You want protection? Prove it!

Alan Polack

Medicaid pays for long term care in nursing homes. Applications for this program are processed by the Michigan Department of Health and Human Services (DHHS).

Over the years, DHHS, by virtue of amendments to state and federal regulations and appellate decisions, has restricted “Medicaid Planning,” which involves various techniques to accelerate the date of Medicaid eligibility for nursing home residents.

Those techniques can be simple or complex.

One of the complex ones is to petition probate court for a protective order to increase the protected spousal amount of assets and the income allowance of the community (at home) spouse over and above the amounts established by DHHS regulation.

These petitions have been quite successful in the last few years.

Now DHHS has won some victories in its war against these petitions.

We have a published opinion out of Saginaw County involving two cases consolidated for appeal.

They are Schroeder vs. DHHS, COA NO 351011 and Almy vs DHHS, COA NO 351012.

A third unpublished opinion out of Clare County was decided the same day by a different panel.  That case is Murphy vs. DHHS, COA NO 350535.

All three decisions zero in on section 5401 of EPIC that controls protective orders and state, in part, as follows:

3) The court may appoint a conservator or make another protective order in relation to an individual’s estate and affairs if the court determines both of the following:

• The individual is unable to manage property and business affairs effectively for reasons such as mental illness, mental deficiency, physical illness or disability, chronic use of drugs, chronic intoxication, confinement, detention by a foreign power, or disappearance.

• The individual has property that will be wasted or dissipated unless proper management is provided, or money is needed for the individual’s support, care, and welfare or for those entitled to the individual’s support, and that protection is necessary to obtain or provide money.

In Schroeder and Morley, the court determined that insufficient evidence was presented to find that either of them was unable to manage his property and business affairs  as required by (3) (a).

In Schroeder and Almy, the court found that the Probate Court could not determine whether the community spouse “needed” support as required by (3) (b) without a prior determination of DHHS of the amount of assets and income to which the community spouse was entitled.

In other words, apply for Medicaid, get their numbers, then go to court if the amounts are inadequate.

I know that practitioners have been filing petitions prior to application to avoid adding DHHS as an interested party.

Curiously, Morley addressed this issue specifically and ruled that DHHS was an interested party to a petition for a Protective Order prior to Medicaid application under MCR (c) (25) (e).

So to get a Protective Order to increase the protected assets or the income allowance for the community spouse you have to:

1. Apply for Medicaid first and get the DHHS Amounts for the community spouse income allowance and the community spouse resource allowance.

2. Then file your petition notifying DHHS of your actions

3. Prove by clear and convincing evidence that:

• Your sick spouse is in fact unable to manage his property and business affairs; and

• That the community spouse needs more assets and/or income than the state allows for reasons other than maintaining her standard of living, ie Medical or personal assistance needs of her own.

Although the Morley Court did not require the petitioner to apply for Medicaid before seeking a court order, it did emphasize that petitioner did not demonstrate the need of the community spouse for the requested “support” as required by MCL 700.5401 (3) (c).

This requirement was also discussed in  Schroeder/Almy.

At any rate the Court of Appeals reversed the decision in each case for a different reason.

In Schroeder/Almy, it was lack of evidence of the amount of  protected assets and income allowance determined by DHHS.

It somewhat sounds like exhaustion of administrative remedies which normally require appeal to Circuit Court not Probate Court. Morley was decided on lack of proof that either 5401 (3) (c) (b) and were satisfied.

It seems that the Protective Order is still available to increase income and assets for the community spouse when actual proofs fit the statutory framework.

The Court of Appeals in Schroeder/Almy did not limit a remedy to Administrative proceedings under the Medicaid Rules.  It should be noted that the COA do not base their decisions on Medicaid Rules and how they apply to these cases.  It based their decisions on the application of EPIC alone.


Alan F. Polack specializes in elder and probate law and practices out of Shelby Township. He is a former president of the Macomb County Probate Bar Association.