Law cases books

Miller v Ibarra

Miller v. Ibara is a landmark case that created the “Miller Trust,” otherwise known as a Qualified Income Trust. Four elderly “mentally incompetent women” brought suit against Irene Ibarra who was the Executive Director of the Colorado Department of Social Services. These women’s income was “too low to enable them to pay their own nursing home costs, but too high to qualify for Medicaid benefits.” And thus, these women did not receive any benefits.


The four women who brought the suit are Lottie Bernice Ham, Marie Louise Turtness, Mary D. Cummings and Maria S. Tasei. Lottie Bernice Ham lived in a nursing home for eight and a half years, four of which were paid by Medicaid. She suffered from Parkinson’s disease and other health ailments which led her to be completely paralyzed except for eye movements.


When Ham’s husband died and she received a survivor’s pension, her income became too great and she was no longer eligible to receive benefits. She had to exhaust her remaining assets to pay for care. Her daughter, and guardian, L. Jeanette Miller had to spend over $40,000 of her own money to pay for the care her mother required.


The district court of Jefferson County, Colorado ordered Ham’s income be placed in a trust that appointed her daughter as trustee. Some of the money would be allowed to pay for her care but there were still specifications on how the money could be used. After the trust was created, Miller applied for Medicaid on behalf of her mother but was subsequently denied.


Marie Louise Turtness was totally incapacitated and resided in a nursing home in Colorado. The district court of Larimer County created a trust, with the same specification as Ham’s trust, to benefit Marie Turtness and required all her income be put into the trust. Before the trust was created, Turtness applied for benefits but was later denied.


Mary D. Cummings required continuous nursing care. She lived in Colorado and her district court authorized Mary J. Henry to create a trust for the benefit of Mary Cummings. The specifications of the trust are the same as Turtness and Ham. She was later denied Medicaid benefits because of the trust.


When she appealed, the denial was revered with the judge saying the income was not available to Cummings and the “creation of the trust was not a voluntary property transfer.”


Maria S. Tasei was completely incapacitated and lived in a nursing home. Her district court in Colorado authorized Larry Tasei to create a trust for the benefit of Maria Tasei. The terms for this trust are the same as the others’ trusts. Tasei was later denied benefits because of the trust. Because Larry Tasei was not able to pay for her nursing home and before the appeal of the denial, she was given notice that she would be evicted. She then entered into a restraining order against the Colorado Department of Social Services from denying benefits until a final resolution was achieved about her trust.


The four main issues the parties raised were:


  1. Whether improper denial of Medicaid benefits is actionable;
  2. Whether the income in the trust should be considered available;
  3. Whether creation of the trust was considered disposing of resources for less than fair market value or transfer without fair consideration; and,
  4. Whether the trusts are Medicaid-qualifying trusts.

The judge ruled on the main four issues as follows:


  1. The plaintiffs were allowed to challenge their denial of Medicaid benefits because “nothing in § 1396(a)(3) or § 1396c indicates a Congressional intent to bar § 1983 claims” and the defendant failed to demonstrate “by express provision or other specific evidence from the statute itself that Congress intended to foreclose such private enforcement.”
  2. The judged concluded that “the plaintiffs’ income subject to the trusts is not ‘available’ within the meaning of 42 U.S.C. §1396a(a)(17)(B) and 9 Colo.Code Regs. §3.200.21.” He also concluded that “each plaintiffs’ annual income, for purposes of determining Medicaid eligibility in accordance with the SSI program, is the maximum amount the trustees…can distribute…this amount is $20.00 less than the applicable income level for Medicaid eligibility.”
  3. The judge reiterated that a private court needs to make certain findings before they can even create a trust for someone. “First, the court must make a finding of incompetence. Second, the incompetent person must have property subject to a threat of being dissipated or wasted or funds must be needed for support, care and welfare of the person. Third, the creation of the trust must be in the best interest of the incompetent person. When these three elements are present, the probate court must exercise its authority in the best interest of the incompetent person.”

He also looked at the difference between resources and income as these specifications are intended to prohibit transactions that may lead wealthy individuals to transfer their assets into irrevocable trusts in order to receive Medicare and save their assets. He supports that the trust was created in the interest of the plaintiffs and any assets left in the trust will go to the Colorado Department of Social Services upon their death so they aren’t shielding any assets to preserve for their heirs.

The judge concludes that “the acts creating the instant trusts were not transfers prohibited by 42 U.S.C. § 1396p(c) and 9 Colo.Code Regs. §3.210.31.”

  1. “If a trust falls within the definition of a Medicaid qualifying trust….under the terms of the trusts at issue….they cannot distribute more than an amount $20.00 less than the Medicaid income eligibility level. Therefore, even if considered to be Medicaid qualifying trusts (which the judge rejects this consideration) these trusts would not render the plaintiffs ineligible for Medicaid.”

The judge ordered that:

  1. The plaintiffs’ motion for summary judgment be granted;
  2. The defendant’s motion for summary judgment be denied;
  3. Judgment be entered in favor of all the plaintiffs and against the defendant; and,
  4. From the date each plaintiff was denied Medicaid benefits, the defendant was ordered to treat the trust assets as available to the plaintiffs, pursuant to 42 U.S.C. §1396(a)(17), only to the extent authorized by the terms of the trusts.

The full document text can be found here.