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Special Needs Trust Follow-up

by Ira M. Leff, Esq.

March 23, 2009

I have written several ELDER LAW MINUTE articles about a Gwinnett County case where my client set up a trust for her disabled daughter. DFCS denied our application and we appealed.

DFCS argued that the trust was a resource of my client because it did not meet all of the criteria to be considered an exempt special needs trust under MEDICAID MANUAL §§ 2337 AND 2346. Their theory was that a trust created on or after August 11, 1993, is either a resource or a transfer.

I argued that Section 2337 only applies to OBRA '93 Trusts. According to MEDICAID MANUAL § 2338, an OBRA '93 trust is a trust created on or after August 11, 1993, by an individual (applicant for Medicaid) with her own funds, and with the applicant/recipient (A/R) named as the beneficiary of the trust. In my case, the A/R's daughter is the sole beneficiary of the trust.

Both sides filed Motions for Summary Determination. The ALJ denied both motions and convened an evidentiary hearing last December. I called the DFCS supervisor as a hostile witness. He admitted that the transfer penalty did not apply in this case. The only issue was whether this trust for my client's daughter counted as a resource with respect to my client.

Because the ALJ's decision was so contorted, I filed a Motion for Agency Review. I asked the Department of Community Health to review and reject the ALJ's decision since it was apparent that the Judge did not adequately understand the issues before the Court to render a fair and impartial decision.

I was delighted to hear from the Appeal Officer last week who was seeking an extension of time to respond to my Motion. He indicated that he thought my Motion had merit and DCH was seriously considering rejecting the ALJ's decision.

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