scope of judicial review of a state administrative agency
action is defined by the Kansas Judicial Review Act (KJRA),
K.S.A. 77-601 et seq. The party asserting the invalidity of
an agency's action bears the burden of proving
Interpretation of a statute or an administrative regulation
is a question of law over which appellate courts have
United States Congress created the Medicaid program to
provide federal financial assistance to states that reimburse
the costs of medical treatment for those in need. Because it
is a cooperative federal and state program, both federal and
state law govern Medicaid.
Kansas has elected to participate in Medicaid and must comply
with federal requirements for making eligibility
determinations, collecting and maintaining information, and
administering the program.
Generally, trust funds are to be counted as assets in making
Medicaid eligibility determinations.
person 65 or older may participate in a pooled supplemental
or special needs trust under the provisions of 42 U.S.C.
§ 1396p(d)(4)(C) (2012). However, a person age 65 or
older who transfers assets to a pooled supplemental or
special needs trust is subject to the imposition of a
transfer penalty under the rules of subsection 42 U.S.C.
§ 1396p(c)(1) if the transfer is for less than fair
Trusts established for disabled persons are exempt from
application of the transfer of assets penalty provisions only
when the disabled person is under the age of 65.
determination of the fair market value of property-whether
real or personal-is generally a question of fact.
from Douglas District Court; Paula B. Martin, judge.
M. Wood, of Stevens & Brand, L.L.P., of Lawrence, for
Landsman, of Ron M. Landsman, P.A., of Rockville, Maryland,
and Craig Reaves, of Reaves Law Firm, P.C., of Kansas City,
Missouri, for amicus curiae National Academy of Elder Law
H. Weber, of Law Offices of Karen H. Weber, of Overland Park,
for amicus curiae Special Needs Alliance, Inc.
M. Vazquez, of Kansas Department of Health & Environment,
Bruns, P.J., McAnany, J., and Steven R. Ebberts, District
judicial review action, Marcia Hutson appeals from the
district court's decision affirming a final order issued
by the Division of Health Care Finance State Appeals
Committee arising out of a Medicaid eligibility
determination. The district court upheld the imposition of a
transfer penalty that significantly delayed Hutson's
receipt of Medicaid benefits for her long-term care. The
Kansas Department for Children and Families (DCF)-the state
agency handling Medicaid eligibility processing at the
time-imposed the penalty on Hutson because she transferred
assets to a pooled supplemental needs trust when she was in
her 70s. After an administrative law judge and the State
Appeals Committee upheld the imposition of the transfer
penalty, Hutson sought judicial review. The district court
also upheld the penalty because it found that Hutson did not
receive fair market value for her transfer.
as a matter of law that transfers of assets by Medicaid
applicants age 65 or older to a pooled supplemental needs
trust are subject to a penalty period if the transfer is for
less than fair market value. However, because we find that
whether a particular transfer to a pooled supplemental needs
trust is for less than fair market value is a question of
fact, we vacate the part of the district court's order
that found as a matter of law that Hutson "did not
receive fair market value for her transfer."
Accordingly, we affirm the district court's decision in
part, we vacate it in part, and we remand this matter for
further proceedings consistent with this opinion.
August 10, 2015, Hutson-who resides in a nursing home
facility in Eudora- transferred $59, 528.42 of assets to
ARCare Trust II Pooled Trust. The trustee is ARCare, Inc.,
which is a not-for-profit corporation that established the
irrevocable pooled supplemental needs trust in 1996 to help
elderly and disabled people pay for living expenses not
covered by needs-based public benefit programs. The assets
that Hutson transferred to the pooled trust were funds that
she received from the sale of her home as well as from life
insurance following the death of her husband. At the time of
the transfer of assets, Hutson was 72 years old.
the terms of the Transfer-Joinder Agreement signed on June
19, 2015, ARCare, Inc. is to administer a sub-account within
the pooled trust for the sole benefit of Hutson.
Specifically, the funds in the sub-account are to be used to
maintain Hutson's "health, safety and welfare . . .
when, in the discretion of the [trustee], such requisites are
not being provided by any public agency, office, or
department of the state . . . or are not otherwise being
provided by any other source of income available to
[Hutson]." As the trustee of the pooled supplemental
needs trust, ARCare, Inc. has a contractual obligation to pay
for Hutson's needs in order to enhance her quality of
life. Although ARCare, Inc. has absolute discretion to
approve or disapprove requests for disbursements from
Hutson's sub-account, it must act in good faith in
administering the pooled trust.
the terms of the pooled supplemental needs trust provide that
upon Hutson's death, the trustee must reimburse the State
for the total amount of Medicaid benefits paid on her behalf
if there are available funds left in her sub-account. If any
residual funds are left in Hutson's sub-account after the
State has been reimbursed, these funds are to remain in the
pooled supplemental needs trust to aid other trust
beneficiaries, to assist other indigent people with
disabilities, or to be used for other charitable purposes as
determined by the trustee. Hutson's life expectancy is
approximately 13 years based ...