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Estate Closed, But Bonding Company Still Liable On Claim

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Louella Starkweather, a California resident, died in 1994. She was apparently not receiving care from the state’s Medicaid program (called “Medi-Cal” in California) at the time of her death, but had received Medi-Cal assistance for almost 18 years ending two years before her death. The total amount of her Medi-Cal bill was $137,997.48.

Ms. Starkweather’s granddaughter Darlene Phillips filed a probate of her grandmother’s estate. In 1995, she reported to the probate court that the estate totaled $145,528.21, that she and her brother were the sole heirs, and that Ms. Starkweather had never received Medi-Cal benefits.

The court appointed Ms. Phillips to be Personal Representative, and required that she post a surety bond of $160,000; the purpose of the surety bond was to make sure Ms. Phillips discharged her duties properly. Based on Ms. Phillips’ representations, the probate court approved distribution of the remaining estate balance, about $116,300 in cash, to Ms. Phillips and her brother.

Sixteen months after the probate proceeding was closed, the Medi-Cal program learned of the distribution to Ms. Starkweather’s heirs. The state brought two separate actions to try to reclaim the amount of its Medi-Cal subsidy–one in the probate proceeding itself and one by a separate lawsuit filed against Ms. Phillips and the bonding company which had ensured her as Personal Representative of Ms. Starkweather’s estate. Although any judgment against the bonding company could theoretically be recovered from Ms. Phillips and her brother, the possibility of securing return of any of Ms. Starkweather’s assets was reduced by the fact that Ms. Phillips had since declared bankruptcy.

In one case, the court ruled that the state could recover from Ms. Phillips bond; in the other, the court dismissed the state’s claim and held that the state could only pursue Ms. Phillips and her brother, since they received the proceeds of the estate The California Court of Appeals was asked to resolve the conflicting holdings.

The appellate judges decided that the bonding company would have to pay back the Medi-Cal claim. Noting that California probate law permits a claim against the Personal Representative (even after the estate has been closed) if there is evidence of fraud, the judges determined that the state’s claim should not have to be subject to Ms. Phillips’ subsequent bankruptcy.

Interestingly, the Medi-Cal claim was originally filed against Ms. Phillips, the bonding company andthe probate lawyer who represented Ms. Phillips. As to the lawyer, the state had argued that he knew (or should have been able to easily figure out) that Ms. Phillips was misrepresenting the facts, and that he in effect assisted her to commit her fraud. The claim against the lawyer was dismissed in the trial court, and the state did not appeal that part of the case. Estate of Starkweather, Cal. Appeals, First District, June 5, 1998.

In Arizona, the result would likely have been different, though the same principles govern administration of probate proceedings. Where a Personal Representative defrauds the Probate Court (and creditors), a claim against her will not be barred just because the estate has been closed. If the Personal Representative was required to post a bond (few Probate cases require bonds under Arizona law), the bonding company would have been liable for the claim just as in California.

Arizona Medicaid law differs from the California law in Starkweather, however. Under Arizona law the state has a claim against the estate of a “member” of the Medicaid program; someone who has previously received benefits but no longer does so is not a member. In Arizona the state should not have had a claim against Ms. Starkweather’s estate.

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Robert B. Fleming


Robert Fleming is a Fellow of both the American College of Trust and Estate Counsel and the National Academy of Elder Law Attorneys. He has been certified as a Specialist in Estate and Trust Law by the State Bar of Arizona‘s Board of Legal Specialization, and he is also a Certified Elder Law Attorney by the National Elder Law Foundation. Robert has a long history of involvement in local, state and national organizations. He is most proud of his instrumental involvement in the Special Needs Alliance, the premier national organization for lawyers dealing with special needs trusts and planning.

Robert has two adult children, two young grandchildren and a wife of over fifty years. He is devoted to all of them. He is also very fond of Rosalind Franklin (his office companion corgi), and his homebound cat Muninn. He just likes people, their pets and their stories.

Elizabeth N.R. Friman


Elizabeth Noble Rollings Friman is a principal and licensed fiduciary at Fleming & Curti, PLC. Elizabeth enjoys estate planning and helping families navigate trust and probate administrations. She is passionate about the fiduciary work that she performs as a trustee, personal representative, guardian, and conservator. Elizabeth works with CPAs, financial professionals, case managers, and medical providers to tailor solutions to complex family challenges. Elizabeth is often called upon to serve as a neutral party so that families can avoid protracted legal conflict. Elizabeth relies on the expertise of her team at Fleming & Curti, and as the Firm approaches its third decade, she is proud of the culture of care and consideration that the Firm embodies. Finding workable solutions to sensitive and complex family challenges is something that Elizabeth and the Fleming & Curti team do well.

Amy F. Matheson


Amy Farrell Matheson has worked as an attorney at Fleming & Curti since 2006. A member of the Southern Arizona Estate Planning Council, she is primarily responsible for estate planning and probate matters.

Amy graduated from Wellesley College with a double major in political science and English. She is an honors graduate of Suffolk University Law School and has been admitted to practice in Arizona, Massachusetts, New York, and the District of Columbia.

Prior to joining Fleming & Curti, Amy worked for American Public Television in Boston, and with the international trade group at White & Case, LLP, in Washington, D.C.

Amy’s husband, Tom, is an astronomer at NOIRLab and the Head of Time Domain Services, whose main project is ANTARES. Sadly, this does not involve actual time travel. Amy’s twin daughters are high school students; Finn, her Irish Red and White Setter, remains a puppy at heart.

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Matthew M. Mansour


Matthew is a law clerk who recently earned his law degree from the University of Arizona James E. Rogers College of Law. His undergraduate degree is in psychology from the University of California, Santa Barbara. Matthew has had a passion for advocacy in the Tucson community since his time as a law student representative in the Workers’ Rights Clinic. He also has worked in both the Pima County Attorney’s Office and the Pima County Public Defender’s Office. He enjoys playing basketball, caring for his cat, and listening to audiobooks narrated by the authors.