MATTER OF SCHNEIDER, 325932 (6-12-2007)
2007 NY Slip Op 51185(U)
In the Matter of the Estate of Leon Schneider, Deceased.
325932.
Surrogate's Court,
Nassau County.
Decided June 12, 2007.
[EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.]
Epstein Becker & Green, New York, NY, (Attorney for Petitioner).
H. William Hodges, Esq., Rockville Centre, NY, (Guardian Ad Litem).
Nassau County Department of Social Services, Uniondale, NY., (Attorney
for Respondent).
JOHN B. RIORDAN, J.
This is a proceeding brought by Beth Schneider, the executor of the
estate of her father, Leon Schneider, to determine the validity of a
claim made by the Nassau County Department of Social Services against
the estate for public assistance rendered to Zeena Schneider, Leon's
wife, from June 10, 1996 to October 3, 2002, while Leon was still alive.
Leon and Zeena had two children, Beth Schneider and Marc Schneider,
who is mentally retarded. On August 11, 1972, Leon was shot four times
in what Beth described as a "bungled mob" assassination attempt.
According to newspaper articles, the gunman mistook Leon and three
others for the mobsters he intended to kill. Leon suffered serious
injuries that left him unable to work for the remainder of his life. He
began receiving Social Security disability benefits in January 1976 and,
according to Beth, also received a Worker's Compensation award.
Zeena was diagnosed with Alzheimer's Disease in 1992. On December 22,
1995, Leon, as attorney-in-fact for Zeena, executed an "Assignment to
Petition the Court for Support Pursuant to 18 NYCRR 360-3.2." It states
that, in consideration of the medical assistance and care provided and
to be provided to Zeena by the New York State and Nassau County
Departments of Social Services, Zeena assigned to the Nassau County
Department of Social Services (DSS) "so much of [her] right, title and
interest to petition the court for support from my legally responsible
spouse." Leon, as Zeena's spouse, executed a "Declaration of the Legally
Responsible Relative" on January 4, 1996. It states, "I, Leon Schneider,
declare that I refuse to make my income and/or resources available for
the cost of necessary medical care and services for the Medicaid
applicant/recipient listed above."
Zeena began receiving Medicaid on June 10, 1996 when she was placed in
a nursing home. The record before the court includes a "Medical
Assistance Institutionalized Spouse Budget Worksheet," which was signed
on March 11, 1997 by a representative of DSS. The worksheet bears the
date of March 12, 1997 and lists the date of application as April 18,
1996. According to the worksheet, Leon had $ 268,048 in excess resources
and $ 157.80 in excess monthly income above the amounts allowed under
the rules and regulations applicable at that time.
Leon predeceased Zeena. He died on October 3, 2002. By prior decision
(Dec. No. 951, January 13, 2003), the guardian ad litem appointed by the
court to represent Zeena's interest in the probate proceeding in Leon's
estate was directed to exercise the right of election on her behalf, as
the surviving spouse, as the failure to exercise it would have resulted
in Zeena's non-eligibility for Medicaid.
Zeena died on December 3, 2003. The guardian ad litem had not yet
exercised the right
Page 2
of election on Zeena's behalf and, the right being personal, with
certain statutory exceptions, to the surviving spouse, was extinguished
upon her death (EPTL 5-1.1-A [c] [3].) A personal representative has not
been appointed for her estate.
On or about June 9, 2003, DSS filed the subject claim for $ 386,382.77
for public assistance provided to Zeena from June 10, 1996 to October 3,
2002, claiming preferred creditor status pursuant to Social Services Law
§ 104 (1); the claim was rejected by the estate on September 5, 2003.
Leon's will was admitted to probate by decree of this court on
February 24, 2004. The will created a supplemental needs trust for Zeena
to be funded with Leon's residuary estate. Upon Zeena's death, her
supplemental needs trust was to be distributed in accordance with the
terms of Leon's will, which contained bequests to Marc of $ 15,000 in a
supplemental needs trust, $ 15,000 outright to a niece, $ 5,000 to
Putnam ARC, and the rest to Beth.
Beth commenced the instant proceeding on December 1, 2005, asking the
court to determine that DSS's claim is invalid and should be disallowed.
The petition alleges that Leon's gross taxable estate is approximately $
566,000 and the net probate estate is approximately $ 350,625. Along
with the petition, Beth filed an affidavit, sworn to on November 1,
2005, in which she states, but supplies no proof, that Leon
"continuously made the monthly spousal income contributions requested by
the Department of Social Services." On the return date of the citation,
DSS failed to appear or interpose any objection to the relief requested.
By order dated April 21, 2006, the court appointed a guardian ad litem
to protect Marc's[fn1] interests in this proceeding. The guardian ad
litem filed his report on May 15, 2006, at which time DSS was in
default. In the report, the guardian ad litem states that Marc is
"woefully disabled" and "functions at the level of a two-year old
infant." The guardian ad litem also states that "if the claim is upheld
no beneficiary, including my ward, Marc Schneider, who is permanently
disabled, will receive any benefit under the will." The guardian ad
litem concludes that the claim should be denied.
DSS filed its verified answer to the petition on September 14, 2006,
after the court issued Dec. No. 405 on August 16, 2006 giving DSS thirty
days from the date of the decision and order to do so. The DSS asserts
that the claim is valid under a theory of an "implied contract" between
it and Leon.
After the petitioner and DSS submitted memoranda of law, the matter
was submitted for decision.
DISCUSSION
The petitioner asserts that the claim against the estate is invalid on
the following grounds: (1) both federal and New York State law preclude
the recovery of properly paid medical assistance, except in certain
circumstances not applicable in this case; (2) DSS cannot recover
against the estate of a Medicaid recipient's spouse; (3) DSS cannot
recover against the estate of a Medicaid recipient's predeceased spouse;
(4) recovery of a claim is prohibited where the Medicaid recipient is
survived by a permanently disabled child; (5) DSS failed to meet its
burden of proving "sufficient ability" on Leon's part at the time
Medicaid assistance was rendered to
Page 3
Zeena; and (6) the claim is barred by the equitable defense of laches.
DSS counters that the claim is properly recoverable from Leon's estate.
Briefly, Medicaid is a "co-operative Federal-State program operated
under State direction, but subject to Federal statutory and regulatory
guidelines" (Scarpuzza v Blum, 73 AD2d 237, 241-242 [2d Dept 1980]).
Enacted by Congress in 1965, Medicaid "was intended to provide partial
federal funding of the cost of providing medical care to the
disadvantaged" (id. at 241). States are not required to participate in
the Medicaid program; however, if a state participates, it is required
by federal law to enact a "statutory plan detailing the extent of
coverage and comporting with Federal law" (id. at 242). The numerous
required provisions of a state Medicaid plan are governed by
42 USC § 1396a (a). State programs are required to comply with
42 USC § 1396p
"with respect to liens, adjustments and recoveries of medical assistance
correctly paid" (42 USC § 1396a [a] [18]). Section 1396p (b) (1) permits
a state to recover for medical assistance properly paid only in limited
circumstances:
(A) In the case of an individual described in subsection (a)(1)(B) of
this section, the State shall seek adjustment or recovery from the
individual's estate or upon sale of the property subject to a lien
imposed on account of medical assistance paid on behalf of the
individual.
(B) In the case of an individual who was 55 years of age or older when
the individual received such medical assistance, the State shall seek
adjustment or recovery from the individual's estate, but only for
medical assistance consisting of
(i) nursing facility services, home and community-based services, and
related hospital and prescription drug services, or
(ii) at the option of the State, any items or services under the
State plan (42 USC § 1396p [b] [1] [A] & [B]).
New York State began participating in the Medicaid program in 1966
(Matter of Colon, 83 Misc 2d 344, 346 [Sur Ct, Kings County 1975],
citing L 1966, ch 256, § 3, eff April 30, 1966). Sections 363 through
369 of Article 5, title 11 of the Social Services Law govern New York
State's medical assistance implementation. Federal and New York State
law generally prohibit "recovery from the property of the recipient"
(Matter of Craig, 82 NY2d 388, 391 [1993], citing 42 USC § 1396a [a]
[18] and Social Services Law § 369 [2]). Social Services Law § 366 (3)
(a) is of particular significance to the determination of this
proceeding. It states: Medical assistance shall be furnished to
applicants in cases where, although such applicant has a responsible
relative with sufficient income and resources to provide medical
assistance as determined by the regulations of the department, the
income and resources of the responsible relative are not available to
such applicant because of the absence of such relative or the refusal or
failure of such relative to provide the necessary care and assistance.
In such cases, however, the furnishing of such assistance shall create
an implied contract with such relative, and the cost thereof may be
recovered from such relative in accordance with title six of article
three and other applicable provisions of law (Social Services Law § 366
[3] [a]).
In Matter of Craig (82 NY2d 388 [1993]), the issue before the Court of
Appeals was
Page 4
whether the Wayne County Department of Social Services was entitled to
reimbursement from the estate of Elizabeth Craig for Medicaid payments
provided to her husband, Norman. In 1983, Norman received Medicaid in
the amount of $ 4,373.79. He died intestate soon after. Wayne County did
not seek reimbursement from Elizabeth during her lifetime. The Court of
Appeals noted that it was undisputed that she lacked the financial means
that would have made her a "financially responsible relative" during the
time her husband was receiving benefits and until her own death
(id. at 390). By way of further background, Elizabeth also received
Medicaid in the amount of $ 10,478 prior to her death in 1989. She died
leaving an estate worth $ 27,348.50, out of which was paid the $ 10,478
claim filed in connection to her care. It was the claim against
Elizabeth's estate for $ 4,373.79 (plus interest since 1983) for
Medicaid provided to Norman that made its way to the Court of Appeals
after the Surrogate's Court and the Appellate Division disallowed the
claim (id. at 390-391).
The Court of Appeals determined that the Wayne County Department of
Social Services was not permitted to require an individual to sell his
home to pay for Medicaid (id. at 391). Thus, the surviving spouse of a
Medicaid recipient is not a responsible relative solely by dint of the
fact that he or she owned a house. However, an exception to the rule is
allowed upon the death of a person who was over fifty-five[fn2] when he
received medical assistance. In that instance, his house can be sold to
recover Medicaid payments properly paid to the recipient
(id.;42 USC § 1396p [b] [1] [B]). The Court of Appeals noted that this
was what was done in order for Wayne County to recover the payments made
to Elizabeth. But, the Court found that "the exception is qualified and
did not allow Wayne County to reach even farther back for recoupment as
to her predeceased husband's Medicaid payments" (id.).
The Court of Appeals explained that:
"[t]his scheme is set forth in Social Services Law § 369(2), which
incorporates Social Services Law § 366(3). When medical assistance is
furnished to an applicant who has a responsible relative with sufficient
income and resources to provide medical assistance, the furnishing of
such assistance shall create an implied contract with such relative. But
a responsible relative' by necessity and statute is determined by the
sufficient ability to pay at the time the expenses are incurred. Social
Services Law § 101 (Liability of relatives to support') only provides
that the spouse or parent of a recipient of public assistance or care
. . . if of sufficient ability, [will] be responsible for the support of
such person' (§ 101 [1]; emphasis added)" (id. at 391-392).
The Court of Appeals held that Elizabeth's estate was not liable for
the Wayne County Department of Social Services' claim for services
rendered to Norman because Elizabeth did not have sufficient means at
the time Medicaid payments were furnished to Norman (id. at 392). The
Court found that Wayne County's reliance on Social Services Law §
104[fn3] to support its claim
Page 5
against Elizabeth was misplaced, because that "section does not take the
sufficient means test out of contemporaneous assessment as of the time
the Medicaid payments are made on behalf of a predeceased relative"
(id.). The Court of Appeals concluded that the "assertion of a nunc pro
tunc obligation against the widow's estate is not supportable under
presently governing statutes, regulations and decisional reasoning"
(id. at 390).
There are three significant differences between the facts in
Matter of Craig and those before this court. First, in Craig, Elizabeth
was determined to have lacked sufficient means at the time Norman
received Medicaid benefits. Thus, the Court of Appeals concluded that
Wayne County could not recoup the payments from her estate (id. at 390,
392). In the instant case, a contemporaneous assessment was made by
Nassau County DSS that Leon had the requisite excess resources above the
maximum community spouse[fn4] resource allowance[fn5] and income above