1.1 	A bill for an act
1.2 	relating to human services; allowing recovery of
1.3 	medical assistance from trusts and annuities;
1.4 	proposing coding for new law in Minnesota Statutes,
1.5 	chapter 501B.
1.6 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. [501B.895] RECOVERY OF MEDICAL ASSISTANCE FROM
1.8 	TRUSTS AND ANNUITIES.
1.9 		Subdivision 1.Policy, applicability, purpose, and
1.10 	construction; definition. (a) Section 256B.15, subdivision 1,
1.11 	paragraphs (a), clauses (3) to (5), and (b), shall apply to this
1.12 	section.
1.13 	(b) The provisions of this section expanding the interests
1.14 	included in an estate for purposes of recovery under this
1.15 	section and section 256B.15, give effect to the provisions of
1.16 	United States Code, title 42, section 1396p, governing
1.17 	recoveries, but do not give rise to any express or implied liens
1.18 	in favor of any other parties not named in this or any other
1.19 	provisions.
1.20 	(c) This section shall be deemed to be included as a
1.21 	provision of all trusts and annuities first created or
1.22 	established on and after July 1, 2005, whether or not it appears
1.23 	in those instruments.  All persons establishing, administering,
1.24 	and benefiting or who might benefit from trusts and annuities
1.25 	first established after July 1, 2005, are deemed to have
2.1 	irrevocably consented to the provisions of this section.  The
2.2 	duties, obligations, and responsibilities under this section may
2.3 	not be disclaimed, waived, or assigned.
2.4 	(d) All trusts and trustees shall be deemed to be located
2.5 	in and subject to the laws of this state and the personal
2.6 	jurisdiction of the courts of this state to the extent the
2.7 	recipient or the recipient's predeceased spouse had an interest
2.8 	in the trust at the time of the recipient's or recipient's
2.9 	predeceased spouse's death as provided for in this section.
2.10 	Notwithstanding any provision of law or rule to the contrary,
2.11 	all annuities and parties administering annuities shall be
2.12 	subject to the laws of this state and the personal jurisdiction
2.13 	of the courts of this state to the extent the recipient or the
2.14 	recipient's predeceased spouse had an interest in the annuities
2.15 	at the time of the recipient's or recipient's predeceased
2.16 	spouse's death.
2.17 	(e) The rights and remedies under this section shall be in
2.18 	addition to and not in place of any other rights and remedies
2.19 	provided for by law for the recovery of medical assistance.
2.20 	These rights and remedies are cumulative, and the use of any
2.21 	shall not preclude the use of any other rights and remedies
2.22 	provided for by law for the recovery of medical assistance.
2.23 		Subd. 2.Definitions. The terms used in this section
2.24 	have the meanings given in paragraphs (a) to (o).
2.25 	(a) "Administrator" means any trustee of a trust or any
2.26 	person, firm, corporation, or other entity that administers an
2.27 	annuity.
2.28 	(b) "Beneficiary" means any person or party entitled to
2.29 	receive or who might be entitled to receive any benefit or
2.30 	anything of value under the terms of a trust or annuity.
2.31 	(c) "Clearance" means a clearance for medical assistance
2.32 	claims as provided in this section.
2.33 	(d) "Commissioner" means the commissioner of human services
2.34 	or the commissioner's designee.
2.35 	(e) "County agency" means a county social services or other
2.36 	count agency with a claim arising under section 256B.15.
3.1 	(f) "Created or established" or similar words and phrases
3.2 	means, for purposes of determining when a trust is subject to
3.3 	this section, the date an inter vivos trust is fully executed by
3.4 	or on behalf of the person whose assets fund any part of the
3.5 	trust, or the date on which the person contracting for an
3.6 	annuity or anyone acting on their behalf signs the written
3.7 	agreement providing for the annuity.
3.8 	(g) "Department" means the Minnesota Department of Human
3.9 	Services.
3.10 	(h) "Legal instrument, device, or arrangement similar to a
3.11 	trust or annuity" means any instrument, device, or arrangement
3.12 	which involves a grantor who transfers or whose property is
3.13 	transferred by another, including any court, administrative
3.14 	body, or anyone else with authority to act on their behalf or at
3.15 	their direction, to an individual or entity with fiduciary,
3.16 	contractual, or legal obligations to the grantor or others to be
3.17 	held, managed, or administered by the individual or entity for
3.18 	the benefit of the grantor or others.  These legal instruments,
3.19 	devices, or other arrangements are trusts or annuities for
3.20 	purposes of this section.
3.21 	(i) "Marital property" means any and all property acquired
3.22 	by either or both the recipient and the recipient's surviving
3.23 	spouse at any time during the marriage regardless of how it was
3.24 	acquired, titled, or owned, and the proceeds of the property.
3.25 	(j) "Medical assistance" means medical assistance as
3.26 	defined in section 256B.15, subdivision 1, paragraph (b).
3.27 	(k) "Predeceased spouse" means any spouse of the recipient
3.28 	or surviving spouse who did not survive the recipient's or
3.29 	surviving spouse's death.
3.30 	(l) "Recipient" means a person who received medical
3.31 	assistance as defined for purposes of this section or any
3.32 	person, court, or administrative body with legal authority to
3.33 	act in place of or on behalf of or at the direction of the
3.34 	person or their spouse.
3.35 	(m) "Satisfaction" or "satisfaction of claim" means a
3.36 	satisfaction of medical assistance claim as provided for in this
4.1 	section.
4.2 	(n) "Surviving spouse" means the spouse of a recipient who
4.3 	survived the recipient's death or any person, court, or
4.4 	administrative body with legal authority to act in place of or
4.5 	on behalf of or at the direction of the person or their spouse.
4.6 	(o) "Trust" means an inter vivos trust.
4.7 		Subd. 3.Applicability. This section applies to all
4.8 	trusts and annuities to the extent they contain assets of a
4.9 	recipient or the recipient's spouse, and to legal instruments,
4.10 	devices, or arrangements similar to trusts and annuities which
4.11 	are first created or established on and after July 1, 2005,
4.12 	except to the extent otherwise provided under federal law.
4.13 		Subd. 4.Estate. For purposes of recovery of medical
4.14 	assistance under this section, section 256B.15, or any other
4.15 	federal or state laws, the following shall be part of the estate
4.16 	and subject to recovery of medical assistance under this section
4.17 	and section 256B.15:
4.18 	(1) the interests, as defined in this section, a recipient
4.19 	has in trusts or annuities at the time of the recipient's death;
4.20 	(2) the interests, as defined in this section, a
4.21 	recipient's surviving spouse has in trusts or annuities at the
4.22 	time of the recipient's surviving spouse's death; and 
4.23 	(3) the life estates in real property owned by a trust or
4.24 	annuity in which the recipient or the recipient's surviving
4.25 	spouse has an interest at the time of the recipient or surviving
4.26 	spouse's death.
4.27 		Subd. 5.Extent of interest. For purposes of this
4.28 	section:
4.29 	(a) Except for life estates in real property, a deceased
4.30 	recipient shall be deemed to have an interest in all of the
4.31 	unpaid amount of an annuity and all of the trust assets,
4.32 	proceeds of assets, and income from those assets or proceeds of
4.33 	assets which the administrator was obligated or had any
4.34 	discretion to pay to the recipient or for the recipient's
4.35 	benefit on the date of the recipient's death.
4.36 	(b) Except for life estates in real property, a deceased
5.1 	surviving spouse shall be deemed to have an interest in the
5.2 	unpaid amount of the annuity and all of the trust assets,
5.3 	proceeds of assets, and income from those assets or proceeds of
5.4 	assets which the trustee was obligated or had any discretion to
5.5 	pay to the recipient or for the recipient's benefit on the date
5.6 	of the recipient's death to the extent those assets were
5.7 	property that was jointly owned or marital property at any time
5.8 	during the marriage of the decedent and the surviving spouse.
5.9 	All of the assets and proceeds of assets used to fund the trust
5.10 	or an annuity shall be presumed to be property which the
5.11 	deceased recipient and the deceased surviving spouse owned
5.12 	jointly or which were marital property during their marriage.
5.13 	Any party asserting otherwise in any appeal under section
5.14 	256.045, a court proceeding, or otherwise, may overcome this
5.15 	presumption by clear and convincing evidence to the contrary.
5.16 	(c) For purposes of this section and section 256B.15, and
5.17 	notwithstanding any provision of law or rule to the contrary, a
5.18 	deceased recipient or deceased surviving spouse shall be deemed
5.19 	to have an interest in the entire life estate in real property
5.20 	that a trust or annuity owns when the recipient or surviving
5.21 	spouse dies.
5.22 		Subd. 6.First use of assets. (a) Upon the death of a
5.23 	recipient or a surviving spouse who is a beneficiary of a trust
5.24 	or an annuity, the administrator shall set aside and retain
5.25 	trust assets or the portion of the unpaid amount of the annuity
5.26 	equal to the decedent's interest in the trust or annuity
5.27 	determined under this section.  The administrator shall not
5.28 	sell, assign, transfer, convey, or encumber the portion so set
5.29 	aside except for reasonably equivalent value.  The administrator
5.30 	shall not distribute the portion so set aside until after
5.31 	receiving a clearance or satisfaction from the department or a
5.32 	court.  As soon as practical after the recipient or surviving
5.33 	spouse's death, the administrator or administrator's attorney
5.34 	shall apply to the commissioner for a clearance for medical
5.35 	assistance claims.  The administrator shall retain that portion
5.36 	set aside and administer and pay it according to this section,
6.1 	section 256B.15, and all other laws governing or relating to
6.2 	recovery of medical assistance.
6.3 	(b) Notwithstanding any statute, rule, or the terms of any
6.4 	trust or annuity to the contrary, the administrator shall have
6.5 	the duty and the authority to do all things necessary to
6.6 	liquidate the assets or proceeds of assets set aside to repay
6.7 	medical assistance as provided for by law.  The administrator
6.8 	shall promptly pay the department or a county agency as provided
6.9 	for by law.
6.10 	(c) Except as otherwise provided, nothing in this section
6.11 	shall be construed to be or create an express or implied lien on
6.12 	the real and personal property included in the portion of the
6.13 	trust or annuity set aside and administered under this section
6.14 	or to make the title to the property unmarketable.
6.15 		Subd. 7.Clearance for medical assistance claims. (a)
6.16 	The application for a clearance of medical assistance claims
6.17 	shall be addressed to the commissioner.  The application shall
6.18 	state:
6.19 	(1) the name, date of birth, and Social Security number for
6.20 	the decedent and any predeceased spouses;
6.21 	(2) the names, current address, and work and home telephone
6.22 	numbers for all administrators and all surviving beneficiaries
6.23 	of the trust or annuity;
6.24 	(3) whether the decedent's estate is being probated and, if
6.25 	it is, the district court and case number for the probate;
6.26 	(4) the approximate value of the portion of the trust or
6.27 	annuity being set aside; and 
6.28 	(5) other contents as the commissioner deems appropriate.
6.29 	(b) The commissioner shall determine whether the decedent
6.30 	or any predeceased spouses received medical assistance giving
6.31 	rise to a claim under section 256B.15.  If there are no claims,
6.32 	the commissioner, at no cost to others, shall send the
6.33 	administrator or the administrator's attorney a clearance for
6.34 	claims by first class mail.  If there are claims and the
6.35 	application states the decedent's estate is being probated, the
6.36 	commissioner shall send written notice a claim exists to the
7.1 	administrator or the administrator's attorney and the county
7.2 	agency.  If there are claims and the application states the
7.3 	decedent's estate is not being probated, the commissioner shall
7.4 	send the administrator or the administrator's attorney and all
7.5 	of the beneficiaries listed on the application written notice
7.6 	stating the approximate amount of the claim, and a notice of the
7.7 	right to a hearing as provided for in this section and section
7.8 	256.045.
7.9 	Notice shall be by certified mail, return receipt
7.10 	requested, at the address in the application.
7.11 	(c) A clearance for medical assistance claims shall
7.12 	constitute prima facie evidence of compliance with the notice
7.13 	requirements of this subdivision.  Except in cases of fraud,
7.14 	fraud in fact, or misrepresentation, if the commissioner issues
7.15 	a clearance for medical assistance claims stating there are no
7.16 	claims for medical assistance under section 256B.15 with respect
7.17 	to a person properly identified in the application, the
7.18 	administrator and all others who do or may benefit from the
7.19 	trust or annuity with respect to which it is issued shall be
7.20 	entitled to conclusively rely on the certificate.  The
7.21 	department shall thereafter be fully and finally barred from
7.22 	recovering any medical assistance for such persons from the
7.23 	trust or annuity and from anyone who becomes or may become
7.24 	entitled to receive anything from the trust or annuity after the
7.25 	person's death.  The clearance is not a waiver, release, or
7.26 	satisfaction of any claims for recovery of medical assistance
7.27 	arising under law.
7.28 		Subd. 8.Recovery. (a) If the estate of the deceased
7.29 	recipient or the surviving spouse is probated, the deceased
7.30 	recipient or the surviving spouse's interest in trusts and
7.31 	annuities shall be part of the estate and subject to recovery of
7.32 	medical assistance as provided for under section 256B.15 and all
7.33 	other applicable laws.  The court, upon the court's motion or
7.34 	upon motion by the personal representative or any party with a
7.35 	claim under section 256B.15, and upon any prior notice given by
7.36 	the court, shall enter all orders or grant legal or equitable
8.1 	remedies that are necessary to carry out the purposes of this
8.2 	section and all related statutes.  Upon payment or satisfaction
8.3 	of the claim, the party asserting the claim, the personal
8.4 	representative, or the court shall issue the party administering
8.5 	the trust or annuity a satisfaction under this section.  The
8.6 	satisfaction shall be prima facie evidence of compliance with
8.7 	all of the requirements of this section.
8.8 	(b) If the estate of the deceased recipient or surviving
8.9 	spouse is not being probated, the commissioner shall recover all
8.10 	medical assistance for which a claim could be filed under
8.11 	section 256B.15 from that portion of the trust or annuity set
8.12 	aside under this section.  Upon payment or satisfaction of the
8.13 	claim, the commissioner shall issue the party administering the
8.14 	trust or annuity a satisfaction.  The satisfaction shall be
8.15 	prima facie evidence of compliance with all of the requirements
8.16 	of this section.
8.17 	(c) A satisfaction under this section releases a claim
8.18 	under section 256B.15 only to the extent the claim is actually
8.19 	paid according to this section.  It does not operate as a
8.20 	release and satisfaction of that claim to the extent the claim
8.21 	remains unpaid or otherwise unsatisfied.
8.22 		Subd. 9.Appeal. (a) If the decedent's estate is not
8.23 	being probated, the administrator or any beneficiary named in
8.24 	the application for a clearance may request a hearing under
8.25 	section 256.045 solely to determine the existence or extent of
8.26 	the claim arising under section 256B.15 or whether property was
8.27 	jointly owned or marital property at any time during the
8.28 	marriage of the recipient and the surviving spouse.  The appeal
8.29 	must be made within 30 days of the date of receipt of the notice
8.30 	of claim.  The request must:
8.31 	(1) be in writing;
8.32 	(2) list the names, addresses, and home and business
8.33 	telephone numbers of the administrator and all of the
8.34 	beneficiaries of the trust or annuity;
8.35 	(3) state that no application or petition for the
8.36 	appointment of a personal representative of the decedent is
9.1 	pending or has been granted in any jurisdiction; and 
9.2 	(4) include a copy of the notice of a claim for the
9.3 	decedent.
9.4 	(b) A request for a hearing shall be deemed to be a request
9.5 	by all of the administrators and all of the beneficiaries.  When
9.6 	an administrator requests a hearing, the administrator shall be
9.7 	deemed to be acting on behalf of all of the actual, contingent,
9.8 	known, and unknown beneficiaries as well.  Notice of the hearing
9.9 	need only be given to the administrator, and the decision in the
9.10 	appeal shall be final and binding on the administrator and all
9.11 	beneficiaries.  If a beneficiary requests a hearing, notice of
9.12 	the hearing shall be given to the administrator and all of the
9.13 	other beneficiaries listed in the request for a hearing.
9.14 	(c) The administrator shall be deemed to represent all
9.15 	contingent, known, and unknown beneficiaries and any other
9.16 	beneficiaries for whom there is no current address or home or
9.17 	work telephone number listed in the hearing request, and any
9.18 	decision in the appeal shall be final and binding upon the
9.19 	parties they represent.  Any party to whom notice of the hearing
9.20 	is mailed shall be deemed to have waived any and all of the
9.21 	party's claims and defenses for themselves and any parties they
9.22 	represent with respect to the department's claim under section
9.23 	256B.15 unless that party appears and asserts the party's claims
9.24 	and defenses at the hearing.
9.25 		Subd. 10.Life estates. Notwithstanding any law or rule
9.26 	to the contrary, if a trust or an annuity owns a life estate in
9.27 	real property, the provisions in paragraphs (a) to (c) apply.
9.28 	(a) The life estate shall continue to exist until
9.29 	terminated of record as provided for in this section and shall
9.30 	not terminate except as provided for in this section.
9.31 	(b) The recorder or registrar of titles shall not accept,
9.32 	record, or file any instrument terminating a life estate of
9.33 	record or transferring or encumbering the life estate unless a
9.34 	clearance or a satisfaction is recorded, filed, or attached to
9.35 	the instrument.  The clearance or satisfaction need not be
9.36 	attested, certified, or acknowledged as a condition of filing
10.1 	and may be separately recorded or filed if it includes a legal
10.2 	description of the property.  When attached, the clearance or
10.3 	satisfaction and the instrument to which it is attached shall be
10.4 	deemed to be a single instrument for all purposes.  The life
10.5 	estate shall terminate upon the filing or recording of the
10.6 	clearance or satisfaction or an instrument of termination and
10.7 	attached satisfaction or certificate of clearance for medical
10.8 	assistance claims, and examiners of title shall not carry the
10.9 	life estate or instrument of termination forward to any new
10.10 	certificates.
10.11 	(c) The commissioner may charge the annuity, trust, or any
10.12 	other party requesting a clearance or satisfaction an issuance
10.13 	fee not to exceed the lesser of the actual amount of its claim
10.14 	for medical assistance under section 256B.15 or the value of the
10.15 	life estate for a satisfaction of claim.  The extent of the life
10.16 	estate in the property shall be the life estate percentage
10.17 	factor for the person who is the measuring life on the date of
10.18 	the death of the recipient or the surviving spouse as listed in
10.19 	the life estate mortality table of the health care program's
10.20 	manual.
10.21 		Subd. 11.Liability and remedies. (a) Administrators who
10.22 	do not comply with this section shall be personally liable to
10.23 	the department or a county agency for the lesser of the unpaid
10.24 	amount of claims arising under section 256B.15 or the value of
10.25 	the portion of the trust or annuity payable in satisfaction of
10.26 	claims arising under section 256B.15 as provided for under this
10.27 	section.  If there is a failure to comply with this section,
10.28 	anyone who receives anything of value from the trust or annuity
10.29 	shall be personally liable to the department or a county agency
10.30 	for the lesser of the unpaid amount of claims arising under
10.31 	section 256B.15 or the value of anything or any benefit they
10.32 	directly or indirectly receive from the trust or annuity on and
10.33 	after the date the recipient or the surviving spouse dies.
10.34 	(b) The commissioner or a county agency may bring civil
10.35 	actions in district court to compel compliance with this section
10.36 	or section 256B.15 or to obtain judgment or other legal or
11.1 	equitable relief against anyone liable to it under this section
11.2 	or section 256B.15.  Venue for all actions the commissioner
11.3 	brings shall be in Ramsey County.  Venue for all actions a
11.4 	county agency brings shall be in the county in which the county
11.5 	agency is located.  Administrators or beneficiaries shall be
11.6 	deemed to submit to the personal jurisdiction of the district
11.7 	court with venue when they agree to or begin administering the
11.8 	trust or annuity or become entitled to any actual or potential
11.9 	benefit from the trust or annuity.  A clearance or a
11.10 	satisfaction shall be admissible as evidence, prima facie
11.11 	evidence of compliance with the requirements of this section,
11.12 	and an affirmative defense to any action for recovery or
11.13 	otherwise.  The commissioner shall have the burden of overcoming
11.14 	the presumption of compliance arising from admission of the
11.15 	certificate or satisfaction by a preponderance of the evidence.
11.16 	The court shall have the authority to enter judgments, orders,
11.17 	and temporary and permanent injunctions granting and providing
11.18 	all legal and equitable remedies necessary to accomplish the
11.19 	purposes of this section.  As part of a judgment in the
11.20 	commissioner's or county agency's favor, the court shall award
11.21 	the commissioner or the county agency reasonable attorney fees
11.22 	and all other costs associated with obtaining the judgment.
11.23 	(c) The provisions of section 289A.50, subdivision 5, shall
11.24 	apply with respect to recovery of judgments in favor of the
11.25 	commissioner in actions arising under this section.  Upon being
11.26 	presented with a certified copy of the judgment entry and a
11.27 	statement of the unpaid balance of the judgment, the
11.28 	commissioner of the Department of Revenue or the commissioner's
11.29 	designee shall withhold any refunds due the judgment debtor from
11.30 	the state of Minnesota and remit them to the commissioner in the
11.31 	manner provided for in section 289A.50, subdivision 5.  The
11.32 	withholding shall not exceed the unpaid balance of the judgment,
11.33 	together with interest and costs.
11.34 	(d) An administrator who sells, liquidates, delivers,
11.35 	transfers, or pays any of the trust assets or the unpaid amount
11.36 	of the annuity to the commissioner or a county agency to meet
12.1 	obligations under this section shall be fully and finally
12.2 	discharged and released from any and all liability to all
12.3 	beneficiaries to the same extent as if they had delivered,
12.4 	transferred, or paid them to the beneficiaries as provided for
12.5 	in law and the terms of the trust or annuity.
12.6 		Subd. 12.Exceptions. This section does not apply to
12.7 	supplemental needs trusts or to special needs trusts that
12.8 	qualify as exempt assets for purposes of eligibility for medical
12.9 	assistance, to testamentary trusts, or to a trust or annuity
12.10 	otherwise subject to this section to the extent that persons
12.11 	other than a recipient, the recipient's spouse, a predeceased
12.12 	spouse, or anyone with authority to act on their behalf used
12.13 	their own funds or assets to fund the trust or annuity at the
12.14 	time it was created or established.
12.15 		Subd. 13.Settlement. The commissioner, the
12.16 	commissioner's designee, or a county agency may, but are not
12.17 	required to, settle and compromise recoveries under this section
12.18 	for terms and conditions and for amounts that the commissioner,
12.19 	the commissioner's designee, or a county agency deems
12.20 	appropriate.
12.21 	
EFFECTIVE DATE. This section is effective on the day
12.22 	following final enactment, applies to all trusts and annuities
12.23 	first created or established on or after July 1, 2005, and
12.24 	applies to all interests in real or personal property regardless
12.25 	of the date on which the interest was created, reserved, or
12.26 	acquired.