Singin’ the One and One Blues

An estate recovery case I am handling just “settled.” Quotation marks are used because money is extremely unlikely to change hands. This case puts me in a one-and-one position. I won one of the first estate recovery cases filed in Michigan, but my client insisted on settling this one. This was disappointing because I could have won the case and squeezed some attorney’s fees out of the state. A mouthful of Mr. Clean would taste better than telling an Assistant Attorney General, “You win.”

Estate recovery is a new program for Michigan Medicaid. See “Beware of HMS,” February 16, 2012, in this blog. If a person dies a nursing home resident on Medicaid, the state goes after the person’s probate estate to be repaid. Do you know the difference between a prostitute and a lawyer? When the client dies, the prostitute stops providing services and demanding to be paid for them. Now the state, itself, has decided that deceased Medicaid clients should not be allowed to rest in peace.

I had two former Medicaid clients whose estates were targeted by the Michigan Attorney General. After the rigamarole with HMS, the AG’s office filed lawsuits against these two estates. In the first one, the probate estate had already been closed when the estate recovery program was initiated on July 1, 2011. The case turned on the question of whether Medicaid was a “known creditor” before July 1, 2011. If Medicaid was a known creditor, it was entitled to a special notice that was never sent out by the personal representative. After some back and forth, the judge decided that Medicaid was not a known creditor entitled to special notice, and dismissed the lawsuit.

The more recent estate was still open on July 1, 2011, so Medicaid was given notice. The estate only included a $20,000 house. The AG’s office filed suit and I answered that the state was not entitled to any recovery for three reasons:

A) Estate recovery exempts the home, or portion of the home, that is “less than 50% of the average price of a home in the county.” MCLA 400.112g(e)(i). The AG is being secretive about what the state will claim is the average price of a home, but it is pretty clear that $20,000 is less than that.

B) The statute authorizing Medicaid estate recovery, 2007 Publ. Act 74, provides that the Department of Community Health “shall provide to the individual written materials explaining the process for applying for a waiver from estate recovery due to hardship.” MCLA 400.112g(3)(e). My client never received required such an explanation before she died.

C) The statute also requires Medicaid to “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.” MCLA 400.112g(7). This mandatory notice was not provided.

Since the state did not abide by its own rules, winning should have been a slam dunk, but the AG’s office offered a settlement that would not cost the estate anything. The only way the state would get any money from the estate would be if new estate assets surfaced. Because my client, the personal representative, was nervous, I was directed to settle on the AG’s terms.

It is always a bad idea to litigate over “principle.” A client deceives herself or him self by saying, “It is not about the money.” It is about the money. I always advise my clients to settle when there is not enough money on the table to make litigation worthwhile. However, one of the advantages of being a attorney is that I do not have to take my own advice.

I really wanted to go to the mat on this case. The Attorney General has the money and the staff to bully estates into settling. I hate that. I do not hesitate to go toe-to-toe with the state or a big lawfirm. After years of criminal practice, where it is one lawyer against a legal department that can devote millions to a single case, I am no longer intimidated. I just hope that the next time I have a Medicaid estate recovery case my client will let me do what I do best: Win!


John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
©2012 John B. Payne, Attorney

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