Oregon Estate Recovery Rules Held Invalid

Attorney Tim Nay ( NAELA's first president by the way), recently posted on listservs about the Oregon Supreme Court's opinion on the state Medicaid agency's rules regarding estate recovery.  The Oregon Supreme Court, in Nay v. Department of Human Services, affirmed the court of appeals decision that the administrative rules were invalid:

In 2008, the department amended its administrative rules regarding the scope of that recovery. The amended rules allow the department to recover the payments from assets that the recipient had  transferred to a spouse up to five years before a person applies for Medicaid. Pursuant to ORS 183.400, petitioner Tim Nay sought judicial review of those rule amendments in the Court of Appeals. The Court of Appeals agreed with petitioner that the amendments were invalid ... and the department sought review. As we will explain, we conclude that the rule amendments are invalid under ORS 183.400(4)(b) because they exceed the department’s statutory authority. Accordingly, we affirm the Court of Appeals. (citations omitted).

After reviewing state family law and probate law (elective share) and the arguments advanced by the Department of Human Services, the Oregon Supreme Court concluded

The department promulgated rule amendments that allow it to obtain estate recovery from transfers made to a spouse within the five years before a person applies for Medicaid. Our standard for judicial review is whether the department exceeded its statutory authority ..., and more specifically whether the rule amendments depart from a legal standard expressed or implied in the particular law being administered.... Because “estate” is defined to include any property interest that a Medicaid recipient held at the time of death, the department asserted that the Medicaid recipient had a property interest that would reach those transfers. In doing so, it relied on four sources: the presumption of common ownership in a marital dissolution, the right of a spouse to claim an elective share under probate law, the ability to avoid a transfer made without adequate consideration, and the ability to avoid a transfer made with intent to hinder or prevent estate recovery. In all instances, the rule amendments departed from the legal standards expressed or implied in those sources of law. Accordingly, the rule amendments exceeded the department’s statutory authority..... The Court of Appeals correctly held the rule amendments to be invalid. (citations omitted).

The opinion is available here.

Congrats Tim and thanks for letting us know!