In re: Fujimori v. Department of Human Services. ( 2022 )


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  • FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
    Electronically Filed
    Intermediate Court of Appeals
    CAAP-XX-XXXXXXX
    31-AUG-2022
    09:09 AM
    Dkt. 84 OP
    IN THE INTERMEDIATE COURT OF APPEALS
    OF THE STATE OF HAWAI‘I
    ---o0o---
    IN THE MATTER OF FLORENCE FUJIMORI,
    Appellant-Applicant/Appellant, v.
    DEPARTMENT OF HUMAN SERVICES, STATE OF HAWAI‘I;
    PANKAJ BHANOT, DIRECTOR; LANE T. ISHIDA, HEARING OFFICER,
    Appellees-Appellees.
    (CIVIL NO. 16-1-1703)
    AND
    IN THE MATTER OF EDWARD FUJIMORI,
    Appellant-Applicant/Appellant, v.
    DEPARTMENT OF HUMAN SERVICES, STATE OF HAWAI‘I;
    PANKAJ BHANOT, DIRECTOR; LANE T. ISHIDA, HEARING OFFICER,
    Appellees-Appellees.
    (CIVIL NO. 16-1-1914)
    NO. CAAP-XX-XXXXXXX
    APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
    AUGUST 31, 2022
    HIRAOKA, PRESIDING JUDGE, NAKASONE AND MCCULLEN, JJ.
    FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
    OPINION OF THE COURT BY MCCULLEN, J.
    Appellants-Applicants/Appellants Edward Fujimori
    (Edward) and Florence Fujimori (Florence) (collectively,
    Fujimoris) appeal from the Circuit Court of the First Circuit's 1
    April 26, 2017 order and May 11, 2017 judgment affirming
    Appellees/Appellees Department of Human Services' (DHS)
    administrative decisions denying Edward's and Florence's
    applications for Medicaid assistance to pay for their long-term
    care.    In challenging the circuit court's order and judgment,
    Edward and Florence request that we vacate and remand with
    instructions to "issue all benefits . . . determined to be due
    and owing since the time of their original applications."              We
    affirm the circuit court's order and judgment.
    BACKGROUND
    A.   Relevant Medicaid History
    "The purpose of [M]edicaid is to provide assistance to
    those whose income and resources are inadequate to meet the
    costs of necessary medical services."            Barham by Barham v.
    Rubin, 
    72 Haw. 308
    , 312, 
    816 P.2d 965
    , 967 (1991) (citing 
    42 U.S.C. § 1396
    ).     "Medicaid is a cooperative Federal and State
    program that provides medical assistance to low income persons
    based on financial need[,]" Fournier v. Sec'y of the Exec. Off.
    of Health & Human Servs., 
    170 N.E.3d 1159
    , 1164 (Mass. 2021)
    (citation and internal quotation marks omitted), and "is
    1   The Honorable Bert I. Ayabe presided.
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    designed to be the payer of last resort, available only when no
    other source is liable for the expense."     Est. of Scheidecker v.
    Montana Dept. of Pub. Health & Human Servs., 
    490 P.3d 87
    , 91
    (Mont. 2021) (citation and internal quotation marks omitted).
    Generally, an individual must have less than $2,000.00 in assets
    to qualify for Medicaid assistance.    See Hawai‘i Administrative
    Rules (HAR) § 17-1725.1-43; see also Fournier, 170 N.E.3d at
    1164; Social Security Programs Operations Manual System at SI
    01110.003.A.1, SI 01110.003.A.2 (effective Dec. 8, 2010).
    "Through the practice known as Medicaid planning,
    however, individuals with significant resources devise
    strategies to appear impoverished in order to qualify for
    Medicaid benefits."    Fournier, 170 N.E.3d at 1164 (citation and
    internal quotation marks omitted).    "One such strategy is to
    transfer assets into an inter vivos trust, whereby funds appear
    to be out of the individual's control, yet generally are
    administered by a family member or loved one."      Id. (citation
    omitted).    "Accordingly, a loophole existed under the pre-1986
    law, pursuant to which individuals anticipating the need for
    expensive long-term medical care could impoverish themselves and
    qualify for Medicaid assistance while preserving their resources
    for their heirs."    Petition of Est. of Braiterman, 
    145 A.3d 682
    ,
    687 (N.H. 2016) (cleaned up).
    In 1986, Congress responded to this loophole by
    enacting 42 U.S.C. § 1396a(k) (1988) (repealed 1993), which
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    "deemed available to the applicant (the beneficiary) the maximum
    amount that could, at the trustee's discretion, be distributed
    to the beneficiary from an irrevocable trust regardless of
    whether the funds were actually distributed."           Braiterman, 145
    A.3d at 687 (cleaned up).       In other words, Medicaid qualifying
    trusts "were no longer a permissible means to shelter assets for
    purposes of Medicaid eligibility."         Id. at 688 (citation
    omitted).    "Congress sought to prevent wealthy individuals,
    otherwise ineligible for Medicaid benefits, from making
    themselves eligible by creating irrevocable trusts in order to
    preserve assets for their heirs."         Barham, 
    72 Haw. at 312
    , 
    816 P.2d at 967
     (citation omitted).
    "In 1993, in reaction to the sophisticated instruments
    used to circumvent the [Medicaid qualifying trust] rules,
    Congress repealed § 1396a(k) and enacted § 1396p(d) (1993),
    which was aimed at more effectively curtailing the use of trusts
    or similar mechanisms to qualify for Medicaid."           Braiterman, 145
    A.3d at 688 (cleaned up).       In that enactment, the Omnibus Budget
    Reconciliation Act of 1993, "Congress established a general rule
    that trusts would be counted as assets for the purpose of
    determining Medicaid eligibility."         Id. (citation omitted).
    With respect to an irrevocable trust, the act provides that
    "if there are any circumstances under which payment from
    the trust could be made to or for the benefit of the
    individual, the portion of the corpus from which, or the
    income on the corpus from which, payment to the individual
    could be made shall be considered resources available to
    the individual."
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    Fournier, 170 N.E.3d at 1164 (quoting 42 U.S.C.
    § 1396p(d)(3)(B)(i)).
    B.   Edward And Florence Fujimori
    In August 2006, Edward and Florence created the
    "Edward M. and Florence Y.K. Fujimori Irrevocable Trust" (Trust)
    "for the benefit of [their] descendants, by representation," and
    assigned their son, Alan Y. Fujimori, as trustee (Son).        That
    same day, they funded the Trust with their residential property
    at 5314 Uhiuhi Street in Honolulu (Property), reserving "a life
    estate in an undivided ten-thousandth (.0001 or 1/10,000)
    interest in and to" the Property.      (Formatting altered.)
    Six years later, in 2012, Son, as trustee, sold the
    Property for $700,000 to Clint and Lisa Kagami (Kagamis), and
    conveyed the Property by warranty deed.      In the same warranty
    deed, Edward and Florence conveyed their life estate in the
    undivided 0.0001% interest in the Property to the Kagamis.        Two
    checks totaling $666,873.81 ($333,436.90 and $333,436.91) were
    made payable to the Trust and were deposited into two separate
    bank accounts belonging to the Trust.
    Two years later, in July 2014, Florence applied for
    Medicaid assistance to pay for her long-term care, which was
    approved.    In September 2015, Edward applied for Medicaid
    assistance to pay for his long-term care, and had been given
    presumptive eligibility beginning December 16, 2015.
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    In December 2015, DHS requested that Florence provide
    information to "[v]erify life estate interest in a property."
    DHS, apparently, requested that Edward also provide more
    information.
    On January 8, 2016, Edward, through the Fujimoris'
    attorney, responded to DHS' request for more information by
    stating,
    Since the currents [sic] assets owned by the Irrevocable
    Trust are not a countable asset to Mr. Fujimori, the
    current bank statements of the Irrevocable Trust accounts
    that the Attorney General is requesting is not relevant to
    the applicant's qualification purposes and infringes on the
    privacy of the beneficiaries of the trust.
    The response further asserted that the Fujimoris "did not keep a
    right to receive income, so when the trust sold the property in
    2012 Mr. and Mrs. Fujimori did not dispose of any income or
    asset."    (Emphasis omitted.)
    In April 2016, DHS terminated Medicaid assistance in
    paying for Edward's and Florence's long-term care effective
    June 1, 2016, because they did "not meet other program
    requirements" and their "[a]ssets exceed[ed] eligibility
    limits."    DHS also terminated assistance to Edward because the
    "[r]equired information was not provided."
    Before his Medicaid assistance was set to end, Edward
    passed away on May 20, 2016.        Edward's attorney requested that
    the administrative hearing proceed, but DHS denied the request
    because a "power of attorney terminates when the principal
    dies."    Edward's attorney then requested that Medicaid reimburse
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    Edward's estate for the three and one-half months (September 1,
    2015 to December 15, 2015) of long-term care Edward paid for
    while his application was pending, attaching an Affidavit for
    Collection of Personal Property signed by Son.
    DHS held an administrative hearing for Florence in
    June 2016 and for Edward in August 2016.     On August 10, 2016,
    DHS issued its Notice of Administrative Hearing Decision for
    Florence's request for Medicaid assistance, concluding that:
    (1)   "Under the [HAR], the Fujimori Trust is a
    'revocable' trust";
    (2)   "Even assuming arguendo that the Fujimori Trust
    is 'irrevocable' for Medicaid purposes, the
    [Property] was a countable asset of [Florence]";
    and
    (3)   Florence "also individually owned an undivided
    1/10,000th interest in a life estate in the
    [Property]."
    (Formatting altered.)   A month later, on September 13, 2016, DHS
    issued its Notice of Administrative Hearing Decision for
    Edward's request for Medicaid assistance, concluding among other
    things that:
    (1)   "Under the [HAR], the Fujimori Trust is a
    'revocable' trust";
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    (2)   Edward "also individually owned an undivided
    1/10,000th interest in a life estate in the
    [Property] which was valued at $45,099.25"; and
    (3)   "It is undisputed that [Edward] did not provide
    the information requested by [DHS] regarding the
    Fujimori Trust."
    (Formatting altered.)
    Florence and Edward timely appealed to the circuit
    court.   The circuit court consolidated the cases, and heard oral
    arguments.   Without addressing whether the Trust was revocable,
    the circuit court held that:
    (1)   "The Hearing Officer did not err in concluding
    [Edward and Florence] had 'full' Life Estate
    interests in their [Property]";
    (2)   "[T]he Hearing Officer did not err and properly
    affirmed [DHS'] denial of benefits to [Edward]
    for failure to provide requested updated
    information related to the status of assets in
    the Fujimori Trust, as required by HAR § 17-
    1725.1-10(g)"; and
    (3)   Florence "shall return any and all Aid Paid
    pending the August 10, 2016 administrative
    hearing decision, because [DHS] is the prevailing
    party."
    Florence and Edward timely appealed to this court.
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    STANDARD OF REVIEW
    This court must determine whether the circuit court
    was right or wrong in its decision, applying the standards set
    forth in Hawaii Revised Statues (HRS) § 91-14(g) (2012) to the
    agency's decision.    AlohaCare v. Ito, 126 Hawai‘i 326, 341, 
    271 P.3d 621
    , 636 (2012).    HRS § 91-14(g) provides as follows:
    Upon review of the record the court may affirm the decision
    of the agency or remand the case with instructions for
    further proceedings; or it may reverse or modify the
    decision and order if the substantial rights of the
    petitioners may have been prejudiced because the
    administrative findings, conclusions, decisions, or orders
    are:
    (1) In violation of constitutional or statutory
    provisions; or
    (2) In excess of the statutory authority or
    jurisdiction of the agency; or
    (3) Made upon unlawful procedure; or
    (4) Affected by other error of law; or
    (5) Clearly erroneous in view of the reliable,
    probative, and substantial evidence on the whole
    record; or
    (6) Arbitrary, or capricious, or characterized by
    abuse of discretion or clearly unwarranted
    exercise of discretion.
    (Emphasis added.)    For subsection (5),
    administrative findings of fact are reviewed under the
    clearly erroneous standard, which requires [the appellate]
    court to sustain its findings unless the court is left with
    a firm and definite conviction that a mistake has been
    made. Administrative conclusions of law, however, are
    reviewed under the de novo standard inasmuch as they are
    not binding on an appellate court. Where both mixed
    questions of fact and law are presented, deference will be
    given to the agency's expertise and experience in the
    particular field and the court should not substitute its
    own judgment for that of the agency. To be granted
    deference, however, the agency's decision must be
    consistent with the legislative purpose.
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    AlohaCare, 126 Hawai‘i at 341, 
    271 P.3d at 636
     (citation
    omitted).
    DISCUSSION
    In this secondary appeal, the Fujimoris challenge the
    circuit court's holdings affirming (1) the finding that the
    Fujimoris had a full life estate, (2) that Florence reimburse
    DHS for aid paid pending the decision in her case, and (3) the
    denial of Edward's application for failing to provide
    information. 2   Because the circuit court did not err in affirming
    DHS' decision, we too affirm.
    A.    Transfer Of Life Estate For Less Than Market Value
    First, Edward and Florence argue that the "circuit
    court clearly erred in affirming the hearing officer's finding
    that [they] had a full life estate interest in the [Property]"
    and that the Hearing Officer clearly erred because he "ignored
    the plain language of the August 17, 2006 deed as to the
    reservation of the small fractional interest" in the Property.
    1.    Medicaid and life estates
    Again, Medicaid is for the needy and is meant to be
    the payer of last resort.       Fournier, 170 N.E.3d at 1164; Est. of
    2  The Fujimoris raise a fourth point of error, contending that the
    "circuit court erred in failing to reverse the hearing officer's conclusions
    that the Fujimori Trust is revocable and that the Fujimoris therefore had
    access to the Trust's assets and were ineligible for benefits." Edward's
    failure to provide information and the fact that the fair market value of the
    life estates exceeded Medicaid limits were sufficient to affirm the hearing
    officer's (Hearing Officer) decisions. Therefore, the circuit court did not
    err by deciding on those grounds and declining to rule on whether the Trust
    was revocable.
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    Scheidecker, 490 P.3d at 91.       As such, Congress made clear that
    a State's plan must provide that an individual is ineligible for
    medical assistance if that institutionalized individual or
    spouse "disposes of assets for less than fair market value on or
    after the look-back date . . . ."        42 U.S.C. § 1396p(c)(1)(A)
    (2013).
    Hawai‘i thus requires that an individual applying for
    long-term care assistance
    shall be assessed a penalty period for coverage of these
    services if the individual or the individual's spouse,
    transferred an asset for less than fair market value within
    the applicable look-back period. The length of the look-
    back period shall be sixty months for an asset transferred
    on or after February 8, 2006.
    HAR § 17-1725.1-51(a).     "The transfer provision shall apply to
    an asset held by the individual and the individual's spouse when
    any action is taken that reduces or eliminates such individual's
    ownership or control of such asset."        HAR § 17-1725.1-51(c).
    An "'Asset' means cash and any other personal
    property, as well as real property, that an individual or
    family:   (1) Owns; (2) Has the right, authority, or power to
    convert to cash (if not already cash); and (3) Is not legally
    restricted from using for the individual's or family's support
    and maintenance."    HAR § 17-1700.1-2 (formatting altered).             "In
    a transaction involving a life estate, a transfer of assets is
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    involved."     Centers for Medicare & Medicaid Services, State
    Medicaid Manual § 3258.9. 3
    A life estate is "the value of a property that is
    allocated between the life tenant and the remainderman."              HAR
    § 17-1700.1-2.     The life tenant is "a life estate holder who is
    entitled to certain property rights and the right to reside on
    the property for the duration of the holder's life or the life
    of another."    HAR § 17-1700.1-2.         "The life tenant:    (A) Owns
    the physical property for the duration of the life estate;
    (B) Has the right to possess, use, and obtain profits from the
    property; (C) Can sell his or her life estate interest; but
    (D) Cannot take any action concerning the interest of the
    remainderman."     HAR § 17-1725.1-34(f)(3) (formatting altered).
    The remainderman is "an individual who is given a
    remainder interest in a property which he or she will inherit
    upon the death of the life estate holder."           HAR § 17-1700.1-2.
    The remainderman: (A) Has ownership interest in the
    physical property; (B) Does not have the right to possess
    and use the property until termination of life estate; and
    (C) Unless restricted by will or deed, is able to sell his
    or her interest in the physical property before the life
    estate interest expires but the market value of the
    remainder interest may be reduced as the sale is subject to
    life estate interest.
    HAR § 17-1725.1-34(f)(4) (formatting altered).
    The current   value of the property shall be allocated
    between the   life tenant and the remainderman by determining
    the present   worth of their respective interest using the
    Life Estate   and Remainderman Interest Table (
    26 C.F.R. § 20.2031-7
       and 49 FR Vol. 49 No. 93/5-11-84), that
    corresponds   to the age of the life tenant[.]
    3  The State Medicaid Manual can be found at:
    https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-
    Manuals-Items/CMS021927 (last visited: Aug. 25, 2022).
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    HAR § 17-1725.1-34(f)(2).    A transfer of a life estate "is for
    less than fair market value whenever the value of the
    transferred asset is greater than the value of the rights
    conferred by the life estate."    Centers for Medicare & Medicaid
    Services, State Medicaid Manual § 3258.9 (emphasis added).
    2.     Edward's and Florence's life estate
    Here, Edward and Florence reserved a life estate in an
    undivided 0.0001% interest in and to the Property when they
    transferred the Property to the Trust by warranty deed.       Thus,
    the life estate existed independent of the Trust.      Florence in
    2014, and Edward in 2015, applied for Medicaid assistance to pay
    for their long-term care.    Since Florence and Edward transferred
    their life estate to the Kagamis in 2012, the transfer of that
    asset falls within the five-year look-back period.      HAR § 17-
    1725.1-51(a).    DHS was thus obligated to determine whether the
    transfer of Florence's and Edward's life estate to the Kagamis
    was for less than fair market value.     See generally 42 U.S.C.
    § 1396p(c)(1)(A); HAR § 17-1725.1-51(a).     The dispute in this
    case centers around the phrase "ten-thousandth (0.0001 or
    1/10,000) interest in and to" the Property.     (Formatting
    altered.)
    In applying for Medicaid assistance to pay for her
    long-term care, Florence represented the value of her life
    estate in the Property as worth $8.06 by calculating as follows:
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    $546,000.00    Property tax assessed value
    x   .29526   Life estate factor
    $161,211.96    Full value
    x   0.0001   Percentage of interest in
    Property
    $16.12   Adjusted life estate value
    ÷        2   Adjusted for joint life tenant
    with Edward
    $8.06   Florence's proposed life estate
    value
    Accounting for his life estate factor, Edward similarly
    calculated the value of his life estate at $7.04.       Apparently
    taking issue with these low valuations, the Hearing Officer
    considered the circumstances surrounding the transfers of the
    Property to assess the value of Florence's and Edward's life
    estate.
    As to using the tax assessed value as the "fair
    market" value, the Hearing Officer found that "[b]ecause [the
    Property] was sold for $700,000.00, there [was] no reason for
    using the tax assessed value of $546,000."     The Fujimoris do not
    appear to challenge the Hearing Officer's use of the sales
    price.    They merely assert that "[e]ven when using the $700,000
    fair market value as a starting point, [Florence] could only
    have received, at most, $10.33, and [Edward] could only have
    received, at most, $9.02."
    As to reducing the value of the life estate to 0.0001%
    of the full value, the Hearing Officer found that "only
    [Florence and Edward] had an interest in the life estate of [the
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    Property] and that no other person or persons received an
    undivided interest in the Life Estate of [the Property]."
    Although the Fujimoris challenged this finding, they fail to
    cite to where evidence was adduced showing that there was
    another life tenant holding a life estate in the Property.
    Indeed, the record shows that the Fujimoris
    transferred the Property into the Trust with Son as trustee,
    reserving a life estate, albeit in a 0.0001% interest to the
    Property.    The deed to the Property shows only Florence and
    Edward as reserving a life estate, no one else.           Significantly,
    there was no evidence in the record that Florence and Edward's
    right to enjoy the entire Property as life tenants was somehow
    diminished or restricted by holding a life estate in only a
    0.0001% interest to the Property.         And, it seems implausible
    that the Kagamis would purchase the Property for $700,000
    encumbered by a life estate in the other 99.9999% interest in
    the Property.     Thus, the Hearing Officer's finding that only
    Florence and Edward held a life estate to the Property was not
    clearly erroneous.
    The Hearing Officer further found that one of the
    reasons for establishing a life estate in 0.0001% interest of
    the Property was explained by the Fujimoris' attorney as,
    most importantly, the value of your life estate share is so
    small that even if the law were to change to accommodate
    the Attorney General's new position regarding collecting
    liens against life estates, you could buy out that piece of
    life estate and pay off the Medicaid lien for under $50 in
    most cases – no matter how big the lien amount is.
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    The Fujimoris did not challenge this finding, and this finding
    goes directly to the purpose of establishing such a life estate
    in the Property–to evade a large Medicaid lien.
    The Fujimoris' application of a 0.0001% adjustment in
    calculating the value of their life estate was a mathematical
    manipulation of the Medicaid program, a program meant to help
    the most needy in our community.      See Fournier, 170 N.E.3d at
    1164; Est. of Scheidecker, 490 P.3d at 91.      DHS was duty bound
    to uphold the law and fulfill the purposes of the Medicaid
    program and, thus, was obligated to assess the true nature of
    the Fujimoris' life estate.    HRS § 346-14(7) (2015) (providing
    that DHS shall "[a]dminister the medical assistance programs for
    eligible public welfare and other medically needy individuals by
    establishing standards, eligibility, and health care
    participation rules, . . . systems to monitor recipient and
    provider compliance, and assuring compliance with federal
    requirements to maximize federal financial participation").
    Accordingly, we hold that the circuit court did not
    err by affirming the Hearing Officer's decision because, based
    on the circumstances in this particular case, Edward and
    Florence improperly attempted to diminish the value of their
    life estate to qualify as individuals in need of Medicaid
    assistance.
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    B.   Reimbursement For Assistance Pending The Decision
    The Fujimoris argue that because DHS erred in denying
    Florence's benefits, she need not reimburse DHS "for any aid
    paid pending the August 10, 2016 Administrative Hearing Decision
    in her case."
    HAR § 17-1703.1-17(a) provides that "[a]id paid
    pending a hearing decision from the date aid paid pending begins
    through the ninetieth (90th) day shall be recoverable by the
    department if the department's action is sustained."       DHS
    identified the period pending as June 1, 2016 through August 10,
    2016, a little over two months.
    The Hearing Officer calculated the value of Florence's
    life estate as follows:
    $700,000.00     Property sales price
    x   .29526   Florence's life estate factor
    $206,682.00     Full value of Florence's interest
    ÷       2    Adjusted for joint life tenant with
    Edward
    $103,341.00     Value of Florence's life estate in
    2012
    Based on this calculation, the Hearing Officer concluded that
    Florence "was not fairly compensated for her [0.0001%] undivided
    interest in a life estate" of the Property, and that the fair
    market value of her life estate in 2012 was $103,341.00, and not
    $8.06.   Based on the record, this calculation fairly reflects
    the value of Florence's life estate in the ($700,000.00)
    Property, and was not clearly erroneous.
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    Because Florence transferred her life estate within
    the look-back period, the life estate value exceeded $2,000.00,
    and the aid paid pending the decision was within ninety days of
    the decision, we hold that the circuit court did not err by
    affirming the Hearing Officer's decision requiring Florence to
    return the Medicaid assistance paid pending the administrative
    hearing decision.
    C.   Failure To Provide Information
    Edward does not dispute that DHS requested
    information, and that he refused to provide the requested
    information.   Edward, instead, argues that "[b]ecause assets in
    the Fujimori Trust did not belong to [him, DHS] should not have
    denied his application for benefits for failure to provide
    information regarding the amount of assets belonging to the
    Trust."   Edward insists that the information requested was
    "irrelevant" because "the Trust's bank accounts are not part of
    the universe of assets to be considered," and that DHS "does not
    have a right to request information regarding assets in the
    Fujimori Trust."
    Trusts and life estates may affect an individual's
    Medicaid eligibility.    HAR §§ 17-1725.1-18 and 17-1725.1-34(f).
    As an applicant seeking Medicaid assistance to pay for his or
    her long-term care, "[a]n individual shall apply for and develop
    potential sources of assets, when applicable."       HAR § 17-1725.1-
    10(a).    And DHS "shall deny or terminate medical assistance when
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    an individual fails to . . . [c]ooperate in providing accurate
    and complete information or verification[.]"      HAR § 17-1725.1-
    10(g)(2).
    Importantly, "[r]eal property which is considered the
    home or usual place of residence of the individual is generally
    exempt from consideration as a countable asset," subject to some
    terms and exceptions.    HAR § 17-1725.1-36(a).    Cash in a bank
    account, however, "shall be considered in the personal reserve"
    of the individual.    HAR § 17-1725.1-17(2).   In a revocable
    trust, "[t]he corpus of the trust is considered an available
    asset[.]"    HAR § 17-1725.1-18(d)(1).   In an irrevocable trust,
    there are circumstances under which funds can be considered an
    available asset.    HAR § 17-1725.1-18(e).   A trust is irrevocable
    only when its "term and conditions cannot be amended under any
    circumstances, including a court order."     HAR § 17-1700.1-2.
    Here, the Trust transferred the Property and Edward
    transferred his life estate to the Kagamis in 2012, effectively
    converting these assets into cash.    This conversion occurred
    within the five-year look-back period of Edward's 2015
    application for Medicaid assistance.
    Accordingly, at the time of his application, DHS was
    obligated to determine whether the cash was an asset available
    to Edward.    HRS § 346-14(7); HAR §§ 17-1700.1-2, 17-1725.1-
    17(2), 17-1725.1-18(d)(1).    Necessary to that determination
    would be an inquiry as to whether the Trust was irrevocable for
    19
    FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
    purposes of qualifying for Medicaid assistance and whether the
    life estate was transferred for less than its fair market value.
    HAR §§ 17-1700.1-2, 17-1725.1-18(e).     Thus, the circumstances
    surrounding the 2012 transfer of the Property and Edward's life
    estate were relevant to determining whether Edward was eligible
    for Medicaid assistance.
    We thus hold that the circuit court did not err in
    affirming the Hearing Officer's decision denying Edward's
    application for failing "to provide requested updated
    information related to the status of assets in the Fujimori
    Trust, as required by HAR § 17-1725.1-10(g)."
    Based on the foregoing, we affirm the circuit court's
    April 26, 2017 "Order Affirming Administrative Hearing Decisions
    Dated August 10, 2016 and September 13, 2016" and May 11, 2017
    "Judgment on Appeal of Hearing Officer's Decisions."
    On the briefs:                        /s/ Keith K. Hiraoka
    Presiding Judge
    Gregory W. Kugle
    Christopher J.I. Leong                /s/ Karen T. Nakasone
    (Damon Key Leong Kupchak              Associate Judge
    Hastert),
    for Appellants-                       /s/ Sonja M.P. McCullen
    Applicants/Appellants.                Associate Judge
    Ruth K. Oh,
    Deputy Attorney General,
    for Appellees-Appellees.
    20
    

Document Info

Docket Number: CAAP-17-0000466

Filed Date: 8/31/2022

Precedential Status: Precedential

Modified Date: 8/31/2022