by me may amend this agreement to the extent the [303 Neb. 27] agent is specifically authorized to do so in the instrument appointing the agent. An amendment made by my agent in good faith shall be conclusive on all persons interested in the trust and my agent shall not be liable for the consequences of any amendment or for not having amended the trust. An amendment by my agent must be in a written instrument signed by the agent.

         (c) Addition or Removal of Trust Property

         I have the absolute right, at any time and from time to time, to add to the trust property and to remove any property from my trust.

         Section 12.20 addressed Winslow and Garman's trustee powers as to real estate and stated in part, "My Trustee may sell at public or private sale, convey, purchase, exchange, lease for any period, mortgage, manage, alter, improve and in general deal in and with real property in such manner and on such terms and conditions as my Trustee deems appropriate."

         Winslow also executed a durable special power of attorney appointing Garman and Cindy Kuhn to serve as Winslow's holders of financial power of attorney. This document provided Garman and Kuhn the "full power and authority to do everything necessary to transfer, assign, convey, and deliver any interest [Winslow] may have in property owned by [Winslow] to the then acting Trustee of the . . . LaVeta Winslow Living Trust."

         In late 2015 and again in May 2016, Garman applied for Medicaid for Winslow. These applications were denied in part because Winslow's resources exceeded program standards. These resources included the Mankato house.

         Garman again applied for Medicaid for Winslow on September 23, 2016. The September application indicated Winslow's assets included a car, a checking account, a savings account, an annuity account, an irrevocable burial trust, and the Mankato house.

         On October 3, 2016, DHHS mailed Winslow a verification request seeking confirmation of Winslow's interest, dividends, [303 Neb. 28] royalties, annuity, pension, and trust fund income and requesting Winslow's most recent bank statements and life insurance documentation. The request provided that "[f]ailure to provide verifications by 10-13-2016 could result in the denial, termination or decrease in [Winslow's] benefits.''

         On October 17, 2016, DHHS mailed Winslow another verification request seeking confirmation of "Current Trust, Bonds, Certificates of Deposit . . ., IRA, Money Market, Keogh, 4Ol(K), [and] Mutual Funds." DHHS also requested a current accounting of the assets held by the trust. The request noted that Winslow was likely over the resource limit but that "if LaVeta is wanting to revoke the entire trust at this time and return all assets in the trust to herself she is able to do so. . . . Initially, if this is done she may still be over resources, but she could potentially gain Medicaid eligibility." The request again provided that "[f]ailure to provide verifications by 10-27-2016 could result in the denial, termination or decrease in [Winslow's] benefits."

         In a DHHS supervisor narrative dated October 17, 2016, DHHS acknowledged that the trust assets were available to Winslow and that Winslow had the authority to revoke or amend the trust. This DHHS supervisor narrative copied an October 6 email from a program specialist with DHHS, Division of Medicaid and Long-Term Care, explaining Winslow's authority under the trust.

         On November 4, 2016, DHHS mailed Winslow an initial notice of action denying her coverage for failure to provide information. The notice stated that the information requested in the October 17 request was applicable only if Winslow was dissolving her trust. If not, Winslow would remain over the resource limit and would be ineligible for Medicaid. The notice further provided that the September application would remain valid until December 22.

         On December 20, 2016, Garman deeded the Mankato house from the trust to Winslow. On December 22, Winslow's attorney called DHHS concerning the Mankato house to request an [303 Neb. 29] "IM-1 form"-a document entitled "Agreement to Sell Real Property and Repay Assistance" which allows an applicant 6 months to sell real property and excludes use of that property as a resource for Medicaid eligibility purposes. DHHS responded to Winslow's attorney that an IM-1 form would not be needed because DHHS had not determined whether Winslow's resources would be under the eligibility limits. Winslow then submitted verification documents on December 22, 23, and 28. DHHS eventually provided Winslow an IM-1 form sometime after December 22.

         After reviewing the documentation provided in December 2016, DHHS determined Winslow was ineligible for Medicaid because her resources, which included two credit union accounts and the Mankato house, were above $4, 000. On December 30, DHHS mailed Winslow notice of the denial which stated "Resources Exceed Program Standard" as the reason for Winslow's ineligibility. Also on December 30, Winslow signed the IM-1 form for the Mankato house. Winslow then reapplied for Medicaid, and on April 12, 2017, she was approved, with a share of cost, effective January 1, 2017.

         Winslow filed an administrative appeal, and a hearing was held in June 2017. At the hearing, the parties agreed the main issue on appeal was whether the Mankato property "is a countable resource during the potential period of affected benefits for the September 2016 application." Testimony from Sarah Shurigar-Meyer and Garman was received.

         Shurigar-Meyer was the lead Medicaid worker with DHHS, Division of Medicaid and Long-Term Care. In her testimony, she explained DHHS' reasoning for the denial of Winslow's September 2016 application. Specifically, Shurigar-Meyer testified that Winslow was denied because she was over the resource limit of $4, 000 for Medicaid. Winslow's asset with the most value was the Mankato house, and Shurigar-Meyer testified Winslow would have been under the resource limit if the property were not an available resource. The Mankato house was determined to be an available resource "[b]ecause [303 Neb. 30] the property was listed in a trust" and "there was not a[n] IM-1 [form] signed to exclude that property because it was listed in the trust." Shurigar-Meyer ...

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