PROPOSED RULEMAKING
DEPARTMENT OF
PUBLIC WELFARE
[55 PA. CODE CH. 258]
Medical Assistance Estate Recovery Program
[29 Pa.B. 3888] Statutory Authority
The Department of Public Welfare (Department), Office of Administration, proposes to add Chapter 258 (relating to MA estate recovery program) to read as set forth in Annex A.
The Department is proposing this new chapter under the authority of sections 201(2), 1410 and 1412 of the Public Welfare Code (62 P. S. §§ 201(2), 1410 and 1412).
Need for the Proposed Regulations
The purpose of these proposed regulations is to interpret and implement section 1412 of the Public Welfare Code (62 P. S. § 1412) which requires the Department to establish and implement a Medical Assistance (MA) estate recovery program. The proposed regulations will implement requirements of the Federal Medicaid Program (42 U.S.C.A. § 1396p(b)(1)), which mandate that each state operate an estate recovery program.
Title XIX of the Social Security Act (42 U.S.C.A. §§ 1396--1396u) established the Medicaid program in 1965 as a cooperative Federal-state program through which various health care services are provided to poor and needy individuals. Under Title XIX, a participating state must designate a single state agency to administer or supervise the administration of the state Medicaid program. 42 U.S.C.A. § 1396a(a)(5). The designated state agency must prepare an MA plan consistent with Federal law and regulations and submit it to the Health Care Financing Administration (HCFA) of the United States Department of Health and Human Services (DHHS), for approval. Upon approval of its plan by HCFA, the state becomes eligible for Federal matching funds for reimbursement of the cost of specific types of medical care and services. 42 U.S.C.A. § 1396a.
The Commonwealth participates in the Title XIX Medicaid program. The Department is designated the single State agency responsible for administration of the Commonwealth's Medicaid program which is known as the MA program.
Pub. L. No. 103-66 amended Title XIX to add a requirement that participating states establish and implement a program to recover MA payments from the probate estates of certain individuals. (42 U.S.C.A. § 1396p(b)(1)). To comply with this Federal mandate, the Legislature amended the Public Welfare Code in 1994 to authorize creation and implementation of the estate recovery program. (62 P. S. § 1412) (act of June 16, 1994 (P. L. 319, No. 49) as amended by the act of June 30, 1995 (P. L. 129, No. 20)). The estate recovery program has been in operation in this Commonwealth since August 15, 1994. Notice of rule change was published in the Pennsylvania Bulletin at 25 Pa.B. 1916 (May 13, 1995). During the period of its operation, many questions have arisen as to interpretation and procedures under the statute. These proposed regulations are needed to supply guidance with respect to issues not directly addressed by the Federal and State statute, and to resolve ambiguities in the statutory language. Conforming changes to §§ 178.1(h) and 257.21(b) (relating to general policy on MA resources common to all categories of MA; policy) will be made when those chapters are revised.
Significant Provisions
The scope of the proposed regulations is established by § 258.1 (relating to policy). Although the Legislature has authorized the Governor to adopt a broad estate recovery program, the Department has generally elected to establish the minimum program required by Federal law consistent with the policy of Executive Order 1996-1. The Department will recover only from the estates of persons aged 55 years or older at the time assistance was received. The Department will restrict its recovery efforts to obtaining reimbursement for the following types of medical assistance: nursing facility services, home and community based services, and related hospital and prescription drug services and will not seek reimbursement for other services. The Department will also restrict its recovery efforts to property which passes through a decedent's estate. Accordingly, property held jointly with a right of survivorship, Totten trust bank accounts and property held in trust at time of death will generally not be subject to estate recovery.
Section 1412 of the Public Welfare Code uses the term ''probate estate'' to define the scope of estate recovery, and in this Commonwealth, the term ''probate'' generally refers to a proceeding involving a will. See 20 Pa.C.S. § 3131 (relating to place of probate). However, the Federal statute requires the Commonwealth to include all assets included in an estate as defined for purposes of State probate law. Nationally, the term ''probate'' has a much broader meaning. See for example, Black's Law Dictionary (4th Ed. 1968). We believe it is clear from the Federal statute, as well as from Federal interpretative materials, that intestate estates are subject to the estate recovery program. The Legislature's intent was to conform to Federal law and accordingly, the Department has adopted an interpretation which includes property passing by intestacy in its definition of ''estate property.'' (§ 258.2. Definitions).
The Department has not included permanently institutionalized persons under the age of 55 within the estate recovery program. In Regional Medicaid Letter 95-42, the Federal government clarified that recovery from these persons is not required unless a state has a process for determining that persons under age 55 are permanently institutionalized. The Department does not have such a process. The services provided to these persons upon reaching age 55 and thereafter will be subject to the estate recovery program.
Property which is not included in a decedent's estate is generally not subject to the estate recovery program. It is not improper or illegal for individuals to structure their financial affairs to avoid application of the estate recovery program. However, 12 Pa.C.S. §§ 5101--5110 (relating to Pennsylvania Uniform Fraudulent Transfer Act) limits the ability of individuals to transfer property for less than reasonably equivalent value. Section 258.3(f) (relating to property liable to repay the Department) provides that property which can be recovered for the benefit of an estate under the Pennsylvania Uniform Fraudulent Transfer Act is subject to the Department's estate recovery claim. Additionally, § 258.3(f) establishes a rebuttable presumption that property which is transferred for less than reasonably equivalent value within 1 year prior to death is subject to recovery under the Pennsylvania Uniform Fraudulent Transfer Act.
Commonwealth law authorizes the direct transfer of wages, small bank accounts, certain life insurance proceeds and patient care account balances directly to family members or funeral directors. (20 Pa.C.S. § 3101 (relating to payments to family and funeral directors)). The Department will not object to the direct transfer of funds to funeral directors to pay for burial expense. However, the Department's claim to these assets is ahead of that of family members. Section 258.3(e) provides that family members who receive this money remain answerable to the Department.
Section 1412 of the Public Welfare Code places the burden of insuring payment of the Department's claim upon the personal representative. The Department has provided instructions to the personal representative in § 258.4 (relating to request for statement of claim). Section 258.5 (relating to computation of claim) outlines how the Department's claim is computed.
Section 1412 of the Public Welfare Code adopts the priority scheme of 20 Pa.C.S. § 3392 (relating to classification and order of payment). This priority scheme is mirrored in § 258.6 (relating to priority of the Department's claim). The proposed regulation also clarifies that the Department's claim against assets subject to 20 Pa.C.S. § 3101 (relating to payments to family and funeral directors) is superior to that of family members but inferior to certain funeral expenses.
Federal law requires that the Department postpone the collection of reimbursement whenever the decedent has a surviving spouse, minor child or blind or disabled child. In § 258.7 (relating to postponement of collection), the Department has attempted to balance the statutory right of these surviving relatives to use property during the postponement period with the Department's right to eventual collection once the postponement period expires. The proposed regulation generally provides that certain property will be preserved and protected during the postponement period and that eligible survivors may use the property. In the case of cash and cash equivalents, the eligible survivors may consume income, pay medical bills, and with court approval, consume principal. Additionally, the Department has decided that it would not be cost-effective to attempt to protect certain property during the postponement period. Thus, for example, where an estate contains less than $50,000 dollars in cash or cash equivalents, the Department will not attempt to protect those assets. Lesser amounts of cash and cash equivalents do not generally produce significant amounts of income and any attempt by the Department to protect these assets would result in a burdensome number of requests for access to the principal to pay the living expenses of eligible survivors. No interest will be charged on the Department's claim during the postponement period.
Section 1412 of the Public Welfare Code imposes personal liability upon both personal representatives and transferees when the Department's claim is not paid. The proposed regulations in §§ 258.8 and 258.9 (relating to liability of personal representative; and liability of transferees) explain the conditions upon which personal liability will be imposed upon personal representatives and transferees. If specified procedures are followed, the court order approving distribution of estate assets will usually discharge the personal representative from potential liability to the Department. In addition, to protect purchasers and to insure the marketability of real estate title, a special provision in the proposed regulations provides that real estate, which is sold in the normal course of estate administration, will pass free from any claim by the Department (§ 258.9(c)).
Federal law requires that the Department make provisions for undue hardship waivers in accordance with standards set by the Federal government (42 U.S.C.A. § 1396p(b)(3)). The Department has adopted hardship criteria suggested in HCFA's State Medicaid Manual. (§ 258.10). Additionally, the Department has given itself discretion to waive claims, compromise claims and postpone collection under other circumstances.
Occasionally, the Department learns of significant estates where no administrator has been appointed. In these cases, the Department may authorize one of its employes to be appointed as administrator (§ 258.11). Additionally, the Department may make available lists of unadministered estates to encourage attorneys and others to administer these estates.
Appeals regarding the estate recovery program will generally be adjudicated by the Department's Bureau of Hearings and Appeals (§ 258.12). Common pleas courts will have concurrent jurisdiction to adjudicate disputes regarding the amount of the Department's claim. Common pleas courts may not determine undue hardship or otherwise exercise discretion vested in the Department.
Affected Individuals, Groups and Organizations
Affected persons include attorneys administering estates, courts and heirs of decedents.
Accomplishments/Benefits
These proposed regulations will increase compliance by estates with the Federally mandated estate recovery requirements and will decrease confusion regarding those requirements.
Fiscal Impact
Public Sector Commonwealth
The estate recovery program has generated in excess of $25.3 million since its inception in August 1994. The Department anticipates that these proposed regulations will slightly increase revenues due to better compliance with estate recovery requirements.
Local Government
These proposed regulations may impact the process of estate administration in the courts of common pleas. However, no significant impact is expected.
Private Sector General Public
The estate recovery program results in an increase of revenue to the Commonwealth and helps to ensure continued financing of long-term care services under MA at the expense of heirs and beneficiaries of deceased individuals. Additionally, the costs of administering estates are increased. This increase in cost is not believed to be significant.
Paperwork Requirements
The estate recovery program affects the paperwork requirements for the Commonwealth and the general public because additional paperwork is required to obtain and provide statements of claim. However, there is no reasonable alternative to the increased paperwork. These proposed regulations do not increase paperwork beyond that required since August 15, 1994.
Effective Date
Immediately upon publication of a final rulemaking.
Sunset Date
A sunset date is not anticipated because the underlying statute is permanent.
Public Hearings
Public hearings concerning these proposed regulations are not planned.
Public Comment Period
Interested persons are invited to submit written comments, suggestions or objections, regarding the proposed regulations to the Department of Public Welfare, Charles Jones, Acting Chief, Third Party Liability Section, P. O. Box 8486, Harrisburg, PA 17105, (717) 772-6247 within 30 days of the date of publication of this notice in the Pennsylvania Bulletin. All comments received within 30-calendar days will be reviewed and considered in the preparation of the final-form regulations. Comments after the 30-day comment period will be considered for any subsequent revisions of these regulations.
Persons with a disability may use the AT&T Relay Service by calling (800) 654-5984 (TDD users) or (800) 654-5988 (Voice users).
Regulatory Review Act
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on July 8, 1999, the Department submitted a copy of these proposed regulations to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House Committee on Health and Human Services and the Senate Committee on Public Health and Welfare. In addition to submitting the proposed regulations, the Department has provided IRRC and the Committees with a copy of a detailed Regulatory Analysis Form prepared by the Department in compliance with Executive Order 1996-1, ''Regulatory Review and Promulgation.'' A copy of this material is available to the public upon request.
If IRRC has objections to any portion of the proposed regulations, it will notify the Department within 10 days of the expiration of the Committees' review period. The notification shall specify the regulatory review criteria which have not been met by that portion. The Regulatory Review Act specifies detailed procedures for the review of objections raised, prior to final publication of the regulations, by the Department, the General Assembly and the Governor.
FEATHER O. HOUSTOUN,
SecretaryFiscal Note: 14-445. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 55. PUBLIC WELFARE
PART II. PUBLIC ASSISTANCE MANUAL
CHAPTER 258. MA ESTATE RECOVERY PROGRAM
Subpart G. RESTITUTION AND REIMBURSEMENT Sec.
258.1. Policy. 258.2. Definitions. 258.3. Property liable to repay the Department. 258.4. Request for statement of claim. 258.5. Computation of claim. 258.6. Priority of the Department's claim. 258.7. Postponement of collection. 258.8. Liability of personal representative. 258.9. Liability of transferees. 258.10. Undue hardship waivers. 258.11. Unadministered estates. 258.12. Administrative enforcement. 258.13. Appeals and jurisdiction. 258.14. Service on the Department. § 258.1. Policy.
(a) This chapter applies to the estates of MA clients who were 55 years of age or older at the time that MA was received and who died on or after August 15, 1994, and who received MA on or after August 15, 1994. It does not apply to individuals who received MA before they reached 55 years of age, and whose MA eligibility terminated before reaching age 55.
(b) The estate of an MA client who was 55 years of age or older at the time that MA was received is liable to repay the Department for the amount of MA paid for all nursing facility services, home and community based services and related hospital and prescription drug services provided upon reaching 55 years of age. Only MA services provided on or after August 15, 1994, are subject to the Program. Services provided prior to August 15, 1994, are not subject to the Program.
§ 258.2. Definitions.
The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:
Cash equivalent assets--Stocks, bonds, notes, bank accounts, mutual fund shares and other financial instruments convertible into cash.
Decedent--A deceased MA client who was 55 years of age or older at the time that MA was received.
Decree of distribution--An instrument by which heirs receive property of a deceased. It is the final determination of the parties to a proceeding.
Department's claim--The claim of the Department computed and made under this chapter.
Estate property--All real and personal property of a decedent which is subject to administration by a decedent's personal representative, whether actually administered or not.
Facility of payment clause--A provision which authorizes the direct payment to an individual.
Family exemption--The exemption provided by 20 Pa.C.S. § 3121 (relating to when allowable).
Home and community based services--A broad array of Medicaid services provided to an individual to avoid institutionalization under the waiver authority of section 1915(c) of the Social Security Act (42 U.S.C.A. § 1396n(c)).
Immediate family member--Spouse, child, parent or sibling.
Income producing asset--Property which is used in a trade or business such as a family farm, family business or rental property. The term excludes cash, stocks and bonds, mutual fund shares or other marketable financial instruments.
Nursing facility services--General, hospital based, and county nursing facility services and services provided in an intermediate care facility for the mentally retarded.
Perfected liens--A claim or charge on a property for payment of a debt, for which the person owed the debt has taken the necessary legal steps required to secure his interest in the subject property.
Personal representative--An executor or administrator of any description.
Postponement period--The period during which the Department will defer collection of its claim.
Primary residence--The principal home of the decedent at the time of death or prior to admission to a nursing facility.
Program--The Estate Recovery Program.
Protectable asset--An asset which shall be preserved and protected for eventual payment of the Department's claim after the postponement period. The term includes:
(i) Real estate and all improvements thereto.
(ii) Items of personal property with a fair market value in excess of $10,000.
(iii) Cash and cash equivalent assets of an estate with an aggregate value in excess of $50,000 dollars.
(iv) Other property with a fair market value in excess of $10,000.
Related hospital and prescription drug services--Hospital and prescription drug services received by a decedent as follows:
(i) While the client was a resident in a nursing facility or was receiving home and community based services.
(ii) While the client was on temporary leave from a nursing facility.
(iii) Subsequent to a transfer from a nursing facility to a hospital.
Response period--The period during which the Department will respond to a notice requesting a statement of claim. The response period is 45-calendar days unless extended in accordance with this chapter.
Surviving spouse or child--The surviving spouse of a decedent or a child who is blind or totally and permanently disabled, as determined under the standards of the Supplemental Security Income (SSI) program operated under Title XVI of the Social Security Act (42 U.S.C.A. §§ 1381--1383f).
Testamentary trust--Trust created by the will of a decedent.
Transferee--An individual or entity, other than a personal representative, possessing or receiving property subject to the Department's claim. Both initial and subsequent recipients of property are transferees.
§ 258.3. Property liable to repay the Department.
(a) All estate property is subject to the Department's claim.
(b) Property held by a decedent and another at the time of death as joint tenants with rights of survivorship, or as tenants by the entireties, is not subject to the Department's claim.
(c) The proceeds of life insurance on the decedent which are directly payable to a third party are not subject to the Department's claim. However, life insurance which is payable to the decedent's estate is subject to the Department's claim even if the life insurance policy contains a facility of payment clause.
(d) Assets placed in trust prior to the death of the decedent, including irrevocable burial reserves, are not subject to the Department's claim so long as the assets are not payable to the decedent's estate. Trust assets and burial reserve proceeds which are or become payable to the decedent's estate are subject to the Department's claim. Assets designated for a testamentary trust are subject to the Department's claim.
(e) Property within the scope of 20 Pa.C.S. § 3101 (relating to payments to family and funeral directors), including unpaid wages, certain bank accounts, certain life insurance and patient care accounts, are subject to the Department's claim.
(f) Notwithstanding subsections (b)--(d), a property which a personal representative could recover for the benefit of the estate under 12 Pa.C.S. Chapter 51 (relating to the Uniform Fraudulent Transfers Act) is subject to the Department's claim. For purposes of this chapter, the Department will presume that any transfer of assets which a decedent made within 1 year of death for less than reasonably equivalent value is recoverable for the estate.
§ 258.4. Request for statement of claim.
(a) The personal representative of the estate of any decedent who was 55 years of age or older at the time of death has a duty to ascertain whether the decedent received MA services during the 5 years preceding death and, if so, shall give notice to the Department requesting a statement of claim. The 5-year time frame is for notification purposes only and does not limit the Department's claim. Effective August 15, 1994, the amount of MA paid for services rendered after August 15, 1994, to an individual 55 years of age or older is subject to the Department's claim. The notice shall be mailed by certified mail return receipt to the address of the Department specified by § 258.14 (relating to service on the Department). The notice shall include, at a minimum, the following information:
(1) A statement that the personal representative is requesting a statement of claim against the estate of the decedent.
(2) The decedent's name.
(3) The decedent's last address.
(4) The decedent's date of birth.
(5) The decedent's date of death.
(6) The decedent's Social Security Number.
(7) The personal representative's name, address and telephone number.
(b) The Department will submit a statement of claim to the personal representative within the response period. If the notice from the personal representative is mailed to the incorrect address, or does not otherwise fully comply with subsection (a), the response period shall be suspended until a fully complying notice is received. If the Department fails to submit a statement of claim to the personal representative within the response period, the Department's claim will be forfeited.
(c) The Department's Third Party Liability Section will date stamp all notices from personal representatives when received. The date stamp conclusively establishes the date of the Department's receipt of the notice. The Department will also date all statements of claim. The date on the statement of claim conclusively establishes the Department's submission date for the statement of claim, regardless of any postmark date.
(d) A personal representative may extend the Department's response period. Additionally, if the last date of the response period falls on a weekend, State holiday or other day that the offices of the Third Party Liability Section are closed, the response period will be extended until the next business day.
(e) The Department may issue a statement of claim based upon information received by telephone, fax machine or electronic mail. However, use by the personal representative of the alternative forms of communication will not cause the Department's response period to commence.
(f) The Department may amend a statement of claim after the response period has elapsed. The amended claim shall relate back to the date of the original statement of claim.
§ 258.5. Computation of claim.
(a) The Department's claim with respect to a decedent will consist of the total of all MA payments made with respect to the decedent for nursing facility services, home and community based services and related hospital and prescription drug services rendered on or after August 15, 1994.
(b) Premium payments and cost-sharing for decedents who were qualified Medicare beneficiaries shall be included in the statement of claim for the time the decedent received nursing facility services, home and community based services or related hospital and prescription drug services rendered on or after August 15, 1994.
(c) If the decedent was a surviving spouse or child, the Department's statement of claim will include the Department's claim against a previously deceased spouse or parent deferred by the Department during the postponement period.
(d) With respect to claims against third parties for the costs of MA services delivered through a Managed Care Organization (MCO) contract, the Department will recover the actual payment to the hospital or other medical provider for the service. If no specific payment is earmarked by the MCO for the service, such as in the example of a capitated payment to physicians, the Department will recover its fee schedule amount for the service.
(e) If the MCO fails to provide the Department with information necessary to compute the statement of claim within contractual deadlines, the Department will use the amount of the capitation payments made to the MCO since the date of the injury as its claim against the third party until sufficient information is provided to compute a statement of claim in accordance with subsection (d). If the Department is forced to use the capitation payment to compute its statement of claim, the MCO will be liable to the Department for the amount of the Department's diminished recovery in accordance with the terms of the MCO's contract with the Department.
(f) There shall be a rebuttable presumption that the Department's statement of claim is correct. The burden of proof is upon the personal representative to show that the Department's statement of claim is incorrect by a preponderance of evidence.
(g) The Department will not reduce its claim on account of attorneys' fees or other costs incurred by the estate to obtain or liquidate assets. These costs may be treated as expenses of administration of the estate.
§ 258.6. Priority of the Department's claim.
(a) The Department's claim is entitled to priority under 20 Pa.C.S. § 3392(3) (relating to classification and order of payment) to the extent it includes payment for services rendered within 6 months of death. Otherwise, the Department's claim shall be paid under 20 Pa.C.S. § 3392(6).
(b) The Department's claim against deposit accounts and patient care accounts subject to 20 Pa.C.S. § 3101 (relating to payments to family and funeral directors) shall be subordinate to reasonable funeral expenses and to those claims having priority over the Department under 20 Pa.C.S. § 3392.
(c) The Department's claim against assets subject to 20 Pa.C.S. § 3101 is superior to that of family members and any person receiving money under these provisions of law shall be answerable to the Department.
(d) The Department's claim is subordinate to the family exemption and to perfected liens on specific property.
§ 258.7. Postponement of collection.
(a) The Department will postpone collection of its claim until the later of one of the following:
(1) The death of any surviving spouse.
(2) The death of any child who is blind or totally and permanently disabled, as determined under the standards of the Supplemental Security Income (SSI) Program.
(3) The date any surviving child attains 21 years of age.
(b) The personal representative has a duty to insure protection of the Department's claim during the postponement period.
(c) The personal representative will be deemed to have complied with his responsibilities to protect the Department's claim during the postponement period if, after liquidating the assets as is appropriate and paying all expenses of administration and claims against the estate, the personal representative takes one or more of the following actions until the Department's claim is fully protected, or until all protectable assets are protected.
(1) If the decedent's estate contains real estate, the personal representative shall cause a mortgage or other recorded encumbrance to be placed against the real estate in favor of the Department.
(2) If the decedent's estate contains individual items of personal property with an aggregate fair market value in excess of $10,000, the personal representative shall cause a properly perfected security interest to be placed against the items of personal property in favor of the Department.
(3) If the estate contains cash or cash-equivalents in an aggregate amount in excess of $50,000, the personal representative shall cause the money to be placed in trust, with terms and trustees approved by the Department. The trust shall name the Department as remainderman and shall allow the spouse or child, or both, as appropriate, to consume income without court approval, shall allow the consumption of principal to pay reasonable medical expenses of the spouse or child, or both, and shall allow the consumption of principal for the benefit of the spouse or child, or both, with court approval. The personal representative may serve as trustee and a reasonable trustee fee may be provided by the trust document.
(4) If the decedent's estate contains protectable assets which are not adequately protected by the procedures provided in paragraphs (1)--(3), the personal representative shall request and follow the directions of the Department.
(d) No interest is charged on the Department's claim during the postponement period.
(e) Postponement of collection may be waived by a spouse, adult child or legal representative of a child under 18 years of age.
§ 258.8. Liability of personal representative.
(a) The personal representative has a duty to insure that the Department's claim is adequately presented to the Court and, unless the Department's claim is postponed, to pay the Department's claim after payment of all superior claims.
(b) The personal representative is personally liable to pay the Department's claim if property subject to the Department's claim, and not subject to postponement of collection, is transferred without valuable and adequate consideration to an heir or other person having a lower priority claim, without satisfaction of the Department's claim.
(c) When the Department's claim is postponed, the personal representative is personally liable if property subject to the Department's claim is transferred without valuable and adequate consideration to an heir or other person having a lower priority claim, without protecting the Department's claim.
(d) A decree of distribution will discharge the liability of the personal representative to the Department only if the following conditions are met:
(1) The Department is served with a copy of the proposed distribution at least 30 days in advance of court approval.
(2) The court records show that the personal representative made the inquiry required by § 258.4 (relating to request for statement of claims) and obtained a statement of claim, if appropriate.
(3) The court records show that any claim of the Department was presented to the court and paid, or that there were insufficient assets to pay the Department's claim.
(4) The Department is served with a copy of the final distribution order and paid all amounts that it is due.
(e) Notwithstanding subsection (d), a decree of distribution will not discharge the liability of the personal representative to the Department if the petition for distribution fails to disclose the existence of property subject to the Department's claim, or if the personal representative refuses to present and pay the Department's claim.
§ 258.9. Liability of transferees.
(a) A transferee is liable to pay the Department's claim when it receives property subject to the Department's claim for which it did not pay valuable and adequate consideration--that is, fair market value--for the property. The transferee's liability is limited to the fair market value of the property received.
(b) When the Department's claim is postponed, any transferee is personally liable to pay the Department's claim if the transferee receives property subject to the Department's claim and the transferee fails to protect the Department's claim during the postponement period.
(c) The arm's length sale of the decedent's real property at fair market value by the personal representative to a party unrelated to the decedent or the personal representative shall be deemed to be supported by valuable and adequate consideration.
§ 258.10. Undue hardship waivers.
(a) The Department will waive its claim in cases of undue hardship.
(b) The Department may find undue hardship and may waive its claim with respect to the real and personal property constituting the primary residence of a decedent and an immediate family member of the decedent, if they have:
(1) Continuously resided in the residence for at least 2 years immediately preceding the decedent's receipt of nursing facility services.
(2) No other alternative permanent residence.
(3) Annual gross family income that does not exceed 100% of the Federal poverty guidelines.
(c) The Department may find undue hardship and may waive its claim with respect to an income-producing asset if an immediate family member of the decedent meets one of the following conditions:
(1) Utilizes the asset to generate the primary source of income for the household.
(2) Would have a gross family income of less than 100% of the Federal poverty guidelines without use of the asset.
(d) The Department may find undue hardship and may postpone collection of its claim until one of the following:
(1) The death of a sibling who has an equity interest in the property and has been living in the house for at least 2 years prior to the death of the decedent.
(2) Upon the disposition of the property by the sibling living in the house.
(e) The Department has exclusive authority to waive its claim, compromise its claim or postpone collection, in other circumstances when undue hardship exists, or when collection is not cost effective, as determined by the Department on an individual case-by-case basis.
(f) Waiver requests shall be submitted to the following address: Estate Recovery Program, Post Office Box 8486, Harrisburg, Pennsylvania 17105-8486.
§ 258.11. Unadministered estates.
(a) The Department may cause one of its employes to administer an estate if no administrator has been appointed and assets may exist to pay the Department's claim.
(b) The Department's Office of Legal Counsel may provide legal services to an estate if a Departmental employe has been designated to administer the estate. Alternatively, the administrator may employ private counsel.
(c) The Department will charge the estate a reasonable fee, as an expense of administration, if administration services and attorney services are provided to the estate by Commonwealth employes.
(d) The Department may periodically develop lists of unadministered estates which may have assets. The lists will be made available to any attorney or member of the public who may desire to seek appointment as administrator. The Department may also refer unadministered estates to local private counsel to administer the estate.
§ 258.12. Administrative enforcement.
(a) In addition to any other remedies allowed by law, the Department may administratively assess liability upon a personal representative or transferee in accordance with §§ 258.8 and 258.9 (relating to liability of personal representative; and liability of transferees). This assessment may be appealed under § 258.13 (relating to appeals and jurisdiction).
(b) A final administrative order in any proceeding to assess liability against a personal representative or transferee shall be binding upon the parties in any subsequent judicial proceeding to enforce the administrative order.
§ 258.13. Appeals and jurisdiction.
(a) A personal representative, transferee or family member adversely affected by a decision of the Department under this chapter may appeal to the Department's Bureau of Hearing and Appeals within 30 days of the date the affected person is notified of the decision.
(b) An appeal shall be mailed to the Bureau of Hearings and Appeals, Department of Public Welfare, Post Office Box 2675, Harrisburg, Pennsylvania 17105.
(c) The Bureau of Hearings and Appeals has exclusive jurisdiction over disputes involving a request for waiver, compromise or postponement of collection. Appeals will be reviewed by the Bureau under an abuse of discretion standard. The Bureau's decision is binding on all parties, subject to the Secretary's reconsideration and appellate review.
(d) The Bureau of Hearings and Appeals has concurrent jurisdiction with the courts of common pleas over disputes involving the computation of the Department's claim or assessment of liability against a personal representative or transferee. If the personal representative or transferee files an appeal with the Bureau of Hearings and Appeals, the filing will be deemed to be an irrevocable election to proceed exclusively before the Bureau. The Bureau's decision is binding upon all parties, subject to the Secretary's reconsideration and appellate review.
§ 258.14. Service on the Department.
The address for requesting a statement of claim, or for serving legal papers on the Department is: Third Party Liability Section, Department of Public Welfare, Estate Recovery Program, Post Office Box 8486, Harrisburg, Pennsylvania 17105-8486.
[Pa.B. Doc. No. 99-1179. Filed for public inspection July 23, 1999, 9:00 a.m.]
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