A federal district court dismisses a claim by the trustee of a trust who wanted a declaratory judgment that the state should not consider a trust with a spendthrift provision to be an available asset for the purposes of Medicaid eligibility because that rule is more restrictive than Supplemental Security Income (SSI) eligibility rules. Todd v. Jones (U.S. Dist. Ct., N.D., No. 1:18-cv-150, May 6, 2019).
Terry David West was the beneficiary of a trust that had a spendthrift provision, limiting his ability to control the assets. Mr. West received Medicaid benefits before he died. After he died, the state filed a claim against his estate to recover Medicaid benefits paid on his behalf and sued the trustee of the trust, arguing that she breached her fiduciary duty by not paying Mr. West benefits from the trust during his lifetime.
The trustee filed a claim in federal court for declaratory judgment and injunctive relief. The trustee argued that the state's policy of considering trusts with valid spendthrift provisions as available assets is more restrictive than SSI eligibility rules, which violates federal law, and that the trust is not a part of Mr. West's estate. The state filed a motion to dismiss, arguing that North Dakota is a Section 209(b) state, which exempts it from the requirement that Medicaid eligibility criteria be no more restrictive than SSI eligibility criteria.
The U.S. District Court, District of North Dakota, grants the motion to dismiss, holding that North Dakota's Medicaid eligibility criteria may be more restrictive than the eligibility criteria for SSI. The court also rules that it does not have jurisdiction to determine whether the trust is an estate asset because that should be decided in the probate court where proceedings have already been started.
For the full text of this decision, go to: https://www.govinfo.gov/content/pkg/USCOURTS-ndd-1_18-cv-00150/pdf/USCOURTS-ndd-1_18-cv-00150-0.pdf
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