Sometime in 2010, the Department of Human Services ("DHS") distributed what has become known as the "Life Estate Memo" to county social services agencies. The undated and unsigned Memo postulates that a non-homestead life estate held by a community spouse must be counted against his or her community spouse resource allowance ("CSRA"), but will not be counted if held by the institutionalized spouse. Because the Memo provides for differing treatment depending on which spouse owns the life estate, it also states that married couples must identify which of their combined resources will make up the CSRA before an eligibility determination is made.
In 2013, Minnesota's 9th Judicial District Court, acting as an appellate court, found DHS's policy arbitrary and capricious and contrary to state and federal law. Larson v. Minnesota Department of Human Services, et al., No. 60-CV-13-465 (Polk County, 9th Dist., 2013). Despite this outcome on appeal, DHS continued to impose the policy in other counties.
In December 2014, following an administrative hearing out of Renville County, the Human Services Judge agreed that the state may not treat a life estate as countable when held by a community spouse when it would not be counted if held by an institutionalized spouse. In re: Appeal of Vait, Docket #155286. In January 2015, Renville County requested reconsideration, arguing inter alia, that the Larson decision was not binding on the state. On April 3, 2015, the Director of DHS' Appeals Division denied the request for reconsideration, concluding that the issue was addressed in Larson under nearly identical facts, and that the statutory analysis was sound.
Yet another case arose in Renville County in 2018 on the application for Medical Assistance by Esther Schmalz. Esther and her husband, Marvin, jointly hold a variety of life estate interests in family farm property. Renville County denied Esther's eligibility for Medical Assistance based on Marvin's retention of his joint life estates, and Esther appealed. The Human Services Judge, with virtually no analysis and no reference to the prior adjudications, affirmed the denial of benefits.
Ms. Schmalz appealed to the Renville County District Court, and the decision issued on November 29, 2018. The Minnesota Chapter of the National Academy of Elder Law Attorneys intervened as amicus, and participated in briefing and oral argument.
In the decision, Judge Slieter reversed the denial of Esther's eligibility, concluding that disparate treatment of the life estates depending on which spouse holds title is an error of law. The Court also expressed concern about the continuing enforcement of the policies put forth in the Life Estate Memo, and expressed hope that the Commissioner would review its manual of instructions accordingly.
The information above was shared with the Elder Law Section's Governing Council on December 21, 2018. More recently, however, the Commissioner of Human Services has filed a Notice of Appeal to the Minnesota Court of Appeals. We will provide further updates as they become available. If you have a similar set of circumstances, or need further information, please contact Laura Zdychnec at [email protected].
Review Decision: 65-CV-18-157 Schmalz vs. MN Dept of Human Services - Order for Judgment Reversing Denial of Benefits