Oregon ElderLawAnswers member attorney Tim Nay did not spend his Christmas weekend relaxing with family and friends this year. He spent it, and the ensuing days, “working feverishly” to locate the families of deceased Medicaid recipients whose money the state wrongfully took from them.
The Supreme Court of Oregon had just ruled in Nay’s favor in a landmark case he brought challenging a 2008 state law that allowed Medicaid authorities to recoup assets that Medicaid recipients had transferred to their spouses prior to death if the transfer was within five years of applying for benefits. Even though the Medicaid spouse had no legal interest or title in the asset at the time of death, upon the community spouse’s demise the state has routinely been recovering property owned by the community spouse alone.
“This is a great victory,” Nay says of the court’s ruling, “and it’s going to help middle class Oregonian families, really going to help.” The question now is how many families will be helped and how quickly. As Nay told a local NBC affiliate, “The state has said we don’t intend to refund one penny of the money that we took wrongfully from these families.”
Five Years in the Making
The suit, initially brought in 2011, has been a labor of love for Nay over the past five years, consuming close to $50,000 out of pocket and thousands of hours of staff time at his firm, Nay & Friedenberg LLC, in Portland.
Nay, who was the founding president of the National Academy of Elder Law Attorneys, brought the case under an Oregon statute that allows any person to challenge the validity of a rule directly to the state’s Court of Appeals. “You don’t have to have a case; you just challenge the rule facially and demonstrate the rule exceeded the authority that the Oregon Department of Human Services (DHS) was delegated from the federal government and the Oregon government,” he says.
Things got off to a rocky start, however. Having just had serious spinal surgery, Nay retained a firm to write the petitioner’s opening brief. When he was finally able to concentrate, Nay realized that the firm’s proposed brief was missing important law and that the case would likely fail. So, a year and a half into the process, he pulled the case and started over, this time writing his own opening brief that included authority going back to 1982. He also hired longtime friend and skilled appellate lawyer Matthew Whitman to argue the case and do the nuts and bolts appellate work.
The fresh start paid off. In 2014, the Court of Appeals unanimously held that the state’s recovery rules exceeded both the authority delegated to DHS by the state as well as the authority from the federal government regarding estate recovery. DHS petitioned for review by Oregon’s Supreme Court, reasserting its position that either Oregon probate law or domestic relations law created an interest at the time of death in property that the Medicaid recipient had transferred before death.
A Long Wait for a Magnificent Gift
Oral arguments took place in early November 2015, and then a long, torturous wait ensued. Each Wednesday the court’s website lists cases that are expected to be published the following day, and each Wednesday for a year Nay would check the website. On November 14, 2016, “Nay v. Department of Human Services” finally appeared on the site, and the favorable opinion was issued the following day.
Although gratified by the high court’s overall agreement with his position, Nay says that “what was so magnificent” about the opinion was that it was all couched in Oregon law. Because the rules were invalid under state law, the court found it unnecessary to consider federal law and vacated that part of the appellate court's finding. This, Nay says, effectively precludes the DHS from petitioning for U.S. Supreme Court review. When the Court looks at a matter that is strictly state law, it determines the case based on that state’s law and looks to the opinion of the state’s highest court. This aspect of the Oregon high court’s ruling, Nay says, “was really a great Christmas gift.”
Potentially Substantial Payback
Nay and his staff have ow begun the hard work of identifying families whose money the state wrongfully took and helping them recoup it. It’s a matter of “put[ting] together a plan to get the word out and see if people respond.” He has launched a website, OregonMedicaidRefund.com, and he held a news conference on January 3 that was covered by major news outlets, followed by Nay’s appearance on the local NBC station.
Nay says he has no idea how many individual cases there may be, although he notes that the payback could be substantial, “well into the seven or even eight figures.”
“It’s not a slam dunk by any means and is going to require a great deal of further blood, sweat and tears and investment to help these families recover,” says Nay. “We’re looking at all of our legal options and have talked to some great colleagues around the country about it and we’re moving in a direction now,” although he declined to say what that direction is.
Although Nay says that he, like most elder law attorneys, is usually a “micro helper” who works with individual clients and families, he points out that this is his second foray into “macro” helping. Almost exactly two decades ago, in 1997, Nay successfully sued the then-U.S. Attorney General Janet Reno, nullifying the “Granny Goes To Jail Law,” which criminalized transferring assets in order to qualify for Medicaid.
“It’s really neat,’ Nay says of his latest mega victory, “because I’m 70. You’d think I’d be drinking Ensure and watching soap operas from my rocking chair in the retirement facility.” Instead, he says, helping people is “why I get up in the morning.”
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