DHCS may recover from special needs trust after a beneficiary’s death where trust’s purpose was to preserve Medi-Cal eligibility

Herting v. Calif. Dept. of Health Care Services, (6th Dist. Ct. of App.), 2015 DJDAR 3521 (March 27, 2015)

Alexandria Pomianowski was severely injured in a auto accident at age 19.  For the next four years, until her death, she required constant nursing and personal care. A personal injury lawsuit related to the accident resulted in a large damages award for Ms. Pomianowski and that award was placed in a special needs trust for her care to facilitate her continued eligibility for Medi-Cal. Her mother, appellant, was named trustee.

Relying upon federal and state law that bars Medi-Cal from seeking reimbursement from a decedent’s estate for care provided to  via Medi-Cal to him or her while younger than 55, appellant sought to terminate the trust in which more than $1 million remained and deny Medi-Cal’s claim for reimbursement for more than $400,000 in health care costs it paid for the woman’s care. Department of Health Care Services (DHCS) pursued its claim, citing state and federal regulations that special needs trusts must provide for reimbursement to the state upon death. Ms. Pomianowski’s trust included such a provision.

Finding that the Ms. Pomianowski’s trust was established for the “specific and exclusive” purpose of maintaining the her eligibility for Medi-Cal and to pay for her additional needs not covered by Medi-Cal during her life rather than as an instrument to preserve and distribute estate property, the court held that DHCS may recover its expenses for her care prior to her death.  Appellant should have paid DHCS’s claim for its expenses for Ms. Pomianowski’s care in accordance with the terms of the trust, which specifically provided for such reimbursement.