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LIENS AND ESTATE RECOVERY CHALLENGES IN OKLAHOMA

Many of our clients are interested in leaving something for their children and other heirs. Many of their children are interested in receiving this inheritance that has been promised to them or to which they otherwise think they are entitled. This can become a problem, if a parent requires long-term care in a nursing facility and requires help from Medicaid to pay for this nursing home care. When this happens, all plans go out the window. If the Medicaid agency, in our case the Department of Human Services or DHS, has spent money on behalf of that parent, it will file a Medicaid lien to protect its interest. GOVERNMENT LIENS The government uses the Medicaid lien to foreclose on a recipient's property, usually after his or her death. On occasion, the government can seek to recover these assets from the individual directly while the individual is still living, but usually it is the estate that bears this burden. It really doesn't matter as the government always gets its money. The theory is simple. The government has used taxpayer money to pay for an individual's care and the government should be able to recover that money for the public coffers. It wouldn't be fair for the recipient to have had the benefit of these government payments and then for the children to inherit whatever assets remain without having to repay what has essentially been a government "loan." On the other hand, many individuals feel that the inheritance is so important to the goodwill of the family that the children should be allowed to receive it free of lien. In some cases, family members are successful in avoiding the enforcement of this Medicaid lien. CREATURE OF STATUTE The Medicaid lien is a creature of statute. Even so, it is up to the government's representative to file the lien or to file a claim in the probate action to recover sufficient funds to satisfy the lien. Because the lien is a creature of statute, it arises automatically with respect to the recipient's property so long as the facts of the case fit within the statutory requirements to impose the lien. Once it is determined that the government is entitled to a lien, then notice and a hearing are required before the lien can be filed and foreclosed upon or raised as a claim in the probate case. AUTHORIZED RECIPIENTS There are two types of recipients of benefits. The first is called the "institutionalized individual." This is a person who is a patient in a nursing facility, a medical institution to whom payment is made based on the level of care provided in a nursing facility, or someone who fits the description set forth in Section 1396(a)(10)(A)(ii)(VI) of the statute. This is the parent or recipient discussed at the beginning of this section. The other class of individuals who may be entitled to benefit is referred to as the "non-institutionalized individual." This is someone who receives any of the services set forth in (c)(1)(C)(ii) of the statute, namely those services set forth in paragraph (7), (22), or (24) of Section 1396d(a), but excludes care provided in a nursing facility, the level of care in any other institution equivalent to that of a nursing facility, or home or community-based services provided under a waiver granted under sub-Section (C) or (D) of Section 1396n. In many instances, this is the spouse of an institutionalized individual. ESTATE RECOVERY When we talk about recovering from the estate of a recipient, we are talking about the real and personal property, tangible and intangible, which are included in an individual's probate estate as defined in Title 58 of the Oklahoma Statutes. In addition, for the purpose of the Medicaid lien, the recipient's estate may also include at the state's option (and will include in the case of an individual to whom paragraph (1)(C)(I) applies), any long-term care insurance policy benefits for the decedent or his or her estate. It may also include any legal title or interest the recipient may have had at the time of death, up to the extent of the recipient's interest in said property, including assets which were conveyed to a surviving spouse, and heir, or an assignee of the decedent as a result of ownership in joint tenancy, tenancy in common, survivorship, a life estate, a living trust, or other similar arrangement. REQUIRED TESTS For the government to recover property from a living recipient or a deceased recipient's estate, the government must meet certain tests. These include: 1. That the government paid nursing home expenses are covered by the Medicaid lien law; 2. That the circumstances of the case are such that a lien attached as a matter of law; 3. That there are no superior claims or liens on the property; and 4. The amount of the lien claimed. If the government meets its burden, usually the probate court will order the personal representative to pay the government the full amount of the lien out of available probate assets or, if there are insufficient assets to pay the lien in full, the probate court will assign its priority over other claims. If the Medicaid lien attaches by law under the provisions of 42 U.S.C. Section 1396p, then the property may be recovered by the government. the first issues that must be established are (1) do the facts of the case automatically result in a Medicaid lien attaching to the recipient's property, and (2) can the lien be foreclosed? Pursuant to the provisions of 42 U.S.C. Section 1396p, there are two times when a lien can be foreclosed during a recipient's lifetime: 1. If the court finds benefits were improperly paid to or on behalf of an individual, the government can foreclose on the property. 2. If the recipient is a patient in a nursing home, intermediate care facility for the mentally retarded, or other medical institution, pays all income but approximately $50 per month for this care, and is not expected to return home, the government can foreclose its lien against the recipient's unoccupied real property. A Medicaid lien will not attach to the property if: 1. The spouse of the recipient resides in the home; 2. A child of the recipient under age 21, blind or permanently or totally disabled lives there; or 3. A sibling with an equity interest in the home resided in the home for at least one year prior to the recipient's admission to the nursing or other facility and still resides in the home. Once a Medicaid lien is in place, it may be enforced before or after the death of the recipient, but only in the following situations: 1. Following the death of the surviving spouse; 2. After the surviving spouse abandons the homestead; 3. Once no child under the age of 21 resides in the home; 4. No blind or disabled child resides in the home; 5. No qualifying sibling resides in the home; and 6. No qualifying child of the recipient, who lived in the home for 2 years immediately prior to the recipient's admission to the facility and provided care to the recipient, lives in the home. If the lien is satisfied, by whatever means, or if it is dissolved because the recipient returns home and lives there for more than 90 days, the Oklahoma Health Care Authority will release the lien.

Additional resources provided by the author

Additional information can be found in the Deficit Reduction Act of 2005, signed into law by President Bush on February 8, 2006 and made effective in Oklahoma in August 2007, with most provisions of the DRA retroactive to the February 2006 date.

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