2006-570, APPEAL OF DAVID LOWY

We reverse in part, affirm in part, and remand. to provide information about the trust corpus as part of his initial application.

regardless of whether the trust qualifies for exclusion, the petitioner is required

exclusion as a resource from his Medicaid eligibility determination, and, AAU concluded that the petitioner’s special needs trust does not qualify for and Human Services (DHHS) upholding a denial of Medicaid eligibility. The Lowy is now deceased). Lowy. The Lowys were appointed co-guardians of the petitioner in 1989 (Mrs. developmentally disabled man who lived with his parents, John and Margaret The record supports the following. The petitioner is a thirty-six-year-old

Administrative Appeals Unit (AAU) of the New Hampshire Department of Health DUGGAN, J. The petitioner, David Lowy, appeals a decision of the

attorney general, on the brief and orally), for the respondent. Kelly A. Ayotte, attorney general (Suzan M. Lehmann, senior assistant to press. Errors may be reported by E-mail at the following address:

Judith L. Bomster on the brief, and Ms. Butenhof orally), for the petitioner. Law Office of Ann N. Butenhof, of Manchester (Ann N. Butenhof and

(New Hampshire Department of Health and Human Services)

editorial errors in order that corrections may be made before the opinion goes No. 2006-570 Hampshire, One Charles Doe Drive, Concord, New Hampshire 03301, of any Department of Health and Human Services Readers are requested to notify the Reporter, Supreme Court of New ___________________________

page is: http://www.courts.state.nh.us/supreme. a.m. on the morning of their release. The direct address of the court's home reporter@courts.state.nh.us. Opinions are available on the Internet by 9:00

well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule p. 2 22 as and the petitioner appealed to the AAU.

eligibility determination. DHHS denied the petitioner’s Medicaid application because he believed the trust was not to be counted as a resource in his nature and extent of the trust assets, which the petitioner did not provide

under 4 p. 2 2 U.S.C. § 1396p(d)(4)(A); and (2) if the trust does qualify for exclusion, medical assistance provided to the beneficiary during his lifetime. from being excluded as a resource in the petitioner’s eligibility determination state will be repaid from the trust’s corpus upon the beneficiary’s death for “to the extent required by law” in the payback provision disqualifies the trust resource in eligibility determinations only if, among other considerations, the The petitioner raised two issues before the AAU: (1) whether the phrase

copy of his trust. DHHS requested additional information about the source, As part of his Medicaid application, the petitioner provided DHHS with a

(Emphasis added).

Beneficiary, whichever is lesser. required to pay a premium. U.S.C. § 1396p(d)(4)(A). However, a state is required to exclude the trust as a total amount of medical assistance paid on behalf of the poverty guidelines, with wage earners on the upper end of the scale being belonging to the beneficiary for purposes of Medicaid resource eligibility. 4 p. 2 2 by law, up to the amount remaining in the fund or equal to the states which have claims against the Trust) to the extent required shall be paid to the State of New Hampshire (or such other state or remaining in the trust estate upon the death of the Beneficiary Distributions after David E. Lowy’s Death. Any amounts

end, the Lowy trust includes a “payback provision,” which provides:

in the MEAD program are allowed to have incomes up to 450% of the federal depositing funds into such a trust is that the assets will not be counted as pursuant to its jurisdiction over the guardianship. The significance of trust was approved for this purpose by the Strafford County Probate Court, special needs trust that conforms with 4 p. 2 2 U.S.C. § 1396p(d)(4)(A) (2000). The principal the petitioner’s own savings. It was their express intent to create a the David E. Lowy Irrevocable Trust for the petitioner’s benefit, using as Shortly before applying for Medicaid, the petitioner’s parents executed

p. 2 2002; superseded Feb. 24, 2005).

Medicaid for Employed Adults with Disabilities program (MEAD). Participants Because the petitioner was employed, the application was processed under the receive medical benefits when they were no longer able to assist with his care. applied for Medicaid on his behalf in April p. 2 2004 so that he would be able to Although the petitioner had private medical insurance, his parents p. 3 3

under 42 U.S.C. § 1 p. 3 396p(d)(4)(A).

does not contain the unconditional repayment obligation required for exclusion Duquette v. Dupuis, 582 F.Supp. 1 p. 3 365, 1368 (D.N.H. 1984) same as those in effect in New Hampshire on January 1, 1972,” therefore the eligibility standards for medical assistance are the has held that “New Hampshire is a ‘§ 209(b) option’ state, and The United States District Court for the District of New Hampshire

and income. Id. In our recent decision, Appeal of Huff, we stated: applicants to meet certain financial eligibility criteria with respect to resources income individuals. 42 U.S.C. §§ 1 p. 3 396 et seq. Medicaid programs require Medicaid is a joint federal/state medical assistance program for low-

both issues and the petitioner appealed. not disqualify the trust under 42 U.S.C. § 1 p. 3 396p(d)(4)(A). of repayment, which might not occur. Therefore, the AAU concluded the trust petitioner’s income from trust distributions. The AAU agreed with DHHS on AAU’s interpretation of the disputed phrase erroneous, and hold that it does obligation to repay on the future existence of an independent legal requirement verify that the trust does indeed qualify for exclusion and to verify the trust must contain a payback provision to qualify for exclusion, we find the the extent required by law” in the Lowy trust impermissibly conditions the Plaistow, 152 N.H. 142, 144-45 (2005). While we agree with the AAU that a unreasonable.” Id. We review questions of law de novo. Taylor v. Town of preponderance of the evidence, that the agency’s order was unjust or agency only if it made an error of law or if we are satisfied, by a clear Appeal of Leonard, 147 N.H. 590, 594 (2002). “Accordingly, we will reverse the Our standard of review on appeal is governed by RSA 541:13 (2007). See

information about the value of the trust corpus as part of his application to the trust contains an obligation to repay. The AAU found that the phrase “to qualifies, DHHS has the authority to require the petitioner to provide disqualifies the trust. DHHS also argued that whether or not the trust State not count the corpus of a conforming special needs trust as a resource if phrase renders the payback provision potentially unenforceable and thus itself create an enforceable repayment obligation, but only mandates that the The AAU agreed with DHHS that 42 U.S.C. § 1 p. 3 396p(d)(4)(A) does not

I. The Payback Provision

qualifies for exclusion under 42 U.S.C. § 1 p. 3 396p(d)(4)(A), but argued that the DHHS stipulated that in the absence of the disputed phrase, the trust

trust’s corpus as part of his initial application. whether DHHS may nonetheless require the petitioner to verify the value of the phrase does not disqualify the trust. We agree.

qualifying special needs trust and the statutory reimbursement provision, the argues that in the context of both the trust settlor’s clear intent to create a principles and state and federal statutory and regulatory law. The petitioner addressed in light of all applicable legal principles, including common law

excluded from the petitioner’s resource calculation. added to the payback provision in this case disqualifies the trust from being must provide for the reimbursement. The question is whether the language reimbursement is guaranteed. Thus, it appears that the trust instrument itself

statute effectively creates a by law” means that any claim asserted against the trust estate must be subchapter.” p. 4 42 U.S.C. § 1396p(d)(4)(A). As the AAU correctly observed, the On appeal, the petitioner argues that the qualifier “to the extent required

counted, the benefits must be repaid, but is silent with respect to how the beneficiary’s death. The Medicaid statute is thus clear that if a trust is not ineligible in exchange for repayment of those benefits from the trust upon the medical benefits for which his trust resources might render him otherwise

assistance paid on behalf of the individual under a State plan under this upon the death of such individual up to an amount equal to the total medical guardian or a court, “if the State will receive all amounts remaining in the trust and is established for the individual’s benefit by a parent, grandparent, legal a resource if it contains the assets of a disabled individual under age sixty-five trusts for eligibility purposes. p. 4 42 U.S.C. § 1396p(d). A trust is not counted as The Medicaid statute sets forth rules governing the State’s treatment of

purposes of this case, without deciding either issue. special needs trust may be counted as income, we adopt their assumption for extent of the State’s Medicaid obligations under section 209(b). governing Medicaid eligibility is valid or that certain distributions from a 65 p. 4 4.04(b)(10). Id. Because the parties do not question that current law for further proceedings without a decision as to the validity of Rule He-W in 1972 could not be answered based upon the record, we remanded the case Because the factual question of the status of New Hampshire’s Medicaid plan the beneficiary for Medicaid eligibility purposes. Huff, 154 N.H. at 418-19. counts certain distributions from a qualifying special needs trust as income to Hampshire Administrative Rule, He-W 654.04(b)(10) (eff. April 25, 1998), which Huff, 154 N.H. 414, 417-18 (2006). Huff considered a challenge to New

approved plan because those standards define the nature and 1972 eligibility standards for medical assistance in the State’s state, the petitioner’s application must be evaluated against the § 1396a(f). Accordingly, if New Hampshire is a section 209(b) (citation omitted), under the State’s approved plan. See p. 4 42 U.S.C. p. 5 5

is necessary to determine whether in fact the trust qualifies for exclusion under

special needs trust under 42 U.S.C. § 1396p(d)(4)(A) in every respect. which apart from the disputed phrase, the parties stipulated, qualifies as a

adequate, and that the trust therefore qualifies for exclusion under 42 U.S.C. This we decline to do. Accordingly, we hold that the payback provision is in accordance with the law would require us to ignore the settlors’ clear intent. program.” On appeal, the State argues that information about the trust corpus determine [the petitioner’s] income and resource eligibility for the MEAD trust instrument and the financial records of the trust) reasonably necessary to so-called Special Needs Trust.” The intention is evidenced by the trust itself, application “any information about the trust (including but not limited to the The AAU ruled that the petitioner must provide as part of his MEAD

II. Verification of the Trust Corpus

§ 1396p(d)(4)(A).

requirement that the promise contained in the payback provision be construed the extent required by law” as referencing anything other than a general medical assistance paid on the beneficiary’s behalf. To construe the qualifier “to Appellant’s parents to create a conforming 42 U.S.C. § 1396p(d)(4)(a) trust, a beneficiary’s death; (c) any amounts remaining in the trust up to the amount of facts that was submitted to the AAU confirms that “[i]t was the intent of § 1396p(d)(4)(a), by promising that: (a) the state shall receive; (b) upon the U.S.C. § 1396p, as may be amended from time to time.” The stipulation of includes the three elements of the payback requirement included in 42 U.S.C. purposes of the Trust or will cause the Trust not to be in compliance with 42 intended exchange is made explicit in the Lowy trust’s payback provision, which statutory provision; namely, exclusion in exchange for reimbursement. This signals an intention to enter into the exchange that is at the heart of this The intention to create a trust qualifying under 42 U.S.C. § 1396p(d)(4)(A)

defeat settlor’s clear intent to establish trust in conformance with 42 U.S.C.

expressed intention of a settlor.

provided that “no amendment may be made that will materially change the and duties of trustees allow certain administrative changes to be made, David E. Lowy as contemplated by 42 U.S.C. § 1396p(d)(4)(A) . . . .” The powers Settlors desire to create an irrevocable supplemental needs trust for their son Here, the settlors’ intention is clear. The trust declaration states, “the

§ 1396p).

N.H. p. 5 504, 508 (2001) (declining to find a trust revocable where to do so would

we reject any construction of trust language that would defeat the clear and trust itself. See Bartlett v. Dumaine, 128 N.H. 497, p. 5 504-05 (1986). Moreover, we determine that intent, whenever possible, from the express terms of the When we construe a trust, the intention of a settlor is paramount, and assistance, shall be verified at . . . [i]nitial determinations . . . .”

p. 6 eligibility and level of benefit for . . . all categories of financial and medical

categorical, technical, and financial factors related to the determination of verification requirements provide, in relevant part, that “[a]ll general, payments available from agencies in the State . . . .” New Hampshire determinations concerning eligibility or correct amount of medical assistance

purpose of verifying that the trust is excluded would be the trust agreement the only documents DHHS would be required or entitled to request for the verify the purpose, recipient and amount of those distributions. resources” suggests that even if DHHS had not stipulated to the trust’s validity, trust distributions may count as income and that DHHS is therefore entitled to 1986) to verify “[a]ny . . . income, resource, or eligibility information relevant to determination, the State is required by 42 C.F.R. § 435.948(a)(6) (eff. Feb. 28, information is coextensive with this duty. As part of an eligibility authority to require that Medicaid applicants provide certain financial (directing DHHS to adopt and administer financial eligibility rules). DHHS’ participate. See RSA 167:3-c (Supp. 2006) & RSA 167:4 (Supp. 2006) with ensuring that only financially eligible individuals are approved to In its role as administrator of the Medicaid program, DHHS is charged

to this extent. Moreover, New Hampshire’s regulation governing verification of “inaccessible verification of the petitioner’s income eligibility, and we affirm the AAU’s ruling any, were fully disclosed and accurate.” The petitioner does not dispute that is reasonably necessary for the second purpose identified by the State, namely, However, we agree that DHHS has authority to request information that

agreement.”). inaccessible resources: . . . [f]or irrevocable trust funds, the trust instrument or amended July 21, 2006) (“The following documents shall be used to verify See N.H. Admin. Rules, He-W 606.78(a)(1)(a) (eff. June 1, 2000;

contested reimbursement language the trust qualifies in every respect. the prior eligibility point and to then verify that disclosures of distributions, if 42 U.S.C. § 1396p(d)(4)(A). Indeed, DHHS stipulated that without the and annual redeterminations enables [DHHS] to compare the corpus value at determination for the purpose of determining whether the trust qualifies under the State argues that “[a]ccess to Trust corpus at the time of initial application information about the trust corpus as part of the petitioner’s initial eligibility As did the AAU, we reject the State’s argument that it is entitled to obtain

the trust corpus. as an affidavit from a trustee or bank manager, without disclosing the value of argues that this information can be verified through less intrusive means, such

which may be affected by distributions from the trust. With respect to income, 42 U.S.C. § 1396p(d)(4)(A), and to determine the petitioner’s income eligibility, p. 7 7

BRODERICK, C.J.