Court of Appeals Holds that Difficulty in Accessing Assets Does Not Render Them “Uncountable” for Determination of Rights to Medicare Benefits

On November 8, 2016, the Arizona Court of Appeals handed down its decision in McGovern v. AHCCCS.  In this case, McGovern was denied long-term benefits under the Arizona Long-Term Care System (“ALTCS”) by AHCCCS, which determined he had available assets in exceeding the threshhold for receiving such benefits.  McGovern appealed AHCCCS’ determination to the superior court which reversed that determination and ordered AHCCCS to provide the applied for benefits, based upon the court’s determination that AHCCCS’ denial was arbitrary and capricious.  McGovern’s argument in superior court was that, although he had three bank accounts and a motor vehicle all of which were titled in joint tenancy with his daughter, he did not actually have the use of these funds because, due to his mental incapacity, the daughter controlled his ability to withdraw funds, which she refused to allow to McGovern’s attorney-in-fact, and because the vehicle was in the possession of the daughter.  In short, McGovern’s argument was to the effect that even though legal title to the property in question remained in his name, it would be difficult to actually control the assets based upon his mental incapacity, and that court intervention would be necessary in order for him to actually receive the benefit of this money and property.

The court of appeals disagreed.  Citing the standards set by the Director of the U.S. Department of Health and Human Services, the court noted that difficulty is not a consideration in making the determination of what resources are available and countable to an applicant for benefits.  Under those standards, “The inquiry…focuses on an individual’s legal right to income or a resource.”  Because McGovern had the “legal authority to liquidate [the accounts] despite his daughter’s refusal to consent” and his right as a titled owner of the vehicle he had the “legal right to liquidate it,” these assets were countable for purposes of denying benefits.  Although his ability to liquidate these assets may be more difficult due to his mental incapacity and would require a court to appoint a conservator for purposes of achieving such liquidation, that difficulty is not relevant to the legal fact of availability.

Finally, McGovern’s counsel argued that because a conservator’s appointment may be required to obtain the funds, McGovern would in effect have to engage in litigation to reach these assets, and that assets which may be only potentially attained resulting from litigation are not countable under Health and Human Services criteria. In rejecting this particular argument, the court of appeals noted the rule in question does not require an applicant to engage in litigation “[w]hen there is a legal bar” to sale or access.  The court noted that “even if we were to equate establishing a conservator with litigation, in this case there was no legal bar to establishing the conservatorship…” As such, the particular regulation relied on by McGovern did not apply based on the facts of this case.

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