In re: Fujimori v. Department of Human Services.

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.
2
FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
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
3
FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
"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."
4
FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
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.
5
FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
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
6
FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
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";
7
FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
(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.
8
FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
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.
9
FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
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.
10
FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
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
11
FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
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).
12
FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
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:
13
FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
$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
14
FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
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.
15
FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
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.
16
FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
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.
17
FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
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
18
FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
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