Riverside County Public Guardian v. Snukst (Jan. 10, 2022, E074949) __ Cal.App.5th __ [2022 WL 92772]

Riverside County Public Guardian v. Snukst (Jan. 10, 2022, E074949) _ Cal.App.5th _ [2022 WL 92772]

DHCS may recoup the cost of Medi-Cal services from pay-on-death trust beneficiary.

Joseph Snukst purchased an annuity and created a revocable inter vivos trust. He designated the trust as the pay-on-death beneficiary of his annuity and named his niece Shawna as its beneficiary. He later spent seven years at a senior care facility where he received Medi-Cal benefits. Upon his death, the trust received $804,456.13 from his annuity. The Department of Health Care Services (DHCS) presented a creditor’s claim to Joseph’s public guardian seeking nearly $500,000 for the cost of Medi-Cal benefits it provided to Joseph. The probate court disallowed the public guardian’s request to satisfy the DHCS’s claim, ruling that (upon Joseph’s death) the annuity became a trust asset, rather than a conservatorship asset, requiring the entire trust to be distributed to Shawna. The DHCS appealed.

The Court of Appeal reversed, holding that both state and federal law governing revocable inter vivos trusts require reimbursement of Medi-Cal benefits paid by DHCS. The court explained that the public guardian, which acted as both the trustee of Joseph’s trust and conservator of his estate, properly notified DHCS of his death, as required by Probate Code section 19202. Both state and federal law entitled the DHCS to seek reimbursement of Medi-Cal benefits from Joseph’s estate, which included money transferred to Shawna through the trust because of the broad definition of an “estate” under both 42 U.S.C. section 1396p(b)(4)(A)-(B) and Welfare and Institutions Code section 14009.5, subdivision (a). Public policy also weighed in favor of allowing DHCS to recover “as much as possible” of the costs of providing medical services to low-income people, so that DHCS may continue providing such services.

For more information regarding this bulletin, please contact H. Thomas Watson, Horvitz & Levy LLP, at 818-995-0800 or htwatson@horvitzlevy.com.