Estate of Evelyn Sue Tate v. Commonwealth of Kentucky, Cabinet for Health and Family Services, Department for Medicaid Services

• Court: Court of Appeals of Kentucky
• Decided: September 14, 2023
• Docket: 2022 CA 001469
• Status: Unknown

Opinion

RENDERED: SEPTEMBER 15, 2023; 10:00 A.M. NOT TO BE PUBLISHED

Commonwealth of Kentucky Court of Appeals NO. 2022-CA-1469-MR

ESTATE OF EVELYN SUE TATE, DECEASED; E’LISA ADAMS, PERSONALLY AND IN HER CAPACITY AS EXECUTRIX FOR THE ESTATE OF EVELYN SUE TATE; AND PAUL ADAMS, IN HIS PERSONAL CAPACITY APPELLANTS

APPEAL FROM MCCRACKEN CIRCUIT COURT v. HONORABLE WILLIAM ANTHONY KITCHEN, JUDGE ACTION NO. 19-CI-00971

COMMONWEALTH OF KENTUCKY, CABINET FOR HEALTH AND FAMILY SERVICES, DEPARTMENT FOR MEDICAID SERVICES APPELLEE

OPINION AFFIRMING

** ** ** ** **

BEFORE: THOMPSON, CHIEF JUDGE; ACREE AND JONES, JUDGES.

THOMPSON, CHIEF JUDGE: The Estate of Evelyn Sue Tate, deceased; E’lisa

Adams, personally and in her capacity as Executrix for the Estate of Evelyn Sue Tate; and Paul Adams, in his personal capacity (“Appellants”), appeal from an

order of the McCracken Circuit Court denying their Kentucky Rules of Civil

Procedure (“CR”) 59.05 motion to alter, amend, or vacate an order granting

summary judgment in favor of Commonwealth of Kentucky, Cabinet for Health

and Family Services, Department for Medicaid Services (“Appellee”). Appellants

argue that the circuit court improperly concluded that they engaged in fraudulent

conduct designed to prevent Appellee from recovering $105,700.17 from the estate

representing Medicaid payments made on Ms. Tate’s behalf during her lifetime.

After careful review, we find no error and affirm the summary judgment.1

FACTS AND PROCEDURAL HISTORY

From 2016 to 2018, Evelyn Sue Tate received Medicaid benefits to

pay for community-based services and nursing home care. As a condition of

receiving these benefits, Ms. Tate’s estate would be subject to Appellee’s Medicaid

estate recovery rights upon her death.

Ms. Tate died on March 10, 2018. Her will appointed her daughter,

Appellant E’Lisa Adams (“Mrs. Adams”), as Executrix and conveyed all of her

1 In their Notice of Appeal, Appellants attempt to appeal from the order denying their CR 59.05 motion to alter, amend, or vacate the order of summary judgment. Orders denying CR 59.05 motions “are interlocutory, i.e., non-final and non-appealable and cannot be made so by including the finality recitations.” Tax Ease Lien Investments 1, LLC v. Brown, 340 S.W.3d 99, 103 (Ky. App. 2011) (footnote and citations omitted). Under circumstances void of prejudice, we may consider such an appeal as “properly taken from the final judgment that was the subject of the CR 59.05 motion.” Id. at n.5 (citation omitted). As such, we will consider Appellants’ appeal as if taken from the order of summary judgment.

-2- estate to Mrs. Adams. The estate included a parcel of residential real property

situated in McCracken County, Kentucky.

In October 2018, and prior to the estate being settled, Appellant Paul

Adams, who is married to Mrs. Adams, filed an action in Livingston Circuit Court

seeking a declaratory judgment awarding him title to the parcel situated in

McCracken County. In support of the action, Mr. Adams claimed that he had an

oral agreement with Ms. Tate to recover from the estate the expenditures he made

to upkeep her home while she was in the nursing home. According to Mr. Adams,

these expenses included the payment of utility bills, property taxes, maintenance

costs, and home insurance totaling $112,870.00.

Attorney Joe Kimmel represented Ms. Tate during her lifetime, the

estate in the probate proceeding, and Mr. Adams in the declaratory action. Mrs.

Adams, as Executrix, executed an agreed order in the action for the declaratory

judgment, resulting in the Livingston Circuit Court entering an order transferring

title of the parcel to Mr. Adams. At the same time, the probate action was

proceeding in McCracken Circuit Court, where Mr. Kimmel filed a Final

Settlement stating that all lawful claims against the estate had been paid. On

January 22, 2019, Mr. Kimmel informed Appellee that the estate had about $3,000

in assets, and was therefore exempt from Medicaid estate recovery.

-3- In May 2019, Appellee informed Mrs. Adams and her counsel of its

intent to recover funds from the estate in the amount of $105,700.17, representing

the benefits Ms. Tate received during her lifetime. Appellee filed a claim against

the estate in McCracken District Court on August 9, 2019, which was denied.

Appellee then brought the instant action against the estate and the Adamses to

recover the McCracken County property, which it claimed was fraudulently

removed from the estate to avoid Appellee’s Medicaid estate recovery.

On January 28, 2022, Appellee filed a motion for summary judgment

in which it sought a finding that the transfer of the property from the estate to Mr.

Adams was fraudulent. It also sought a judgment against the defendants in the

amount of $105,700.17. After oral arguments were heard on the motion, the

McCracken Circuit Court entered an order granting summary judgment in favor of

Appellee. In support of the order, the court determined that the transfer of the

parcel from the estate to Mr. Adams was designed to defraud Appellee of its lawful

right of recovery of estate assets, and that Mrs. Adams engaged in an

unconscionable violation her fiduciary duty as Executrix to properly dispose of

estate assets. The court also noted that Mr. Adams’s action to gain title to the

parcel was filed in a county where no parties resided and the parcel was not

located. The court determined that under these facts, the law imposed a

constructive trust on the parcel with Mr. Adams as Trustee. It then entered a

-4- judgment in rem against the parcel in the amount of $105,700.17, and ordered the

Master Commissioner to sell the parcel and distribute the proceeds. This appeal

followed.

STANDARD OF REVIEW

Summary judgment “shall be rendered forthwith if the pleadings,

depositions, answers to interrogatories, stipulations, 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.” CR 56.03. “The record must be viewed in a light most favorable to the party

opposing the motion for summary judgment and all doubts are to be resolved in his

favor.” Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476, 480 (Ky.

1991). Summary judgment should be granted only if it appears impossible that the

nonmoving party will be able to produce evidence at trial warranting a judgment in

his favor. Id. “Even though a trial court may believe the party opposing the

motion may not succeed at trial, it should not render a summary judgment if there

is any issue of material fact.” Id. Finally, “[t]he standard of review on appeal of a

summary judgment is whether the trial court correctly found that there were no

genuine issues as to any material fact and that the moving party was entitled to

judgment as a matter of law.” Scifres v. Kraft, 916 S.W.2d 779, 781 (Ky. App.

1996).

-5- ARGUMENTS AND ANALYSIS

Appellants argue that the circuit court improperly granted Appellee’s

motion for summary judgment because Appellee failed to meet the statutory

burden of proving intentional, knowing, or wanton conduct by Appellants. They

direct our attention to Kentucky Revised Statutes (“KRS”) 205.8463 for the

proposition that they did not have the requisite intent to commit fraud, as they were

unaware of Appellee’s right to recover estate assets until after Mr. Adams took title

to the parcel. They assert that while Ms. Tate and Mr. Kimmel may have been

informed of Appellee’s right of recovery, no evidence was adduced that Appellee

informed the Adamses of such a right until after the property had been conveyed to

Mr. Adams. They argue that summary judgment was improper because they

presented evidence upon which a jury could reasonably conclude that Appellants

had no intent to commit fraud. Lastly, Appellants contend that Appellee’s motion

for summary judgment ran afoul of state and federal law, as well as Appellee’s

own guidelines. They seek an opinion reversing the order on appeal, and

remanding the matter for further proceedings in McCracken Circuit Court.

KRS 205.8463 states,

(1) No person shall knowingly or wantonly devise a scheme or plan a scheme or artifice, or enter into an agreement, combination, or conspiracy to obtain or aid another in obtaining payments from any medical assistance program under this chapter by means of any fictitious, false, or fraudulent application, claim, report,

-6- or document submitted to the Cabinet for Health and Family Services, or intentionally engage in conduct which advances the scheme or artifice.

(2) No person shall intentionally, knowingly, or wantonly make, present, or cause to be made or presented to an employee or officer of the Cabinet for Health and Family Services any false, fictitious, or fraudulent statement, representation, or entry in any application, claim, report, or document used in determining rights to any benefit or payment.

(3) No person shall, with intent to defraud, knowingly make, or induce, or seek to induce the making of a false statement or false representation of a material fact with respect to the conditions or operations of an institution or facility in order that the institution or facility may qualify, upon initial certification or upon recertification, as a hospital, skilled-nursing facility, intermediate-care facility, home-health agency, or other provider of services to the Medical Assistance Program.

(4) No person shall, in any matter within the jurisdiction of the Cabinet for Health and Family Services under this chapter, knowingly falsify, conceal, or cover up by any trick, scheme, or device a material fact, or make any false, fictitious, or fraudulent statement or representation, or make or use any false writing or document knowing the same to contain any false, fictitious, or fraudulent statement or entry.

We must first note that Appellants presented no evidence in response

to Appellee’s motion for summary judgment, which was supported by multiple

exhibits. The only evidence presented to the circuit court to make its ruling on

Appellee’s motion was submitted by Appellee. Appellants tendered supportive

affidavits only as attachments to their subsequent CR 59.05 motion to alter, amend,

-7- or vacate the order of summary judgment. A CR 59.05 motion to alter, amend, or

vacate a judgment, however, cannot be used to raise arguments and introduce

evidence that should have been presented during the proceedings before entry of

judgment. Short v. City of Olive Hill, 414 S.W.3d 433 (Ky. App. 2013) (rehearing

denied).

Appellants acknowledge that Appellee has a general right to estate

asset recovery, but they assert that it is not applicable here because the assets in

Ms. Tate’s estate are below the minimum threshold for recovery. The focus of

Appellants’ argument is their contention that Appellee’s motion for summary

judgment should not have been granted because Appellee did not offer any

evidence that Appellants fraudulently transferred the McCracken County property

to Mr. Adams, nor otherwise improperly concealed or removed estate assets.

After careful consideration of the record and the law, we find

persuasive Appellee’s contention that the Adamses engaged in a concerted effort to

remove the real property from the estate as quickly as possible and conceal it from

Appellee. Evidence was adduced that Ms. Tate, her family, and Mr. Kimmel

acknowledged Appellee’s right to recover estate assets when they assisted her in

enrolling for Medicaid benefits in 2016. Appellee stated that Ms. Tate and Mr.

Kimmel were sent an Estate Recovery Fact Sheet annually, which reminded them

of Appellee’s right of recovery.

-8- In addition, Mr. Adams’ action to acquire title to the property was

filed in a different county – one in which no parties resided and the parcel was not

located – and within 2 days Mrs. Adams waived service and tendered an agreed

order in favor of Mr. Adams. Mr. Adams could have filed a claim as a creditor in

the probate proceeding but, inexplicably, he did not. As noted by the circuit court,

there appears to be no legitimate purpose in filing the action in Livingston County

rather than McCracken County where the property was located, the parties resided,

and the probate action was filed. Further, Mr. Kimmel represented Ms. Tate

during her lifetime, the estate after her death, and Mr. Adams in his Livingston

Country action to gain title to the parcel. We may reasonably conclude that he was

aware of Appellee’s Medicaid estate recovery rights. Further, the record is void of

any documentation that Ms. Tate intended for Mr. Adams to receive the parcel as

compensation for his upkeep of it. Rather, Ms. Tate’s will expressly characterized

the parcel as an estate asset. And finally, there is no record of Mr. Adams’ actual

expenses related to his alleged labor, costs, and maintenance on the parcel.

CONCLUSION

When these facts are considered in concert, we find no error in the

McCracken Circuit Court’s conclusion that Appellants were aware of Appellee’s

right to recover from the McCracken County property the Medicaid benefits

provided to Ms. Tate during her lifetime. The circuit court properly determined

-9- that despite this knowledge, Mrs. Adams, as Executrix, agreed through litigation

initiated by her husband in a different county to transfer title of the real estate in

direct contravention of KRS 395.195 (“Transactions authorized for personal

representative”) requiring her to defend claims for the protection of the estate. The

McCracken Circuit Court’s conclusion bears repeating:

DMS is entitled to judgment as a matter of law because the evidence of fraud is so overwhelming. Based on the facts of this case, the Court can conceive of no other reason for the Defendants’ action in the Livingston County case than to knowingly and intentionally transfer the property in order to avoid the Medicaid estate recovery claim.

We agree with the circuit court, and are not persuaded by Appellants’

third argument that the summary judgment ran afoul of state law, federal law, or

Appellee’s own guidelines. Based on the foregoing, the McCracken Circuit Court

“correctly found that there were no genuine issues as to any material fact and that

the moving party was entitled to judgment as a matter of law.” Scifres, 916

S.W.2d at 781. We find no error, and affirm the order of the McCracken Circuit

Court.

ALL CONCUR.

-10- BRIEF FOR APPELLANTS: BRIEF FOR APPELLEE:

Joe Harvey Kimmel, III Olivia M. Peterson Paducah, Kentucky Ashley G. Kennedy Frankfort, Kentucky

-11-