State May Not Recover From Surviving Spouse’s Estate If Medicaid Recipient Had No Legal Interest at Death

The Supreme Court of Minnesota rules that Medicaid may not recover from the estate of a Medicaid recipient’s surviving spouse if, at the time of her death, the recipient did not possess a legal interest in the property being claimed. However, the court also finds that federal Medicaid law does not totally preclude recovery from the estate of a surviving spouse of a Medicaid recipient.

Dolores and Francis Barg had been married for 53 years when Mrs. Barg entered a nursing home in 2001. Once she entered the home and began receiving Medicaid benefits, Mrs. Barg’s guardian transferred her joint tenancy interest in the couple’s home to Mr. Barg, individually. Mrs. Barg died in January 2004 without leaving a probate estate and Mr. Barg passed away five months later. The county Medicaid agency then filed a claim against Mr. Barg’s estate for the cost of Medicaid services paid on Mrs. Barg’s behalf. Mr. Barg’s estate contested a portion of the county’s claim and an appellate court decided that, under principals of real property law, Mrs. Barg possessed a one-half share of the property at the time of her death which could be recovered from Mr. Barg’s estate.

Mr. Barg’s estate appealed, arguing that federal Medicaid law preempts any recovery from the estate of a surviving spouse, and, even if recovery was allowed in some cases, the state could not recover from Mr. Barg’s estate because Mrs. Barg had transferred her property interest to Mr. Barg during her life, not through a transfer at her death. The county argued that Minnesota law allows recovery from the estate of a surviving spouse for any assets jointly owned by the couple at any point during their marriage.

The Supreme Court of Minnesota rules that federal Medicaid law does not preempt a state from pursuing all estate recovery against the estate of a surviving spouse because there is “sufficient ambiguity” in the federal statute authorizing estate recovery. However, the court also finds that the allowable scope of estate recovery is limited to assets that the Medicaid recipient had a legal interest in at the time of her death and voids a portion of the Minnesota estate recovery statute permitting recovery of assets in which the recipient did not have a legal interest. Since “Dolores had no interest in assets at the time of her death that were part of a probate estate or an expanded estate definition permissible under federal law … there is no basis for the County’s claim against the estate,” the court writes.

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