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IN RE: the Accounting of Joseph J. TIMPANO as the Administrator of the Estate of Jean McGurk, Deceased.
Decedent Jean McGurk died intestate on October 25, 2011. At the time of her death, Decedent resided in a nursing home and was a recipient of Medicaid assistance. Voluntary administration proceedings were commenced in 2012 for the purpose of liquidating assets to pay the funeral home expenses. Joseph Timpano, Oneida County Comptroller, subsequently was appointed Administrator of her Estate on July 31, 2012. Having concluded his work, Mr. Timpano filed a petition for judicial settlement of account. He reports having received a total of $14,329.80 in assets and income, with a net balance of $10,247.30 after payment of attorney's fees, costs and commissions. Mr. Timpano proposes to pay this amount to the Oneida County Department of Social Services, hereinafter referred to as “DSS,” in partial satisfaction of the Medicaid lien.
In February 2012, prior to Mr. Timpano's appointment, St. Joseph's Pastoral Care, Inc., which operated the nursing home where Decedent lived and will hereinafter be referred to as the “Nursing Home,” filed a claim against the estate for $99,530.50 for unpaid nursing home services. The Nursing Home then filed another notice of claim in September 2014 in the amount of $107,626.84. After Mr. Timpano filed his accounting, the Nursing Home filed an objection to the account and moved for summary judgment on the ground that its claim against decedent has priority over the Medicaid lien.1 DSS cross-moved for summary judgment. Oral argument was heard May 15, 2018, following which this Court reserved decision.
Decedent entered the Nursing Home in April 2009. Afterward, her son Timothy wrote checks to himself from her bank account in excess of $26,000.00. He was subsequently prosecuted. The principal received by the estate consists of the court-ordered restitution payments collected from Timothy. Even though he still owes money in this regard, Timothy left the area in 2016. The Administrator has been unable to locate him, despite diligent efforts to do so.
Meanwhile, on April 11, 2011, DSS issued its determination that Decedent qualified for Medicaid coverage retroactively to September 1, 2010. On October 19, 2010, the Nursing Home commenced a collections action against Decedent and Timothy. On October 11, 2011, Supreme Court issued an order awarding judgment to the Nursing Home to cover services, attorney's fees and costs. Although Decedent and her son defaulted in appearing in the action, Timothy did appear at the damages inquest but presented no evidence. The record before this Court does not indicate that a guardian ad litem was appointed to appear on Decedent's behalf. Judgment on default was entered on October 24, 2011 in the amount of $99,530.50.
Decedent died the day after the default judgment was entered. The Nursing Home served Timothy with a notice of entry on November 1, 2011. On March 13, 2014, the Oneida County Sheriff received the Nursing Home's income execution relative to Timothy. On November 14, 2014, Supreme Court issued a conditional order requiring Timothy to make biweekly installments toward the total judgment owed.
The Court must now consider the priority of the judgment obtained by the Nursing Home relative to the Medicaid lien asserted by DSS.
The Nursing Home concedes that pursuant to statute, DSS is a preferred creditor. (See Social Services Law § 104(1) [“In all claims of the public welfare official made under this section the public welfare official shall be a preferred creditor.”] ). The Nursing Home argues however, that its judgment lien nevertheless takes priority because it was docketed prior to the effective date of the Medicaid lien, which according to federal and state laws cited by the Nursing Home, is the date of death.
The Nursing Home's argument relies in part on two cases. The first is Matter of Pierce, 106 A.D.2d 892, 483 N.Y.S.2d 500 [4th Dept. 1984], lv. denied, 64 N.Y.2d 609, 489 N.Y.S.2d 1025, 478 N.E.2d 209 . In this memorandum decision, the Fourth Department concluded that a hospital with docketed judgments against the decedent held a “prior specific lien” superior to a Medicaid lien. The Nursing Home suggests this general principal applies here, as it too has a docketed judgment against Decedent. As DSS points out however, the appellate decision must be read in conjunction with the underlying Surrogate's Court opinion, Matter of Pierce, 122 Misc. 2d 908, 472 N.Y.S.2d 275 [Sur. Ct., Onondaga County 1984], to gain a complete understanding of the factual circumstances in which this legal principle was applied.
The decedent in Pierce died owning real and personal property. Prior to decedent's death, the hospital obtained and filed two judgments. Decedent also received Medicaid assistance. As part of the estate proceedings, the hospital claimed that it was a preferred creditor relative to the real estate and an unsecured creditor relative to the personal property. The Surrogate interpreted the CPLR to mean that once the judgments were docketed, the hospital's liens attached immediately to the real property. Since these docketed liens preceded the Medicaid lien, and since the value of the hospital's liens exceeded the value of the real property, the Surrogate held that the value of the real property was to be credited entirely toward the hospital debt.
The distinction drawn between real property and personal property is important in the case at hand, since Decedent in the instant matter died without owning real property. With only personal property available to satisfy estate debts, and employing the rationale of both the Surrogate's Court and the hospital in Pierce, the Nursing Home is nothing more than an unsecured creditor. The Medicaid lien would be given priority regardless of the date on which the Nursing Home's judgment was entered.
The Nursing Home tries to avoid this outcome by citing to Matter of Pizzirusso, N.Y.L.J., Nov. 17, 2005 at 32, col. 3 [Sur. Ct., Westchester County 2005]. Aware of the holding in Pierce, the Surrogate in Pizzirusso determined that DSS held a priority lien not only because the decedent died owning no real property, but also because the respondent judgment creditor had taken no action during the decedent's lifetime to perfect his lien upon the decedent's personal property by utilizing such tools as are found in CPLR article 52. The Nursing Home argues that unlike the general creditor in Pizzirusso, it did take such steps by filing an income execution and obtaining a conditional order in Supreme Court for payments toward the amount owed. The flaw in this logic however, is that these steps were taken against Decedent's son Timothy and not Decedent herself. The fact that Decedent died the day after entry of the default judgment and before collection efforts could be initiated against her does not permit the Court to presume the Nursing Home would have taken such steps. Furthermore, simply because Timothy stole Decedent's money does not mean the collection efforts undertaken against Timothy should be viewed as having been executed against Decedent personally. The Nursing Home still has the option of enforcing its judgment against Timothy. The practical barriers to doing so will not permit the Nursing Home to leapfrog the priority Medicaid lien relative to settling Decedent's estate.
In the alternative, the Nursing Home reasons that because DSS knew about the stolen funds at the time Medicaid assistance was approved, and because those funds were taken at a time when Decedent was a private pay resident, the restitution payments now held by the estate should be applied toward the Nursing Home lien because “[DSS] would have categorized said monies as uncompensated transfers or excess resources, and [DSS] would have ordered the uncompensated transfers or excess resources to be paid directly to the [Nursing Home] prior to Medicaid becoming effective.” (Affidavit of Elizabeth Kearns in support of summary judgment, sworn to March 7, 2018, ¶ 25). The Court finds this logic unavailing. First of all, the monies taken by Timothy were not uncompensated transfers made by Decedent, but rather funds taken without Decedent's permission as evidenced by Timothy's criminal conviction. Second, even if the Nursing Home were correct that DSS did not take the stolen funds into consideration when approving Decedent's Medicaid application, the Court is unaware of authority granted to DSS to “order” uncompensated transfer funds (presuming such funds can be recovered) be paid to a creditor. Third, as DSS points out, Medicaid coverage began prior to the Nursing Home obtaining its judgment. Prior to the entry of such judgment, the validity of the Nursing Home's claim against Decedent was not yet determined.
At oral argument, the Nursing Home added that once Decedent became Medicaid eligible, she was obligated to make NAMI payments to the Nursing Home to supplement her Medicaid assistance. The judgment lien however, is for services provided when Decedent was a private pay resident. Whatever monies Decedent may have owed after she became Medicaid eligible have not been reduced to judgment.
In sum, both caselaw and the specific facts of this particular proceeding support a finding that Mr. Timpano's account correctly allocates the payment of assets to DSS. As such, it is hereby
ORDERED that the motion for summary judgment brought by the Nursing Home is DENIED; and it is further
ORDERED that the cross-motion for summary judgment brought by DSS is GRANTED; and it is further
ORDERED that the objections to the petition for judicial settlement of account brought by the Nursing Home are DISMISSED; and it is further
ORDERED that counsel for Mr. Timpano is to submit a proposed decree in accordance with this Decision and Order.
1. The Nursing Home's moving papers consist of an affidavit signed by an individual who describes herself as an “Authorized Representative” (as opposed to an officer or member of the Board). When asked at oral argument what legal grounds supported this Authorized Representative submitting such an affidavit, counsel indicated she is a Board member and received Board authorization. The Court will accept this explanation at face value, even though the Court has no independent verification such as a copy of the resolution or a copy of the corporate by-laws. The Court does however, recommend that legal arguments not be included in a layperson's affidavit, as was done here.
Louis P. Gigliotti, S.
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Docket No: 2011-907/B
Decided: September 25, 2018
Court: Surrogate's Court, New York,
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