Gheen v. State

326 P.3d 918

James Thomas GHEEN and Edward Dale Gheen, Appellants (Petitioners),

v.STATE of Wyoming, ex rel., DEPARTMENT OF HEALTH, DIVISION OF HEALTHCARE FINANCING/EQUALITYCARE, Appellee (Respondent).

No. S–13–0159.

Supreme Court of Wyoming.

May 30, 2014.

Representing Appellants: Craig C. Cook and Dennis C. Cook, Cook and Associates, P.C., Laramie, Wyoming. Argument by Mr. Dennis C. Cook.

Representing Appellee: Peter K. Michael, Wyoming Attorney General; Robin Sessions Cooley, Deputy Attorney General; Donna A. Murray, Senior Assistant Attorney General. Argument by Ms. Murray.

Before KITE, C.J., and HILL, BURKE, DAVIS, and FOX, JJ.

KITE, Chief Justice.

[¶ 1] The State of Wyoming, ex rel. Department of Health, Division of Healthcare Financing/Equalitycare (the Department) filed a lien against two properties to recover the cost of Medicaid benefits paid on behalf of Peggy Gheen. Mrs. Gheen's sons, James and Edward Gheen (hereinafter “Gheen sons”), filed a petition to remove a false lien and quiet title, claiming they were the rightful owners of the properties pursuant to quitclaim deeds recorded after their mother's death. The district court granted summary judgment in favor of the Department, ruling that under the relevant federal and state laws, the lien was appropriate.¹ The Gheen sons appealed.

[¶ 2] We affirm.

ISSUES

[¶ 3] The Gheen sons present the following issues on appeal:

I. Whether the district court had subject matter jurisdiction to determine sua sponte the validity of the quitclaim deeds transferring property to [the Gheen sons] when [the Department] lack[ed] standing to question the grantor's donative intent at the time of due execution of the conveying deeds, or in the alternative whether it erred as a matter of law by nullifying two uncontested quitclaim deeds.

II. Whether the remedial provisions of Wyo. Stat. Ann. § 29–1–601(b) may be invoked against [the Department] as claimant on the legally groundless and impermiss[i]ble recorded claim of lien against property known to belong to [the Gheen sons], as individuals against whom [the Department] ha[s] no rights to recover, as a matter of public record.

The Department states the issues as:

I. Federal and state law require [the Department] to seek reimbursement from the real and personal property in which an individual had any legal title or interest at the time of death in order to recover amounts paid for medical assistance. [The Department] provided medical assistance to Peggy Gheen during the last three months of her life. After Mrs. Gheen died[,] [the Department] placed a lien on two parcels of land in which Ms. Gheen had an interest.

Ms. Gheen's sons brought a petition to remove the lien claiming it was false or frivolous because they had recorded deeds which they found after their mother died. Although the deeds were dated in 2006, they were not delivered to the Gheen [sons], the Gheen [sons] did not know of them until after their mother's death, and they were not recorded until 2011.

Did the district court correctly rule that, as a matter of law, there had been no conveyance of the property in 2006 and that [the Department] could record a lien against it?

II. Wyoming's prohibition against frivolous liens invalidates liens filed against the property of a government official based on that official's performance or nonperformance of official duties. Did the district court correctly determine that this statute does not apply to a lien filed by [the Department] against Ms. Gheen's property and correctly dismiss the Petition to Remove False Claim filed pursuant to Wyoming Statute § 29–1–601(b)? ²

FACTS

[¶ 4] This matter involves two Goshen County, Wyoming properties—a residence and a farm. Dale Gheen, who was Mrs. Gheen's husband and the Gheen sons' father, passed away in 2001. Mr. and Mrs. Gheen owned the residential property as tenants by the entireties, and after Mr. Gheen's death, Mrs. Gheen filed an affidavit stating she was the sole owner pursuant to her right of survivorship. The farm property was distributed through Mr. Gheen's intestacy proceedings, with an undivided one-half distributed to Mrs. Gheen and an undivided one-quarter interest to each of the Gheen sons. Mrs. Gheen executed quitclaim deeds for her interests in the residential and farm properties to the Gheen sons and they were notarized on December 29, 2006. She did not, however, inform her sons about the deeds or record them.

[¶ 5] On May 4, 2010, James Gheen applied for Medicaid benefits on behalf of Mrs. Gheen. In the application, he indicated that Mrs. Gheen owned the residential property and an interest in the farm property. The Department approved Mrs. Gheen's application, and she received $10,508.54 in Medicaid benefits before she passed away on August 1, 2010.

[¶ 6] The Gheen sons discovered the quitclaim deeds in Mrs. Gheen's personal papers after her death. On the advice of their attorney, they recorded the deeds on March 1, 2011, effectively avoiding probate of their mother's real property interests. On May 19, 2011, the Department filed a lien against both properties.

[¶ 7] The parties corresponded over the next several months about the effect of the quitclaim deeds on the Department's lien. The Department eventually took the position that Mrs. Gheen owned an interest in the properties at the time of her death, which was subject to the Medicaid lien. On July 11, 2012, the Gheen sons filed a petition to remove false lien under Wyo. Stat. Ann. § 29–1–601 (LexisNexis 2011). In general, they asserted the Department's lien was false because they owned the properties pursuant to the quitclaim deeds and they did not owe any debt to the Department. The Gheen sons claimed they were entitled to removal of the lien, statutory damages and attorney fees.

[¶ 8] The Department answered asserting the lien was valid and § 29–1–601 did not apply to Medicaid liens. The Gheen sons moved to amend their petition to clarify that their action was to quiet title in the properties as supplemented by the damages provisions of § 29–1–601. The district court granted the motion to amend. [¶ 9] The Department filed a motion for summary judgment asserting its lien was proper because Mrs. Gheen owned the properties at the time of her death and the quitclaim deeds were not valid conveyances. The Gheen sons filed a cross motion for summary judgment, claiming the deeds were valid, their mother did not own any interest in the properties at the time of her death, and the Department did not take appropriate action to have the deeds declared void. They also asserted that, regardless of the efficacy of the deeds, they owned an undivided one-half interest in the farm property as a result of their inheritance from their father and it could not be encumbered by the Department's lien.

[¶ 10] The district court held a hearing on the competing summary judgment motions on January 2, 2013. On April 18, 2013, the district court granted the Department's motion for summary judgment declaring its lien valid as to Mrs. Gheen's residence and one-half interest in the farm property. It also granted the Gheen sons' motion to quiet title and declared the Department's lien did not apply to their undivided one-half interest in the farm property. The Gheen sons appealed.

STANDARD OF REVIEW

[¶ 11] A district court's summary judgment order is reviewed de novo, using the same materials and following the same standards as the district court. Michael's Constr., Inc. v. American Nat'l Bank, 2012 WY 76, ¶ 8, 278 P.3d 701, 703–04 (Wyo.2012); Grynberg v. L & R Exploration Venture, 2011 WY 134, ¶ 16, 261 P.3d 731, 736 (Wyo.2011). W.R.C.P. 56(c) allows summary judgments when

the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

The facts are viewed from the vantage point most favorable to the party who opposed the motion, and we give that party the benefit of all favorable inferences which may fairly be drawn from the record. Michael's Constr., ¶ 8, 278 P.3d at 703–04.

DISCUSSION

1. General Medicaid Recovery Principles

[¶ 12] We recently discussed the general principles of Medicaid benefits recovery in Estate of Marusich v. State ex rel. Dep't of Health, 2013 WY 150, ¶¶ 9–12, 313 P.3d 1272, 1276–78 (Wyo.2013) and will not repeat the full discussion here. In general, Medicaid is a joint federal and state program that provides medical benefits to qualified recipients and is a “ ‘payer of last resort.’ ” Arkansas Dep't of Health & Human Servs. v. Ahlborn, 547 U.S. 268, 291, 126 S.Ct. 1752, 1767, 164 L.Ed.2d 459 (2006), quoting S.Rep. No. 99–146 at 313 (1985); Wyo. Stat. Ann. §§ 42–4–101 through 102; State of Wyoming ex rel. Dep't of Health, Div. of Healthcare Financing v. Dairyland Insur. Co., 11 P.3d 348, 350 (Wyo.2000).

[¶ 13] Wyoming Medicaid statutes include provisions for reimbursement of Medicaid payments and authorize the filing of a lien against the property of a deceased recipient's “estate” as defined in Wyo. Stat. Ann. § 42–4–207(j) (LexisNexis 2013). That statute states in relevant part:

(j) The department may file a lien against the property of any estate, as defined in W.S. 42–4–206(g), of a deceased recipient for the amount of medical assistance provided while the recipient was fifty-five (55) years of age or older or while the recipient was an inpatient in a nursing facility, intermediate care facility for people with intellectual disability or other medical institution. The department shall perfect this lien by filing a notice in the county in which the real property exists....

Section 42–4–207(j). Section 42–4–206(g) (LexisNexis 2013) defines “estate” as:

(ii) “Estate” shall include all real and personal property and other assets included within the individual's estate, as defined for purposes of this state's...