James Thomas Gheen and Edward Dale Gheen v. State of Wyoming, Ex Rel., Department of Health, Division of Healthcare Financing/Equalitycare

IN THE SUPREME COURT, STATE OF WYOMING
2014 WY 70
APRIL TERM, A.D. 2014
May 30, 2014
JAMES THOMAS GHEEN and
EDWARD DALE GHEEN,
Appellants
(Petitioners),
v.
S-13-0159
STATE OF WYOMING, ex rel.,
DEPARTMENT OF HEALTH,
DIVISION OF HEALTHCARE
FINANCING/EQUALITYCARE,
Appellee
(Respondent).
Appeal from the District Court of Goshen County
The Honorable Keith G. Kautz, Judge
Representing Appellants:
Craig C. Cook and Dennis C. Cook, Cook and Associates, P.C., Laramie,
Wyoming. Argument by Mr. Dennis C. Cook.
Representing Appellee:
Peter K. Michael, Wyoming Attorney General; Robin Sessions Cooley, Deputy
Attorney General; Donna A. Murray, Senior Assistant Attorney General.
Argument by Ms. Murray.
Before KITE, C.J., and HILL, BURKE, DAVIS, and FOX, 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] The State of Wyoming, ex rel. Department of Health, Division of Healthcare
Financing/Equalitycare (the Department) filed a lien against two properties to recover the
cost of Medicaid benefits paid on behalf of Peggy Gheen. Mrs. Gheen’s sons, James and
Edward Gheen (hereinafter “Gheen sons”), filed a petition to remove a false lien and
quiet title, claiming they were the rightful owners of the properties pursuant to quitclaim
deeds recorded after their mother’s death. The district court granted summary judgment
in favor of the Department, ruling that under the relevant federal and state laws, the lien
was appropriate.1 The Gheen sons appealed.
[¶2] We affirm.
ISSUES
[¶3] The Gheen sons present the following issues on appeal:
I. Whether the district court had subject matter
jurisdiction to determine sua sponte the validity of the
quitclaim deeds transferring property to [the Gheen
sons] when [the Department] lack[ed] standing to
question the grantor’s donative intent at the time of
due execution of the conveying deeds, or in the
alternative whether it erred as a matter of law by
nullifying two uncontested quitclaim deeds.
II. Whether the remedial provisions of Wyo. Stat. Ann. §
29-1-601(b) may be invoked against [the Department]
as claimant on the legally groundless and
impermiss[i]ble recorded claim of lien against property
known to belong to [the Gheen sons], as individuals
against whom [the Department] ha[s] no rights to
recover, as a matter of public record.
The Department states the issues as:
I. Federal and state law require [the Department] to seek
reimbursement from the real and personal property in
which an individual had any legal title or interest at the
1
The district court did quiet title in the Gheen sons to an undivided one-half interest in one of the
properties, which they had received in 2002 from their father’s estate.
1
time of death in order to recover amounts paid for
medical assistance. [The Department] provided
medical assistance to Peggy Gheen during the last
three months of her life. After Mrs. Gheen died[,] [the
Department] placed a lien on two parcels of land in
which Ms. Gheen had an interest.
Ms. Gheen’s sons brought a petition to remove the lien
claiming it was false or frivolous because they had
recorded deeds which they found after their mother
died. Although the deeds were dated in 2006, they
were not delivered to the Gheen [sons], the Gheen
[sons] did not know of them until after their mother’s
death, and they were not recorded until 2011.
Did the district court correctly rule that, as a matter of
law, there had been no conveyance of the property in
2006 and that [the Department] could record a lien
against it?
II. Wyoming’s prohibition against frivolous liens
invalidates liens filed against the property of a
government official based on that official’s
performance or nonperformance of official duties. Did
the district court correctly determine that this statute
does not apply to a lien filed by [the Department]
against Ms. Gheen’s property and correctly dismiss the
Petition to Remove False Claim filed pursuant to
Wyoming Statute § 29-1-601(b)?2
FACTS
[¶4] This matter involves two Goshen County, Wyoming properties—a residence and a
farm. Dale Gheen, who was Mrs. Gheen’s husband and the Gheen sons’ father, passed
away in 2001. Mr. and Mrs. Gheen owned the residential property as tenants by the
entireties, and after Mr. Gheen’s death, Mrs. Gheen filed an affidavit stating she was the
sole owner pursuant to her right of survivorship. The farm property was distributed
through Mr. Gheen’s intestacy proceedings, with an undivided one-half distributed to
Mrs. Gheen and an undivided one-quarter interest to each of the Gheen sons. Mrs. Gheen
executed quitclaim deeds for her interests in the residential and farm properties to the
2
The Department overstates the district court’s ruling in this issue. See ¶ 33, infra.
2
Gheen sons and they were notarized on December 29, 2006. She did not, however,
inform her sons about the deeds or record them.
[¶5] On May 4, 2010, James Gheen applied for Medicaid benefits on behalf of Mrs.
Gheen. In the application, he indicated that Mrs. Gheen owned the residential property
and an interest in the farm property. The Department approved Mrs. Gheen’s application,
and she received $10,508.54 in Medicaid benefits before she passed away on August 1,
2010.
[¶6] The Gheen sons discovered the quitclaim deeds in Mrs. Gheen’s personal papers
after her death. On the advice of their attorney, they recorded the deeds on March 1,
2011, effectively avoiding probate of their mother’s real property interests. On May 19,
2011, the Department filed a lien against both properties.
[¶7] The parties corresponded over the next several months about the effect of the
quitclaim deeds on the Department’s lien. The Department eventually took the position
that Mrs. Gheen owned an interest in the properties at the time of her death, which was
subject to the Medicaid lien. On July 11, 2012, the Gheen sons filed a petition to remove
false lien under Wyo. Stat. Ann. § 29-1-601 (LexisNexis 2011). In general, they asserted
the Department’s lien was false because they owned the properties pursuant to the
quitclaim deeds and they did not owe any debt to the Department. The Gheen sons
claimed they were entitled to removal of the lien, statutory damages and attorney fees.
[¶8] The Department answered asserting the lien was valid and § 29-1-601 did not
apply to Medicaid liens. The Gheen sons moved to amend their petition to clarify that
their action was to quiet title in the properties as supplemented by the damages provisions
of § 29-1-601. The district court granted the motion to amend.
[¶9] The Department filed a motion for summary judgment asserting its lien was proper
because Mrs. Gheen owned the properties at the time of her death and the quitclaim deeds
were not valid conveyances. The Gheen sons filed a cross motion for summary
judgment, claiming the deeds were valid, their mother did not own any interest in the
properties at the time of her death, and the Department did not take appropriate action to
have the deeds declared void. They also asserted that, regardless of the efficacy of the
deeds, they owned an undivided one-half interest in the farm property as a result of their
inheritance from their father and it could not be encumbered by the Department’s lien.
[¶10] The district court held a hearing on the competing summary judgment motions on
January 2, 2013. On April 18, 2013, the district court granted the Department’s motion
for summary judgment declaring its lien valid as to Mrs. Gheen’s residence and one-half
interest in the farm property. It also granted the Gheen sons’ motion to quiet title and
declared the Department’s lien did not apply to their undivided one-half interest in the
farm property. The Gheen sons appealed.
3
STANDARD OF REVIEW
[¶11] A district court’s summary judgment order is reviewed de novo, using the same
materials and following the same standards as the district court. 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, 736 (Wyo. 2011).
W.R.C.P. 56(c) allows summary judgments when
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.
The facts are viewed from the vantage point most favorable to the party who opposed the
motion, and we give that party the benefit of all favorable inferences which may fairly be
drawn from the record. Michael’s Constr., ¶ 8, 278 P.3d at 703-04.
DISCUSSION
1. General Medicaid Recovery Principles
[¶12] We recently discussed the general principles of Medicaid benefits recovery in
Estate of Marusich v. State ex rel. Dep’t of Health, 2013 WY 150, ¶¶ 9-12, 313 P.3d
1272, 1276-78 (Wyo. 2013) and will not repeat the full discussion here. In general,
Medicaid is a joint federal and state program that provides medical benefits to qualified
recipients and is a “‘payer of last resort.’” Arkansas Dep’t of Health & Human Servs. v.
Ahlborn, 547 U.S. 268, 291, 126 S. Ct. 1752, 1767, 164 L. Ed. 2d 459 (2006), quoting
S.Rep. No. 99-146 at 313 (1985); Wyo. Stat. Ann. §§ 42-4-101 through 102; State of
Wyoming ex rel. Dep’t of Health, Div. of Healthcare Financing v. Dairyland Insur. Co.,
11 P.3d 348, 350 (Wyo. 2000).
[¶13] Wyoming Medicaid statutes include provisions for reimbursement of Medicaid
payments and authorize the filing of a lien against the property of a deceased recipient’s
“estate” as defined in Wyo. Stat. Ann. § 42-4-207(j) (LexisNexis 2013). That statute
states in relevant part:
(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
4
medical institution. The department shall perfect this lien by
filing a notice in the county in which the real property exists. .
..
Section 42-4-207(j). Section 42-4-206(g) (LexisNexis 2013) defines “estate” as:
(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
individual through joint tenancy, tenancy in common,
survivorship life estate, living trust or other arrangement.
(Emphasis added).
[¶14] As we discussed at length in Marusich, ¶¶ 10-12, 313 P.3d at 1277-78, § 42-4-
206(g)(ii)’s definition of “estate” includes, in addition to typical probate assets, “other
assets in which the individual had any legal title or interest at the time of death.” The
rule also encompasses the corollary—the statutory definition of estate does not include
property properly transferred prior to death.3 Id. See also In re Estate of Barg, 752
N.W.2d 52 (Minn. 2008); In re Estate of Grote, 766 N.W.2d 82, 86-87 (Minn. Ct. App.
2009); North Dakota Dep’t of Human Servs. v. Thompson, 586 N.W.2d 847, 850 (N.D.
1998). The issue raised in this case is whether, under § 42-4-206(g)(ii), Mrs. Gheen
owned an interest in the properties at the time of her death.
2. Department’s Standing to Contest the Deed
[¶15] The district court accepted the Department’s argument that the quitclaim deeds
were not effective to transfer Mrs. Gheen’s property interests because they were not
delivered during her lifetime. The Gheen sons assert the Department did not have
standing to contest the validity of the deeds. Standing implicates a court’s subject matter
jurisdiction and can, therefore, be challenged at any time. Given the jurisdictional nature
of the question, the existence of standing is strictly a legal issue. Northern Laramie
Range Foundation v. Converse County Bd. of County Comm’rs, 2012 WY 158, ¶ 22, 290
P.3d 1063, 1073 (Wyo. 2012); Halliburton Energy Servs. v. Gunter, 2007 WY 151, ¶ 10,
167 P.3d 645, 649 (Wyo. 2007); Hicks v. Dowd, 2007 WY 74, ¶ 18, 157 P.3d 914, 918
(Wyo. 2007).
3
We are not addressing the possibility of recovering assets which were improperly transferred during the
“look back” period. See, e.g., Wyo. Stat. Ann. § 42-4-207(h).
5
[¶16] A party generally has standing if it is “properly situated to assert an issue for
judicial determination.” Cox v. City of Cheyenne, 2003 WY 146, ¶ 9, 79 P.3d 500, 505
(Wyo. 2003). See also Northern Laramie, ¶ 23, 290 P.3d at 1073. As we stated above,
the Department has the statutory right to seek reimbursement of Medicaid benefits under
§§ 42-4-206 and 207. It may do so by filing a lien against property included in the
Medicaid recipient’s estate, as that term is defined in § 42-4-206(g)(ii). The statutes,
therefore, give the Department a stake in determining the assets included within the
statutory “estate.”
[¶17] The Gheen sons claim that, under Wyo. Stat. Ann. § 34-1-127 (LexisNexis 2013),
the Department did not have standing to contest delivery of the deeds from their mother
to them. Section 34-1-127 states:
When a deed or mortgage purports to be an absolute
conveyance in terms, but is made or intended to be made
defeasible by force of defeasance, or other instrument for that
purpose, the original conveyance shall not be thereby
defeated or affected as against any person other than the
maker of the defeasance, or his heirs or devisees, or persons
having actual notice thereof, unless the instrument of
defeasance shall have been recorded in the office of the
county clerk of the county where the lands lie.
[¶18] This statute applies only to a conveyance that is defeasible or subject to
defeasance and restricts the persons who may challenge it unless the document has been
recorded. Defeasance is defined as “[a]n instrument which defeats the force or operation
of some other deed or estate. That which is in the same deed is called a ‘condition;’ and
that which is in another deed is a ‘defeasance.’” The plain meaning of defeasible is:
“Subject to be defeated, annulled, revoked, or undone upon the happening of a future
event or the performance of a condition subsequent, or by a conditional limitation.”
Black’s Law Dictionary 481 (9th ed. 2009).
[¶19] The concept of defeasance, therefore, relies on the validity of the original
conveyance, which can thereafter be defeated by a subsequent action or happening. See,
e.g., Moorcroft v. Lang, 761 P.2d 96 (Wyo. 1988) and Wood v. Bd. of County Comm’rs of
Fremont County, 759 P.2d 1250, 1252 (Wyo. 1988) (explaining that a defeasible interest
may also be known as a fee simple determinable). Here, the Department is not claiming
the quitclaim deeds were subject to defeasance, but, rather, that they were not effective in
the first place because they were not delivered by the grantor, Mrs. Gheen, to the
grantees, the Gheen sons. Section 34-1-127 does not, therefore, apply in this case. The
Department has standing to challenge the quitclaim deeds.
6
3. Effectiveness of Deeds/Delivery
[¶20] The Gheen sons argue the quitclaim deeds were effective when Mrs. Gheen
executed them in 2006. We have stated in several cases that “[t]o effect a conveyance
transferring title, a deed must be both executed and delivered.” Lenhart v. Desmond, 705
P.2d 338, 342 (Wyo. 1985). See also Hein v. Lee, 549 P.2d 286, 292 (Wyo. 1976); B-T
Ltd. v. Blakeman, 705 P.2d 307, 312 (Wyo. 1985). In Forbes v. Volk, 358 P.2d 942, 945
(Wyo. 1961), quoting Klouda v. Pechousek, 110 N.E.2d 258, 262 (Ill. 1953), we stated:
“The delivery is as necessary to make it a deed as the signing and sealing [notarization].”
23 Am. Jur. 2d Deeds § 103 states the concept another way but confirms that delivery is
required for a deed to be valid: “A deed conveying title must be delivered as the final
step in the execution of deed. Thus, a deed, to be operative as a transfer of the ownership
of land or an interest or estate therein, must be delivered; it is delivery that gives the
instrument force and effect.”
[¶21] The Gheen sons argue that delivery is not required for a quitclaim deed, citing the
differences in the statutory language applicable to warranty and quitclaim deeds. Wyo.
Stat. Ann. § 34-2-103 (LexisNexis 2013) states the effect of a warranty deed:
Every deed in substance in the above form [§ 34-2-102],
when otherwise duly executed, shall be deemed and held a
conveyance in fee simple, to the grantee, his heirs and
assigns, with covenants on the part of the grantor, (a) that
at the time of the making and delivery of such deed he was
lawfully seized of an indefeasible estate in fee simple in and
to the premises therein described, and had good right and
power to convey the same; (b) that the same were then free
from all incumbrances; and (c) that he warrants to the grantee,
his heirs and assigns, the quiet and peaceful possession of
such premises, and will defend the title thereto against all
persons who may lawfully claim the same. And such
covenants shall be obligatory upon the grantor, his heirs and
personal representatives, as fully, and with like effect as if
written at length in such deed.
(Emphasis added). The effect of a quitclaim deed is set out in Wyo. Stat. Ann. § 34-2-
105 (LexisNexis 2013):
Every deed in substance in the form prescribed in the
foregoing section [§ 34-2-104], when otherwise duly
executed, shall be deemed and held a sufficient
conveyance, release and quitclaim to the grantee, his heirs
and assigns, in fee of all the then existing legal or equitable
7
rights of the grantor in the premises therein described, but
shall not extend to after acquired title unless words are added
expressing such intention.
(Emphasis added). The Gheen sons claim that since the latter part of the emphasized
language of § 34-2-103 explicitly discusses delivery in the context of warranty deeds
while § 34-2-105 does not mention delivery for quitclaim deeds, delivery is required only
to validate a conveyance by warranty deed but is not required for a valid quitclaim deed.
[¶22] In determining the meaning of statutes, our principal consideration is the
legislature’s intent, which must be determined, if possible, from the plain and ordinary
meaning of the words. When a statute is clear and unambiguous, i.e., “its wording is
such that reasonable persons are able to agree on its meaning with consistency and
predictability,” that meaning governs. If a statute is found to be ambiguous because it is
vague or uncertain and subject to varying interpretations, rules of statutory construction
are applied. Office of State Lands & Invs. v. Mule Shoe Ranch, Inc., 2011 WY 68, ¶ 13,
252 P.3d 951, 954–55 (Wyo. 2011); Dorr v. Smith, Keller & Assoc., 2010 WY 120, ¶ 11,
238 P.3d 549, 552 (Wyo. 2010).
[¶23] Sections 34-2-103 and 105 distinguish between the effects of the two types of
deeds. The statutes do not, however, specifically delineate all of the requirements for a
valid conveyance under either scenario. In fact, both statutes discuss the effectiveness of
deeds that are “duly executed.” Section 34-2-103’s reference to delivery is in the context
of the guarantees of title included within a warranty deed., i.e., the grantor covenants that
at the time of delivery, the grantor has good title to the property. The fact that § 34-2-105
does not contain similar language regarding delivery of a quitclaim deed simply
highlights the differences between warranty and quitclaim deeds; a quitclaim deed does
not contain a guarantee that the grantor has any title or interest in the property. The
obvious purpose of the statute is to highlight the lack of a covenant by the grantor of any
particular interest in the property.
[¶24] Each of the statutes has been in effect since 1895. Over the years, our case law
has consistently stated that delivery is required in order to effectuate any deed. For
example, Hein, 549 P.2d at 292, concerned the validity of a quitclaim deed which had
been placed in escrow. We noted the common use of escrowed quitclaim deeds in
transactions and ruled the signed quitclaim deed was not effective until delivery.
Similarly, Maurer v. Ballou, 440 P.2d 126, 126-28 (Wyo. 1968) stated delivery was
required for an effective quitclaim deed. See also Jenkins v. Miller, 2008 WY 45, ¶¶ 13-
14, 180 P.3d at 925, 930-31 (Wyo. 2008) (delivery and acceptance required for easement
to be effective). The legislature has not taken any action to change the statutes in
response to this Court’s rulings that delivery is required for a valid conveyance by
quitclaim deed, thereby confirming the correctness of our rulings. See, e.g., Barlow
Ranch, L.P. v. Greencore Pipeline Co., 2013 WY 34, ¶ 37, 301 P.3d 75, 87-88 (Wyo.
8
2013); Crago v. Bd. of County Comm’rs of Crook County, 2007 WY 158, ¶ 17, 168 P.3d
845, 854 (Wyo. 2007); Albertson’s, Inc. v. City of Sheridan, 2001 WY 98, 33 P.3d 161
(Wyo. 2001).
[¶25] The two essential elements of delivery are: “1) transferring possession of the deed
by the grantor; and 2) acceptance of the deed by the grantee.” B-T, 705 P.2d at 312;
Jenkins, ¶ 13, 180 P.3d at 930. Delivery and acceptance are both matters of intention, as
manifested by the words and actions of the grantor and grantee, respectively. B-T, 705
P.2d at 312-13; Jenkins, ¶ 13, 180 P.3d at 930-31. The Gheen sons maintain that delivery
is presumed to have occurred in this case because they took possession of the deeds and
recorded them. In Forbes, 358 P.2d at 945, we stated a rebuttable presumption of
delivery was created when the grantee obtained possession of the deed and it was
recorded. That principle of law does not, however, further the Gheen sons’ position that
the deeds were delivered by their mother because it is undisputed that they did not come
into possession of the deeds or record them until after Mrs. Gheen’s death. In fact, they
conceded they knew nothing about the deeds until they found them in her personal
papers.
[¶26] The Gheen sons also seem to argue the deeds were constructively delivered during
Mrs. Gheen’s lifetime when she executed and placed them with her personal papers.
Constructive delivery may occur by placing an executed deed in a location where the
grantee has access, but it must be coupled with evidence of the grantor’s intent to
immediately pass title to the property. Lenhart, 705 P.2d at 342. In the case at bar, the
Gheen sons did not present any evidence that Mrs. Gheen had the intent to pass title to
the properties during her lifetime. The Gheen sons had no knowledge of the deeds and,
in fact, James Gheen listed the properties as assets of his mother’s when he filled out the
application for Medicaid benefits three months before her death. While the documents
were found with her personal papers, there is no evidence that the Gheen sons had routine
access to those papers while Mrs. Gheen was alive. In fact, they apparently did not
search through the papers until sometime after her death. The evidence in this case
indisputably shows the deeds were not delivered by Mrs. Gheen to her sons.
[¶27] The Gheen sons also look to Wyo. Stat. Ann. § 42-2-404 (LexisNexis 2013) in
arguing that the properties were transferred in 2006. That section states:
In the case of an asset held by an individual in common with
another person in a joint tenancy, tenancy in common or
similar arrangement, the asset, or the affected portion of the
asset, shall be considered to be transferred by the
individual when any action is taken, either by the individual
or by any other person, that reduces or eliminates the
individual's ownership or control of the asset.
9
Section 42-2-404 (emphasis added). First of all, we question whether this statute applies
to the residential property because Mrs. Gheen owned the property individually, not in
“joint tenancy, tenancy in common, or similar arrangement.” In any event, the provision
does not support the Gheen sons’ argument because, although Mrs. Gheen signed the
deeds, she did not deliver them. The deeds were not, therefore, effective to reduce or
eliminate her ownership or control of the assets.
4. Due Process
[¶28] The Gheen sons claim they were denied due process of law by the procedures
utilized in this case. In general, due process entitles a party to notice and the opportunity
to be heard. U.S. Const. amends. 5 and 14; Wyo. Const. Art. 1, § 6; Reynolds v. Moore,
2014 WY 20, ¶ 11, 318 P.3d 362, 366 (Wyo. 2014).
[¶29] The Gheen sons argue § 42-4-207(h) required the Department to affirmatively
petition the district court to void the deeds and its failure to do so denied them due
process of law. That section states:
(h) Upon sale of the property on which a lien has been
imposed pursuant to subsection (c) or (j) of this section, the
department shall seek recovery of the amount stated in its
lien. Transfers of real or personal property on or after the
look-back dates defined in 42 U.S.C. § 1396p4 by
recipients of medical assistance under this chapter, or
their spouses, without adequate consideration are
voidable and may be set aside by an action in district
court.
Section 42-4-207(h) (emphasis and footnote added). Once again, the Gheen sons’
argument relies upon the incorrect premise that the deeds were effective transfers.
[¶30] Here, the Department recorded a lien against the properties to perfect its security
interest. It provided notice of the lien to the Gheen sons and the parties negotiated
unsuccessfully for several months. Although the Department indicated that it could file
an action to void the quitclaim deeds, it did not do so. Instead, the Gheen sons filed a
petition to remove a false lien, which was later amended to request title be quieted to
them.
4
The look-back period under 42 U.S.C. § 1396p for deeds dated December 29, 2006, is sixty months.
10
[¶31] In its answer to the petition, the Department asserted, as an affirmative defense,
that it was statutorily authorized to file the lien against the properties.5 The Department’s
motion for summary judgment asserted the quitclaim deeds were not effective because
they had not been delivered during Mrs. Gheen’s lifetime and Mrs. Gheen owned
interests in the properties at the time of her death which were subject to a lien under §§
42-4-206 and 207. The Gheen sons responded to the Department’s argument. The issue
of the validity of the deeds was, therefore, effectively joined and fully litigated. The
Gheen sons do not identify any additional argument or evidence which would have been
produced had the Department initiated an action to void the deeds. They were,
unquestionably, provided notice and an opportunity to be heard regarding the validity of
the deeds.
5. False Lien Statute
[¶32] Section 29-1-601 provides in pertinent part:
(b) Any person whose real or personal property is
subject to a recorded claim of lien who believes the claim of
lien is invalid under subsection (a) of this section, was forged,
or that the lien claimant knew at the time of filing that the lien
was groundless, 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.
....
(iv) If, following a hearing on the matter the court determines
that the claim of lien is invalid under subsection (a) of this
section, was forged or 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,
5
The Gheen sons assert the Department was required to present a compulsory counterclaim under
W.R.C.P. 13. It makes no difference whether an assertion is characterized as a counterclaim or defense
because W.R.C.P. 8(c) specifically allows: “When a party has mistakenly designated a defense as a
counterclaim or a counterclaim as a defense, the court on terms, if justice so requires, shall treat the
pleading as if there had been a proper designation.”
11
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.
[¶33] The Department asserted in the district court that § 29-1-601 did not apply to
Medicaid liens. Although the district court did not address the issue of the applicability
of the statute to the Department’s lien in any detail, it indicated that it may apply. The
district court ruled the Department’s lien could not extend to the Gheen sons’ undivided
one-half interest in the farm property and quieted title in that portion of the property to
them. Using the language of § 29-1-601, the district court concluded:
23. The State’s lien against all of [the farm
property], instead of only against Ms. Gheen’s undivided ½
of [the farm property], does not constitute a material
misstatement or false claim. Because the lien properly
applies to an undivided ½ of the property, and because it
specified that it was made only against Ms. Gheen’s property,
there was no material misstatement or false claim. The lien
was not groundless, but instead was valid against [the
residence] and against Ms. Gheen’s undivided ½ of [the farm
property].
24. As a matter of law, [the Gheen sons’] claim that
the [Department] filed a “groundless” lien or a lien based on a
“material misstatement” or “false claim” must be denied.
25. As a matter of law, [the Gheen sons’] claim for
Quiet Title as to their undivided ½ of [the farm property]
must be granted.
(Emphasis in original).
[¶34] The Department did not appeal the district court’s ruling quieting title in favor of
the Gheen sons on their one-half interest in the farm property. Although the Gheen sons
assert that the district court erred by denying them relief under the remedial provisions of
§ 29-1-601, their argument focuses on the claimed error by the district court in granting
summary judgment in favor of the Department on the validity of its lien. They do not
argue the district court erred by ruling as a matter of law that the Department’s lien
against their one-half interest in the farm property was not groundless or based on a
material misstatement or false claim. Given our affirmance of the district court’s
decision that the Department’s Medicaid lien was valid as to the residence and Mrs.
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Gheen’s one-half interest in the farm property, we do not need to further address the
statute.
[¶35] Affirmed. 6
6
We recognize both parties have strong philosophical beliefs associated with the issues in this case. The
Gheen sons maintain the Department was improperly attempting to “bully” them into paying a debt they
did not owe, while the Department asserts the Gheen sons were attempting to prevent the state from
recovering the reimbursement to which it was legally entitled. The record of this case does not establish
that either party had nefarious intentions. The answers to the legal questions are found directly in our
statutes, federal statutes and our case law, and the parties’ assertions of moral and ethical superiority was
unnecessary and irrelevant.
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