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Factual Background:

Decedent died on November 9, 2003.  During his lifetime, he received Medicaid benefits from the State.  When the decedent died, his home passed to his children, Violet J. Knight and Tommy Jones, through a beneficiary deed he had filed on January 7, 2000.  Because his home was his only asset, no estate was opened initially.  After the State filed a writ of mandamus with the Court of Appeals, the Court ruled that an estate had to be opened to determine whether there were assets subject to administration.  The State requested that Knight, the personal representative, initiate an action for accounting under RSMo. §461.300, but she refused to do so.  The State then filed a petition for accounting with the probate court on November 10, 2005, seeking recovery of Medicaid benefits paid on behalf of the decedent.  Knight and Jones sought to dismiss the petition, arguing that the definition of “estate” in RSMo. §§473.398 and 473.399 did not include nonprobate transfers; the State was not a creditor under RSMo. §461.300; and even if it was a creditor, it was required to amend its Medicaid State Plan or promulgate a rule regarding its interpretation of RSMo. §461.300, and it failed to notify the decedent that it would pursue nonprobate assets outside the definition of “estate” in RSMo. §473.398.

Held:

The Circuit Court of Boone County entered judgment allowing the State’s petition for accounting, stating that Knight and Jones were liable to the estate.  Knight and Jones appealed.

On Appeal:

Affirmed.  The State of Missouri is a proper creditor of an estate under RSMo. §461.300 and therefore may bring an action for accounting in the context of Medicaid estate recovery.

The State’s action under RSMo. §461.300 does not seek to bring nonprobate assets into the estate; rather, it allows the State to recover the value of Medicaid benefits in the form of a monetary judgment from the estate.  Therefore, the other three points regarding the expansion of the definition of “estate” were denied.

Rationale:

Though RSMo. §461.300 is not specifically mentioned as part of the probate code, which allows collections under RSMo. §473.398, Missouri’s other appellate courts have both allowed petitions for accounting brought by the State under RSMo. §461.300, and the state legislature has deemed a RSMo. §461.300 proceeding to be a proceeding under the probate code in RSMo. §461.300.7.  Because RSMo. §461.300 is considered part of the probate code, RSMo. §473.398 does not preclude an accounting action under RSMo. §461.300 to recover Medicaid benefits from a decedent’s estate.

RSMo. §461.300.1 provides:  “Each recipient of a recoverable transfer of a decedent’s property shall be liable to account for a pro rata share of the value of all such property received, to the extent necessary to discharge … claims remaining unpaid after application of the decedent’s estate.”  A “qualified claimant” may bring an action for accounting to enforce the recipients’ obligation.  RSMo. §461.300.2.  A “qualified claimant” includes a “creditor,” which is “any person to whom the decedent is liable, which liability survives whether arising in contract, tort, or otherwise….”  RSMo. §461.300.10(1), (3).  A “recoverable transfer” includes a “nonprobate transfer of a decedent’s property under sections 461.003 to 461.081” RSMo. §461.300.10(4).

Though Medicaid benefits received are only recoverable by the State upon death, the debt is one created during life by the payment of benefits and one that survives the death of the decedent by allowance of recovery from the estate.  Therefore, it is a debt that qualifies the State as a “creditor” under RSMo. §461.300.2.  The transfer of the home by beneficiary deed qualifies as a “recoverable transfer” because beneficiary deeds are governed by RSMo. §461.025.