## Facts

- Mary Smith was admitted to a nursing facility in December 2001 after debilitating strokes.
- Mary later qualified for TennCare (Medicaid) nursing-home benefits beginning July 1, 2002.
- At Mary’s institutionalization, the couple held roughly $217,117 in countable assets in accounts titled in James Smith’s name, Mary Smith’s name, or jointly (including tenancy by the entirety).
- Within one year of Mary’s institutionalization, the jointly held assets were transferred to James; Mary reduced assets to under $2,000 as part of eligibility requirements.
- Mary received benefits from July 1, 2002 until her death in September 2003; the parties did not dispute that the benefits were properly paid.
- Mary died without assets; the formerly joint assets were owned solely by James at her death.
- James died thereafter, and his probate estate largely consisted of the assets previously held jointly with Mary.
- TennCare filed a probate claim against James’s estate to recoup nursing-home benefits paid on Mary’s behalf; the executor objected.

## Issues

1. Whether Tennessee’s Medicaid estate-recovery statutes authorize TennCare to recover correctly paid benefits from the probate estate of a surviving spouse who never received Medicaid.
2. Whether assets transferred from the Medicaid recipient spouse to the non-recipient spouse before the recipient’s death can be treated as part of the recipient’s “estate” for recovery purposes under Tennessee law, including by tracing or former joint ownership.

## Decision

- The Court of Appeals reversed the probate court and disallowed TennCare’s claim against James’s estate.
- Tennessee law, as written at the time, limited recovery to the Medicaid recipient’s estate and did not reach a non-recipient surviving spouse’s probate estate.
- Because Mary held no legal interest in the transferred assets at death and died without probate assets, there was no estate from which TennCare could recover.
- The court rejected TennCare’s tracing and marital-property theories as lacking statutory support.

## Legal Principles

- Federal Medicaid law requires states to pursue estate recovery from certain recipients’ “estates,” but permits (rather than mandates) states to adopt an expanded definition reaching certain non-probate transfers and survivorship interests.
- Whether expanded recovery is available depends on state enactment; courts apply the state statute as written and will not enlarge recovery rights beyond the statutory text.
- Absent explicit state authorization, former joint ownership, marital-property characterizations, or traceability to the recipient’s prior interests do not permit recovery from a non-recipient spouse’s probate estate.

## Conclusion

The court held that TennCare could not recover Medicaid nursing-home payments made for a deceased recipient spouse from the surviving spouse’s probate estate when state law did not expressly adopt an expanded estate definition reaching such assets and the recipient died without an interest in the property at death.


In re Estate of Smith, No. M2005-01410-COA-R3-CV, 2006 WL 3114250 (Tenn. Ct. App. Nov. 1, 2006)