Opinion
February 4, 1999
Appeal from the Supreme Court (Cobb, J.).
Marion F. Judson (hereinafter decedent) resided in a nursing home in the Village of Valatie, Columbia County, from May 1989 until she died on December 26, 1995. Although initially admitted as a private-pay resident, an application for Medicaid assistance was made on her behalf on May 1, 1991, which revealed that decedent was the income beneficiary of a self-settled trust. A copy of the trust instrument was included with the application. While decedent's request was denied on grounds not pertinent here, a second application resulted in an award of benefits from the date of that determination until decedent's death. The income from the trust was paid to the Columbia County Department of Social Services, which continuously covered decedent's nursing home care expenses through the Medicaid program.
Following decedent's death, plaintiff commenced the instant action against defendant Fleet Trust Company, the trustee of the trust, and defendants Kenneth M. Judson and Alan D. Judson, the coexecutors of decedent's estate, seeking reimbursement for the moneys that the Columbia County Department of Social Services had paid for decedent's care. Plaintiff's complaint contained three causes of action — the first predicated upon the regulations of the Department of Social Services contained in 18 NYCRR 360-4.5, the second upon the theory that the executors had breached their fiduciary duty in failing to see to the payment of decedent's debts from the trust corpus and the third seeking recovery from the trust pursuant to the provisions of Social Services Law § 369 (3). Following joinder of issue, plaintiff and the executors each moved for summary judgment. Supreme Court granted plaintiff partial summary judgment on its third cause of action and denied the executors' cross motion. Plaintiff and the executors have cross-appealed.
Turning first to plaintiff's third cause of action, we note that Social Services Law § 369 (3) authorizes Social Services departments "to maintain an action * * * to collect from either a trustee, creator, or creator's spouse any beneficial interest of either the creator or the creator's spouse in any trust * * * to reimburse such department * * * for the costs of medical assistance furnished to, or on behalf of, a creator or creator's spouse." The term "beneficial interest" includes "the income and any principal amounts to which the creator or creator's spouse would have been entitled by the terms of [the] trust by right or in the discretion of the trustee, assuming the full exercise of discretion by the trustee" (Social Services Law § 369 Soc. Serv. [3]).
Here, the trust instrument gave the trustee the discretion to apply "all or such part of the principal * * * for the support, care and maintenance of [decedent] during [her] lifetime". Accordingly, plaintiff contends and Supreme Court found that inasmuch as the terms of the trust gave the trustee unfettered discretion to use the principal for decedent's support, care and maintenance during her lifetime, decedent had a "beneficial interest" in the trust, thereby entitling plaintiff to obtain reimbursement for decedent's covered Medicaid expenses. Such assertion, however, overlooks Social Services Law § 369 Soc. Serv. (2) (b) (i), which provides that "[n]otwithstanding any inconsistent provision of this chapter or other law, no adjustment or recovery may be made against the property of any individual on account of any medical assistance correctly paid to or on behalf of an individual under [Medicaid]" (emphasis supplied). The issue distills then to the question of whether the Medicaid benefits in question were correctly or incorrectly paid.
Based upon this Court's prior holding in Matter of Akullian ( 167 A.D.2d 596), it seems abundantly clear that the benefits here were correctly paid and that plaintiff therefore is barred from recovery under Social Services Law, § 369 Soc. Serv. (3). In Akullian, the local Social Services department sought reimbursement for Medicaid benefits claimed to have been "incorrectly paid" because the decedent's assets had been transferred to family members within the 24 months preceding his Medicaid application, rendering him ineligible for Medicaid benefits. In rejecting the argument that said benefits had been incorrectly paid, we held: "the Department found decedent eligible for medical assistance and does not now argue that any fraud or misrepresentation occurred in the application therefor * * * In our view, those circumstances are, in this instance, tantamount to assistance `correctly paid'" ( id., at 597 [citations omitted]). Here, there is no claim of fraud or misrepresentation in the application process; to the contrary, the record makes plain that the agency was given a copy of the trust instrument, which clearly identified decedent's ineligibility for benefits, so that any erroneous determination in that regard was strictly the result of agency oversight. Accordingly, the benefits at issue here were "correctly paid" and plaintiff is precluded from recovering same under the provisions of Social Services Law § 369 (3).
With regard to plaintiff's second cause of action, plaintiff seeks an order compelling the executors to request that the trustee pay to decedent's estate from the corpus of the trust an amount sufficient to satisfy plaintiff's claim filed in Columbia County Surrogate's Court. In support of that contention, plaintiff cites SCPA 1811 (2), which provides that "[e]very fiduciary must proceed with diligence to pay the debts of the decedent". Plaintiff further relies on paragraph 5 of the trust instrument, which provides that "[t]he Trustee shall, if requested to do so by the executor [of decedent] pay to the [decedent's] Estate from the corpus of the Trust an amount sufficient to pay all or any part of the [decedent's] expenses". Plaintiff cites no authority, nor do we find any, that would support such a cause of action. It is clear from a review of the record that plaintiff has filed a verified creditor's claim in Surrogate's Court. Upon a petition for final accounting, plaintiff will have an opportunity to file objections ( see, SCPA 2211) and, indeed, may seek a compulsory accounting ( see, SCPA 2205), at which time he can seek a judicial determination with regard to the claims now being made.
With respect to plaintiff's first cause of action predicated upon 18 NYCRR 360-4.5, we note that such regulation establishes criteria for determining Medicaid eligibility and does not purport to confer any cause of action upon the various local agencies for reimbursement of allegedly wrongfully or mistakenly paid benefits. Finally, as to plaintiff's contention, made for the first time on appeal, that the trust here is void pursuant to EPTL 7-3.1, we need note only that such question has not been preserved for appellate review ( see, Abbott v. Hulletts Is. View Marina Yacht Club, 241 A.D.2d 658, 660).
Mikoll, J. P., Yesawich Jr., Spain and Carpinello, JJ., concur.
Ordered that the order is modified, on the law, without costs, by reversing so much thereof as granted plaintiff's motion for partial summary judgment on his third cause of action and denied the cross motion by defendants Kenneth M. Judson and Alan D. Judson for summary judgment dismissing the complaint against them; plaintiff's motion for partial summary judgment on his third cause of action is denied and defendants' cross motion for summary judgment dismissing the complaint against them is granted; and, as so modified, affirmed.