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In re Estate of Peterson

Supreme Court of Idaho

August 13, 2014

IN THE MATTER OF THE ESTATE OF MELVIN PETERSON, DECEASED.
v.
CATHIE PETERSON, Respondent-Appellant. IDAHO DEPARTMENT OF HEALTH & WELFARE, Petitioner-Respondent,

2014 Opinion No. 82

Appeal from the District Court of the First Judicial District, State of Idaho, Boundary County. Hon. Jeff M. Brudie, District Judge.

District court decision affirming magistrate court's decision on Medicaid recovery, affirmed in part and remanded for proceedings consistent with this opinion.

Featherston Law Firm, Chtd. Sandpoint, for appellants. Brent C. Featherston argued.

Hon. Lawrence G. Wasden, Idaho Attorney General, Boise, for respondents. William C. Cartwright, Deputy Attorney General argued.

BURDICK, Chief Justice

This case arose out of the Department of Health and Welfare's (IDHW) attempt to recover Medicaid benefits from Melvin Peterson's estate that were paid during his lifetime. At issue is whether any part of a real estate transfer from Melvin Peterson to his daughter Cathie Peterson is subject to Medicaid recovery.

I. FACTUAL AND PROCEDURAL BACKGROUND

The relevant facts of this case are not in dispute. Melvin Peterson died on March 3, 2007, at the age of 83. Prior to his death, he was the owner of residential real property located in Boundary County. On December 6, 2001, Melvin Peterson executed a Gift Deed of his real property to his daughter, Cathie Peterson, retaining for himself a life estate in the property. Shortly thereafter, he applied for Medicaid and began receiving Medicaid benefits in March 2003. At the time of his death, Melvin Peterson had received a total of $171, 386.94 in Medicaid benefits.

Cathie Peterson was appointed personal representative of her father's estate on July 26, 2007. IDHW filed a timely Claim Against Estate and later an Amended Claim Against Estate in the amount of $171, 386.94. Cathie Peterson, in her capacity as personal representative, disallowed the claims without stating a reason. In response, IDHW filed a Petition for Allowance of Amended Claim. After a hearing on March 25, 2008, the court granted IDHW's petition.

After receiving no response to its claim against the estate, IDHW filed a Petition to Require Payment of Claim on May 5, 2008, setting forth its demand for payment of the value of Melvin Peterson's life estate. Using the Life Estate Remainder Table contained in IDAPA 16.03.05.837 and Melvin Peterson's age at the time of his death, IDHW valued the life estate at $41, 444. After a hearing, the magistrate court entered an order requiring payment of IDHW's claim on June 12, 2008. This June 12, 2008 Order held that the life estate was an asset of the estate for purposes of Medicaid recovery and ordered the personal representative to add the life estate interest to the estate's inventory and assign it an appropriate value. However, the personal representative instead filed and was granted a motion to hire an appraiser to determine the fee simple value of the residential real property. After the personal representative failed to file an appraisal, IDHW filed various motions relative to the appraisal, sale of the property, and payment of its claim. On August 11, 2009, the magistrate court granted IDHW's motions to compel appraisal, sale of the property, and payment of the Medicaid claim, which the personal representative subsequently appealed.

On appeal, the district court vacated the magistrate's August 11, 2009 Order and remanded the matter for additional findings of fact and conclusions of law. Shortly after the ruling on appeal was entered, Cathie Peterson, in her capacity as personal representative, sought permission from the magistrate court to sell the property, liquidate an escrow account, and pay counsel for the personal representative of the estate. On the same day, she also filed an Amended Personal Representative's Inventory assigning the life estate zero value.

On September 17, 2010, Attorney Brent Featherston filed a Demand for Notice and Special Appearance on behalf of "Cathie Peterson, individually, " stating that he was seeking to vacate and dismiss all orders entered by the magistrate court regarding her real property. IDHW responded by filing a petition to remove Cathie Peterson as personal representative of the estate, which the magistrate court granted.

Following a court trial, the magistrate court held that the life estate remainder interest was an estate asset of value for purposes of Medicaid reimbursement and that its value was to be determined in accordance with IDAPA 16.03.05.837.01. On appeal, the district court affirmed the magistrate court in its November 16, 2012 Opinion. Cathie Peterson then timely appealed to this Court on December 27, 2012.

II. ISSUES ON APPEAL

1. Whether Cathie Peterson waived her appeal of the decision that Melvin Peterson's life estate was an asset subject to Medicaid recovery.

2. Whether the court had subject matter jurisdiction to determine the issues before it.

3. Whether the court had personal jurisdiction over Cathie Peterson individually.

4. Whether any part of the gift transaction Melvin Peterson made to his daughter before applying for Medicaid benefits is subject to Medicaid recovery.

5. Whether Cathie Peterson was entitled to offsets to the value of the real property based on improvements she made.

6. Whether either party is entitled to attorney fees on appeal.

III. ANALYSIS

A. Standard of Review

"On appeal of a decision rendered by a district court while acting in its intermediate appellate capacity, this Court directly reviews the district court's decision." Idaho Dep't Of Health & Welfare v. McCormick, 153 Idaho 468, 470, 283 P.3d 785, 787 (2012) (quoting In re Doe, 147 Idaho 243, 248, 207 P.3d 974, 979 (2009)). However, to determine whether the district court erred in affirming the magistrate court, we review the record before the magistrate court to determine whether substantial and competent evidence supports the magistrate's findings of fact. Pelayo v. Pelayo, 154 Idaho 855, 858, 303 P.3d 214, 217 (2013). We review questions of law such as statutory interpretation de novo. McCormick, 153 Idaho at 470, 283 P.3d at 787.

Interpretation of a statute begins with an examination of the statute's literal words. Where the language of a statute is plain and unambiguous, courts give effect to the statute as written, without engaging in statutory construction. Only where the language is ambiguous will this Court look to rules of construction for guidance and consider the reasonableness of proposed interpretations. Moreover, unless a contrary purpose is clearly indicated, ordinary words will be given their ordinary meaning when construing a statute. In construing a statute, this Court will not deal in any subtle refinements of the legislation, but will ...

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