Pack v. Osborn, 117 Ohio St.3d 14, 2008-Ohio-90
In 2004, Charlotte Osborn, a physically and mentally disabled individual, was determined ineligible for home-based Ohio Medicaid services (Waiver benefits) because of her beneficial interest in a trust that was set up by her mother in 1987. The terms of the trust indicated that income and principal could be utilized for Ms. Osborn’s supplemental needs over and above those met by public assistance benefits (therefore, the trust was intended to supplement, not supplant governmental benefits). However, Ohio’s Medicaid regulations regarding trust beneficiaries changed at least eight times after the trust was created.
Loretta Pack, the Trustee, sought William Browning’s assistance in having the trust assets declared unavailable to Ms. Osborn. While the trial court ruled that the trust was a countable resource for Medicaid purposes because the Trustee could invade trust principal for Ms. Osborn’s medical care, Ms. Pack appeal and the Ohio Court of Appeals reversed. They held that the trust was not a countable resource because eligibility should be based on the eligibility rules in effect at the date of the creation of the trust. The court further found that Ms. Osborn’s mother, the trust creator, intended to provide Ms. Osborn “with a source of supplemental support that would not jeopardize her access to basic assistance from Medicaid.”
The case was then appealed to the Ohio Supreme Court. The Ohio Supreme Court reversed the Court of Appeals decision, ruling that while the trust itself must be interpreted based on the intent of the Grantor when the trust was created, Ms. Osborn’s eligibility for Medicaid benefits depends on the Medicaid eligibility rules in effect on the date of her application for benefits. The court notes that the legislature has frequently amended eligibility provisions that allowed individuals to receive Medicaid benefits who could otherwise pay for them. The court states, “The rules regarding eligibility for public assistance are not forever locked into place by the establishment of a trust.”