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In re Guardianship of Robbins

Court of Appeals of Indiana

July 26, 2018

In Re the Matter of Guardianship of Timothy A. Robbins, an Adult

          Appeal from the Johnson Superior Court, The Honorable Kevin Barton, Judge, Trial Court Cause No. 41D01-1301-GU-8

          Attorneys for Appellant Jeffrey S. Dible Maggie L. Smith Frost Brown Todd, LLC Indianapolis, Indiana Tamatha A. Stevens Stevens & Associates, P.C. Indianapolis, Indiana Jeffrey C. Eggers Jeffrey C. Eggers, P.C. Franklin, Indiana

          Attorneys for Amicus Curiae Indiana Chapter of the National Academy of Elder Law Attorneys Robert W. Fechtman Fechtman Law Office Indianapolis, Indiana Elizabeth A. Homes Law Office of Elizabeth A. Homes, LLC Indianapolis, Indiana

          Baker, Judge.

         [¶1] Timothy Robbins (Timothy) sustained catastrophic, permanent injuries from a car accident; he will require full-time care for the rest of his life. His father became his guardian, filed a lawsuit on Timothy's behalf, and reached a settlement agreement totaling over $17 million. Timothy's father asked that the trial court authorize the balance of the settlement agreement to be placed in a special needs trust. The trial court, expressing its disagreement with the legislative policy underlying special needs trusts, placed only $1 million into the trust and ordered the remaining funds be paid directly to the guardianship estate. Finding that the trial court exceeded the bounds of its authority and made errors of law in its ruling, we reverse and remand with instructions that the trial court direct the full, available amount of the settlement proceeds be placed into Timothy's special needs trust.


         [¶2] In January 2013, the vehicle being driven by then-42-year-old Timothy was side-swiped by a semi truck, resulting in Timothy being ejected from his vehicle. As a result of the accident, Timothy sustained a devastating traumatic brain injury, multiple skull and facial fractures, and additional serious injuries. He remained in a coma for many weeks. Timothy was eventually transferred to a nursing home, where he remains today with full-time care. His brain injuries and resulting dementia are catastrophic and have resulted in permanent and total impairment, including impairments in "intelligence, reasoning, self-care, adaptive functioning, orientation, executive functioning, memory, language skills, psychomotor functioning, and fine motor functioning." Appellant's App. Vol. II p. 112. Timothy will never again live independently and will continue to require full-time care for the rest of his life. Additionally, his medical team believes that his condition will continue to deteriorate with time.

         [¶3] On February 25, 2013, Timothy was adjudicated to be an incapacitated adult person. His father, Shelly Robbins (Guardian), was appointed to be the permanent guardian over Timothy and his estate. Guardian filed a lawsuit on behalf of Timothy against the tortfeasors responsible for the accident; a jury trial took place in July 2017. The jury found in favor of Timothy and awarded damages in the amount of $18.5 million. The defendants indicated an intent to appeal the verdict. Thereafter, the parties attended post-trial mediation. Guardian was willing to settle the case because Timothy had spent "almost five years now not getting some of the treatment and therapies that he needs to benefit him and [Guardian] felt it was in his best interests to get the case resolved . . . to provide Tim[othy] the care and treatment he needs sooner rather than later." Tr. Vol. II p. 13. The parties agreed to settle the case for $17.75 million.

         [¶4] After reaching the settlement agreement, Guardian retained an elder law attorney to help structure Timothy's finances to ensure that Timothy would be provided with the care he needs for the rest of his life. Guardian's concerns stemmed from the fact that following the accident, Timothy was receiving Medicaid and Supplemental Security Income (SSI). If the settlement proceeds were paid directly to Timothy, it would have caused him to lose eligibility for those benefits.

         [¶5] As will be more fully explained below, both the United States Congress and the Indiana General Assembly have enacted statutes allowing for the creation and funding of "special needs trusts," which permit a disabled person to shield assets that would otherwise affect Medicaid and SSI eligibility. These statutes were adopted, in part, to address the problem present in this case, where a disabled adult receives a large, lump sum payment from third-party litigation that would eliminate the availability of public benefits. Allowing disabled persons to shield these litigation proceeds in special needs trusts is based on the public policy determination that it is beneficial to allow a disabled person to have both public benefits and an additional source of financial support during the person's lifetime.

         [¶6] Special needs trusts are intended to supplement government benefits and provide for treatment, services, equipment, therapy, etc., that are not covered by Medicaid. Where a disabled person's future needs are unknown and unquantifiable, a special needs trust protects that person from a situation in which the litigation proceeds are insufficient to cover the person's medical care and needs over the course of his life. The flip side to a special needs trust is a statutory mandate that, upon the death of the disabled person, any assets remaining in the trust will be used to pay back to the State an amount equal to the total benefits paid to the disabled person. Only after the State is reimbursed in full may the remaining funds in the trust, if any, be distributed to the disabled person's heirs.

         [¶7] On December 22, 2017, Guardian asked that the trial court approve the settlement agreement; Guardian also sought authority to pay attorney fees and litigation expenses and to satisfy the lien asserted by Medicaid for medical care already provided to Timothy. After making all those payments, the net settlement to Timothy was $11.2 million. The structured settlement agreement provided that $4.5 million of the net amount would be funded through two annuities, providing Timothy guaranteed monthly payments for twenty-five years, and that the remaining $6.75 million would be paid in a lump sum. Also on December 22, 2017, Guardian sought authority to create and fund the Timothy Special Needs Trust with the $6.75 million lump sum.

         [¶8] The trial court held a hearing on Guardian's requests on December 28, 2017. There were no objections raised with respect to any of Guardian's requests. After hearing argument made by Guardian's attorneys, the trial court stated that it was "aware of the rules" regarding special needs trusts but that it disagreed with the legislative policy, explaining that "it's . . . the legal fiction of impoverishment which I'm having trouble buying into when we have 12 million sitting here." Id. at 27.

         [¶9] On January 8, 2018, the trial court approved Guardian's requests to compromise and settle Timothy's personal injury claim in the amount of $17.75 million, to pay the personal injury action attorney fees and expenses, and to satisfy the existing Medicaid lien. The trial court denied Guardian's request to fund the Timothy Special Needs Trust in the manner requested by Guardian. Instead, the trial court allowed only $1 million of the $6.75 million to be placed in the trust, ...

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