North Carolina Estate Planning Blog : North Carolina Estate Planning Lawyer & Attorney : Trust Counsel, PA : Trust Administration : Serving Chapel Hill, Durham, Raleigh, Pittsboro, Orange County, Chatham County

The Center for Medicare Advocacy, Inc. reminds us that it’s that time of year again to make choices and change your current prescription drug plan. Plans change every year; premiums and deductibles may change; drug coverage may change; and plan providers may leave your service area. Therefore, it is absolutely necessary that beneficiaries and/or their helpers and caregivers compare different plans BEFORE the Part D Annual Election Period that starts November 15^th and ends December 31^st.

If you or a loved one is currently enrolled in a Private Fee for Service (PFFS) plan, it is especially important to get started reviewing options because changes from the 2008 Medicare Improvement for Patients and Providers Act (MIPPA) go into effect in 2011, and some PFFS plans have decided to leave the marketplace rather than meet the additional requirements enacted by MIPPA.

Another change to Medicare in 2011, a result of the new health care reform law, will help close the coverage gap known as the “Donut Hole.” Eligible plan members who purchase formulary drugs after reaching the Donut Hole will get a 50% discount on brand name drugs and a 7% discount on generic drugs.

Don’t be intimidated. This year, plan sponsors were required to consolidate plan offerings, so there are fewer plans and the differences between plans are more meaningful and easier to compare, and beginning October 15^th, plan premiums, deductibles, co-pay amounts, formularies and formulary drug restrictions can be viewed and compared online at www.medicare.gov.

If you’d like additional assistance, North Carolina offers a Seniors’ Health Insurance Information Program (SHIIP). To find your local SHIIP office, call 1-800-443-9354, or check out their website: www.ncshiip.com.

To view the full bulletin from the Center for Medicare Advocacy Inc.: http://www.medicareadvocacy.org/InfoByTopic/PartDandPrescDrugs/10_10.07.ChoicesTimeAgain.htm

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Probate and Estate Administration Matters Are Generally Handled in the State Courts – But Not Always, As One NC Executor Recently Found Out

Probate – the process of filing a deceased person’s will and administering the estate – is generally considered a matter exclusively for state courts. Federal courts are limited in the types of actions they can hear, and the “probate exception” generally excludes probate matters from the federal courts. The Supreme Court held in one case that the federal courts have no authority to “interfere with the probate proceedings or assume general jurisdiction of the probate or control of the property in the custody of the state court.” Markham v. Allen, 326 U.S. 490, 494 (1946). However, the probate exception does not necessarily exclude all probate-related matters from federal court, as one Executor of a North Carolina estate recently discovered.

In November 2002, Perry Brown, Sr. was injured in a car accident. Mr. Brown was hospitalized and Medicare made payments totaling $100,802.39 for his medical care. These payments were conditional and were subject to reimbursement if insurance proceeds were received to cover those medical expenses. Three years later, Mr. Brown died and his son was appointed the Executor of his estate. State Farm Automobile Insurance Company, which insured the at-fault driver in the 2002 accident, paid $130,000 to the Wake County Clerk of Superior Court in what is called an “interpleader” action. The Wake County Superior Court filed an Order Allowing Interpleader on July 31, 2007, in which it held $100,802.39 to reimburse Medicare subject to Medicare showing satisfactory proof of its lien, and released the remaining $29,197.61 to Mr. Brown’s estate.

Medicare is given 60 days from the date of judgment to provide proof of its lien. Medicare did not respond within 60 days, but the Court continued to hold the money. On August 26, 2009, the Executor of the Estate mailed a copy of the Order to the Centers for Medicare and Medicaid Services in Durham, NC, but Medicare claims it did not receive the letter. On February 16, 2010, Brown’s estate filed an action in state court seeking a declaratory judgment determining that Medicare’s claim was extinguished. Medicare argued that it never received proper notice of the judgment because State Farm did not serve them with the complaint filed in the 2007 interpleader action.

An action against Medicare is an action against the United States, and federal law grants the federal courts jurisdiction to hear claims when the United States is a party to interpleader actions. So, the United States moved the case to federal court. The Executor attempted to move it back to state court on several grounds. One such ground was that the probate exception applied. The federal court found, however, that it could resolve the dispute without assuming general jurisdiction over Brown’s estate. In its findings, the court noted that the probate exception is “judicial”, not “constitutional”, meaning that it was created by the courts rather than in the text of a statute or the Constitution. In this case, the court found a basis to hear the case under federal statutes, which overrode the judicially-created probate exception.

Brown v. United States Department of Health and Human Services, 2010 U.S. Dist. LEXIS 74654 (July 22, 2010).

Thanks to Kristin L. Burrows for this post.

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