Connecticut Superior Court, Judicial District of New Britain at New Britain

PIKULA v. COMMISSIONER OF SOCIAL SERVICES, HHB CV14-6024057S (Nov. 13, 2014)

Marian Pikula v. Commissioner of Social Services.

2014 Ct. Sup. 3058

No. HHB CV14-6024057S

Connecticut Superior Court, Judicial District of New Britain at New Britain.

File Date: November 13, 2014.

[EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.]

Carl J. Schuman, Judge, Superior Court.

CT Page 3058-A

Memorandum of Decision

Plaintiff Marian Pikula appeals from the final decision of the defendant

commissioner of social services (commissioner) denying her claim for

Medicaid benefits on the ground that she was a beneficiary of a trust that

was an available asset and that this trust put her over the Medicaid asset

limit. As discussed below, the court affirms the commissioner's decision and

dismisses the appeal.

I

The record reveals the following facts. In 1989, John Pikula, the

plaintiff's father, executed a will containing a testamentary trust for his

two daughters: Dorothy McKee and the plaintiff. When John Pikula died in

1991, the trust became effective and the probate court appointed a trustee.

In March 2012, the plaintiff entered a long-term care facility and applied

for benefits under the Medicaid program. At about that time, the trust value

was $169,745.91. The department of social services (department) denied the

plaintiff's application in May 2013 on the ground that her assets, including

the trust, exceeded eligibility levels.

A hearing on this denial took place in September 2013. The controversy

centered on whether the trust was an "available" asset that put the

plaintiff's assets over the $1,600 state Medicaid limit. The hearing officer

ruled that the trust is a "general support trust" for the "maintenance and

support" of the plaintiff. Accordingly, the

CT Page 3058-B

officer concluded that the trust was available to the plaintiff and should

be considered in determining the plaintiff's eligibility for Medicaid. On

that basis, the hearing officer denied the appeal. (Return of Record (ROR),

pp. 7-13.) The plaintiff now appeals to this court.

Article III of the trust, which contains the relevant trust language,

provides as follows:

"A. Until my daughter, MARIAN E. PIKULA, shall die, the Trustee shall pay

to or spend on behalf of my said daughter MARIAN E. PIKULA, as much of the

net income derived from this trust fund as the Trustee may deem advisable to

provide properly for his [sic] maintenance and support and may incorporate

any income not so distributed into the principal of the fund at the option

of the Trustee.

"B. I hereby authorize and empower the Trustee in his sole and absolute

discretion at any time and from time to time to disburse from the principal

for any of the trust estates created under this Article, even to the point

of completely exhausting the same, such amount as he may deem advisable to

provide adequately and properly for the support and maintenance of the

current income beneficiaries thereof, any expenses incurred by reason of

illness and disability. In determining the amount of principal to be

disbursed, the Trustee shall take into consideration any other income or

property which such income beneficiary may have from any other source, and

the Trustee's discretion shall be conclusive as to the advisability of any

such disbursement and the same shall not be questioned by anyone. For all

sums so distributed, the Trustee shall have full acquittance." (ROR, p.

129.)

II

Under the Uniform Administrative Procedure Act (UAPA), General Statutes §

4-166 et seq., judicial review of an agency decision is "very restricted."

(Internal quotation marks omitted.) MacDermid, Inc. v. Dept. of

Environmental Protection, 257 Conn. 128, 136-37, 778 A.2d 7 (2001). Section

4-183(j) of the General Statutes provides as follows: "The court shall not

substitute its judgment for that of the agency as to the weight of the

evidence on questions of fact. The court shall

CT Page 3058-C

affirm the decision of the agency unless the court finds that substantial

rights of the person appealing have been prejudiced because the

administrative findings, inferences, conclusions, or decisions are: (1) In

violation of constitutional or statutory provisions; (2) in excess of the

statutory authority of the agency; (3) made upon unlawful procedure; (4)

affected by other error of law; (5) clearly erroneous in view of the

reliable, probative, and substantial evidence on the whole record; or (6)

arbitrary or capricious or characterized by abuse of discretion or clearly

unwarranted exercise of discretion."

Stated differently, "[r]eview of an administrative agency decision

requires a court to determine whether there is substantial evidence in the

administrative record to support the agency's findings of basic fact and

whether the conclusions drawn from those facts are reasonable ... Neither

[the appellate] court nor the trial court may retry the case or substitute

its own judgment for that of the administrative agency on the weight of the

evidence or questions of fact ... Our ultimate duty is to determine, in view

of all of the evidence, whether the agency, in issuing its order, acted

unreasonably, arbitrarily, illegally or in abuse of its discretion."

(Internal quotation marks omitted.) Okeke v. Commissioner of Public Health,

304 Conn. 317, 324, 39 A.3d 1095 (2012). "It is fundamental that a plaintiff

has the burden of proving that the [agency], on the facts before [it], acted

contrary to law and in abuse of [its] discretion." (Internal quotation marks

omitted.) Murphy v. Commissioner of Motor Vehicles, 254 Conn. 333, 343,

757 A.2d 561 (2000).

III

After the department initially denied benefits on May 10, 2013, the

petitioner's sister, Dorothy McKee, filed an application in Newington

Probate Court "to obtain a court ruling concerning whether or not the

[plaintiff here] can compel the Trustee of their father's testamentary trust

to distribute the trust principal for her benefit." (ROR, p. 122.) The

Probate Court recognized that the "purpose in bringing the proceeding

CT Page 3058-D

was to get a court determination that the testamentary trust in question was

a supplemental needs trust and as such the assets in the trust were

unavailable to the beneficiary, [the plaintiff], which determination is

critical to her pending application with DSS for Title 19 insurance coverage

to pay for her residence in a skilled nursing facility." (ROR, p. 123.) The

court suspended proceedings on October 1 in order to give notice to the

department and provide it an opportunity to be heard. The department did not

appear at the next hearing on November 6, 2013. On November 12, 2013, the

court issued a ruling in which it found that the plaintiff is the

"beneficiary of a supplemental needs trust and as such cannot compel the

trustee to make distributions from the trust." (ROR, p. 124.)

The department's hearing officer acknowledged the probate court decree but

concluded on December 20, 2013 that a probate order "is not used to

determine eligibility for assistance for Department of Social Services

programs." (ROR, p. 10.) The hearing officer observed that, under General

Statutes § 17b-261(a), "[a] disposition of property ordered by a court shall

be evaluated in accordance with the standards applied to any other

disposition for the purpose of determining eligibility." (ROR, p. 10.)

The initial argument raised by the plaintiff is that the Probate Court's

decision operates as a collateral estoppel bar to the department's

determination of ineligibility. Our Supreme Court has considered but not

decided this issue. See Corcoran v. Dept. of Social Services, 271 Conn. 679,

687-98, 859 A.2d 533 (2004).[fn1] The court now holds that, based on the

doctrine of primary jurisdiction, the department correctly declined to

follow the probate decision.

The doctrine of primary jurisdiction applies "where a plaintiff, in the

absence of pending administrative proceedings, invokes the original

jurisdiction of a court to decide the merits of a controversy ... That

doctrine, like exhaustion, is grounded in a policy of fostering an orderly

process of administrative adjudication and judicial review in which a

reviewing court will have the benefit of the agency's findings and

conclusions ...

CT Page 3058-E

[W]here a statute has established a procedure to redress a particular wrong

a person must follow the specified remedy and may not institute a proceeding

that might have been permissible in the absence of such a statutory

procedure ... A failure to do so deprives the court of subject matter

jurisdiction over the controversy." (Internal quotation marks omitted;

citations omitted.) Dontigney v. Brown, 82 Conn.App. 11, 15-16, 842 A.2d 597

(2004).[fn2]

General Statutes § 17b-261b(a) provides: "The Department of Social

Services shall be the sole agency to determine the eligibility for

assistance and services under programs operated and administered by said

department." Even if this statute does not expressly preclude Probate Court

consideration of an eligibility determination such as the present one, it

does so by way of the doctrine of primary jurisdiction. Clearly, the

legislature recognized the department as the agency with the expertise to

address eligibility determinations in the first instance. An applicant

aggrieved by an adverse decision of the department can then appeal to the

Superior Court under the orderly and well-established procedures in the

UAPA.

The plaintiff seeks to upset this process by asking the Probate Court to

make a determination that that court recognized as "critical to her pending

application with DSS for Title 19 insurance coverage to pay for her

residence in a skilled nursing facility." The plaintiff essentially seeks to

circumvent the administrative process in hopes of obtaining a more favorable

forum. The plaintiff's approach promotes a race to the courthouse that

begins after the department makes an initial denial of benefits. Such an

approach is contrary to the policy "of fostering an orderly process of

administrative adjudication and judicial review in which a reviewing court

will have the benefit of the agency's findings and conclusions..." Dontigney

v. Brown, supra, 82 Conn.App. 15. Accordingly, the court concludes that the

department has primary jurisdiction over the Medicaid eligibility

determination at issue here, that the Probate Court lacked jurisdiction, and

that therefore the

CT Page 3058-F

department was not bound by the probate decree.

IV

The court now turns to the merits of whether the trust in this case is an

available asset for Medicaid purposes. Our Supreme Court has stated: "[F]or

the purposes of determining eligibility for the medicaid program, only

assets actually available to a medical assistance recipient may be

considered ... Assets held in trust are considered available if the

beneficiary has the legal right to compel distributions." (Internal

quotation marks omitted; citations omitted.) Corcoran v. Dept. of Social

Services, supra, 271 Conn. 692. "For medicaid purposes, general support

trusts are considered available because a beneficiary can compel

distribution of the trust income ... In other words, the beneficiary has a

legal right ... to obtain the fund ... Conversely, supplemental needs

trusts, in which a trustee retains unfettered discretion to withhold the

income, are not considered available to the beneficiary." (Internal

quotation marks omitted; citations omitted; footnote omitted.) Id., 699-700.

The leading cases in the state on trust construction in relation to

Medicaid eligibility areZeoli v. Commissioner of Social Services,

179 Conn. 83, 425 A.2d 553 (1979), and Corcoran v. Dept. of Social Services,

supra, 271 Conn. 679.[fn3] In Zeoli, "the plaintiffs, two mentally disabled

sisters, appealed from the department of social services decision to

terminate their medicaid benefits for having excess assets in the form of a

testamentary trust devised to them by their father. [Zeoli v. Commissioner

of Social Services, supra], 84-85. The language of the bequest granted the

trustee 'absolute and uncontrolled discretion' to make distributions to

either daughter, 'regardless of whether any one of my daughters may be

totally deprived of any benefit hereunder.' (Internal quotation marks

omitted.) Id., 86-87 n. 2. The trust instrument further provided that

'[w]ithout in any way limiting the absolute discretion of my Trustee, it is

my fond hope that my trustee pay or apply the net income or principal of the

trust for the maintenance, support, education,

CT Page 3058-G

health and general welfare of ... my daughters...' (Internal quotation marks

omitted.) Id. [The Supreme Court], after analyzing the testamentary

language, concluded that 'the testator's intent was to provide the trustee

with sufficient flexibility to use the funds under the trust solely for

supplemental support.' Id., 90. Therefore, '[s]ince the assets held in the

spendthrift trust were not intended for the plaintiffs' general support,

they could not compel their distribution' and the trust corpus and income

could not be considered available. Id., 92."Corcoran v. Dept. of Social

Services, supra, 700-01. As the Zeoli Court stated: "[t]he combination of

express and precatory terms in the will attempts to grant the trustee

flexibility to provide the support that would benefit either of the

beneficiaries the most, that is, imposing on the trustee the legal duty to

furnish only supplementary support." Zeoli v. Commissioner of Social

Services, supra, 91.

The trust in Corcoran was significantly different. There the Supreme Court

stated: "the testator created the trust with the following language: 'If

[the plaintiff there] is then living, the trust established for her shall be

retained by my trustees to hold, manage, invest and reinvest said share as a

Trust Fund, paying to or expending for the benefit of [the plaintiff] so

much of the net income and principal of said Trust as the Trustees, in their

sole discretion, shall deem proper for her health, support in reasonable

comfort, best interests and welfare...' Thus, the trustees' 'sole

discretion' is limited by the ascertainable standard of the plaintiff's

'health, support in reasonable comfort, best interests and welfare...' Put

simply, whereas the testator in Zeoli imbued his trustees with 'absolute and

uncontrolled discretion' and noted his mere desire that the trust be used

for the maintenance and support of the beneficiaries; Zeoli v. Commissioner

of Social Services, supra, [179 Conn.] 86-87 n. 2; the testator in the

present case created the trust for the purpose of supporting the plaintiff

'in reasonable comfort...' Absent the requisite testamentary intent to

provide only for the plaintiff's supplemental needs, we agree with the

department and conclude that the trust in question

CT Page 3058-H

is a general support trust." (Internal quotation marks omitted.) Corcoran v.

Dept. of Social Services, supra, 271 Conn. 703.[fn4]

Although the trust in the present case bears some similarities to the

trust in Zeoli, on the whole it is much closer to the trust in Corcoran. The

primary similarity to the Zeoli trust is that both the present trust and the

Zeoli trust have language making the trustee's decisions conclusive and

essentially releasing him from liability.[fn5]

The size of the trust in the present case is essentially a neutral factor.

In Zeoli, the estate had a balance of $9,515.85. The Court observed: "As the

amount held under trust, approximately one-half of his entire estate,

indicates, the plaintiffs' father was a person of modest means. Presumably,

the funds under the trust would not provide for the general support of his

daughters for much more than a few months." (Footnote omitted.) Zeoli v.

Commissioner of Social Services, supra, 179 Conn. 90. The present trust had

a balance of $169,454.91 at the time of the hearing officer's decision. The

Corcoran trust had a large balance of $854,307.95. Corcoran v. Dept. of

Social Services, supra, 271 Conn. 682. Thus, the balance in the present case

places it in between the Zeoli trust and the Corcoran trust.

In most other respects, the present trust closely resembles the Corcoran

trust and differs from the Zeoli trust. Here the trust uses mandatory

language in providing that the trustee "shall pay" as much trust income to

the plaintiff for her "maintenance and support" as the trustee "deems

advisable."[fn6] With regard to the principal, the trustee has "sole and

absolute discretion" to pay amounts "as he may deem advisable," and thus the

duty is less mandatory, but the trustee may make such payments of principal

"even to the point of completely exhausting the same" for the purpose of

providing "adequately and properly for the support and maintenance of the

current income beneficiaries thereof, any expenses incurred by reason of

illness and

CT Page 3058-I

disability."[fn7] As discussed, the Corcoran trust also limited the "sole

discretion" of the trustee by the standard of one specific beneficiary's

health and support.

In contrast, the Zeoli trustee was "not required to distribute any net

income of such trust currently and may, in his absolute and uncontrolled

discretion, accumulate any part or all of the net income of such trust,

which such accumulated net income shall be available for distribution to the

beneficiaries as aforesaid." Zeoli v. Commissioner of Social Services,

supra, 179 Conn. 86-87 n. 2. Further, the Zeoli trust expressed only a "fond

hope" that the trustee would use the income or the principal to provide for

the maintenance and support of whichever of the two daughters "would benefit

most."[fn8] Thus, unlike the present trust, the Zeoli trust did not create

even a discretionary duty to distribute anything to any specific

beneficiary.

Finally, the current trust, like the trust in Corcoran, provides that, in

determining the amount of principal to disburse, the trustee "shall take

into consideration any other income or property which such income

beneficiary may have from any other source..."[fn9] The Zeoli trust, in

contrast, explicitly stated that the trustee "shall not be required to

consider the amount of income from other sources of any beneficiary" and did

not impose any mandatory factors for the trustee to consider that would

limit his discretion.[fn10]

In short, the trust in this case provided that the trustee had a mandatory

duty to use as much of the trust income for the maintenance and support of

one specific beneficiary as the trustee deemed advisable and that he had

discretion to use principal, even to the point of exhausting it, to provide

for expenses related to her illness and disability. On the whole, such a

trust is much more akin to the one in Corcoran, in which the beneficiary