Pfoser v. Harpstead

by MN NAELA Chapter: Jill M. Sauber

Pfoser: MA-LTC Recipient Not Subject to a Penalty Period for Transfers to Pooled Special Needs Trust After Age 65 -- Valuable Consideration Received

Pfoser v. Harpstead, 953 N.W.2d 507 (Minn. Jan. 20, 2021).

 

David Pfoser had Parkinson's disease and lived in a long-term care facility, the cost of which was paid by Medicaid for Long-Term Care (Medical Assistance or “MA-LTC”). In late 2017, Pfoser transferred $28,010 into a pooled special needs trust sub-account for his benefit. Pfoser was age 65 at the time of the transfer. The Minnesota Department of Human Services issued a final agency decision affirming the imposition of a 3.94-month transfer penalty on the sole grounds that Pfoser was over the age of 64 when he made the transfer. Pfoser appealed.

The district court reversed the agency decision, concluding that Pfoser's vested equitable interest in the trust assets was adequate compensation under federal and state law. The decision was affirmed on appeal. The Department appealed.

The Minnesota Supreme Court affirmed that the Department erred in affirming the transfer penalty against Pfoser.  The Court held that when a long-term care Medicaid recipient over age 64 makes a satisfactory showing under Minn. Stat. § 256B.0595(4)(a)(4) that he intended to dispose of assets for valuable consideration, a transfer of assets by the recipient to a pooled special needs trust is not subject to the imposition of a penalty period.

First, when an MA-LTC recipient challenges a transfer penalty and asserts the asset-transfer exception, the Department must make a factual determination whether the recipient intended to dispose of the assets either at fair market value or for other valuable consideration. Second, while analyzing whether an MA-LTC recipient has proven the asset-transfer exception, the Department must consider evidence of fair market value received at the time of the transfer and evidence of other valuable consideration received before, during, and after the time of the transfer.

The court said that Pfoser successfully demonstrated he intended to receive valuable consideration in the form of a legally enforceable interest in the trust and the future goods and services he would receive; accordingly, the transfer was not subject to a penalty period.

Read the Pfoser decision here.