Trusts & Estates - Fraser Trebilcock

Estate Recovery Cases Pending Before the Michigan Court of Appeals

Hands with Paper DollsMost of you have heard the term estate recovery by now and understand what it is.  Estate recovery is the program through which the State of Michigan is paid back for Medicaid benefits provided to certain recipients upon the recipient’s death by allowing the state to recover property from the recipient’s probate estate. In an ideal world, estate recovery wouldn’t be an issue for our clients because they would have taken the appropriate steps prior to death to ensure they wouldn’t have a probate estate. But in reality, many individuals die as Medicaid recipients and, for any number of reasons, own a homestead that must pass through probate. If such a client walks through your door, estate recovery is now your issue. If you’re faced with this issue, you would be wise to review the many differing opinions issued by various probate courts around the state, the Court of Appeals published opinion in the In re Keyes Estate, dated April 16, 2015, Case No. 320420 (oral argument heard on April 10), and pay close attention to the seven estate recovery cases currently pending before the Michigan Court of Appeals. With one exception, each of the appeals were filed by the Department of Community Health.

The issue on appeal in each of these cases is either (1) whether the statutory notice requirements were met by the State of Michigan or (2) whether the estate qualifies for the home of modest value hardship exemption. MCL 400.112g(3)(e) provides that the department of community health shall provide written materials explaining the process for applying for a waiver from estate recovery due to hardship to the individual at the time he/she enrolls in Medicaid for long-term care services. MCL 400.112g(7) requires that the department of community health provide written information to individuals seeking Medicaid eligibility for long-term care services describing the provisions of the Michigan Medicaid estate recovery program, including, but not limited to, a statement that some or all of their estate may be recovered. Finally, MCL 400.112g(3(e)(i) provides that the department of community health shall develop a definition of hardship that includes an exemption for the portion of the value of the medical assistance recipient’s homestead that is equal to or less than 50% of the average price of a home in the county in which the Medicaid recipient’s homestead is located as of the date of the medical assistance recipient’s death.

In the Keyes case, the decedent began receiving Medicaid benefits in April 2010 and died in January 2013.  The decedent’s May 2012 redetermination Medicaid application contained a paragraph under the acknowledgments section, paragraph 12, that provides in part:

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 . . .

The MDCH filed suit against the estate to recover approximately $110,000 after the estate disallowed it’s claim.  The estate moved for summary disposition claiming that MDCH could not recover because it did not provide the decedent with notice that her estate could be subject to estate recovery at the time she enrolled in Medicaid. The trial court agreed and granted summary disposition in favor of the estate on the basis that the relevant statute required notice at the time of enrollment and that MDCH’s failure to do so violated the estate’s due process rights.

On appeal, the Court of Appeals agreed with MDCH that the portion of MCL 400.112g(3)(e) that mandates notice of estate recovery at the time of enrollment is part of a subsection that requires MDCH to seek guidance from the federal government and, so, that notice requirement does not apply.  The court further determined that since the language used in MCL 400.112g(7) only required written information to be provided to individuals “seeking medicaid eligibility,” it is presumed that the omission of the language “at the time an individual enrolls in medicaid” that was used in MCL 400.112g(3)(e) was intentional.

The court determined that the distinction between enrolling in Medicaid and seeking Medicaid eligibility was determinative.  It found that decedent did not receive notice of estate recovery at the time she enrolled in Medicaid, but that she did receive notice about estate recovery when she filed her May 2012 Medicaid Application, which included the paragraph 12 noted above.  The court concluded that the trial court erred because MDCH sufficiently notified the decedent that her estate could be subject to estate recovery.  The court also agreed with MDCH that the trial court erred when it determined that allowing estate recovery in this case would violate the estate’s due process rights.  In support of this determination, the court stated that in addition to receiving sufficient notice under MCL 400.112g(7), the estate was personally apprised of MDCH’s action seeking estate recovery, and it had the opportunity to contest the possible deprivation of its property in the circuit court.  The court found that the estate had both notice and a hearing, which is what due process requires.  The case was then reversed and remanded for further proceedings consistent with the court’s opinion.

It is unknown as of the date this article was written on 4/20/15 whether the estate will file a motion for reconsideration or seek leave to appeal this decision. In the interim, MCR 7.125(C)(2) indicates that this opinion is precedent, even if an application for leave to appeal to the Michigan Supreme Court is filed or an order granting leave to appeal is granted.  Such filing does not diminish the precedential effect of a published opinion of the Court of Appeals.

Below is a list of the cases pending before the Michigan Court of Appeals (as of the date this article was written).

  1. In re Clark Estate (COA Case No. 320720) from Calhoun County Probate Court.
  2. In re Gorney Estate (COA Case No. 323090) from Huron County Probate Court.
  3. In re French Estate (COA Case No. 323185) from Calhoun County Probate Court.
  4. In re Ketchum Estate (COA Case No. 323304) from Clinton County Probate Court.
  5. In re Ketchum Estate (COA Case No. 324741) from Clinton County Circuit Court.
  6. In re Galloway Estate (COA Case No. 325792) from Huron County Probate Court.
  7. In re Rasmer Estate (COA Case No. 326642) from Bay County Probate Court.

Oral argument is scheduled for May 6 in the Clark case.

It will be interesting to see how the remaining pending estate recovery cases will be handled now.  MCR 7.215(J) will play an important role.  Some of them involve lower court decisions holding that paragraph 12 in the Medicaid application entitled “Estate Recovery” is not adequate notice under the statute, and, so, even where that exists, estate recovery is barred – both in situations where it existed at the time of enrollment and where it only existed in a later Redetermination application. Others involve lover court decisions holding that the home of modest value hardship exemption set forth in MCL 400.112g(3)(e)(i) is a statutory hardship exemption and it has been applied expressly as set forth in the statute.  Can we convince a different panel of the court that MCL 400.112g requires something other than what the Keyes opinion states and that MCR 7.215(J)(2) should be employed?

To learn more, contact attorney Melisa Mysliwiec at or 616-301-0800. Melisa works out of Fraser Trebilcock’s Grand Rapids and Lansing offices, focusing her work in the areas of Elder Law and Medicaid planning, estate planning, and trust and estate administration. She was named a “Rising Star” in Michigan by Super Lawyers in 2013 and 2014.