Massachusetts Supreme Judicial Court: Personal Representative’s Power To Pay Claims Extinguished After Three Years

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In In re Estate of Kendall, the Massachusetts Supreme Judicial Court decided whether the personal representative of the Estate of Jacqueline Kendall was required to pay a creditor claim for reimbursement from the Commonwealth’s MassHealth Program when the estate proceeding was commenced more than three years after Kendall died.  The short answer: no.

The Facts Of In Re Estate Of Kendall

Kendall received Mass Health benefits of almost $105,000.  MassHealth is a State program designed to provide basic health coverage to people who do not have sufficient income or resources to provide for themselves.  Kendall died intestate on August 7, 2014.

When Kendall died, she had a fifty percent interest in a house in Gloucester, a portion of which was recoverable by MassHealth under Massachusetts law.  On May 24, 2018 (over three years after Kendall’s death), one of her heirs filed a petition for late and limited formal testacy and notified MassHealth. MassHealth informed counsel for the petitioner that it would be filing a notice of claim in the estate.

The personal representative of the estate informed MassHealth that she could not pay the claim since more than three years had passed from Kendall’s death. MassHealth objected.

The personal representative filed a motion to strike the affidavit of objections, which MassHealth opposed, and which the court denied. MassHealth filed a petition for formal probate, requesting the appointment of a personal representative of its choosing (a public administrator) so that its claim could be paid, which the petitioner opposed.

The Massachusetts Supreme Judicial Court received the case to determine whether the personal representative of the estate was required to pay MassHealth’s claim more than three years after Kendall’s death, whether MassHealth was permitted to file claims in late estates, whether there is an exception on the one year limitation on presentation of claims, and whether MassHealth was permitted to commence formal testacy proceedings for the purpose of pursing a creditor claim.

Ultimate Time Limitations On Estates In Massachusetts

The Massachusetts Uniform Probate Code imposes an ultimate time limit on estates in G. L. c. 190B, § 3-108, which states in part:

No informal probate or appointment proceeding or formal testacy or appointment proceeding, other than a proceeding to probate a will previously probated at the testator’s domicile and appointment proceedings relating to an estate in which there has been a prior appointment, may be commenced more than [three] years after the decedent’s death…

Exceptions exist to this time bar, including late and limited probate proceedings:

[A]n informal appointment or a formal testacy or appointment proceeding may be commenced thereafter if no proceedings relative to the succession or estate administration has occurred within the [three] year period after the decedent’s death, but the personal representative shall have no right to possess estate assets as provided in [§] 3–709 beyond that necessary to confirm title thereto in the successors to the estate and claims other than expenses of administration shall not be presented against the estate.

See G. L. c. 190B, § 3-108.

Time Limits On Creditor Claims In Massachusetts

The Massachusetts Uniform Probate Code also provides specific time limits for creditor claims in G.L. c. 190B, § 3-803(a):

Except as provided in this chapter, a personal representative shall not be held to answer to an action by a creditor of the deceased unless such action is commenced within [one] year after the date of death of the deceased…

MassHealth Claims In Estates

Federal Medicaid law mandates that MassHealth operate and maintain an estate recovery program, so that in certain circumstances, MassHealth may recover money paid out as benefits during a member’s lifetime as a claim against the estate.  To this end, the Massachusetts Legislature has given MassHealth various advantages over other creditors.

First, MassHealth has priority status over other creditors when a personal representative pays out estate assets.  See G.L.c. 190B, § 3-805.

Second, in certain circumstances MassHealth is exempted from the general one-year limitation on creditor claims under Massachusetts law.

Pursuant to § 32, the division of medical assistance (division) may present claims against the estate in two ways that other creditors cannot: (1) within four months after the approval of the official bond of the personal representative, thereby extending the one-year deadline; and (2) by designating a public administrator5 in circumstances where more than one year has passed from the decedent’s date of death, the division determines it may have a claim against the estate, and a petition for administration of the estate or for admission to probate the will has not yet been filed. G. L. c. 118E, § 32 (b), (i). Section 32 also mandates that MassHealth be directly notified whenever a petition for probate or administration is filed, and that if the petitioner fails to notify MassHealth, “any person receiving a distribution of assets from the decedent’s estate shall be liable to the See G. L. c. 118E, § 32 (b) (allowing claims within four months of approval of personal representative).

Massachusetts Personal Representative Power To Pay Claims Is Extinguished After Three Years – No Exceptions

The personal representative argued that § 3-108(4) limits the personal representative so that no claims against the estate can be paid and that MassHealth is subject to both the ultimate three year time bar on creditor claims in § 3-108 (4) and the one-year creditor filing deadline in § 3-803 (a).

MassHealth argued that the specific provisions governing its ability to recover against estates exempt it from the § 3-803 (a) deadline and overcome the ultimate time limit in § 3-108, and it should therefore be able to recover from Kendall’s estate.  Specifically, MassHealth urged that it was entitled to present and recover claims after the three-year period so long as it files within four months after the personal representative has obtained a bond.

The Massachusetts Supreme Judicial Court considered the “plain and clear” language of § 3-108, stating:

We conclude that § 3-108 (4) bars claims made after three years and precludes a personal representative from paying any creditor claims in late and limited probate proceedings under G. L. c. 190B, § 3-108 (4). No exceptions have been included for MassHealth. Where the Legislature intended for differential treatment for MassHealth in the probate process, it did so expressly.

The statutory scheme devised by the Legislature established a relatively expeditious probate process to be concluded within three years. Section 3-108 expressly provides for a three-year “ultimate time limit.” This three-year ultimate time limit functions essentially as a statute of repose, allowing only very limited activity after the three years. On more than one occasion, we have characterized statutes of repose as having the effect of placing an “absolute time limit” on liability.

The three-year ultimate time limit ensures the orderly settlement and liquidation of estates in Massachusetts in a relatively expeditious manner. If the Legislature intended to create an exception for MassHealth to this ultimate time limit, it would have done so expressly in that particular provision. The Massachusetts Supreme Judicial Court refused to read in such an important exception inferentially, and noted:

MassHealth retains the unique ability to present timely claims from one year after death through the date when the “ultimate time limit” of § 3-108 is triggered. Indeed, MassHealth may present an otherwise timely claim even after three years, provided that the petition for an appointment of a personal representative was filed prior to the expiration of the “ultimate time limit” of § 3-108.

The Massachusetts Supreme Judicial Court acknowledged (as does the Massachusetts Legislature) the possibility of heirs waiting for the nonclaim period to kick in before commencing an estate proceeding, simply to avoid claims.  However, the risk of intentional delay is considered low, since beneficiaries in turn suffer from lack of proof of title to estate assets, and the inability to enjoy their inheritances.

In conclusion, the Massachusetts Supreme Judicial Court stated:

For the reasons discussed above, we conclude that G. L. c. 190B, § 3-803 (f), creates an exception for MassHealth to the general limitation on creditor claims laid out in § 3-803 (a), but does not create an exception to the ultimate time limit on the personal representative’s power to pay claims and creditors’ ability to bring claims laid out in § 3-108.

Therefore, the personal representative of the Massachusetts estate was not required to pay MassHealth’s claim.  MassHealth was not authorized to file notices of claims in estates under so-called “late and limited” petitions under G. L. c. 190B, § 3-108, nor was the personal representative authorized to pay such claims under clear Massachusetts law.