By Alan Polack
In its published opinion, entitled Department of Community Health v. Sharon Pumford, Personal Representative of the Estate of Catherine Klein, dated July 19, 2016, (No. 329725) the Court of Appeals has driven another nail in the coffin of the home of modest value exception to Medicaid Estate Recovery.
This is an appeal from the Saginaw Probate Court.
In that case, Michigan Department of Community Health (MDCH) filed a claim against Klein's Estate for reimbursement of Medicaid expenses in the amount of $133,768.90.
The only asset in the estate was Klein's home valued at $45,521.77.
Pumford disallowed the claim asserting that client's home was exempt based on its value.
MDCH moved for Summary Judgment, claiming that there was no exemption for a home of modest value since the estate had failed to apply for hardship waiver.
The Probate Court found that MCL400.112 (g) (3) established a mandatory exemption for a home of modest value and that the estate was not required to apply for a hardship waiver.
As you might recall from earlier discussions of homes of modest value, they were defined as a home whose value was equal to or less than 50 percent of the average price of a home in the county in which the Medicaid recipient's homestead is located at the time of death.
The Court of Appeals cited In Re Estate of Clark (unpublished opinion dated May 28, 2015 ( No. 320720) which opined "if the Legislature wanted to automatically prohibit DCH from pursuing estate recovery against estates that included homes valued at equal to or less than 50 percent of the average price of a home in the county in which the Medicaid recipient's homestead is located as of the date of the medical assistance recipient's death, it would have prefaced such language with an explicit mandate."
Based upon the Clark interpretation of the statute, the court found that there is no mandatory exemption for a home of modest value and that unless the estate can establish a hardship under different sections of the statute, MDCH is entitled to recover regardless of the value of the homestead.
Probate Court ruling reversed - end of story.
Based on this decision and In Re: Estate of Ketchum (2016) (No.324741) , there is no exemption for a home of modest value unless there's a hardship waiver.
All this begs the question of why did the legislature talk about a home of modest value in the first place?
The state never intended to grant it and they wrote their rules specifically to prevent it.
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Alan F. Polack is a Shelby Township attorney who formerly served as president of the Macomb County Probate Bar Association.
Published: Fri, Sep 16, 2016
