Miller v. Ibarra

Facts

On different dates, all four plaintiffs entered a skilled nursing facility with the intention of permanently residing there. Since each of their incomes exceeded the state’s monthly income cap, they were each ordered to create a trust into which their income would be placed, and the trustee given discretion to pay the institutionalized individual’s living expenses from. Subsequent to creating the trust, each individual submitted an application for Medicaid benefits and was denied on the basis that the income transferred to the trusts was a transfer without fair consideration rendering the Plaintiffs ineligible.

Issue

The parties have raised the following issues:

• Whether improper denial of Medicaid benefits is actionable under 42 U.S.C. 1983
• Whether the Plaintiffs’ income placed in trust should be considered “available” for purposes of 42 U.S.C. 1396a(a)(17)(B) and 9 Colo. Code Regs. 3.200.21 (1979)
• Whether creation of the trusts constituted disposing of resources for less than fair market value within the meaning of 42 U.S.C. 1396p(c) or transfers without fair consideration in violation of 9 Colo. Code Regs. 3.210.31 (1979) and;
• Whether the trusts are Medicaid qualifying trusts within the meaning of 42 U.S.C. 1396a(k)

Holding

Judgement is entered in favor of all the plaintiffs and against the defendant. From the date each plaintiff was denied Medicaid benefits, the defendant is ordered to treat the trust assets as “available” to the plaintiffs pursuant to 42 U.S.C. §1396a(a)(17) only to the extent authorized by the terms of the trusts.

Rationale

The Court determined that the Plaintiffs did have the standing to invoke §1983 in order to challenge the agency’s denial of Medicaid benefits. Furthermore, because applicable federal and state laws dictate that income and resources may only be considered available for consideration in determining Medicaid eligibility when the applicant has actual ownership of those funds, the Court concluded that the income deposited into the trust was not “available” to them. Additionally, since the transfers were considered involuntary and consisted of the Plaintiffs’ income, not resources, the federal and state statutes barring transfers without fair consideration do not apply to this case. Lastly, upon review of the terms of the trust, even considering full exercise of discretion by the trustees, the trustees are unable to distribute more than an amount $20.00 less than the Medicaid income eligibility level. Therefore, these trusts, which were not created by the Plaintiffs but rather ordered by the Probate court, would not render the Plaintiffs ineligible for Medicaid and cannot be considered ‘Medicaid qualifying trusts.’

The full document text can be found here.