The Estate of Joan M. Marusich v. State of Wyoming, Ex Rel., Department of Health, Office of Healthcare Financing/Equalitycare , 2013 WY 150 ( 2013 )

IN THE SUPREME COURT, STATE OF WYOMING
2013 WY 150
OCTOBER TERM, A.D. 2013
December 10, 2013
THE ESTATE OF JOAN M.
MARUSICH,
Appellant
(Petitioner),
v.
S-13-0036
STATE OF WYOMING, ex rel.,
DEPARTMENT OF HEALTH, OFFICE
OF HEALTHCARE
FINANCING/EQUALITYCARE,
Appellee
(Respondent).
Appeal from the District Court of Albany County
The Honorable Jeffrey A. Donnell, Judge
Representing Appellant:
Craig C. Cook and Dennis C. Cook of Cook & Associates, P.C., Laramie,
Wyoming. Argument by Mr. Craig C. Cook.
Representing Appellee:
Gregory A. Phillips, Wyoming Attorney General; Robin Sessions Cooley, Deputy
Attorney General; Kristin M. Nuss, Senior Assistant Attorney General. Argument
by Ms. Nuss.
Before KITE, C.J., and HILL, VOIGT, BURKE, and DAVIS, JJ.
NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third.
Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building,
Cheyenne, Wyoming 82002, of typographical or other formal errors so correction may be made
before final publication in the permanent volume.
KITE, Chief Justice.
[¶1] After Joan M. Marusich died, the State of Wyoming ex rel. Department of Health,
Office of Healthcare Financing/Equalitycare (Department) filed a lien against the home
she owned with her husband, William Marusich, as tenants by the entirety. The
Department sought to recover the cost of Medicaid benefits paid on behalf of Mr.
Marusich, who had predeceased Mrs. Marusich. The Estate of Joan M. Marusich
(Marusich Estate) filed a petition to remove a false lien. The district court granted
summary judgment in favor of the Department, ruling that under the relevant federal and
state laws, the lien was appropriate. After the district court entered a final judgment on
the amount of the lien and denied the Marusich Estate’s motion to amend the petition, the
estate appealed.
[¶2] We affirm.
ISSUES
[¶3] The Marusich Estate presents the following issues on appeal:
1. Whether property owned by a married couple as
tenants by the entireties may be subject to a lien against
property in the estate of the surviving spouse for recovery of
Medicaid expenses paid solely on behalf of the predeceased
spouse.
2. Whether the remedial provisions of W.S. § 29-
1-601(b) may be invoked against appellee as claimant on a
legally groundless and impermiss[i]ble recorded claim of lien.
3. Whether the district court erred when it denied a
motion to amend petition to conform the pleadings to the
underlying cause of action in quiet title that was argued by the
parties on cross motions for summary judgment.
The Department’s issues are similar, though phrased differently.
FACTS
[¶4] The material facts of this case are undisputed. Mr. and Mrs. Marusich had been
married almost forty-four years when Mr. Marusich died in 2005. At the time of his
death and for several years before, Mr. Marusich was an inpatient in a nursing home, and
he received Medicaid benefits to assist in paying for his care. Mrs. Marusich continued
1
to live in the marital home, which they owned as “husband and wife.” Mrs. Marusich did
not receive Medicaid benefits and died intestate in February 2012.
[¶5] On April 6, 2012, the Department filed a lien against the Marusiches’ home to
recover Medicaid expenses of $160,410.66 paid on behalf of Mr. Marusich. On April 11,
2012, the district court opened the Marusich Estate. Although notification of the probate
was published in the local newspaper, the Marusich Estate did not send a notice to the
Department and, accordingly, it did not file a claim in accordance with probate law. On
April 19, 2012, the estate’s attorney and co-administrator executed and recorded an
Affidavit of Survivorship, stating that Mrs. Marusich had full survivorship interest in the
marital property upon Mr. Marusich’s death in 2005.
[¶6] On August 8, 2012, the Marusich Estate filed a Petition to Remove False Lien
against the Department, pursuant to Wyo. Stat. Ann. § 29-1-601(b) (LexisNexis 2013).1
The Department answered asserting the lien was valid, counterclaimed for a judgment in
the amount of the lien and requested an order allowing sale of the property to satisfy its
lien. The parties filed competing motions for summary judgment, and, after a hearing,
the district court granted summary judgment in favor of the Department and against the
1
Wyo. Stat. Ann. § 29-1-601(b) states in relevant part:
(b) Any person whose real or personal property is subject to a recorded claim of lien
who believes . . . that the lien claimant knew at the time of filing that the lien was
groundless, [or] contained a material misstatement or false claim, may petition the court
having jurisdiction over the lien of the county in which the claim of lien has been
recorded for the relief provided in this subsection. The petition shall state the grounds
upon which relief is requested, and shall be supported by the affidavit of the petitioner or
his attorney setting forth a concise statement of the facts upon which the motion is based.
. . . Upon the filing of the petition the following shall apply:
(i) The court may enter its order, which may be granted ex parte, directing the
lien claimant to appear before the court at a time no earlier than six (6) nor later than
fifteen (15) days following the date of service of the petition, and order the lien claimant
to show cause, if any, why the relief provided in this subsection should not be granted;
....
(iv) If, following a hearing on the matter the court determines . . . that the lien
claimant knew at the time of filing that the lien was groundless or contained a material
misstatement or false claim, the court shall issue an order striking and releasing the claim
of lien and awarding damages of one thousand dollars ($1,000.00) or actual damages,
whichever is greater, costs and reasonable attorneys’ fees to the petitioner to be paid by
the lien claimant;
(v) If the court determines that the claim of lien is valid, the court shall issue an
order so stating and shall award costs and reasonable attorneys’ fees to the lien claimant
to be paid by the petitioner.
2
Marusich Estate on the validity of the lien but concluded there was a genuine issue of fact
regarding the proper amount of the lien. The parties subsequently stipulated as to the
amount of Medicaid benefits paid by the Department on behalf of Mr. Marusich and the
district court entered a final judgment. The district court also denied the Marusich
Estate’s motion to amend its petition. The Marusich Estate filed a timely notice of
appeal.
STANDARD OF REVIEW
[¶7] With regard to the district court’s grant of summary judgment in favor of the
Department, we look to W.R.C.P. 56(c):
The judgment sought shall be rendered forthwith if the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any,
show that there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a
matter of law.
We review a district court’s summary judgment rulings de
novo, using the same materials and following the same
standards as the district court. The facts are reviewed from
the vantage point most favorable to the party who opposed
the motion, and we give that party the benefit of all favorable
inferences that may fairly be drawn from the record.
Michael’s Constr., Inc. v. American Nat’l Bank, 2012 WY 76, ¶ 8, 278 P.3d 701, 703-04
(Wyo. 2012); Grynberg v. L & R Exploration Venture, 2011 WY 134, ¶ 16, 261 P.3d
731, 735-36 (Wyo. 2011). This case requires interpretation of the relevant statutes which
is a question of law subject to our de novo standard of review. Western Wyo. Constr. Co.
v. Bd. of County Comm’rs of Sublette County, 2013 WY 63, ¶¶ 10, 15, 301 P.3d 512,
514-16 (Wyo. 2013); Vogel v. Onyx Acceptance Corp., 2011 WY 163, ¶ 21, 267 P.3d
1057, 1063 (Wyo. 2011).
[¶8] The district court has discretion in ruling on a motion to amend a pleading, and we
will not reverse its decision unless it abused its discretion. Jasper v. Brinckerhoff, 2008
WY 32, ¶ 8, 179 P.3d 857, 862 (Wyo. 2008). The core inquiry under the abuse of
discretion standard is whether the district court could have reasonably concluded as it did.
Fix v. South Wilderness Ranch Homeowners Ass’n, 2012 WY 96, ¶ 12, 280 P.3d 527, 531
(Wyo. 2012); Magin v. Solitude Homeowner’s, Inc., 2011 WY 102, ¶ 40, 255 P.3d 920,
932 (Wyo. 2011).
DISCUSSION
3
1. Lien for Recovery of Medicaid Benefits
[¶9] Before discussing the specific aspects of this case, it is helpful to set out some
general principles of Medicaid benefits recovery. Medicaid is a program that provides
medical benefits to qualified recipients and is designed to be a “‘payer of last resort.’”
Arkansas Dep’t of Health & Human Servs. v. Ahlborn, 547 U.S. 268, 291, 126 S. Ct.
1752, 164 L. Ed. 2d 459 (2006), quoting S.Rep. No. 99-146 at 313 (1985); Wyo. Stat.
Ann. §§ 42-4-101, 102; State ex rel. Dep’t of Health, Div. of Healthcare Financing v.
Dairyland Ins. Co., 11 P.3d 348, 350-51 (Wyo. 2000). See also Poindexter v. State of
Illinois, Dep’t of Human Servs., 869 N.E.2d 139, 149 (Ill. App. Ct. 2006). The federal
and state governments jointly fund Medicaid, and individual states administer the
program. Cargill v. Dep’t of Health, Div. of Healthcare Financing, 967 P.2d 999, 1001
(Wyo. 1998). Before a state can receive federal appropriations for Medicaid, a state plan
must be approved by the appropriate federal agency. Id. See also 42 U.S.C. § 1396;
Dairyland, 11 P.3d at 351. The state plan must include provisions for collecting payment
from any legally liable third party, including the estate of the Medicaid recipient or his or
her spouse. In the Matter of the Estate of Campbell, 950 P.2d 557, 559 (Wyo. 1997). See
also Knori v. State of Wyoming ex rel. Dep’t of Health, Office of Medicaid, 2005 WY 48,
¶ 5, 109 P.3d 905, 907 (Wyo. 2005).
[¶10] U.S.C. § 1346p(b)(4)(A) and (B)2 allow the states to choose between defining the
“estate” from which Medicaid recovery may be made by typical state probate law or by
using an expanded definition which includes non-probate assets. Wyoming complied
with the federal mandate to enact Medicaid benefits recovery provisions and adopted the
expanded definition of “estate.” Knori, ¶ 5, 109 P.3d at 907.
[¶11] Wyo. Stat. Ann. § 42-4-206 (LexisNexis 2013) states in relevant part:
2
Section 1346p(b) states in pertinent part:
(4) For purposes of this subsection, the term “estate”, with respect to a deceased
individual--
(A) shall include all real and personal property and other assets included
within the individual’s estate, as defined for purposes of State probate law; and
(B) may include, at the option of the State (and shall include, in the case
of an individual to whom paragraph (1)(C)(i) applies), any other real and personal
property and other assets in which the individual had any legal title or interest at the time
of death (to the extent of such interest), including such assets conveyed to a survivor,
heir, or assign of the deceased individual through joint tenancy, tenancy in common,
survivorship, life estate, living trust, or other arrangement.
4
(a) If an individual receives any medical assistance
pursuant to this chapter, upon the individual’s death, if single,
or upon the death of the survivor of a married couple, either
of whom received medical assistance, the total amount paid
for medical assistance rendered for the individual or the
spouse shall be filed by the department as a claim against the
estate of the individual or the estate of the surviving spouse in
the court having jurisdiction to probate the estate. A claim
shall be filed if medical assistance was rendered for either
person under one (1) of the following circumstances:
(i) The person was fifty-five (55) years of age or
older when he received medical assistance; or
(ii) The person was an inpatient in a nursing facility,
intermediate care facility for people with intellectual
disability or other medical institution when he received
medical assistance.
....
(c) The claim shall include only the total amount of
medical assistance rendered after the individual attains fifty-
five (55) years of age or during a period of institutionalization
as described in paragraph (a)(ii) of this section, and shall not
include interest. A claim for medical assistance rendered for
the predeceased spouse, against the estate of a surviving
spouse who did not receive medical assistance, is limited to
the value of the assets of the estate that were marital property
or jointly owned property at any time during the marriage.
....
(g) As used in this section:
(i) “Asset” means as defined under W.S. 42-2-
401(a)(i);
(ii) “Estate” shall include all real and personal
property and other assets included within the individual’s
estate, as defined for purposes of this state’s probate law, and
includes any other real and personal property and other assets
in which the individual had any legal title or interest at the
time of death to the extent of that interest, including such
assets conveyed to a survivor, heir or assign of the deceased
5
individual through joint tenancy, tenancy in common,
survivorship life estate, living trust or other arrangement.3
[¶12] Wyo. Stat. Ann. § 42-4-207(j) specifically permits the filing of a lien against the
property of a deceased recipient’s estate, as that term is defined in § 42-4-206(g)(ii):
(j) The department may file a lien against the property
of any estate, as defined in W.S. 42-4-206(g), of a deceased
recipient for the amount of medical assistance provided while
the recipient was fifty-five (55) years of age or older or while
the recipient was an inpatient in a nursing facility,
intermediate care facility for people with intellectual
disability or other medical institution. The department shall
perfect this lien by filing a notice in the county in which the
real property exists. . . .
[¶13] The parties agree the deed which granted the property to the Marusiches as
“husband and wife” created a tenancy by the entirety. That is consistent with our
precedent. See, e.g., Witzel v. Witzel, 386 P.2d 103, 105 (Wyo. 1963); Peters v. Dona, 54
P.2d 817, 819-20 (Wyo. 1936). The Marusich Estate argues the Department was not
entitled to take a lien against the house because it was owned by Mr. and Mrs. Marusich
as tenants by the entirety and that tenancy was not identified in § 42-4-206(g)(ii) as part
of the “estate.” The district court concluded that the legislature intended that property
owned in tenancy by the entirety be included within the definition of estate as an “other
arrangement.”
[¶14] We interpret statutes by applying the following principles:
[Our] paramount consideration is to determine the
legislature’s intent, which must be ascertained initially and
primarily from the words used in the statute. We look first to
the plain and ordinary meaning of the words to determine if
the statute is ambiguous. A statute is clear and unambiguous
if its wording is such that reasonable persons are able to agree
on its meaning with consistency and predictability.
Conversely, a statute is ambiguous if it is found to be vague
or uncertain and subject to varying interpretations.
3
There are a few minor differences between the federal and Wyoming versions but there is no argument
the differences are relevant in this case. Compare U.S.C. § 1346(b)(4)(B) with § 42-4-206(g)(ii).
6
Office of State Lands & Invs. v. Mule Shoe Ranch, Inc., 2011 WY 68, ¶ 13, 252 P.3d 951,
954–55 (Wyo. 2011), quoting Dorr v. Smith, Keller & Assoc., 2010 WY 120, ¶ 11, 238
P.3d 549, 552 (Wyo. 2010). See also Vogel, ¶ 21, 267 P.3d at 1063. The determination
of whether a statute is clear or ambiguous is a matter of law for the court. Office of State
Lands, ¶ 13, 252 P.3d at 955. In ascertaining the meaning of a statutory provision, all
statutes relating to the same subject or having the same general purpose must be
considered and construed in harmony. Mountain Cement Co. v. South of Laramie Water
& Sewer Dist., 2011 WY 81, ¶ 13, 255 P.3d 881, 885 (Wyo. 2011).
[¶15] As we stated earlier, Wyoming adopted the expanded definition of “estate” which
clearly includes non-probate assets that pass by operation of law upon the death of one of
the tenants. Section 42-4-206(g)(ii). Tenancy by the entirety is not specifically listed in
the statutory section; nonetheless, the definition of estate is expansive, including
survivorship tenancies and “other arrangements.” The clear intent of the statute is to
reach any type of non-probate survivorship interest. This intent is, in fact, confirmed in
other Wyoming statutes. In Wyo. Stat. Ann. § 4-10-402(c) (LexisNexis 2013) the
legislature directed that the typical protections which inured to tenancies by the entirety
would be preserved when the property was transferred into a living trust. However, § 4-
10-402(e) also specifically states: “Nothing in this section shall be construed to limit or
otherwise alter the authority granted to the department of health to assert a claim against
an estate under W.S. 42-4-206 or to file a lien under W.S. 42-4-207 as could be asserted
against a tenancy by the entirety . . . .” If tenancies by the entirety were not included
within the definition of estate in § 42-4-206(g)(ii), § 4-10-402(e) would not be necessary.
We, therefore, conclude the plain language of § 42-4-206(g)(ii) includes tenancy by the
entirety as an “other arrangement” within the individual’s Medicaid recovery “estate.”
[¶16] The Marusich Estate also argues that a tenancy by the entirety does not include
any separate interest of a spouse; hence, the first deceased spouse does not have any
interest at the time of death. There are Wyoming statutes which refer to tenancy by the
entirety. For example, Wyo. Stat. Ann. § 34-1-140 (LexisNexis 2013) allows property
owners to create a joint tenancy or tenancy by the entirety without using a strawman.
However, there are no statutes which specifically state the requirements for establishing a
tenancy by the entirety or its particular attributes. Consequently, most of Wyoming’s law
on this matter is found in the common law, as reflected in our published precedent. See
In re Anselmi, 52 B.R. 479, 484-85 (D.Wyo. 1985).
[¶17] Five requirements are necessary to establish a tenancy by the entirety:
[T]here are technical requirements of a joint tenancy or
tenancy by the entirety. There are four essential
characteristics of either tenancy, viz., (1) unity of interest,
(2) unity of title, (3) unity of time, and (4) unity of
possession. For a tenancy by the entirety, there is of
7
course the additional characteristic of unity of person
which exists only in the case of a husband and wife.
Wambeke v. Hopkin, 372 P.2d 470, 475 (Wyo.1962) (citing
Peters v. Dona, 49 Wyo. 306, 54 P.2d 817, 820 (1936); 41
C.J.S. Husband and Wife § 31, p. 442; 14 Am.Jur.,
Cotenancy, § 7, p. 81).
Baker v. Speaks, 2013 WY 24, ¶ 47, 295 P.3d 847, 858 (Wyo. 2013).
[¶18] In general, neither spouse may convey his or her interest as a tenant by the entirety
without being joined in the conveyance by the other spouse. Ward Terry & Co. v.
Hensen, 297 P.2d 213, 215 (Wyo. 1956). Property held in tenancy by the entirety is not
part of the first deceased spouse’s probate proceeding; instead, it passes to the surviving
spouse by operation of law. Id. See also Wambeke, 372 P.2d at 474. As we explained
many years ago in In re Bergman’s Survivorship, 151 P.2d 360, 368 (Wyo. 1944), such
property “becomes the absolute property of the survivor upon the death of a spouse and is
not part of the estate of the latter.” In addition to the restraints on conveyance and devise,
property held in tenancy by the entirety is generally not subject to legal process to satisfy
a debt of only one spouse. Ward Terry, 297 P.2d at 219. See also Peters, 54 P.2d at 820-
22; Colorado Nat’l Bank v. Miles, 711 P.2d 390, 393-94 (Wyo. 1985). The purpose of
these rules is to protect each spouse’s right to possession and enjoyment of the property.
Ward Terry, 297 P.2d at 218-20.
[¶19] The fact that neither spouse, alone, may encumber or alienate property held in
tenancy by the entirety, and it may not be subject to the debt of just one spouse does not
necessarily lead to a rule that such property is forever exempt from execution for one of
their debts. Even the early statements of the rule contain the caveat that it only applies
during the life of the surviving spouse. In Ward Terry, 297 P.2d at 218-19, this Court
quoted McCurdy v. Canning, 64 Pa. 39, 41-42 (Pa. 1870) (emphasis added) as follows:
[O]ne who, without the consent of the wife, purchases
the husband’s interest in real estate in which both husband
and wife are seised of the entirety, and to the possession of
the whole of which she is entitled equally with him, does not
acquire, during the wife’s life, any right to the possession,
either jointly with her or to her entire exclusion.
Similarly, we quoted Shinn v. Shinn, 21 P. 813, 815 (Kan. 1889):
As long as the wife lives, the property cannot be legally
seized or sold on execution for the husband’s debts; nor
could the purchaser, if the property should be sold, take the
8
possession of it, for the wife has the exclusive right to the
possession thereof, and to the use and control of the same,
except as against her husband alone, who has a like right to
the possession and to the use and control of the same.’
Ward Terry, 297 P.2d at 219 (emphasis added). See also Colorado Nat’l Bank, 711 P.2d
at 393.
[¶20] The Medicaid recovery statutes specifically recognize the surviving spouse’s right
to possession and enjoyment of the marital property by delaying execution until after the
death of the surviving spouse.4 See § 42-4-206(a). See also 79 Am.Jur.2d Welfare § 41
(2013). This accommodation protects the surviving spouse from impoverishment while
allowing the Department to recover Medicaid benefits when the surviving spouse dies in
order to fund future services to needy persons. 79 Am.Jur.2d Welfare § 41; Wisconsin
Dep’t of Health & Family Servs. v. Blumer, 534 U.S. 473, 480, 122 S. Ct. 962, 151 L. Ed.
2d 935 (2002); In re Estate of Jobe, 590 N.W.2d 162, 166 (Minn. Ct. App. 1999). The
procedure also recognizes the surviving spouse’s common law entirety interest by
allowing full use of the property and its value during his or her life. To the extent the
Medicaid recovery statutes change the common law, the legislature has the prerogative to
do so, provided its intent was sufficiently clear. Ward Terry, 297 P.2d at 220. See also
Sorenson v. State Farm Auto. Ins. Co., 2010 WY 101, ¶ 19, 234 P.3d 1233, 1238 (Wyo.
2010). As we stated earlier, the statutes clearly indicate the legislature intended for
entirety property to be available to the Department for reimbursement of Medicaid
benefits once both spouses have died.
[¶21] The Marusich Estate argues that cases from other jurisdictions support its position
that the tenancy by the entirety interest is not available for Medicaid recovery, placing
particular emphasis on In re Estate of Barg, 752 N.W.2d 52 (Minn. 2008). In that case,
the husband and wife owned property as joint tenants. The wife entered a nursing home
and received Medicaid benefits. Prior to her death, the wife transferred her interest in the
joint property to her husband. After the husband died, the Welfare Department sought to
recover Medicaid benefits paid on behalf of the wife from the husband’s estate. Id. at 57.
Minnesota had adopted the optional expanded definition of estate, and the Welfare
Department argued it was entitled to recover against the real property because the wife
had owned it “at any time during the marriage,” relying on a provision similar to § 42-4-
206(c). Id. at 61.
[¶22] The Minnesota Supreme Court acknowledged that its Medicaid recovery statutes
modified “common law to provide for continuation of a recipient’s life estate or joint
4
Restrictions on recovery also apply under other circumstances, such as if the recipient, if single, or
surviving spouse of a married couple is survived by a child under the age of twenty-one, etc. See §§ 42-4-
206 through 207. Those restrictions are not applicable here.
9
tenancy interest in real property after his death for the purposes of recovering medical
assistance.” Id. at 61. Compare, In re Estate of Bruce, 260 S.W.2d 398 (Mo. Ct. App.
2008) (holding the state was not allowed to recover Medicaid benefits from property
previously held in tenancy by the entirety because the Missouri General Assembly had
not adopted the expanded definition of estate); Hines v. Dep’t of Public Aid, 850 N.E.2d
148, 154-55 (Ill. 2006) (holding Illinois had not adopted the more expansive definition of
“estate” except where a long-term care insurance policy was involved). However, the
Barg court also recognized the statutory language expanding the definition of estate
which, like our § 42-4-206(g)(ii), covered “other assets in which the individual had any
legal title or interest at the time of death,” and concluded the state’s authority to recover a
Medicaid recipient’s assets was limited to those he or she had an interest in at the time of
death. Id. at 69-70. Because the recipient spouse, the wife, had transferred all of her
interest in jointly held property to her husband prior to her death, she did not own any
interest at the time of her death and the assets were not available for Medicaid benefits
recovery. Id. See also In re Estate of Grote, 766 N.W.2d 82, 86-87 (Minn. Ct. App.
2009) (emphasizing the important distinction between jointly held assets transferred
before the first spouse’s death, which are not available for recovery, and those transferred
by operation of law upon death, which are).
[¶23] In North Dakota Dep’t of Human Servs. v. Thompson, 586 N.W.2d 847, 850 (N.D.
1998), the North Dakota Supreme Court held that the “expansive definition [of estate] is
broad enough to encompass the department’s claim against the estate of a deceased
spouse of a deceased recipient of medical assistance benefits for the amount of medical
assistance paid out, to the extent the recipient at the time of death had any title or interest
in assets which were conveyed to his or her spouse” by survivorship rights. In that case,
the property was held jointly by the spouses with a right of survivorship and had earlier
passed to the surviving spouse by operation of law. Id. at 850 n.2.
[¶24] In In re Estate of Smith, 2006 WL 3114250 (Tenn. Ct. App. 2006), a Tennessee
Court of Appeals rejected the state’s effort to reach property which had originally been
held by husband and wife as tenants by the entirety because the wife had transferred all of
her interest to the husband before she died. However, it is significant for our purposes
that the court did not suggest that property held in tenancy by the entirety is never subject
to Medicaid recovery efforts. Similarly, the Missouri Court of Appeals in Bruce, 260
S.W.2d at 403-404, indicated the expanded definition of estate would apply to property
held as tenants by the entirety.
[¶25] While Barg and Smith ultimately reached a result consistent with that sought by
the Marusich Estate, they do not support its argument that the house should not be
available for recovery. In fact, those cases compel the opposite conclusion. Given Mr.
Marusich owned an interest in the house when he died (unlike the recipient spouses in
Barg and Smith), it was within the Department’s authority to file a lien even though his
interest passed by operation of law to Mrs. Marusich upon his death. The present case is
10
akin to Thompson, in which the North Dakota Supreme Court held that survivorship
assets are available for Medicaid recovery under the expanded definition of estate after
the surviving spouse dies.
[¶26] The Marusich Estate also argues that the Department could not recover because it
did not file a creditor’s claim in Mrs. Marusich’s probate proceeding. Sections 42-4-206
and 207 provide two separate means of recovering Medicaid payments. Section 42-4-206
allows creditor claims in estates and § 42-4-207 allows liens. When Medicaid
reimbursement is sought against the recipient’s or his or her spouse’s probate estate under
§ 42-4-206, then the requirements for filing claims against estates under our probate law
apply. Campbell, 950 P.2d at 559-60. However, given the Department’s lien in this case
was against Mr. Marusich’s “estate” as defined in the Medicaid recovery statutes and not
against the surviving spouse’s probate estate, a creditor’s claim in Mrs. Marusich’s
probate estate was unnecessary.
[¶27] The district court correctly granted summary judgment upholding the
Department’s lien.5
2. Relief Under False Lien Statute
[¶28] In a confusing argument, the Marusich Estate asserts that the remedial provisions
of § 29-1-601(b) should be applied to extinguish the Department’s lien and award it
damages and attorney fees. Section 29-1-601(b) provides: “Any person whose real or
personal property is subject to a recorded claim of lien who believes . . . that the lien
claimant knew at the time of filing that the lien was groundless, [or] contained a material
misstatement or false claim, may petition the court having jurisdiction over the lien of the
county in which the claim of lien has been recorded for the relief provided in this
subsection.” Under the statute, if the court determines the lien was false or groundless, it
must strike the lien and award the property owner damages and attorney fees. Section
29-1-601(b)(iv). On the other hand, if the court determines the lien was valid, then the
lien claimant is entitled to costs and attorney fees. Section 29-1-601(b)(v).
[¶29] Section 29-1-601 does not set out the requirements for a valid lien; that is
determined by applying other substantive law. Given we have affirmed the district
court’s decision on the validity of the Department’s Medicaid lien, there is no basis for
the Marusich Estate to argue that § 29-1-601 somehow provides an additional avenue for
invalidating the lien.
5
Our decision that the lien is valid under the relevant statutes is dispositive; consequently, we do not need
to address the Marusich Estate’s argument concerning the effect of Mrs. Marusich’s signature, or lack
thereof, on Mr. Marusich’s Medicaid application. Additionally, any issue regarding the extent of the
recipient spouse’s interest in tenancy by the entirety property is not properly raised or argued in this
appeal. Accordingly, we leave that determination to another day.
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[¶30] As to the damages and attorney fee provisions of § 29-1-601(b), the Marusich
Estate argues that they should apply if the lien was groundless (so the estate would
recover), but not if the lien was valid (so the Department would recover). The basis for
the estate’s argument that the Department is not entitled to recover attorney fees and costs
under § 29-1-601(b) is that the Department had asserted in the district court that the
statute did not apply to Medicaid liens and it was not a “lien claimant” under the
provision. The Marusich Estate seems to ignore that it is the party who initiated the
action pursuant to § 29-1-601(b). It seems disingenuous to argue the statute should apply
if the ruling is in petitioner’s favor but not to a ruling against it.
[¶31] In any event, although the district court stated in its decision letter that the
Department was entitled to attorney fees and costs and the Department submitted an
affidavit in support of its claim, the record does not indicate that the district court ever
awarded fees and costs. In fact, the Marusich Estate concedes no such order was ever
entered. We will not, therefore, further address the issue of whether the Department was
entitled to attorney fees and costs.
3. Motion to Amend Complaint
[¶32] In its final issue, the Marusich Estate maintains the district court erred by denying
its motion to amend the pleadings to conform to the evidence presented at trial. It sought
to “provide clarity to the nature of the proceedings as an action in Quiet Title as
supplemented by W.S. § 29-1-601 in conformance with Petitioner’s subsequent pleadings
and arguments.” The district court denied the motion to amend on the grounds it had
already ruled the lien was valid and there was no additional dispute over title to the
property or encumbrances.
[¶33] W.R.C.P. 15(b) governs amendments under these circumstances:
(b) Amendments to Conform to the Evidence. – When
issues not raised by the pleadings are tried by express or
implied consent of the parties, they shall be treated in all
respects as if they had been raised in the pleadings. Such
amendment of the pleadings as may be necessary to cause
them to conform to the evidence and to raise these issues may
be made upon motion of any party at any time, even after
judgment; but failure so to amend does not affect the result of
the trial of these issues. If evidence is objected to at the trial
on the ground that it is not within the issues made by the
pleadings, the court may allow the pleadings to be amended
and shall do so freely when the presentation of the merits of
the action will be subserved thereby and the objecting party
fails to satisfy the court that the admission of such evidence
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would prejudice the party in maintaining the party's action or
defense upon the merits. The court may grant a continuance
to enable the objecting party to meet such evidence.
In Jasper, ¶ 8, 179 P.3d at 862 (citations omitted), we stated:
A motion to amend a pleading under W.R.C.P. 15(a) “shall be
freely given when justice so requires.” However, a district
court's decision to grant or deny a motion to amend is a
matter best left to the judgment of that court and we will not
reverse its decision absent an abuse of discretion.
[¶34] The quiet title claim propounded by the Marusich Estate was based upon the
validity of the Department’s Medicaid lien. In fact, the motion to amend the petition
specifically stated that the Marusich Estate “does not seek to amend or alter any factual
allegation in its original Petition or prayer for relief. . . . The proposed amendment will
not, in any way, alter Petitioner’s legal arguments already presented in this matter.” As
the district court properly recognized, the validity of the lien had already been decided.
Whether the Marusich Estate’s claim was restyled as a quiet title action or not, the result
would be the same. The district court did not abuse its discretion by denying the
Marusich Estate’s motion to amend the petition.
[¶35] Affirmed.
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