State v Roy (IN)

Summary: Family and Social Services Administration lien for Medicaid was not subject to the claims limitation in a probate estate.

State v Roy, 963 NE2d 78 (Ind. Ct. App., 2012).

Facts: On November 2, 2008, Phillip Roy (Roy) died intestate.  At the time of his death, Roy owned real estate in New Castle, Indiana.  Between the age of fifty-five and his death, Roy received $39,695.46 in Medicaid assistance. 

On April 1, 2009, the Family and Social Services Administration (FSSA) recorded a lien against Roy’s real estate.  On August 26, 2009, the FSSA filed a petition to open Roy’s estate.  On December 17, 2009, two of Roy’s relatives were appointed co-personal representatives (Representatives) of Roy’s supervised estate.  In February of 2010, the Representatives filed a denial of FSSA’s claim.  In June of 2010, the trial court granted the Representatives’ petition to sell Roy’s real estate.  Then the Representatives filed a motion to void FSSA’s lien.  The trial court found that the FSSA’s lien was both invalid and time barred.  The FSSA appealed, and the Representatives cross-appealed.

Holding: Reversed in part and remanded with instructions.  The court of appeals held that the trial court improperly relied upon the nine-month time bar found in Indiana Code Section 29-1-14-1(d), looking to the text in section (a) that exempts claims of the United States, the state, or a subdivision of the state from the nine-month requirement. The court held that the FSSA is a subdivision of the state and therefore exempt from the nine-month requirement.

The court further held that under Section 12-15-9-1, the Medicaid claim must be allowed as a preferred claim against the estate.

The court held that the Representatives were not precluded from selling the real estate and using the proceeds to pay the FSSA.  The FSSA conceded that its lien was not valid.  The Representatives argued that, absent a valid lien, they were prevented from selling the real estate to pay off the Medicaid debt under Section 29-1-7-15.1(b).  That section holds that no real estate may be sold by the executor or administrator of an estate to pay any debt, which is not a lien, unless letters of testamentary or of administration are taken out within five months after the decedent’s death. 

The court held that because the Representatives had already received permission to sell the real estate, and because no one contested the sale, that the issue is moot.  The court looked at the language of the chapter title to further hold that Section 29-1-7-15.1(b) was not a limitation on the trial court’s authority to issue an order authorizing the sale of real estate under Section 29-1-15-3, and that it did not prevent the proceeds from the sale from being used to pay the FSSA.  Indiana Code Section 29-1-7-15.1(b) is merely a limitation on the ability of the representative’s ability to sell the real estate without court order.  Therefore, because the trial court was not barred from authorizing the sale, the FSSA had a valid preferred claim, and the FSSA claim was not time barred, the court directed the Representatives to use proceeds from the sale of the real estate to pay the FSSA’s claim.

Opinion Year: 
By: ATG Underwriting Department | Posted on: Mon, 07/02/2012 - 3:31pm