## Facts

- Barbara J. Molloy, a nursing-home resident and Medicaid recipient since 1989, was severely disabled after a cerebral hemorrhage.
- Molloy’s adult daughter died intestate in 1991; the distributees were Molloy and Molloy’s former husband.
- The estate had no known assets apart from a potential recovery from a wrongful-death claim.
- The local social services agency requested that Molloy (through her attorney-in-fact) assign her share of the estate to the agency; there was no response to the first two requests.
- Before receiving a third request, Molloy filed a renunciation of her intestate interest in the estate.
- The agency treated the renunciation and refusal to execute an assignment as noncooperation and a failure to pursue an available resource, and discontinued Medicaid after an administrative fair hearing.

## Issues

1. Whether a Medicaid recipient’s renunciation of an intestate share, where the estate’s only potential value was a contingent wrongful-death recovery, may be treated as a transfer of assets or failure to pursue an available resource for Medicaid eligibility purposes.
2. Whether discontinuing benefits on this record was arbitrary or capricious, including in light of claims that litigation would endanger the recipient’s health.

## Decision

- The court confirmed the administrative determination and dismissed the petition.
- It held that, for Medicaid eligibility, the renunciation functioned as a transfer of an asset and as a failure to pursue an available resource.
- It rejected the argument that the lack of an ascertainable value at the time of renunciation defeated the agency’s determination.
- It found no evidentiary basis that pursuing the wrongful-death claim would have required participation that threatened Molloy’s health; it noted that a substantiated health-based inability to cooperate could render a termination arbitrary in a different case.

## Legal Principles

- Although individuals generally may renounce testamentary or intestate distributions even if doing so frustrates creditors, Medicaid eligibility rules prioritize conserving limited public funds for the “truly needy.”
- In the Medicaid context, a formal renunciation may be treated as the practical equivalent of an asset transfer when it divests a recipient of a resource that could reduce or eliminate need.
- A contingent or unliquidated interest may constitute a “resource” that a Medicaid recipient must pursue or assign as required by eligibility and cooperation regulations.
- An agency determination terminating benefits for noncooperation may be arbitrary if the recipient substantiates an inability to cooperate (e.g., due to health), but the claimant bears the burden to support that contention on the record.

## Conclusion

The court upheld termination of Medicaid benefits because the recipient’s renunciation of her intestate share—tied to a potential wrongful-death recovery—was treated as an asset transfer and a failure to pursue an available resource, consistent with Medicaid’s limits on retaining eligibility through divestment of accessible assets.


Molloy v. Bane, 214 A.D.2d 171 (N.Y. App. Div. 2d Dep’t 1995)