A recent reported Court of Special Appeals case clarified how the statutory 6-month claim period works for Medicaid reimbursements from the deceased recipient’s estate. Maryland Department of Health v. Myers, Court of Special Appeals, No. 3168, September Term 2018, 2020 WL 7395536 (December 17, 2020). The statutory interpretation should inform decisions by any personal representative dealing with an estate with potential Medicaid reimbursement exposure.
In general, claims against the estate of a decedent must be filed within the earlier of (1) 2 months from when the personal representative mails or otherwise delivers notice to a known creditor or (2) 6-months from the date of death (regardless of notice or even opening the estate). Md. Code Ann., Estates & Trusts (“ET”) § 8-103 (a). Keying an absolute 6-months deadline from death instead of from notice of the appointment of a personal representative running in a newspaper avoids the “state action” element of the due process requirement under the U.S. Constitution. Tulsa Professional Collection Services v. Pope, 485 U.S. 478 (1988); Ohio Cas. Ins. Co. v. Hallowell, 94 Md. App. 444 (1993).
These limitations do not apply to either claims by the state or by the United States. Medicaid reimbursement actions are state claims. ET § 8-103(f) governs Maryland Medical Assistance (i.e., Medicaid) claims. Its 6-month period runs from the date of the notice, not death. Specifically, Medicaid claims must be filed within the earlier of “(1) 6 months after publication of notice of the first appointment of a personal representative;” or (2) 2 months after the personal representative gives actual notice to the state. Federal claims are not so limited.
The “notice” of the appointment of the personal representative requires for notice to be published “in a newspaper of general circulation in the county of appointment once a week in 3 successive weeks.” ET § 7-103. The issue in Myers was whether the deadline for the filing of creditor claims runs from the publication of the first such notice, or from the date after all 3 required notices had run. Applying the plain meaning rule to the statute, the Court in Myers concluded that “the General Assembly made a policy determination that, to adequately provide notice to creditors and other interested parties of the decedent’s death and the appointment of a personal representative, three successive weekly publications of the notice were required; anything less would be incomplete and partial.” Accordingly, the running of the 6-month claims period for state Medicaid reimbursement claims under ET § 8-103 (f) does not commence with the first published notice; it begins to run only after the three required notices have published. (Note that claims of ordinary—non-state—claimants are governed by ET § 8-103 (a), not (f), and therefore the Myers holding does not apply).
Decedents’ estates may also be subject to claims by the United States. If so, the priority of those claims is subject to the Federal priority statute. 31 U.S.C. § 3713 (a)(1)(B) of that statute provides that “a claim of the United States Government shall be paid first when … the estate of a deceased debtor, in the custody of the executor or administrator, is not enough to pay all debts of the debtor.” The literal language of the Federal priority statute is absolute. Federal cases, however, have permitted a carve out for reasonable funeral and estate administrative expenses. United States v. Weisburn, 48 F. Supp. 393 (E.D. Penn. 1943); also see United States v. MacIntyre, 2012 WL 2403491 (unreported 2012) for a list of cases supporting the carve out. MacIntyre is a chilling example of personal liability imposed on the fiduciary based on constructive notice of the federal claim for taxes due. The statute of limitation for federal claims is governed by federal, not state law.
Medicaid is a joint federal/state program, and federal law actually directs state agencies administering Medicaid benefits to file claims for reimbursement from recipients’ estates. Fortunately for personal representatives, however, state (as opposed to federal) law governs the filing and perfection of Medicaid estate claims.