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Simonsen v. Bremby

United States District Court, D. Connecticut

December 23, 2015

DAWN SIMONSEN, by her attorney-in-fact BRUCE SIMONSEN, Plaintiff,
v.
RODERICK L. BREMBY, in his official capacity as Commissioner of the Connecticut Department of Social Services, Defendant.

RULING AND ORDER GRANTING PRELIMINARY INJUNCTION

Victor A. Bolden United States District Judge

Plaintiff, Dawn Simonsen, by her attorney-in-fact, Bruce Simonsen, filed a Motion for Issuance of a Temporary Restraining Order and Preliminary Injunction [Doc. No. 19] on October 6, 2015, to enjoin Defendant, Roderick L. Bremby, Commissioner of the Connecticut Department of Social Services, from treating two third-party trusts as available resources in determining Plaintiff’s eligibility for Medicaid benefits, when they were decanted to new third-party supplemental needs trusts, and from treating that decanting as disqualifying transfers of assets. For the following reasons, the Court GRANTS Plaintiff’s motion for a preliminary injunction, and consequently finds as moot Plaintiff’s motion for a temporary restraining order.

I. FINDINGS OF FACT

After holding a hearing on November 5, 2015, the Court makes the following factual findings under Federal Rule of Civil Procedure 52(a)(2), based on the arguments, written submissions, and exhibits presented by the parties.

Plaintiff, Dawn Simonsen, is a 57 year-old quadriplegic who has been a resident requiring ventilator care in the Hospital for Special Care (“HSC”) in New Britain, Connecticut, since October 11, 2013. She has been receiving medical assistance, or Medicaid, benefits from the Connecticut Department of Social Services (“DSS”) to pay for that care since March 1, 2014, but her benefits were terminated in June 2015. They were subsequently reinstated pending an adverse fair hearing decision.

Title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq. (the “Medicaid Act”), established a program for medical assistance. “Medicaid is a cooperative federal-state program through which the Federal Government provides financial assistance to States so that they may furnish medical care to needy individuals.” Wilder v. Va. Hosp. Ass’n, 496 U.S. 498, 502 (1990).

The federal and state governments share the cost of Medicaid, but each state government administers its own Medicaid plan. State Medicaid plans must, however, comply with applicable federal law and regulations.
Any state that participates in Medicaid must designate ‘a single State agency’ . . . to administer-or to supervise the administration of-the state’s Medicaid plan.

Shakhnes v. Berlin, 689 F.3d 244, 247-48 (2d Cir. 2012) (internal quotation marks and citations omitted). The designated single State agency in Connecticut is DSS. The Medicaid Act requires DSS to grant an opportunity for a fair hearing to any individual whose claim for medical assistance is denied. 42 U.S.C. § 1396a(a)(3).

DSS’s determination that Plaintiff is presently ineligible for Medicaid benefits stems from its classification of two former trusts of which Plaintiff was the beneficiary. Plaintiff’s mother, Joy A. Miller, established these two third party inter vivos trusts-the Dawn Simonsen GST Trust” and the “Dawn Simonsen Residuary Trust” (the “Predecessor Trusts”)-in Florida, and they were funded upon her death in April 2003. The terms of these trusts provided the following:

The trustee shall pay to my daughter or utilize for her benefit so much of the income and principal of her trust as the trustee deems necessary or advisable from time to time for her health, maintenance in reasonable comfort, education and best interests considering all of her resources known to the trustee and her ability to manage and use such funds for her benefits. In exercising its discretion the trustee shall bear in mind that my daughter has suffered severely from alcohol and drug abuse and that I do not want these trust funds to be used to support a drug or alcohol habit or any other activity which may be detrimental to her in the trustee’s sole opinion.
My daughter’s health, happiness and best interests are to be considered foremost in priority over those who will receive the remaining trust funds on her death. Subject to the above considerations the trustee is encouraged to be liberal in its use of the funds for her even to the extent of the full expenditure thereof.

Doc. No. 23-2, at 7, 8-9. The Predecessor Trusts also contain a “spendthrift clause, ” which provides that “[t]he interests of beneficiaries in principal or income shall not be subject to the claims of any creditor, any spouse for alimony or support, or others, or to legal process, and may not be voluntarily or involuntarily alienated or encumbered.” Doc. No. 23-2, at 13. Further, the Predecessor Trusts were established such that they are governed by Florida law. Doc. No. 23-2, at 20-21.

As noted above, Plaintiff was admitted to HSC on October 11, 2013, and she has remained there as a patient virtually continuously since that date. On July 31, 2014, a Medicaid benefits application for Plaintiff was filed with DSS. On August 29, 2014, the Trustee of the Predecessor Trusts executed a petition to the Circuit Court of the 11th Judicial Circuit in and for Miami-Dade County, Florida, Probate Division (the “Florida Probate Court”), requesting an order declaring that the Trustee’s right to invade the principal of the Predecessor Trusts “is an absolute power to invade principal as described in Section 736.04117, Florida Statutes, ” and granting permission to transfer, or “decant, ” the assets in the Predecessor Trusts to two new trusts-the “Dawn Simonsen Third Party Special Needs Trust I” and the “Dawn Simonsen Third Party Special Needs Trust II” (the “Successor Trusts”). Along with its petition, the Trustee submitted a Waiver of Service of Process and Consent, executed by Plaintiff on August 22, 2014, in which Plaintiff consented to the entry of such an order and to the exercise of such ...


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