In this appeal, we consider whether imposing a lien on a deceased Medicaid recipient's interest in a home before the surviving spouse's death
Because the State sought to impose overly broad liens, we affirm the order granting injunctive relief for the individually named surviving spouses. However, the district court prematurely considered injunctive relief as to the class prior to the end of the class notification period. Accordingly, we reverse the order granting injunctive relief to the class members as a whole.
Appellant State of Nevada, Department of Human Resources, Welfare Division (NSWD) provided Harold Ullmer with Medicaid benefits until his death. At the time of Harold's death, he and his wife, respondent Agnes Ullmer, owned their home in joint tenancy. After Harold's death, Agnes continued to reside in the home.
Thereafter, NSWD recorded a notice of lis pendens and filed a verified petition to impose a lien, which sought to place a lien in the amount of $144,475.76 upon the home to protect future recovery of Medicaid benefits correctly paid by NSWD on Harold's behalf. The notice of lis pendens did not reflect that the lien would only apply to Harold's interest in the home as it existed before his death. Moreover, although NSWD alleges it has an unwritten policy to release liens whenever a surviving spouse seeks to sell or encumber property subject to a lien, the notice of lis pendens and of the proposed lien did not contain language reflecting NSWD's policy.
Agnes filed a class action counterclaim against NSWD, seeking, among other things, to permanently enjoin NSWD from placing liens on the homes of deceased Medicaid recipients' surviving spouses. After the district court certified the class under NRCP 23(b)(3), the district court consolidated a similar Medicaid estate recovery case involving respondent Michael Parco, Sr., with the class action.
Prior to class notification, Agnes, the class representative, filed a motion for issuance of a permanent injunction seeking declaratory and injunctive relief to prevent NSWD from obtaining liens against class members and to remove existing liens imposed against class members. Prior to class notification, the district court granted the motion for injunctive relief. This appeal followed.
An appeal may be taken from the grant or denial of a motion for injunctive relief.
I. Premature class action
Because the district court prematurely considered the motion for injunctive relief before the class notification period ended,
II. Medicaid estate recovery
The question before this court is one of statutory construction, namely, the meaning of federal and state Medicaid estate recovery statutes, 42 U.S.C. § 1396p(b)(2) and NRS 422.2935(2).
Issues of statutory construction are subject to de novo review.
Estate recovery acts encompass two important policy considerations relevant to the provision of medical care. First, the government has a legitimate statutory interest in recovering the amount of correctly paid Medicaid benefits from a deceased Medicaid recipient's estate, which includes the recipient's ownership interest in property at the time of death.
However, the federal and state statutes also reflect concern for the second policy consideration, avoiding spousal impoverishment. Congress has long been concerned with preventing spousal impoverishment.
As a result of the federal legislation, Nevada created an estate recovery program.
Nevada's estate recovery statute furthers the government's legitimate interest in recovering, from a deceased Medicaid recipient's estate so that the government can help more people in need of assistance, the amount of benefits correctly paid.
Although the government is prohibited from executing its interest until the surviving spouse's death, the government's interest survives and continues with the property. Any individual who takes property upon the death of a Medicaid recipient, through inheritance, assignment, joint tenancy, etc., takes it subject to the government's interest. For instance, in this case, when Harold died and Agnes took Harold's interest in the home through joint tenancy, the government's interest survived. Similarly, any person who acquires an interest in the property through gift or fraudulent transfer, takes the property subject to the State's interest granted by the estate recovery statutes.
The federal Medicaid estate recovery statute, which is the basis for Nevada's statute, provides that any "adjustment" or "recovery" of medical assistance correctly paid to a deceased Medicaid recipient may be made only after the surviving spouse's death.
Turning to the plain language of the estate recovery statutes, the term "recovery" is not defined. In its every day use, the word "recovery" means "the regaining of something lost or taken away."
The Nevada statutes themselves support our conclusion that a lien is not a "recovery." NRS 422.29355 permits liens to be placed against the real or personal property of a Medicaid recipient before or after the recipient's death. Moreover, after the recipient's death, a lien may be placed upon the undivided estate of the deceased recipient.
Additionally, the federal and state statutes place restrictions on when a lien may be imposed during the lifetime of a Medicaid recipient, but contain no similar restrictions upon liens imposed after the death of the recipient. The failure of Congress and the Legislature to impose specific language on the imposition of post-death liens indicates that such liens are not prohibited.
Agnes also contends that even if a lien is not a recovery, it becomes an impermissible recovery whenever the property subject to the lien is sold or encumbered by the surviving spouse. Agnes argues that the lien itself, if not subject to certain restrictions, has an undeniable chilling effect and becomes due and payable upon a legitimate transaction, such as refinancing the property, which defeats the purpose of ensuring against impoverishment. NSWD argues that the government's interest in the fiscal security of the Medicaid system is not adequately protected if it cannot impose liens. Specifically,
Because the statutory language does not speak to the issue of a lien's effect upon sale or financing of the property, "we construe it according to that which `reason and public policy would indicate the legislature intended.'"
By delaying "recovery" until after the death of the surviving spouse, Congress has evidenced an interest in ensuring fiscal security for the surviving spouse and avoiding spousal impoverishment. By mandating that states establish estate recovery programs, Congress has established an interest in recovering benefits correctly paid from a deceased Medicaid recipient's estate. In balancing these two significant interests, Congress has created a system that defers "recovery" until the surviving spouse's death. It is clear that Congress intended that a surviving spouse be free to utilize the estate property during the spouse's lifetime. This would include the bona fide sale or financing of the property designed to provide the spouse with income from equity. A state's interest would be extinguished in such a transaction. A state's interest is not extinguished when the deceased recipient's interest in the property is transferred for less than fair market value.
We conclude that, to ensure adequate protection of the government's legitimate interest and help protect against fraudulent transfers, the government may impose a post-death lien during the surviving spouse's lifetime upon property in which it has a legitimate interest. However, we conclude that the government's right to impose a lien is not absolute. Nevada's lien statute requires that the lien accurately reflect the State's interest in the property.
First, the notice of lis pendens and the lien do not correctly identify the precise legal interest that the government is claiming, e.g., one-half interest of the property. Second, the notice of lis pendens, lien proceedings, and the lien itself fail to provide clear and unequivocal notice that the government will release the lien upon the surviving spouse's demand for any bona fide transaction, including, but not limited to, selling the property, refinancing the property, and obtaining a reverse mortgage.
In the instant case, the liens go beyond protecting NSWD's interest. Nothing in the notice of lis pendens and the proposed lien contains language indicating the surviving spouses are free to use or dispose of the property, through bona fide transactions, as a method of avoiding spousal impoverishment. Finally, the lis pendens and proposed lien do not accurately indicate they only apply to whatever interest the deceased Medicaid recipient had in the property before his or her death. We conclude that, without such language, the liens are overbroad and violate the spirit of federal and state laws designed to prevent spousal impoverishment.
Because we cannot ignore the affirmative burden Congress placed on states to establish estate recovery programs, we conclude that imposing a proper lien is not an impermissible "recovery." Therefore, the government may impose a post-death lien, subject to certain limitations during the surviving spouse's lifetime, upon property in which it has a legitimate interest. To prevent spousal impoverishment, we conclude that the notice of lis pendens, lien proceedings, and the lien itself must provide clear and unequivocal notice that the government will release the lien upon the surviving spouse's demand for any bona fide transaction and accurately reflect the government's interest in the property.
Because the liens that NSWD sought to impose on the Ullmer and Parco homes were overly broad, we affirm the order granting injunctive relief entered in their favor individually. However, we reverse the order granting injunctive relief entered as to the class members as a whole because the district court prematurely considered the matter prior to the end of the class notification period.
SHEARING, C.J., AGOSTI and ROSE, JJ., concur.
MAUPIN, J., with whom GIBBONS, J., agrees, dissenting and concurring in part.
The majority has judicially legislated Medicaid lien rights into being which I believe are at odds with state and federal law. I therefore remain of the opinion that the district court properly granted injunctive relief, prohibiting the imposition of Medicaid liens against homes of surviving spouses of Medicaid recipients.
The Nevada State Department of Human Resources, Welfare Division, enjoys a qualified right of reimbursement of Medicaid benefits from the recipient's estate. However, pursuant to federal law, the Nevada Legislature provides important protection for families that receive Medicaid assistance by prohibiting the Division from effecting reimbursement recovery until after the death(s) of the recipient's surviving spouse, minor children or children with enumerated disabilities.
To explain, the imposition of a lien against real property held by the survivor, but once owned jointly with the recipient, encumbers the title to that property and works to facilitate the ultimate statutory reimbursement recovery. Accordingly, imposition of lien rights by the Division is inextricably related to enforcement of its right to recover against the recipient's estate. This is underscored by the fact that, regardless of the recitations the majority now requires to be inserted on the face of the recorded lien document, the recorded lien would still have to be cleared to allow for completion of any legitimate inter vivos transaction entered into by the survivor.
Because the lien rights delineated by the majority impede the ability of the survivor to make transactions concerning his or her property, such rights constitute part of the "recovery" process, a process that must await the survivor's demise.
Although the majority has developed an imaginative and well-meaning remedy to facilitate Medicaid reimbursement recoveries, this judicial creation improperly usurps the Legislature's prerogatives to define Medicaid reimbursement recovery options.
GIBBONS, J., concurs.
(A) when he has no surviving child who is under age 21, or (with respect to States eligible to participate in the State program established under subchapter XVI of this chapter) is blind or permanently and totally disabled, or (with respect to States which are not eligible to participate in such program) is blind or disabled as defined in section 1382c of this title....
Webster's Third New International Dictionary 1306 (1968). Recovery is defined in part in Webster's as "a means of restoration." Id. at 1898. Thus, a "lien" is merely a component in the enforcement of a "recovery."