Bucholtz v. Belshe

114 F.3d 923, 97 Daily Journal DAR 7175, 97 Cal. Daily Op. Serv. 4279, 1997 U.S. App. LEXIS 13183, 1997 WL 298352
CourtCourt of Appeals for the Ninth Circuit
DecidedJune 6, 1997
DocketNo. 96-16438
StatusPublished
Cited by8 cases

This text of 114 F.3d 923 (Bucholtz v. Belshe) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bucholtz v. Belshe, 114 F.3d 923, 97 Daily Journal DAR 7175, 97 Cal. Daily Op. Serv. 4279, 1997 U.S. App. LEXIS 13183, 1997 WL 298352 (9th Cir. 1997).

Opinion

OPINION

FERNANDEZ, Circuit Judge:

S. Kimberly Belshe, Director of the California Department of Health Services, and other officials of that Department (collectively Belshe) appeal from the district court’s injunction in favor of Charlotte Bucholtz, Ernest Gentile, and Janet Cottrell, who brought this action on their own behalves and on behalf of all others similarly situated,1 (collectively Bucholtz). The district court determined that the State of California was not entitled to recover certain Medi-Cal payments from the successors of deceased MediCal recipients, when the successors received the property through revocable inter vivos trusts, or by passage without probate administration of property held in the form of tenancy in common or community property. The district court then enjoined Belshe from taking steps to recover from Bucholtz and further required steps directed toward the refund of money already recovered. We affirm in part, reverse in part, and remand.

BACKGROUND

Although it might make for somewhat less interesting reading, we will not set forth the facts involved in the individual cases before us. That is because all of the cases follow the same essential pattern, and nothing turns on their individual differences as far as this litigation is concerned.

Basically, Medi-Cal recipients, who have since died, had placed property into revocable inter vivos trusts. When they died, the property went to the beneficiaries of the inter vivos trusts.

Belshe, however, asserted that the state had a Medi-Cal claim against the property and the beneficiaries because of California Welfare and Institutions Code § 14009.5, which allows for a claim “against the estate of the decedent, or against any recipient of the property of that decedent by distribution or survival.” Bucholtz asserted that federal law precluded application of § 14009.5 to the beneficiaries of inter vivos trusts created by Medi-Cal recipients who died before October 1, 1993. See 42 U.S.C. § 1396p(b)(l) (1989).2 The district court agreed with Bucholtz.

A similar, but far from the same, set of problems was presented by property which passed from Medi-Cal recipients without the necessity of probate administration because it was held in the form of tenancy in common or in the form of community property. The district court also resolved those issues against Belshe. This appeal followed.

JURISDICTION AND STANDARDS OF REVIEW

The district court had jurisdiction pursuant to 28 U.S.C. § 1331. We have jurisdiction pursuant to 28 U.S.C. § 1291.

“A district court’s grant of permanent injunctive relief is reviewed for an abuse of discretion or application of erroneous legal principles.” United States v. Yacoubian, 24 F.3d 1, 3 (9th Cir.1994) (citation omitted). We review questions of law de novo. See Twenty-Three Nineteen Creekside, Inc. v. Commissioner, 59 F.3d 130, 131 (9th Cir.1995), cert. denied, — U.S.-, 116 S.Ct. 1034, 134 L.Ed.2d 111 (1996).

DISCUSSION

Medicaid is a federal program which provides medical assistance to eligible low-income persons and which is administered through the states under a cooperative federal-state funding scheme. A state’s participation in Medicaid is voluntary, but participating states must comply with the federal Medicaid Act. California participates through its Medi-Cal program.

[925]*925Under 42 U.S.C. § 1396p(b)(l),3 states whieh participate in the program may not recover medical assistance amounts “correctly paid on behalf of an individual” except, as relevant here, “from his estate.” It was pursuant to this enabling statute that California enacted the provision that allows amounts to be recovered from people who received property from a decedent “by distribution or survival.” Cal.Welf. & Inst.Code § 14009.5(a).

It is undisputed that Belshe believes that § 14009.5(a) reaches property in which the decedent had an interest at his death, whether that property was held in joint tenancy, in an inter vivos trust, in tenancy in common, or in community property. Neither the parties, nor we, dispute her interpretation of that statutory provision. However, we have made it clear that to the extent that the California provision seeks to reach further than § 1396p(b)(l), it cannot stand.

We thoroughly explained that in Citizens Action League v. Kizer, 887 F.2d 1003 (9th Cir.1989). In Kizer, California was attempting to recover Medi-Cal payments from “persons who by right of survivorship have succeeded to property they formerly held in joint tenancy with a benefits recipient.” Id. at 1005. The survivors sued to turn aside the state’s claims, and we said:

In construing the statute, we look first to its plain meaning. If the statutory language is unambiguous, its plain meaning controls unless Congress has “clearly expressed” a contrary legislative intention. In addition, unless Congress has made manifest an intent to the contrary, a presumption obtains that when Congress uses a common law term, it intends to use it in its common law sense.
Federal Medicaid law limits a participating state’s ability to recoup benefits as follows: “No adjustment or recovery of any medical assistance correctly paid on behalf of an individual under the State plan may be made, except ... from his estate.” Because Congress did not define “estate” in the Act, we look to its common law meaning in construing this statutory section.
At common law, “estate” excluded interests in a decedent’s property that were formerly held in joint tenancy. Because the California statute is not so limited, appellants’ argument is compelling.

Id. at 1006 (citations and footnote omitted). We, therefore, agreed that “use of the word ‘estate’ in the recoupment provision limits a state’s recovery to property which descends to the recipient’s heir or the beneficiaries of the recipient’s will upon death.” Id. at 1005. In so doing, we also noted that even the California statute distinguished between the “estate” of the decedent and property which passed by “distribution or survival.” Id. at 1006 n. 3. But, again, the federal statute was limited to the estate itself. Thus, the state’s claims failed.

Belshe cannot avoid the holding or implications of Kizer, but bridles under it and seeks some solace from the fact that Congress has now amended § 1396p(b)(l) to provide that a decedent’s estate for purposes of recovery includes assets within his “estate, as defined for purposes of State probate law,” and may, at the state’s option, include assets which pass through “joint tenancy, tenancy in common, survivorship, life estate, living trust, or other arrangement.” 42 U.S.C.

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114 F.3d 923, 97 Daily Journal DAR 7175, 97 Cal. Daily Op. Serv. 4279, 1997 U.S. App. LEXIS 13183, 1997 WL 298352, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bucholtz-v-belshe-ca9-1997.