Medicaid Estate Recovery Mystification

One of the core principles of government in the United States is transparency. Freedom of the press and laws that require government agencies to provide information to citizens on request are considered essential to keeping our bureaucrats, mandarins, syndics and pashas more honest than they might otherwise be. However, as in many states, Michigan Department of Human Services and Department of Community Health, which administer welfare programs, are exempt from the public notice and open meetings laws that govern other departments. DHS and DCH are particularly restrictive in providing information about the new Estate Recovery Program that started July 1, 2011 to recoup Medical Assistance, or Medicaid, benefits from deceased recipients.

State welfare agencies are the bureaucratic offspring of local and county welfare boards. These boards operated with very loose guidelines to provide assistance to the poor and the sick. Until welfare became largely federalized and firm guidelines imposed, the role of the welfare worker was very maternalistic toward the individuals and families the welfare boards helped. They were free to remove children from homes that fell short on hygienic or moral grounds, as viewed by the workers. They would stage dawn raids on the homes of single mothers to look for a man in the house or evidence such as men’s shoes under the bed. This highhandedness has been curbed through court cases establishing that welfare recipients have the right to fair treatment, but it still exists.

The Medicaid agency must properly consider relevant data in making its decisions. Friedman v. Perales, 668 F. Supp. 216, 221 (S.D.N.Y. 1987), aff’d, 841 F. 2d 47 (2d Cir. 1988). This infers a right to present information to the agency and the right to be informed how the agency makes its decisions. Michigan DHS and DCH have been thwarting elder law attorneys and their clients in procuring information about estate recovery. For example, HMS, the estate recovery contractor refuses to provide a copy of the form used to request an estate-recovery exemption.

In a call to HMS recently, the agent refused to provide a copy of the exemption form unless an estate-recovery questionnaire were first submitted–and HMS decided that there might be an exemption. This would make it difficult to know how to fill out the questionnaire. A letter to the DCH Director has not been answered.

In a bizarre twist, DCH refuses to provide information about how it will determine whether a home is “of modest value.” Medicaid policy says that a home is of modest value if it is worth less than the average price of a home in the county where located. A colleague attempted to get information about how HMS and DCH will determine the relevant average. He explained that his request concerned the exemption in MCL 400.112g(3)(e)(i) “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.” He requested a copy of records to be used to determine the value of the “average price of a home” for each Michigan county or the method that would be used to determine it.

The response from DCH was:

There are no records that meet the description of your request. It is the responsibility of the applicant to provide sufficient documentation showing that a hardship exists. If the home is of modest value, this would include a tax assessment value from the county where the home is located. It may also include an appraisal of the home. This documentation must be submitted along with the undue hardship application to show that a hardship exists. MDCH will use this information in making a decision about whether to grant the hardship.

In other words, the personal representative should provide information about the value of the home and hope that the agency will decide that it is of “modest value.” This is unfair to potential and present Medicaid recipients of long-term care services. They need to make decisions about whether to maintain the home or abandon it, keep it or sell it.

This is an important issue to our elderly poor and middle class. The Michigan government owes fair disclosure to Medicaid recipients and their families. The exemption form and how DCH will determine the average values of homes in various counties will become common knowledge as estate recovery claims are made and decided. It is oppressive and unfair to the first few Medicaid recipients who have to deal with the issues to impose an information lockdown. The Medicaid agency should stop playing headgames with its clientele and adopt a policy of open and fair disclosure.


John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
©2011 John B. Payne, Attorney