Bulletin: AL2019001

Dear Associates:

I. Introduction

Alabama Act 2019-489 was signed into law on June 10 of this year and became effective September 1, 2019. 

The legislative purpose of the Act is to “require that specific notice be provided to Medicaid at the commencement of a probate proceeding and bar payments of claims in the sixth order of preference as well as summary distributions until proof of such notice has been filed and Medicaid has timely responded to the notice; and to provide a uniform mechanism for Medicaid to commence probate proceedings around the state.”

The Act will certainly have an impact on the Alabama probate process as well as real property transactions involving estates. While the Act seems to be limited in application to cases filed under the Alabama Small Estates Act (Code of Alabama (1975) Section 43-2-690, et seq), a provision of the Act that creates some ambiguity is contained in Section 1(i) where the following appears: “For the purpose of this section, personal representative shall have the same meaning as provided in Section 43-8-1,” which is a section found in the Probate Code definitions. Personal representative is defined in that section to include “executor, administrator, successor personal representative, special administrator, and persons who perform substantially the same function under the law governing their status.” That definition, taken with the legislative intent “to require that specific notice be provided to Medicaid at the commencement of a probate proceeding” broadens the application of the Act to include all estates, both testate and intestate, irrespective of the size. Therefore, in order to minimize the risk associated with potential Medicaid liens, the Act should be applied as set forth below. 

Commencing with probate proceedings for estates filed on September 1 and thereafter, the Act requires every personal representative initiating a proceeding under the Alabama Small Estates Act to give notice of his or her appointment to the Alabama Medicaid Agency (hereinafter referred to as “AMA”). Such notice shall include the following:  

-the full legal name of the deceased;

-the date of birth of the deceased;

-the date of death of the deceased;

-the social security number of the deceased;

-the marital status of the deceased at the time of death;

-the name, address, and phone number of the spouse of the deceased, if applicable; 

-the court in which a probate estate has been opened;

-the probate case number;

-the date on which letters testamentary or letters of administration were issued by the probate court;

-the name, address, and telephone number of the person giving the notice; and

-the type of probate proceeding.

This notice must be mailed by certified mail directly to AMA for every probate action. The personal representative must file with the probate court a copy of the notice with an affidavit of certified mailing of notice.  

The Act prohibits payment of distributions from the estate and debts of the decedent or of the estate until the notice has been filed in the probate court AND 30 days having passed since the agency received the notice. AMA has thirty (30) days from the date it received notice in which to respond to the notice by the personal representative. Otherwise, the agency loses the right to take action. A response may take one of the following forms:

-a claim;

-a waiver of claim; or

-a statement that no amount is due.

AMA is authorized to file a claim against the estate of the Medicaid recipient for the amount of any medical assistance payments made on behalf of the recipient, with exceptions.  

While AMA has always had the same right to force an administration of a decedent that other creditors have, the Act specifically authorizes AMA to petition to open the probate estate of a Medicaid recipient by filing a petition to appoint a third party administrator and issue letters of administration. 

II. Title Insurance and Underwriting Implications of the Act

A. Transactions with Estates Filed Under the Alabama Small Estates Act

Commencing with sales out of all estates in which the Petition for Letters Testamentary or Petition for Letters of Administration is filed in Probate Court on September 1, 2019, and thereafter, determine whether the probate proceedings are being commenced under the Alabama Small Estates Act (Code of Alabama (1975) Section 43-2-690, et seq.). If so, determine whether the AMA has been given the requisite notice. If the notice has been provided, the sale must not close until after 30 days from the date the AMA received the statutory notice. The date the Agency received the notice will be reflected in the return receipt or, if the Agency develops an electronic system for the purpose of providing notice in accordance with the Act, on the electronic serialized certificate issued by the Agency. Review the court file after the expiration of thirty (30) days from the date AMA received notice to determine whether AMA has filed a response. If no response is yet filed, add the following requirement:

Response from the Alabama Medicaid Agency to the notice of appointment of personal representative as required by Alabama Act 2019-489 in the case styled ______________________, Probate Court of ______________ County, Alabama, Case Number _______________________.

If the court file does not contain evidence that the Agency has received the requisite notice, make the following requirement in Schedule B-1:

Proper filing of the Returned Receipt or, in the alternative, the serialized certificate issued by the Alabama Medicaid Agency, evidencing receipt by the Alabama Medicaid Agency of the statutory notice that probate proceedings for _________________________, deceased, have commenced in the Probate Court of ___________ County, Alabama, Case Number ______________. 

If AMA responds by filing a claim, make the following requirement in the Commitment:

Properly executed and filed release of the claim of the Alabama Medicaid Agency in the amount of $_______________, dated ___________________, to be filed in that certain case styled _________________, Probate Court of _______________ County, Alabama, Case Number _______.

It is imperative to remember – the transaction must not close until after AMA has responded.

B. Transactions with Estates NOT filed under the Alabama Small Estates Act

Review the death certificate of the decedent. If, from the face of the death certificate, it appears that the decedent had been a resident of a medical institution or nursing facility, make the following requirements in Schedule B-1 of your commitment:

Sworn affidavit from  __________________, the personal representative of _________________________, deceased, Probate Court of __________ County, Alabama, Case Number ____________, to the effect that the decedent did not receive assistance from, nor was any of his/her medical expenses paid by, the Alabama Medicaid Agency.

If the decedent was the recipient of assistance from Medicaid, make the following requirements:

a) Notice of appointment of ________________ as personal representative of the estate of _______________, deceased, Probate Court of __________________ County, Alabama, Case Number ________________, to the Alabama Medicaid Agency.

b) Proper filing of the Returned Receipt or, in the alternative, the serialized certificate issued by the Alabama Medicaid Agency, evidencing receipt by the Alabama Medicaid Agency of the statutory notice that probate proceedings for _________________________, deceased, have commenced in the Probate Court of ___________ County, Alabama, Case Number ______________.

Review the court file after the expiration of thirty (30) days from the date AMA received notice to determine whether AMA has filed a response. The transaction must not close until after AMA has responded. If AMA responds by filing a claim, add the following requirement to your Commitment:

Properly executed and filed release of the claim of the Alabama Medicaid Agency in the amount of $_______________, dated ___________________, to be filed in that certain case styled _________________, Probate Court of _______________ County, Alabama, Case Number _______.

C. Transactions with Heirs of Decedents with no Probate Proceedings

While the Agency has always had the authority to force an administration like any other creditor, it is now more important than ever to identify possible situations where a Medicaid estate claim can be made. In the event title is in one or more individuals who have died and circumstances are such that you have been authorized to proceed without a formal administration or probate of a last will and testament:

1. obtain a copy of the death certificate of the decedent(s);

2. review the death certificate(s) to determine whether the death occurred as an in-patient in a hospital, medical institution, nursing facility or other intermediate care facility.

If, from a review of the death certificate, death occurred as an in-patient in a nursing facility or other intermediate care facility, or it appears from the death certificate that the decedent had been a resident of a nursing facility or other intermediate care facility, make the following requirements in Schedule B-1 of your commitment:

a) Affidavit from two unrelated and disinterested third parties as to the survivors and heirs at law of ___________________________, deceased, the contents of which must be in compliance with the Alabama Rules of Evidence, and which must be approved in advance by the Company.

b) Sworn affidavit and indemnity from the heirs at law of _________________, deceased, to the effect that the decedent did not receive assistance from, nor was any of his/her medical expenses paid by, the Alabama Medicaid Agency. 

If the heirs disclose by affidavit or otherwise that the decedent was a recipient of assistance from AMA, AMA must be contacted to determine whether it is seeking reimbursement. You must be provided with written evidence from AMA that is is not seeking reimbursement. If it is seeking reimbursement, you must be provided with written evidence from AMA of the amount it is seeking. 

If you have any questions relating to this or other bulletins, please contact the Alabama State Office for assistance.

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