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Parents of Deceased SNT Beneficiary Must Be Paid for Caregiving Services Before Medicaid

An Indiana appeals court rules that
before the state may be reimbursed for its Medicaid payments to an SNT
beneficiary, the beneficiary’s parents must be paid for the
uncompensated care they rendered. State v. Hammans (Ind. Ct. App., No. 55A04-0606-CV-294, Aug. 2, 2007).


1994, Roland and Sue Hammans’s son Nicholas sustained traumatic brain
injury as the result of a car crash, leaving him completely disabled
and requiring 24-hour care. The Hammanses later received a lawsuit
settlement of $200,000 on Nicholas’s behalf, which was placed in a
court-established special needs trust (SNT) under 42 U.S.C. §
1396p(d)(4)(A). The Hammanses subsequently provided Nicholas
round-the-clock care at their home, with Medicaid contributing nursing
services 40 hours a week.

died unexpectedly in 2005. At the time of his death, the SNT had a
balance of $143,860. The Hammanses petitioned for fees associated with
the administration of the trust and for compensation for the care they
had rendered to Nicholas. The trial court ordered payment of $140,000
to the Hammanses, finding that the Hammanses’ caregiving services were
consistent with the trust’s terms and had been performed with the
expectation that compensation would eventually be authorized prior to
Nicholas’s death.

State of Indiana appealed, arguing that according to both the terms of
the trust and the (d)(4)(A) statute, the Hammanses were required to pay
the entire remaining amount of the trust to the state upon Nicholas’s
death. The state asserted that the Hammanses did not advance any claims
for caregiving services during Nicholas’s lifetime and that they
volunteered their services out of love for their son.

Court of Appeals of Indiana affirms, finding that the services provided
by the Hammanses fulfilled the essential function of the trust and
were expenditures authorized under its terms. Therefore, the Hammanses
are legitimate creditors who require payment before the state may be
reimbursed. "It would be absurd," the court writes, "to interpret the
trust and the statute in such a way as to condition the payment of
legitimate creditors upon the physical receipt of funds from the trust
prior to the death of the

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