Does “Imputed Driving Value” Somehow Make an Irrevocable Trust a Countable Asset for MassHealth Purposes?

Lawyers representing the MassHealth agency continue to sink to new lows in their continuing battle against irrevocable trusts in Massachusetts. Massachusetts Lawyers Weekly has recently published  an article on the MassHealth agency’s tactics. Unfortunately, that article did nothing to curb what was described as the MassHealth agency’s war on trusts, and one of the MassHealth lawyers has now reached rock bottom with an argument that I refer to as “imputed driving value.” The argument is that if the trust’s assets cannot be distributed to the MassHealth applicant but the assets can be distributed to the applicant’s children, they can then choose to buy an expensive sports car and let the MassHealth applicant drive it. The MassHealth lawyer argues that because there is a value to that driving experience, the MassHealth agency doesn’t have to pay the nursing home for any part of the applicant’s care.

I am not making this up. It’s not my case, but a Massachusetts elder law attorney has shared a September 10, 2019 MassHealth legal brief with me that was submitted by a MassHealth lawyer into the record at a fair hearing, and here is exactly what that brief says:

The Applicant can simply condition an appointment of principal upon the principal being returned outright to him as cash or require the children use the principal to purchase things for his comfort and enjoyment. This would be a payment “for the benefit” of the Applicant and thus make the Trust countable without using the power to discharge a legal obligation. … For example, as argued at the Hearing, the Applicant could distribute Trust principal to his issue on the condition that they purchase a sports car under the name of the issue, with that principal, with the condition that Applicant could use the car when he wanted at his leisure. The legal obligation (i.e., the obligation to pay for the car) would run to the issue, not the Applicant, and yet the Trust principal would still be made available for the benefit of the Applicant – namely the benefit of the use of the car at the Applicant’s whim. This scenario would … allow[] the Trust principal to be used for the Applicant’s benefit: 1) the Applicant would exercise his … special power of appointment to distribute Trust principal, 2) to his issue, 3) upon the condition that the Applicant can use the car at his desire, and 4) not fulfilling any of the Applicant’s legal obligations. All of which still lend the principal to be made available for the benefit of the Applicant, rendering the Trusts countable.

The MassHealth lawyers apparently imagine the scene of great-grandma slowly using her walker to get outside to the nursing home parking lot, then tossing it aside and tooling around in the Lamborghini Veneno Roadster that her children always leave parked there with a full tank of gas.

If great-grandma crashes this expensive sports car into a telephone pole and totals it, hey, her family can just buy another one with money they received from the irrevocable trust.

Are there no limits to the MassHealth agency’s creative imaginations? What’s next — an “imputed recliner” argument? After all, the children receiving a distribution from the trust could buy a new recliner for the nursing home resident, and could replace it every week.

How did we get to the point where such a ridiculous idea as “imputed driving value” is advanced by a government lawyer in an administrative hearing? In 1985, Congress had discovered that just about any trust could help get an applicant onto Medicaid, and put a new law in place that was slightly revised in 1993. The central point of the 1993 federal Medicaid trust law is that if the assets of an irrevocable trust can be given to or used for the MassHealth applicant, why should the government be paying the nursing home instead of the trust? Somehow the lawyers representing the MassHealth agency have gotten so caught up in their war against trusts that they have lost sight of the reason for the law, and have no apparent concern for whether the nursing home that is providing care could actually get paid. The lawyers representing the MassHealth agency certainly cannot have thoughtfully considered that the value of that driving experience would somehow make the MassHealth applicant’s payment to the nursing home, and they apparently have not grasped their recent legal spanking in Daley v. Secretary of the Executive Office of Health and Human Services, 477 Mass. 188 (2017), where the Supreme Judicial Court of Massachusetts ruled that the MassHealth agency cannot attribute nonexistent resources (such as the intrinsic value of driving an expensive sports car) to MassHealth applicants:

“As the United States Supreme Court has declared, “the principle of actual availability . . . has served primarily to prevent the States from conjuring fictional sources of income and resources by imputing financial support from persons who have no obligation to furnish it or by overvaluing assets in a manner that attributes nonexistent resources to recipients.” Heckler v. Turner, 470 U.S. 184, 200 (1985). The “any circumstances” test for trusts requires an additional layer of analysis, but it does not depart from this fundamental purpose. See Guerriero, 433 Mass. at 634 (trust assets not available to applicant where trustee did not have “any legal discretion” to pay any part of trust principal to her).” Daley at 202.

Unfortunately, our legal system has degenerated to the point where we now have Massachusetts government lawyers driving to and from fair hearings to advance this “imputed driving value” gamesmanship, then expending their taxpayer-funded time in writing briefs about it, then there are taxpayer-funded hearing officers who have to conduct the administrative hearings and then write extensive fair hearing decisions; then, if a hearing officer somehow buys into this argument and upholds the MassHealth denial, the case ends up in Superior Court where a taxpayer-funded Assistant Attorney General will defend the decision with an extensive brief and oral arguments in front of a taxpayer-funded Superior Court justice. We the taxpayers are paying for this drivel, and during all of this time the nursing home is not getting paid for its services.

This new “imputed driving value” argument is about as frivolous as any legal argument can be, but I may soon regret sarcastically suggesting the “imputed recliner” argument, because the MassHealth lawyers just might see fit to use it.