Parents of Deceased SNT Beneficiary Must Be Paid for Caregiving Services Before Medicaid

An Indiana appeals court rules that before the state may be reimbursed for its Medicaid payments to an SNT beneficiary, the beneficiary's parents must be paid for the uncompensated care they rendered. State v. Hammans (Ind. Ct. App., No. 55A04-0606-CV-294, Aug. 2, 2007).

 

In 1994, Roland and Sue Hammans's son Nicholas sustained traumatic brain injury as the result of a car crash, leaving him completely disabled and requiring 24-hour care. The Hammanses later received a lawsuit settlement of $200,000 on Nicholas's behalf, which was placed in a court-established special needs trust (SNT) under 42 U.S.C. § 1396p(d)(4)(A). The Hammanses subsequently provided Nicholas round-the-clock care at their home, with Medicaid contributing nursing services 40 hours a week.

Nicholas died unexpectedly in 2005. At the time of his death, the SNT had a balance of $143,860. The Hammanses petitioned for fees associated with the administration of the trust and for compensation for the care they had rendered to Nicholas. The trial court ordered payment of $140,000 to the Hammanses, finding that the Hammanses' caregiving services were consistent with the trust's terms and had been performed with the expectation that compensation would eventually be authorized prior to Nicholas's death.

The State of Indiana appealed, arguing that according to both the terms of the trust and the (d)(4)(A) statute, the Hammanses were required to pay the entire remaining amount of the trust to the state upon Nicholas's death. The state asserted that the Hammanses did not advance any claims for caregiving services during Nicholas's lifetime and that they volunteered their services out of love for their son.

The Court of Appeals of Indiana affirms, finding that the services provided by the Hammanses fulfilled the essential function of the trust and were expenditures authorized under its terms. Therefore, the Hammanses are legitimate creditors who require payment before the state may be reimbursed. "It would be absurd," the court writes, "to interpret the trust and the statute in such a way as to condition the payment of legitimate creditors upon the physical receipt of funds from the trust prior to the death of the beneficiary."