State's Medicaid Lien Filed After Death of Recipient Enforceable

An Ohio appeals court has ruled that the state has priority over a nursing home in a claim for Medicaid recovery against the estate of a nursing home resident even though the state did not file a lien against the resident's property until after the resident died. Wiesenmayer v. Vaspory (Ohio Ct. App., 2ndDist., No. 27931, May 10, 2019).

The decision carves out special treatment for the state when enforcing liens for Medicaid, because generally, a lien filed on real estate after the death of the debtor is not enforceable.  See Dressler v. Bowling, 24 Ohio St.3d 14, 492 N.E.2d 446 (1986); Brandon v. Keaton, 90 Ohio App.3d 542, 630 N.E.2d 17 (2d Dist.1993).  In Dressler, the Ohio Supreme Court wrote, “[i]t is well-settled that no lien is obtained by a certificate of judgment filed after the judgment debtor’s death, since his real property descends to his heirs at the time of death.”  Dressler at 16. This had been well-settled law, until the advent of Medicaid resource recovery and the need to protect state lien rights, since many Medicaid recipients pass away before the state has an opportunity to perfect its rights by filing a lien against property.  Notwithstanding the well-settled law, the courts afford the state special protection and the opportunity to enforce liens filed after the death of the debtor, an opportunity not afforded to other creditors.

The following are the facts in the case: Nursing home resident Margaret Edwards received Medicaid benefits for five months before she died. After she died, the state recorded a lien on her property in order to recover Medicaid benefits it paid on her behalf.  The probate court appointed R.C. Wiesenmayer administrator for Ms. Edwards' estate, and he requested authority to sell Ms. Edwards' property. The nursing home filed a claim against the estate for unpaid bills. The state also filed a claim to recover Medicaid benefits. The trial court ruled that the state's lien was valid and had priority over the claim of the nursing home. The nursing home appealed, arguing that the state's lien was not valid because it was not recorded before Ms. Edwards died.

The Ohio Court of Appeals, Second District, affirmed the trial court's decision, holding that the state's lien is valid and has priority over the nursing home's claim. Noting that "the estate recovery program contemplates the recovery of Medicaid costs from the assets of deceased recipients," the court ruled that the state's Medicaid lien law "does not apply exclusively to living, permanently institutionalized recipients of Medicaid benefits, and consequently, that [the state] was not required to record its lien against [Ms.] Edwards’s property before she died."

New Budget Deal Reinstates Protections for Personal Injury Awards from State Claims

The budget deal signed into law by President Trump on February 9, 2018 permanently and retroactively restored protection of personal injury recoveries from State claims.  Under the new law, States can only make claims against the medical expense reimbursement portion of personal injury judgments and settlements, protecting the rest of such recoveries, such as the portions representing compensation for pain and suffering from such claims.

The new law represents a permanent and retroactive repeal of the law that overturned the Supreme Court decision in Arkansas Department of Health and Human Services, et al. v. Ahlborn 547 U.S. 268 (2006).  Ahlborn had been overturned by Section 202 of the Bipartisan Budget Act of 2013 (BBA), which expanded states’ access to entire personal injury settlements and awards to recoup Medicaid costs spent on a beneficiary’s behalf.  Originally set to take effect on October 1, 2014, it was twice delayed before finally coming into force late in 2017.  The current bill eliminates the 2013 language that nullified Ahlborn.

In 2006 the Supreme Court issued its Ahlborn decision, finding that under the anti-lien restrictions of the Social Security Act states had a right to recover only from the portion of a settlement or award that was allocated to medical expenses. The remainder of the settlement went to help cover the recipient’s expenses not covered by Medicaid.  Seven years later, in Wos v. E.M.A. 568 U.S. 627 (2013), the Court struck down a state statute imposing a mandatory Medicaid lien on up to one-third of a recovery, reiterating that "[a]n irrebuttable, one-size-fits-all statutory presumption is incompatible with the Medicaid Act's clear mandate that a State may not demand any portion of a beneficiary's tort recovery except the share that is attributable to medical expenses." 

Following Wos, and without warning, Congress used the BBA to erase the protection Ahlborn and Wos afforded personal injury recoveries.  The 2013 budget bill amended the Social Security Act to give states the right to recover from Medicaid beneficiaries' entire settlements.  The BBA also gave states the right to place a lien on those settlements or awards. 

From the beginning, the American Association for Justice (AAJ) has vigorously fought to eliminate the BBA provision.  It managed to twice delay implementation -- first to October 2016, and then again to October 2017.  Ever since last October’s delay expired, the AAJ has worked for repeal.  “We believe this is a great victory that will ensure Medicaid recipients retain access to the courts,” said Linda Lipsen, AAJ’s Chief Executive Officer.