TennCare Claims Dismissed for Late Filings
by Angela D. L. Smith

One of the benefits provided by the Tennessee Bureau of TennCare (Tennessee's Medicaid equivalent for low income elderly, blind, and disabled residents) is long-term care payments for nursing home care.  In an attempt to recover the cost of these benefits, TennCare has instituted a program called Estate Recovery.  Estate Recovery authorizes TennCare to file claims against the estate of a nursing home patient for the value of services provided after the patient passes away.  Over the past several years there has been a question as to whether TennCare is required to file its claim for services provided within the same time period as other creditors of a decedent's (deceased person's) estate.

Tennessee law provides that creditors of an estate generally have four months from the date notice to creditors is published to file their claims against an estate with the clerk of the probate court.  If creditors do not file their claims within that four month period, their claims are barred and they cannot recover against the estate.  There are two exceptions to the four month limitation.  First, if a known creditor receives actual notice, that is notice other than by posting or publication, less than sixty days before the expiration of the four month period or more than sixty days before the first anniversary of the decedent's death, that creditor has sixty days to file its claim.  Second, if a known creditor receives actual notice less than sixty days before the first anniversary of the decedent's death or no notice at all, the creditor has up to twelve months from the date of the decedent's death to file its claim.  Most claims are barred after one year, except claims for taxes, claims by the United States government, and claims in tort and contract that have not been reduced to judgment.  While the statute provides that the vast majority of claims against an estate are barred if not filed within one year, attorneys were unsure if TennCare would be required to file Estate Recovery claims within one year or if the courts would hold that TennCare is not governed by the one year statute of limitations because TennCare is a state agency.

Recently, the Tennessee Court of Appeals examined several cases involving the limitations period applicable to TennCare.  In each case, there was no question that the decedent received benefits from TennCare or that the benefits were properly paid by TennCare.  The sole issue presented to the court was whether TennCare filed claim against the estate in a timely manner.

In re:  Estate of Mary B. Henkel, Ms. Henkel began receiving benefits from TennCare in 1991 and died on February 19, 2003.  TennCare received actual notice of her death in March 2003.  On four occasions, from mid 2003 to early 2004, the Bureau of TennCare sent letters to Ms. Henkel's heirs stating that TennCare might have an interest in her estate; however, the letters did not expressly demand that TennCare be reimbursed for Ms. Henkel's care.  Because Ms. Henkel's heirs did not open a probate estate, TennCare filed a complaint to open Ms. Henkel's estate and have an administrator appointed in September, 2005.  On September 9, 2005, the Probate Court issued Letters of Administration to an appointed administrator. 

On January 30, 2006, TennCare filed a claim against Ms. Henkel's estate for benefits paid on Ms. Henkel's behalf.  Ms. Henkel's son objected to TennCare's claim as being filed after the one-year statute of limitation applicable to creditors of a decedent's estate.  The trial court found that TennCare's claim had been filed too late and was barred by statute.  TennCare appealed to the Tennessee Court of Appeals.  In reviewing the decision of the trial court, the Court of Appeals examined whether the trial court's interpretation of the statute limiting the time for TennCare to file a claim was correct.

As explained above, Tennessee law provides two periods which limit the time creditors have to file claims against an estate.  The first, found in Tennessee Code Annotated §§30-2-306 and 30-2-307, provides that creditors (in most cases) have four months in which to file claims.  In examining these statutes, the court found that TennCare's claims were not barred because the statutes did not specifically provide that the statute of limitations applied to state claims.

The second limitations period is set forth in Tennessee Code Annotated §30-2-310.  That statute provides in pertinent part:

• All claims and demands not filed with the probate court clerk, as required by the provisions of §§30-2-306 through 30-2-309, or, if later, in which suit shall not have been brought or revived before the end of twelve (12) months from the date of death of the decedent, shall be forever barred. 
• Notwithstanding the provisions of subsection (a), all claims and demands not filed by the state with the probate court clerk, as required by the provisions of §§30-2-306 through 302-2-309, or, if later, in which suit shall not have been brought or revived before the end of twelve (12) months from the date of death of the decedent, shall be forever barred.  This statute of limitations shall not apply to claims for state taxes.  Such claims shall continue to be governed by §67-1-1501. 

In examining the statute, the Court of Appeals found that the plain meaning of the statute, as supported by the legislative intent, clearly intended to encompass claims by TennCare.  Thus, the Court of Appeals found that the trial court was correct in interpreting the statute to require TennCare to file claims within a year of the date of death of the decedent or have them barred.  Moreover, the court stated that "the legislature has been more than generous with the state by allowing it a full year (as opposed to the usual four months) in which to file any claims against an estate . . . from our reading of this statute . . . we conclude that the legislature did not intend for filing any claim or demand against an estate . . . to extend beyond one year. 

A companion case - In re: Estate of Margie Mary Anderson - was also decided at the same time by the Court of Appeals and the same result was reached.  TennCare must file claims within one year of the date of death of the decedent or forever be barred from collecting on those claims. 

By providing that TennCare must file a claim within one year of the date of death of the decedent, the court has provided families whose loved ones received TennCare a bit more certainty with regard to the scope of TennCare's potential claim.

If you have any questions about this article or need additional information, please do not hesitate to contact a member of our Taxation & Estate Preservation Group.