MHL ARTICLE 81 - New York State Unified Court System

Article: "Hidden Medicaid Lien? 'Ahlborn Supplemental Needs' ", Jay J. Sangerman,
NYLJ, Feb, 16, 2007, p. 4 , col 4.
The article makes the point that all that Ahlborn may accomplish is the delaying of the satisfaction
of the Medicaid lien until after the death of the beneficiary of the SNT. The author warns attorneys
to be careful when drafting the remainder provisions of SNT's so as not to include in the remainder
ALL the Medicaid funds paid out to the individuals over his lifetime and to be sure to exclude
portions that, under Ahlborn, Medicaid should not recoup.
Matter of Dowd, 2006 NY Misc Lexis 5126; 236 NYLJ 72 (Surr. Ct., Westchester Cty)
(Surr.Scarpino)
rd
17-A ward had a non-payback (3 party) SNT funded directly with an inheritance. He also had two
other guardianship accounts, one funded by an inheritance that went to him directly instead of
directly into an SNT and the other was savings from his own wages. His guardians sought to render
him Medicaid eligible so he could enter a group home and petitioned to pour both accounts into the
existing SNT. The Court held that they could not do so but that they could create a payback, (1 st
party) SNT and pour the funds into that which would render him Medicaid eligible during his life
time and he would have to pay back Medicaid upon his death with any remaining funds to the extent
that there were any liens.
Fergeson v. IHB Realty, Inc., 13 Misc.3d 1029; 821 N.Y.S.2d 848 (Sup. Ct. Kings Cty., 2006)
(Lewis, J.)
(N.B. This case raises important issues related to SNT’s but does not involve an SNT)
Supreme Court, Kings County held that the US Supreme Court decision in Ahlborn did not dictate
that a Medicaid lien should remain unsatisfied just because in hearing a personal injury claim it sent
the damages determination to an arbitrator who did not allocate any portion of the damages to
medical expenses. The court reasoned that when it delegated the damages assessment to the
arbitrator, it reserved for itself the right to determine certain issues, including satisfaction of liens,
when confirming and ordering the arbitration award and it could, consistent with public policy and
the intent of the relevant portions of OBRA‘93, order a portion of the settlement to go to satisfy the
Medicaid lien.
Matter of Dowd, 2006 NY Misc Lexis 5126; 236 NYLJ 72 (Surr. Ct., Westchester Cty)
(Surr. Scarpino)
A mentally retarded 17A ward was the beneficiary of a 3rd party, "non-payback" SNT. He lived at
home and was not receiving Medicaid. In addition to the funds in the SNT, he had two bank
accounts outside of the trust: one containing funds he had inherited directly and the other containing
funds he had earned. When the guardians sought to move him to a group home, they needed to apply
for Medicaid and petitioned the court to transfer the two bank accounts into the existing SNT to
avoid having to spend the funds down to achieve eligibility. DSS objected. The Surrogate denied
69