HF 2019

2nd Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to human services; allowing recovery of
medical assistance from trusts and annuities;
proposing coding for new law in Minnesota Statutes,
chapter 501B.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [501B.895] RECOVERY OF MEDICAL ASSISTANCE FROM
TRUSTS AND ANNUITIES.
new text end

new text begin Subdivision 1. new text end

new text begin Policy, applicability, purpose, and
construction; definition. new text end

new text begin (a) Section 256B.15, subdivision 1,
paragraphs (a), clauses (3) to (5), and (b), shall apply to this
section.
new text end

new text begin (b) The provisions of this section expanding the interests
included in an estate for purposes of recovery under this
section and section 256B.15, give effect to the provisions of
United States Code, title 42, section 1396p, governing
recoveries, but do not give rise to any express or implied liens
in favor of any other parties not named in this or any other
provisions.
new text end

new text begin (c) This section shall be deemed to be included as a
provision of all trusts and annuities first created or
established on and after July 1, 2005, whether or not it appears
in those instruments. All persons establishing, administering,
and benefiting or who might benefit from trusts and annuities
first established after July 1, 2005, are deemed to have
irrevocably consented to the provisions of this section. The
duties, obligations, and responsibilities under this section may
not be disclaimed, waived, or assigned.
new text end

new text begin (d) All trusts and trustees shall be deemed to be located
in and subject to the laws of this state and the personal
jurisdiction of the courts of this state to the extent the
recipient or the recipient's predeceased spouse had an interest
in the trust at the time of the recipient's or recipient's
predeceased spouse's death as provided for in this section.
Notwithstanding any provision of law or rule to the contrary,
all annuities and parties administering annuities shall be
subject to the laws of this state and the personal jurisdiction
of the courts of this state to the extent the recipient or the
recipient's predeceased spouse had an interest in the annuities
at the time of the recipient's or recipient's predeceased
spouse's death.
new text end

new text begin (e) The rights and remedies under this section shall be in
addition to and not in place of any other rights and remedies
provided for by law for the recovery of medical assistance.
These rights and remedies are cumulative, and the use of any
shall not preclude the use of any other rights and remedies
provided for by law for the recovery of medical assistance.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin The terms used in this section
have the meanings given in paragraphs (a) to (o).
new text end

new text begin (a) "Administrator" means any trustee of a trust or any
person, firm, corporation, or other entity that administers an
annuity.
new text end

new text begin (b) "Beneficiary" means any person or party entitled to
receive or who might be entitled to receive any benefit or
anything of value under the terms of a trust or annuity.
new text end

new text begin (c) "Clearance" means a clearance for medical assistance
claims as provided in this section.
new text end

new text begin (d) "Commissioner" means the commissioner of human services
or the commissioner's designee.
new text end

new text begin (e) "County agency" means a county social services or other
count agency with a claim arising under section 256B.15.
new text end

new text begin (f) "Created or established" or similar words and phrases
means, for purposes of determining when a trust is subject to
this section, the date an inter vivos trust is fully executed by
or on behalf of the person whose assets fund any part of the
trust, or the date on which the person contracting for an
annuity or anyone acting on their behalf signs the written
agreement providing for the annuity.
new text end

new text begin (g) "Department" means the Minnesota Department of Human
Services.
new text end

new text begin (h) "Legal instrument, device, or arrangement similar to a
trust or annuity" means any instrument, device, or arrangement
which involves a grantor who transfers or whose property is
transferred by another, including any court, administrative
body, or anyone else with authority to act on their behalf or at
their direction, to an individual or entity with fiduciary,
contractual, or legal obligations to the grantor or others to be
held, managed, or administered by the individual or entity for
the benefit of the grantor or others. These legal instruments,
devices, or other arrangements are trusts or annuities for
purposes of this section.
new text end

new text begin (i) "Marital property" means any and all property either
the recipient or the recipient's spouse owned or had an interest
in prior to their marriage or property acquired by either or
both the recipient and the recipient's surviving spouse at any
time during the marriage regardless of how it was acquired,
titled, or owned, and the proceeds of the property.
new text end

new text begin (j) "Medical assistance" means medical assistance as
defined in section 256B.15, subdivision 1, paragraph (b).
new text end

new text begin (k) "Predeceased spouse" means any spouse, whether a
recipient or not, who dies before the surviving spouse, or any
person, court, or administrative body with legal authority to
act in place of or on behalf of or at the direction of the
person or the person's spouse.
new text end

new text begin (l) "Recipient" means a person who received medical
assistance as defined for purposes of this section or any
person, court, or administrative body with legal authority to
act in place of or on behalf of or at the direction of the
person or the person's spouse.
new text end

new text begin (m) "Satisfaction" or "satisfaction of claim" means a
satisfaction of medical assistance claim as provided for in this
section.
new text end

new text begin (n) "Surviving spouse" means any spouse, whether a
recipient or not, who dies after the predeceased spouse, or any
person, court, or administrative body with legal authority to
act in place of or on behalf of or at the direction of the
person or the person's spouse.
new text end

new text begin (o) "Trust" means an inter vivos trust.
new text end

new text begin Subd. 3. new text end

new text begin Applicability. new text end

new text begin This section applies to all
trusts to the extent they contain assets of a recipient or the
recipient's spouse, to all annuities the recipient or a
recipient's spouse own or have a beneficial interest in, and to
legal instruments, devices, or arrangements similar to trusts
and annuities which are first created or established on and
after July 1, 2005, except to the extent otherwise provided
under federal law.
new text end

new text begin Subd. 4. new text end

new text begin Estate. new text end

new text begin For purposes of recovery of medical
assistance under this section, section 256B.15, or any other
federal or state laws, the following shall be part of the estate
and subject to recovery of medical assistance under this section
and section 256B.15:
new text end

new text begin (1) the interests, as defined in this section, a recipient
has in trusts or annuities at the time of the recipient's death;
new text end

new text begin (2) the interests, as defined in this section, a
recipient's surviving spouse has in trusts or annuities at the
time of the recipient's surviving spouse's death; and
new text end

new text begin (3) the life estates in real property owned by a trust or
annuity in which the recipient or the recipient's surviving
spouse has an interest at the time of the recipient or surviving
spouse's death.
new text end

new text begin Subd. 5. new text end

new text begin Extent of interest. new text end

new text begin For purposes of this
section:
new text end

new text begin (a) At the time of death a recipient shall be deemed to
have an interest in:
new text end

new text begin (1) the unpaid principal and income of an annuity the
recipient owns or has an interest in, whether annuitized or
equal to the maximum amount payable to the recipient under the
terms of the annuity determined as though the recipient had
lived long enough to be entitled to receive them;
new text end

new text begin (2) all the remaining trust assets, proceeds of assets, and
income from those assets or proceeds the administrator was
obligated to or had any discretion to pay to the recipient or
for their benefit to the extent they were or can be traced to
assets the recipient or the recipient's spouse owned or had any
interest in, whether individually, jointly, or as marital
property; and
new text end

new text begin (3) all of the remaining trust assets the recipient owned
or had any interest in during his or her lifetime, whether held
individually, jointly, or as marital property, the proceeds of
those assets and the income from those assets and proceeds.
new text end

new text begin (b) At the time of death, a surviving spouse of a
predeceased recipient spouse shall be deemed to have an interest
in:
new text end

new text begin (1) the unpaid principal and income of the annuity the
surviving spouse owns or has an interest in, whether annuitized
or not, equal to the maximum amount payable to the surviving
spouse under the terms of the annuity determined as though the
surviving spouse had lived long enough to be entitled to receive
them; and
new text end

new text begin (2) all of the trust assets the surviving spouse and the
predeceased recipient spouse owned or had any interest in
individually, jointly, or as marital property or in which the
predeceased recipient spouse owned or had any individual or
jointly owned interest, and the proceeds and income from those
assets and proceeds.
new text end

new text begin (c) For purposes of this section and section 256B.15, and
notwithstanding any provision of law or rule to the contrary, a
deceased recipient or deceased surviving spouse shall be deemed
to have an interest in the entire life estate in real property
that a trust or annuity owns when the recipient or surviving
spouse dies.
new text end

new text begin (d) All of the assets, proceeds of assets, and income from
those assets or proceeds in annuities and trusts described in
paragraphs (a) and (b) shall be presumed to be assets the
recipient owned or had an interest in individually, jointly, or
as marital property. Anyone asserting otherwise in an appeal
under section 256.045, a court proceeding, or otherwise may
overcome this presumption by clear and convincing evidence to
the contrary.
new text end

new text begin Subd. 6. new text end

new text begin First use of assets. new text end

new text begin (a) Upon the death of a
recipient or a surviving spouse who is a beneficiary of a trust
or an annuity, the administrator shall set aside and retain
trust assets or the portion of the unpaid amount of the annuity
equal to the decedent's interest in the trust or annuity
determined under this section. The administrator shall not
sell, assign, transfer, convey, or encumber the portion so set
aside except for reasonably equivalent value. The administrator
shall not distribute the portion so set aside until after
receiving a clearance or satisfaction from the department or a
court. As soon as practical after the recipient or surviving
spouse's death, the administrator or administrator's attorney
shall apply to the commissioner for a clearance for medical
assistance claims. The administrator shall retain that portion
set aside and administer and pay it according to this section,
section 256B.15, and all other laws governing or relating to
recovery of medical assistance.
new text end

new text begin (b) As soon as practical after receiving notice of the
death of any person who owned or had any beneficial interest in
an annuity and who resided in this state at the time of the
person's death, the administrator of the annuity shall apply for
a clearance of medical assistance claims under this section. If
the clearance states a claim for medical assistance for anyone
named in the application, the administrator of the annuity shall
pay the department or a county agency with an allowed claim
under section 256B.15 the lesser of the amount of medical
assistance stated in the clearance or the decedent's interest in
the annuity as determined under this section. The administrator
of the annuity shall pay the portion of the annuity due
according to the terms of the annuity and as though the decedent
or surviving spouse were still alive and entitled to receive
payments under the annuity. The administrator may also settle
the administrator's obligations under this section and section
256B.15 with the department or county agency upon mutually
agreeable terms and conditions.
new text end

new text begin (c) Notwithstanding any statute, rule, or the terms of any
trust or annuity to the contrary, the administrator shall have
the duty and the authority to do all things necessary to
liquidate the assets or proceeds of assets set aside to repay
medical assistance as provided for by law. The administrator
shall promptly pay the department or a county agency as provided
for by law.
new text end

new text begin (d) Except as otherwise provided, nothing in this section
shall be construed to be or create an express or implied lien on
the real and personal property included in the portion of the
trust or annuity set aside and administered under this section
or to make the title to the property unmarketable.
new text end

new text begin Subd. 7. new text end

new text begin Clearance for medical assistance claims. new text end

new text begin (a)
The application for a clearance of medical assistance claims
shall be addressed to the commissioner. The application shall
state:
new text end

new text begin (1) the name, date of birth, and Social Security number for
the decedent and any predeceased spouses;
new text end

new text begin (2) the names, current address, and work and home telephone
numbers for all administrators and all surviving beneficiaries
of the trust or annuity;
new text end

new text begin (3) whether the decedent's estate is being probated and, if
it is, the district court and case number for the probate;
new text end

new text begin (4) the approximate value of the portion of the trust or
annuity being set aside; and
new text end

new text begin (5) other contents as the commissioner deems appropriate.
new text end

new text begin (b) The commissioner shall determine whether the decedent
or any predeceased spouses received medical assistance giving
rise to a claim under section 256B.15. If there are no claims,
the commissioner, at no cost to others, shall send the
administrator or the administrator's attorney a clearance for
claims by first class mail. If there are claims and the
application states the decedent's estate is being probated, the
commissioner shall send written notice a claim exists to the
administrator or the administrator's attorney and the county
agency. If there are claims and the application states the
decedent's estate is not being probated, the commissioner shall
send the administrator or the administrator's attorney and all
of the beneficiaries listed on the application written notice
stating the approximate amount of the claim, and a notice of the
right to a hearing as provided for in this section and section
256.045.
new text end

new text begin If there is no probate, notice shall be by certified mail,
return receipt requested, at the address in the application.
new text end

new text begin (c) A clearance for medical assistance claims shall
constitute prima facie evidence of compliance with the notice
requirements of this subdivision. Except in cases of fraud,
fraud in fact, or misrepresentation, if the commissioner issues
a clearance for medical assistance claims stating there are no
claims for medical assistance under section 256B.15 with respect
to a person properly identified in the application, the
administrator and all others who do or may benefit from the
trust or annuity with respect to which it is issued shall be
entitled to conclusively rely on the certificate. The
department shall thereafter be fully and finally barred from
recovering any medical assistance for such persons from the
trust or annuity and from anyone who becomes or may become
entitled to receive anything from the trust or annuity after the
person's death. The clearance is not a waiver, release, or
satisfaction of any claims for recovery of medical assistance
arising under law.
new text end

new text begin Subd. 8. new text end

new text begin Recovery. new text end

new text begin (a) If the estate of the deceased
recipient or the surviving spouse is probated, the deceased
recipient or the surviving spouse's interest in trusts and
annuities shall be part of the estate and subject to recovery of
medical assistance as provided for under section 256B.15 and all
other applicable laws. The court, upon the court's motion or
upon motion by the personal representative or any party with a
claim under section 256B.15, and upon any prior notice given by
the court, shall enter all orders or grant legal or equitable
remedies that are necessary to carry out the purposes of this
section and all related statutes. Upon payment or satisfaction
of the claim, the party asserting the claim, the personal
representative, or the court shall issue the party administering
the trust or annuity a satisfaction under this section. The
satisfaction shall be prima facie evidence of compliance with
all of the requirements of this section.
new text end

new text begin (b) If the estate of the deceased recipient or surviving
spouse is not being probated, the commissioner shall recover all
medical assistance for which a claim could be filed under
section 256B.15 from that portion of the trust or annuity set
aside under this section. Upon payment or satisfaction of the
claim, the commissioner shall issue the party administering the
trust or annuity a satisfaction. The satisfaction shall be
prima facie evidence of compliance with all of the requirements
of this section.
new text end

new text begin (c) A satisfaction under this section releases a claim
under section 256B.15 only to the extent the claim is actually
paid according to this section. It does not operate as a
release and satisfaction of that claim to the extent the claim
remains unpaid or otherwise unsatisfied.
new text end

new text begin Subd. 9. new text end

new text begin Appeal. new text end

new text begin (a) If the decedent's estate is not
being probated, the administrator or any beneficiary named in
the application for a clearance may request a hearing under
section 256.045 solely to determine the existence or extent of
the claim arising under section 256B.15 or whether property was
jointly owned or marital property at any time during the
marriage of the recipient and the surviving spouse. The appeal
must be made within 30 days of the date of receipt of the notice
of claim. The request must:
new text end

new text begin (1) be in writing;
new text end

new text begin (2) list the names, addresses, and home and business
telephone numbers of the administrator and all of the
beneficiaries of the trust or annuity;
new text end

new text begin (3) state that no application or petition for the
appointment of a personal representative of the decedent is
pending or has been granted in any jurisdiction; and
new text end

new text begin (4) include a copy of the notice of a claim for the
decedent.
new text end

new text begin (b) A request for a hearing shall be deemed to be a request
by all of the administrators and all of the beneficiaries. When
an administrator requests a hearing, the administrator shall be
deemed to be acting on behalf of all of the actual, contingent,
known, and unknown beneficiaries as well. Notice of the hearing
need only be given to the administrator, and the decision in the
appeal shall be final and binding on the administrator and all
beneficiaries. If a beneficiary requests a hearing, notice of
the hearing shall be given to the administrator and all of the
other beneficiaries listed in the request for a hearing.
new text end

new text begin (c) The administrator shall be deemed to represent all
contingent, known, and unknown beneficiaries and any other
beneficiaries for whom there is no current address or home or
work telephone number listed in the hearing request, and any
decision in the appeal shall be final and binding upon the
parties they represent. Any party to whom notice of the hearing
is mailed shall be deemed to have waived any and all of the
party's claims and defenses for themselves and any parties they
represent with respect to the department's claim under section
256B.15 unless that party appears and asserts the party's claims
and defenses at the hearing.
new text end

new text begin Subd. 10. new text end

new text begin Life estates. new text end

new text begin Notwithstanding any law or rule
to the contrary, if a trust or an annuity owns a life estate in
real property, the provisions in paragraphs (a) to (c) apply.
new text end

new text begin (a) The life estate shall continue to exist until
terminated of record as provided for in this section and shall
not terminate except as provided for in this section.
new text end

new text begin (b) The recorder or registrar of titles shall not accept,
record, or file any instrument terminating a life estate of
record or transferring or encumbering the life estate unless a
clearance or a satisfaction is recorded, filed, or attached to
the instrument. The clearance or satisfaction need not be
attested, certified, or acknowledged as a condition of filing
and may be separately recorded or filed if it includes a legal
description of the property. When attached, the clearance or
satisfaction and the instrument to which it is attached shall be
deemed to be a single instrument for all purposes. The life
estate shall terminate upon the filing or recording of the
clearance or satisfaction or an instrument of termination and
attached satisfaction or certificate of clearance for medical
assistance claims, and examiners of title shall not carry the
life estate or instrument of termination forward to any new
certificates.
new text end

new text begin (c) The commissioner may charge the annuity, trust, or any
other party requesting a clearance or satisfaction an issuance
fee not to exceed the lesser of the actual amount of its claim
for medical assistance under section 256B.15 or the value of the
life estate for a satisfaction of claim. The extent of the life
estate in the property shall be the life estate percentage
factor for the person who is the measuring life on the date of
the death of the recipient or the surviving spouse as listed in
the life estate mortality table of the health care program's
manual.
new text end

new text begin Subd. 11. new text end

new text begin Liability and remedies. new text end

new text begin (a) Administrators who
do not comply with this section shall be personally liable to
the department or a county agency for the lesser of the unpaid
amount of claims arising under section 256B.15 or the value of
the portion of the trust or annuity payable in satisfaction of
claims arising under section 256B.15 as provided for under this
section. If there is a failure to comply with this section,
anyone who receives anything of value from the trust or annuity
shall be personally liable to the department or a county agency
for the lesser of the unpaid amount of claims arising under
section 256B.15 or the value of anything or any benefit they
directly or indirectly receive from the trust or annuity on and
after the date the recipient or the surviving spouse dies.
new text end

new text begin (b) The commissioner or a county agency may bring civil
actions in district court to compel compliance with this section
or section 256B.15 or to obtain judgment or other legal or
equitable relief against anyone liable to it under this section
or section 256B.15. Venue for all actions the commissioner
brings shall be in Ramsey County. Venue for all actions a
county agency brings shall be in the county in which the county
agency is located. Administrators or beneficiaries shall be
deemed to submit to the personal jurisdiction of the district
court with venue when they agree to or begin administering the
trust or annuity or become entitled to any actual or potential
benefit from the trust or annuity. A clearance or a
satisfaction shall be admissible as evidence, prima facie
evidence of compliance with the requirements of this section,
and an affirmative defense to any action for recovery or
otherwise. The commissioner shall have the burden of overcoming
the presumption of compliance arising from admission of the
certificate or satisfaction by a preponderance of the evidence.
The court shall have the authority to enter judgments, orders,
and temporary and permanent injunctions granting and providing
all legal and equitable remedies necessary to accomplish the
purposes of this section. As part of a judgment in the
commissioner's or county agency's favor, the court shall award
the commissioner or the county agency reasonable attorney fees
and all other costs associated with obtaining the judgment.
new text end

new text begin (c) The provisions of section 289A.50, subdivision 5, shall
apply with respect to recovery of judgments in favor of the
commissioner in actions arising under this section. Upon being
presented with a certified copy of the judgment entry and a
statement of the unpaid balance of the judgment, the
commissioner of the Department of Revenue or the commissioner's
designee shall withhold any refunds due the judgment debtor from
the state of Minnesota and remit them to the commissioner in the
manner provided for in section 289A.50, subdivision 5. The
withholding shall not exceed the unpaid balance of the judgment,
together with interest and costs.
new text end

new text begin (d) An administrator who sells, liquidates, delivers,
transfers, or pays any of the trust assets or the unpaid amount
of the annuity to the commissioner or a county agency to meet
obligations under this section shall be fully and finally
discharged and released from any and all liability to all
beneficiaries to the same extent as if they had delivered,
transferred, or paid them to the beneficiaries as provided for
in law and the terms of the trust or annuity.
new text end

new text begin Subd. 12. new text end

new text begin Exceptions. new text end

new text begin This section does not apply to
supplemental needs trusts or to special needs trusts that
qualify as exempt assets for purposes of eligibility for medical
assistance, to testamentary trusts, or to a trust or annuity
otherwise subject to this section to the extent that persons
other than a recipient, the recipient's spouse, a predeceased
spouse, or anyone with authority to act on their behalf used
their own funds or assets to fund the trust or annuity at the
time it was created or established.
new text end

new text begin Subd. 13. new text end

new text begin Settlement. new text end

new text begin The commissioner, the
commissioner's designee, or a county agency may, but are not
required to, settle and compromise recoveries under this section
for terms and conditions and for amounts that the commissioner,
the commissioner's designee, or a county agency deems
appropriate.
new text end

new text begin Subd. 14. new text end

new text begin Disclosure. new text end

new text begin (a) An annuity contract or trust
instrument must contain a conspicuous disclosure on the front
page of the existence and effects of this section, including
subdivision 1, paragraph (c).
new text end

new text begin (b) An application for medical assistance or general
assistance medical care must contain a conspicuous disclosure on
the front page of the existence and effects of this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective on the day
following final enactment, applies to all trusts and annuities
first created or established on or after July 1, 2005, and
applies to all interests in real or personal property regardless
of the date on which the interest was created, reserved, or
acquired.
new text end