When a person dies, surviving family members are very vulnerable. They are going through the grieving process; they may feel guilty for not having done more for the decedent, or for an unresolved conflict; and they may be confused about their legal obligations related to the decedent’s debts. Collection agents take advantage of this vulnerability. They try to persuade grieving family members to pay debts they do not have to pay.
The State of Michigan has hired a debt collection company called HMS (Health Management Systems, Inc.) to pursue the families of deceased Medicaid recipients. This is called “estate recovery,” which is a euphemism for “take the widow’s mite when she dies.” Nursing home residents on Medicaid are not left with much — $2,000 in the bank, a pre-paid funeral, and maybe the home. The home, which is usually modest and outdated, is all the inheritance that will be left; so the state wants it. The same folks who think a $5 million tax-free estate puts an unreasonable crimp on rich families begrudge poor families a $50,000 bungalow in Grand Rapids.
As if the law, itself, were not burden enough on grieving families, the state will not be satisfied with what it is entitled to. It appears that HMS will act like other debt collectors – its employees will try to fleece grieving families for whatever they can get. It’s like sharing with a crocodile. The crocodile will be happy to accept its fair share, but then it wants your share, too.
The first contact the family of a deceased Medicaid recipient will receive from HMS is a letter asking that the family fill out a “voluntary” questionnaire. Except in very limited circumstances, do not return the questionnaire unless a probate estate has been opened and a personal representative (i.e., executor, executrix, or administrator) has been appointed by the probate court. The personal representative is the only person obligated to report anything to HMS and is the proper person to fill out the questionnaire.
The questionnaire is signed under oath and demands information HMS has no right to request. Filling out and returning the questionnaire if you are not the court-appointed personal representative makes you liable for the accuracy of the statements you make and gives HMS ammunition to try to browbeat you.
Responding to HMS by explaining that there is no probate and no personal representative, makes their collectors more insistent. As HMS sees things, “voluntary” means you have to fill out the questionnaire and return it. It is better to ignore HMS.
If you decide to return the questionnaire, do not make any false statements, but do not answer questions about non-probate assets or family members other than a surviving spouse. HMS has no right to ask about those things. In particular, do not provide HMS with anyone’s Social Security Number, including the surviving spouse’s. Under the Privacy Act of 1974, 5 U.S.C. § 552a, federal, state and local government agencies may only ask for a person’s Social Security Number if the agency needs it for a specific purpose. HMS is not a government agency and does not need the Social Security Number of the decedent’s family members for any legitimate purpose. Just say no.
If there is no probate estate or if there is a surviving spouse, there is no estate recovery and there is no reason to answer HMS. The only reason to fill out the questionnaire is to request a hardship waiver.
Hardship waivers are described in the estate recovery law, MCLA 400.112g. These include a waiver for the portion of the estate that is the primary income-producing asset of survivors, such as a family farm or business. They also include waivers for a home that is worth less than “50% of the average price of a home in the county,” whatever that means. The Medicaid Agency will not say how the average price of a home in the county is determined for this purpose. HMS gives you two weeks to return the questionnaire to request a hardship, but there is no time limit in the law. Furthermore, HMS makes it difficult to pursue a hardship waiver.
There are also four exemptions. The home of a deceased Medicaid recipient is exempt if it is occupied by: A) a surviving spouse, B) a minor, blind or disabled son or daughter, C) a brother or sister who has an ownership interest and has lived there for a year, or D) a relative who lived with, and provided care for, the recipient, keeping him or her out of a nursing home, for at least two years. Since these are exemptions, not hardship waivers, they do not need to be requested using the questionnaire procedure.
It is generally unwise to respond to HMS unless a probate estate has been opened. It is also unwise to do so without consulting a lawyer. Deciding what may be vulnerable to estate recovery involves serious legal issues and estate recovery places anything the decedent owned in jeopardy.
John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com ©2012 John B. Payne, Attorney