Client Alert: Massachusetts Supreme Judicial Court Addresses Enforceability of MassHealth TEFRA Lien Against Decedent’s Home

Written by: Cosmo Karalolos

The Supreme Judicial Court has held that MassHealth could not enforce a lien against a home owned by a permanently institutionalized Medicaid recipient whose home was not sold during her lifetime.

This case presented two questions: (i) whether, in Massachusetts, the Legislature has limited the State’s implementation of the Tax Equity and Fiscal Responsibility Act (“TEFRA”) lien program to allow enforcement of a TEFRA lien only if the encumbered property is sold during the Medicaid recipient’s lifetime (in other words, does the lifetime lien expire at death), and (ii) whether the three-year statute of limitations of the Massachusetts Uniform Probate Code (MUPC), M.G.L. c. 190B, §3-108, applies retroactively to bar MassHealth’s claim to recoup Medicaid benefits paid for the medical care of a Medicaid recipient (the “member”) who died prior to the effective date of the MUPC, March 31, 2012.

What is MassHealth?

MassHealth is a state-administered health insurance program for low-income, low-asset residents in Massachusetts, which is overseen by the Executive Office of Health and Human Services (EOHHS). Qualified Massachusetts residents who are eligible for the program (MassHealth members or recipients) have their medical costs (including long-term-care costs) covered by MassHealth.

The MassHealth program is administered through a cooperative federal and state regulatory scheme. The Massachusetts Medicaid statute, G.L. c. 118E, expressly requires MassHealth to operate pursuant to, and in conformity with, the provisions of the Federal Medicaid Act, enacted as Title XIX of the Social Security Act of 1965. State regulations of the program cannot be more restrictive or conflict with those prescribed under the federal law. Within this framework, federal law provides states with the flexibility to design and operate their individual state plans. 

MassHealth Estate Recovery & the TEFRA Lien

In 1993, Congress conditioned federal funding for Medicaid on a state’s adoption of estate recovery programs designed to attempt to recoup the costs of Medicaid benefits paid for the care of certain categories of members, including permanently institutionalized members (e.g. those receiving long-term-care coverage). The law provides that states shall seek recovery of medical assistance paid on behalf of an individual either “from the individual’s estate or upon sale of the [encumbered] property.”

Because an individual's ownership interest in his or her home is not counted for purposes of determining eligibility for certain Medicaid programs, applicants might retain their homes while still qualifying and receiving coverage, and/or they might transfer their homes to friends or family members in order to qualify for a coverage program and thus avoid MassHealth’s recovery for Medicaid benefits paid on the member’s behalf. To address this situation, Congress passed the Tax Equity and Fiscal Responsibility of Act of 1982 (TEFRA), which authorizes a state Medicaid agency to place a lien against the real estate of a member who becomes an inpatient of a medical institution and who cannot reasonably be expected to be discharged and return home. In the event that the institutionalized member does return home, the statute provides for the dissolution of any TEFRA lien on the property.

Massachusetts law complies with these requirements in that it authorizes MassHealth to recover Medicaid assistance paid on behalf of a permanently institutionalized member from the member’s probate estate as part of an “estate recovery” claims process, and it permits MassHealth to impose TEFRA liens on homes owned by members. In the latter case, if the liened property is sold during the member’s lifetime, MassHealth may be permitted to collect on its lien.

In the Matter of the Estate of Mason, Frances R.

Frances R. Mason, a MassHealth member, entered a nursing home in January 2008, ultimately passing away there on August 18, 2008. MassHealth provided Medicaid benefits covering Mason’s care from the time she entered the nursing home until her death. Pursuant to its authority under federal and state regulations, MassHealth had recorded a TEFRA lien against Mason’s home in May of 2008.

In 2017, a petition was filed in the Probate & Family Court to settle Mason’s estate.

In 2018, MassHealth filed a notice of claim pursuant to its estate recovery rules to recover Medicaid benefits from Mason’s estate paid for Mason’s care while living in the nursing home. MassHealth also sought to enforce what had been its lifetime lien against the decedent’s home and recoup its Medicaid costs thereby.

Mason’s estate then filed a motion to strike both the TEFRA lien and MassHealth’s claim against the estate. After a hearing on the matter, the Barnstable Probate & Family Court struck the lien as being invalid, concluding that the TEFRA lien against the home became unenforceable once Mason died because the property had not been sold during her lifetime. The Court noted how M.G.L.c. 118E, §31(d) provides in pertinent part: “The division is also authorized during an individual's lifetime to recover all assistance correctly provided on or after April 1, 1995, if property against which the division has a lien or encumbrance under section 34 is sold. No lien or encumbrance shall be valid against any bona fide purchaser for value or take priority against any subsequent mortgagee for value unless and until it is recorded in the registry of deeds where the property lies.” To this end, the judge concluded that MassHealth may only enforce a TEFRA lien if the property is sold during the member’s lifetime.

As to MassHealth’s claim against the estate of the deceased member, the Probate Court judge ruled that Mason’s death before the effective date of the MUPC did not preclude application of the law’s three-year statute of limitations and dismissed the claim.

MassHealth appealed the decision and the SJC picked up the case for review.

As to the TEFRA lien, the SJC found that the plain language of M.G.L. c. 118E, § 31(d) and the policy considerations underlying the statutory framework dictated that a TEFRA lien in Massachusetts dissolves automatically upon the Medicaid recipient’s death. Writing for the unanimous court, Justice Dalila Argaez Wendlandt makes clear that “Unlike the Medicaid Act, under which a State agency’s authority to enforce a … lien can be triggered ‘upon sale’ of the encumbered property regardless of whether that sale occurs before or after the member’s death, in Massachusetts, the Legislature has narrowed MassHealth’s enforcement authority… Specifically, under the plain language of M.G.L. c. 118E, § 31(d), MassHealth’s authority to enforce the lien arises ‘during the [member’s] lifetime’ if the encumbered property ‘is sold.’” The Justice further noted that “A construction that would allow MassHealth to enforce a TEFRA lien after a [MassHealth] member’s death would expand the estate against which MassHealth could recover beyond the probate estate… and would be at odds with the legislative decision to limit estate recovery to the probate estate.”

However, the second issue of whether the three-year limitations period provided in M.G.L. c. 190B, § 3-108 applies retroactively to bar MassHealth’s claim against the estate of a decedent who died before the effective date of the Massachusetts Uniform Probate Code, where probate was commenced more than three years after that effective date, the SJC reversed the lower court’s dismissal of MassHealth’s claim for recoupment against the estate. Most importantly, the SJC concluded that the three-year statute of limitations provided in the MUPC, which went into effect after Mason’s death, did not apply to extinguish MassHealth’s claim against her estate. In other words, the three-year statute of limitations applied prospectively to estates arising only from post-MUPC deaths. As for Mason’s estate, which arose from a pre-MUPC death, the Court noted that “under the statute in effect when Mason died, MassHealth has fifty years from the date of Mason's death -- a period of time that had commenced to run prior to the MUPC's effective date -- to press its claim.”

The SJC’s rulings on both issues brings much needed clarity to the enforceability of TEFRA liens in Massachusetts and the question of applicable time limits for MassHealth’s assertion of claims against the estate of a member whose date of death occurred before the effective date of the MUPC.


In the Matter of the Estate of Frances R. Mason (SJC-13439, December 13, 2023)

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