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Hofer v. Montana Dep't of Public Health and Human Services12/6/2005
Argued and Submitted: March 5, 2005
The Department of Public Health and Human Services ("DPHHS") appeals from a Memorandum and Order of the Montana First Judicial District Court, Lewis and Clark County, in which the court held that the net assets of King Colony Ranch, Incorporated, ("KCR" or "Colony")--a Hutterite colony to which the seven above-named Claimants ("Claimants") belong--are not available to Claimants and that a trust relationship does not exist between Claimants and KCR, nor between DPHHS and KCR. On cross-appeal, Claimants argue that the District Court, in granting Claimants' petition, failed to address an allegedly erroneous conclusion of law made at the administrative level, and ask this Court to affirm the result reached by the District Court but explicitly reverse the administrative agency's conclusion that KCR owes Claimants an enforceable legal duty of support. We reverse in part and remand for further proceedings. Because we conclude that the trust relationship analysis is dispositive of the question of whether the Colony's resources are available for the benefit of the Claimants as beneficiaries, we need not address the related question of whether the Colony owes a legal duty of support to its members.
ISSUES
The parties present multiple issues on appeal and cross-appeal. However, we have determined the dispositive issues to be:
1. Did the District Court err when it concluded that an express trust does not exist between KCR and the members of the King Hutterite Colony ("Colony members")?
2. Are Claimants entitled to participate in the Family-Related Medicaid Program?
FACTUAL AND PROCEDURAL BACKGROUND
Claimants are members of KCR, a Hutterite Colony located near Lewistown. Claimants had been participants in a particular Medicaid program, called the Family-Related Medicaid Program, since about 1991. To be eligible for this program, applicants must meet two "tests"--an "income test," and a "resource test." Under the income test, an applicant cannot have income exceeding $3,000 per year. The parties agree that Claimants have income of less than $3,000 per year and thus the income test is not an issue in this case. Under the resource test, an applicant cannot have resources which are determined to be both "countable" and "available" which exceed $3,000 in value.
A few years after Claimants began receiving Medicaid benefits, DPHHS scrutinized Claimants' resources and income to determine if Claimants had been correctly deemed eligible for Medicaid. After reviewing KCR's organizational documents, DPHHS concluded that a trust relationship exists between KCR and the Colony members, including Claimants. Additionally, DPHHS determined that one hundred percent of the net worth of KCR--which totals approximately $2.1 million--is available to each individual Colony member. On December 17, 2001, DPHHS notified Claimants that their Medicaid benefits were being terminated because the resources available to each of them exceeded the allowable resource limit of $3,000.
Claimants requested a Fair Hearing before the Board of Public Assistance ("BPA"). A BPA Hearings Officer presided over a four-day hearing during the summer of 2002. On January 16, 2003, the Hearings Officer, filed a Fair Hearing Decision in which he concluded, based on the Colony's Articles of Incorporation and upon the testimony of the Claimants regarding the care provided to them by the Colony, that a trust relationship existed between KCR and the Colony members with KCR as the Trustee and the members of the Colony as beneficiaries, and that KCR is legally obligated to support the Colony members. The Hearings Of
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