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State seeks to impose lien on inheritance

In Cavanaugh v. Geballe (2nd. Cir. 3/17/2022), Cavanaugh, a Connecticut resident, was covered by an Affordable Care Act insurance policy. When his grandmother’s Will was administered, the Department asked the probate court to honor their lien on grandmoter’s estate. The probate court held a hearing, after which it determined that fifty percent of Cavanaugh’s distributive share, which was less than the Commissioner’s claim for $57,915, “would go toward repayment of [Cavanaugh’s] debt to [the Commissioner].” Cavanaugh then filed a Section 1983 action in the United States District Court for the District of Connecticut.

The district court abstained, applying the Younger doctrine. On appeal to the Second Circuit, the Court foudn the “District Court mistakenly reasoned that any action that invalidates the probate court’s order recognizing the validity of the Commissioner’s statutory lien would interfere with the probate court’s ability to oversee the administration of the estate, which the District Court viewed as integral to the probate court’s performance of its judicial function.”

Here, the probate court’s order recognizing the Commissioner’s lien and standing to participate in the proceedings neither “lies at the core of the administration of a State’s judicial system,” Juidice, 430 U.S. at 335, nor implicates a process that aids the state court’s core ability to function or force the parties to comply with its order. To the contrary, the probate court’s order merely affects how the executor administers the estate. In this case, moreover, there is no record of non-compliance with the probate court’s orders, and neither party challenges the probate court’s basic authority to enforce its orders or adjudicate the matters before it.

The Second Circuit vacated the District Court’s judgment and remand for the District Court to consider in the first instance the parties’ arguments regarding the probate exception to federal jurisdiction and, if necessary, the merits of Cavanaugh’s claims. No where in the decision is any mention of Ark. HHS v. Ahlborn which should prevent any lien from being placed on Cavanaugh’s estate prior to his death.

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