Troy v. Hart

THIEME, Judge. This appeal is from an order of the Circuit Court for Washington County (Sharer, J.) denying an attempt by appellant, Richard E. Troy, Personal Representative of the Estate of Paul H. Lettich, to rescind the decedent’s renunciation and disclaimer of his inheritance. Troy presents for our review the following issues, which we have reorganized for clarity: 1. Did the procurement of Lettich’s disclaimer by Hart [the decedent’s sister] constitute a breach of her confidential relationship with Lettich? 2.

Was the disclaimer procured by undue influence? 3. Was Lettich’s rescission barred by Estates and Trusts § 9-205? 4. Was Lettich’s disclaimer contrary to Medicaid law and against public policy? The State of Maryland, amicus curiae, 1 presents the following issue: Did the circuit court err when it held that a Medicaid recipient is entitled to disclaim an inheritance so that he can remain eligible for Medicaid, where if the recipient had collected his inheritance, he would have been able to pay for his own medical care, without public welfare assistance?

The issue presented by the amicus curiae exceeds and distorts the decision of the circuit court. The question before us is whether the court erred in holding that the Medicaid recipient could disclaim his inheritance. Our answer to that question, as well as to all of the issues presented by appellant, is “No,” and we shall therefore affirm the judgment of the circuit court. ⁴⁷² Facts Paul Lettich (Lettich) became a resident of the Cardinal Sheehan Center for the Aging, Stella Maris Hospice (Stella Maris), in April 1992. Prior to his admission, Lettich appointed Richard Troy (Troy) as his attorney in fact and granted him power of attorney, on 4 February 1992. 2 In conjunction with his duties, Troy applied for medical assistance on behalf of Lettich when Lettich’s resources were exhausted.

Lettich was ultimately deemed qualified to receive those benefits on or about 1 January 1995. All medical expenses were paid by Medicare and Medicaid from that day forward. On 25 February 1995, Lettich’s sister, Alta Mae Lettich (Alta Mae) died intestate, leaving an estate in excess of $300,000. Alta Mae was survived by Lettich and two sisters, Mildred Hart (Hart) and Gladys McGlaughlin (McGlaughlin).

To say that personal contact between Lettich and his sisters was sparse is hyperbole. Troy, however, kept family members abreast of Lettich’s status, including, specifically, financial and administrative matters such as Troy’s legal relationship with Lettich. On 22 March 1995, Hart was appointed personál representative of Alta Mae’s estate with the consent of the surviving siblings. On 28 April 1995, Hart, undeterred by Troy’s capacity as Lettich’s attorney in fact, visited Lettich and assisted him in executing a disclaimer to his share of his sister’s estate.

During that visit, Hart overlooked advising Lettich of the ramifications of the disclaimer on his Medicaid status. As a result of dividing Lettich’s $100,000 share between themselves, 3 Hart and McGlaughlin each became $50,000 richer. ⁴⁷³ The following month, Troy was notified by Stella Maris’s business office that Lettich had renounced his inheritance. Troy promptly retained counsel, on Lettich’s behalf, who filed in the orphans’ court on 24 June 1995 a petition seeking to rescind the disclaimer and remove Hart as personal representative of Alta Mae’s estate. Hart retained Robert Veil, Jr., Esq., to defend her.

On 24 August 1995, one day prior to the deadline for filing Hart’s answer to the petition, Veil visited Lettich and requested him to execute a motion to strike the orphans’ court petition so as to remove the possible irritation of an attorney, and also to execute a revocation of Troy’s power of attorney. A vigilant Stella Maris social worker intervened and suggested that Troy be consulted. When notified, Troy contacted his current counsel, who immediately called Stella Maris and advised Veil that she represented Lettich and that Veil was forbidden to speak to Lettich. For reasons not clear from the record, Veil acquiesced.

Lettich died on 20 September 1995. Subsequent to the orphans’ court’s denial of the petition, Troy sought a de novo appeal in the Circuit Court for Washington County. The court granted Hart’s motion for judgment with respect to the attempt to have her removed as personal representative of the estate and dismissed the portion of the petition seeking to rescind Lettich’s disclaimer. Troy timely filed a notice of appeal.

Discussion Procurement of the Disclaimer Troy asserts that the events surrounding the procurement of the disclaimer from Lettich constituted undue influence ⁴⁷⁴ and, accordingly, that the disclaimer should be set aside. Compounding the egregiousness of this alleged malfeasance on the part of Hart, Troy insists, is the fact that Hart owed Lettich a fiduciary duty in light of their respective statuses of personal representative and devisee. See Maryland Code (1974, 1991 Repl.Vol.), S 7-101 of the Estates and Trusts Article (Est. & Tr.). Moreover, Troy maintains that, because of Lettich’s physical and mental condition, a confidential relationship also existed, and was breached during the procurement of the disclaimer.

A confidential relationship may be established by subjective factors, such as the advanced age, physical debility, mental feebleness, and overall dependence of the individual of whom the dominant party has supposedly taken advantage. Treffinger v. Sterling, 269 Md. 356, 361 , 305 A.2d 829 (1973); Tribull v. Tribull, 208 Md. 490, 507 , 119 A.2d 399 (1956); Gaggers v. Gibson, 180 Md. 609, 612-613 , 26 A.2d 395 (1942). Once established, “[t]he existence of the confidential relation creates a presumption of influence which imposes upon the one receiving the benefit the burden of proving an absence of undue influence by showing that the party acted upon competent and independent advice of another, or such facts as will satisfy the court that the dealing * * * was had in the most perfect good faith on his part and was equitable and just between the parties.” Gaggers at 613, 26 A.2d 395 (citations omitted). In the case sub judice, the court found Lettich to be aged, physically infirm, and, apparently, at least partially dependent on another, namely Troy, to handle his day-to-day affairs.

What the court did not specifically intimate, however, was any suggestion of mental incompetence on the part of Lettich. The circuit court further addressed appellant’s claim of undue influence and found that appellant clearly did not establish that the free agency of Lettich was destroyed. Our independent review of the record supports the trial court’s ⁴⁷⁵ finding inasmuch as it was wholly based on factual observations presented by the parties. Md.Rule 8-131(c) provides that when an action is tried without a jury “[we] will not set aside the judgment of the trial court on the evidence unless clearly erroneous, and will give due regard to the opportunity of the trial court to judge the credibility of the witnesses.” If there is any evidence legally sufficient to support the court’s findings, they are not clearly erroneous, for the weight of the evidence is a question for the court, sitting as the finder of fact.

Weisman v. Connors, 76 Md.App. 488, 500 , 547 A.2d 636 (1988), cert. denied, 314 Md. 497 , 551 A.2d 868 (1989). Estates and Trusts § 9-205 Both Troy and the State assert that Lettich’s disclaimer is barred by Est. & Tr. § 9-205, which provides, in pertinent part: (a) The right to disclaim property or an interest in it is barred by (1) an assignment, conveyance, voluntary encumbrance, or transfer of the property or interest, or a contract for any of those---- It is unquestionably clear that Lettich did not, by applying for Medicaid benefits, assign or transfer to the State his rights to the inheritance. Neither did his application constitute an encumbrance with regard to the inheritance. Because the latter conclusion is not as readily apparent as the former, we think it necessary to discuss how we arrive at it.

While “[t]here is no precise definition of an encumbrance,” Magraw v. Dillow, 341 Md. 492, 503 , 671 A.2d 485 (1996), the term logically includes a withholding of a right or interest in property to a third party. In applying for Medicaid benefits, Lettich only placed himself under a duty to disclose any change in his financial status within 10 days of the change. COMAR 10.09.24.12(B)(1). He did not affirmatively encumber or withhold any prospective interest or right in favor of the State.

If, arguendo, this were the case, such an interest would be tantamount to a confessed judgment. In neither theory nor purpose is an application for Medicaid benefits ⁴⁷⁶ synonymous with executing a confessed judgment. Because an application for Medicaid benefits does not constitute an assignment, conveyance, voluntary encumbrance, transfer of property or an interest, or a contract for any of these actions, Estates and Trusts § 9-205 is therefore inapposite to the instant case, and we accordingly hold the disclaimer was not barred by this statute. Any benefits that may have been incorrectly paid to Lettich would have been solely attributable to his failure to inform the State of his wealth.

Medicaid Considerations Under English Poor Law, “The father and grandfather, mother and grandmother, and children of every poor, old, blind, lame and impotent person, or other person not able to work, being of sufficient ability, shall at their now charges relieve and maintain every other person, in that manner, and according to that rate, as by the justices of that county where such sufficient persons dwell, in their sessions shall be assessed” 4 Today, however, by 42 U.S.C. § 1396a(a)(17)(D), Congress has abrogated the legal duty to support one’s parents, and even a cursory perusal of this, or other sections of 42 U.S.C. § 1396 (the subsection of the Social Security Act with which we will be attempting to deal), will demonstrate Congress’s indifference to the simplicity and clarity of the Elizabethan language. 5 ⁴⁷⁷ Medicaid is a “means-tested” program, that is to say, eligibility for Medicaid depends on meeting various income and resource tests. Maryland’s Department of Health and Mental Hygiene (DHMH) administers the local aspect of the program and requires, as a condition of eligibility for benefits, that applicants disclose all available assets to the Department of Social Services (DSS). COMAR 10.09.24.04. An applicant must satisfy asset limits in order to receive coverage.

Once an individual is receiving benefits, it is not inconceivable that his eligibility status might change due to a multitude of financial circumstances. COMAR dictates, as a post-eligibility requirement, that recipients or their representatives shall notify the department “within 10 working days of changes affecting ... eligibility----” COMAR 10.09.24.12(B)(1). If one