Medicaid Estate Recovery Beyond Probate Deadlines: Independent Heir Actions Under § 53‑6‑167(2), MCA

I. Introduction

The Montana Supreme Court’s decision in Montana Department of Public Health and Human Services v. Johnson, 2025 MT 276, clarifies and significantly strengthens the State’s Medicaid estate recovery powers. The Court holds that the Department of Public Health and Human Services (the “Department”) may pursue a statutory recovery action directly against a person who received property from a deceased Medicaid recipient under § 53‑6‑167(2), MCA, even if the Department failed to file a timely creditor’s claim in the decedent’s probate estate under § 72‑3‑803, MCA.

Equally important, the Court holds that such a later, independent action is not barred by issue preclusion (collateral estoppel) arising from the probate court’s prior rejection of the Department’s untimely creditor’s claim. The decision draws a sharp doctrinal line between:

• A claim against the estate in probate under § 53‑6‑167(1), MCA; and
• A claim against a person who received property from the deceased (heir, survivor, beneficiary, etc.) under § 53‑6‑167(2), MCA.

The opinion is a key precedent in Montana on the interaction between probate limitations, Medicaid estate recovery, statutory interpretation, and issue preclusion.

II. Case Background

A. Parties and Facts

• Decedent: Florence Pound (“Pound”), died intestate on April 4, 2023, at age 77.
• Heir / Respondent: Her daughter, Minta Y. Johnson (“Johnson”), the sole heir.
• Petitioner / Appellant: The Montana Department of Public Health and Human Services (“Department”).

During her lifetime, Pound received Montana Medicaid benefits totaling $5,360.89 after age 55—payments which fall within “recoverable medical assistance” under § 53‑6‑165(4)(a), (ii), MCA. At death, Pound’s principal asset was her home in Flathead County, netting about $200,000 after encumbrances.

On May 1, 2023, Johnson initiated an informal probate of Pound’s estate in the Eleventh Judicial District Court (Flathead County) and was appointed personal representative. She published a Notice to Creditors on May 12, 19, and 26, 2023, triggering the four‑month claim window under § 72‑3‑801 and § 72‑3‑803, MCA, for creditors to present claims against the estate.

The Department presented its “Notice of a Creditor’s Claim” on September 13, 2023—one day after the four‑month period expired. On March 28, 2024, the probate court denied the Department’s claim as untimely, and on April 30, 2024, it approved Johnson’s final accounting and distributed the roughly $200,000 in net proceeds from the sale of the home to Johnson as sole heir. The Department’s petition for allowance of its creditor’s claim was denied.

B. Procedural History

1. Probate proceeding (Eleventh Judicial District – Flathead County):
   • Johnson, as personal representative, published notice to creditors.
   • The Department’s creditor’s claim under § 72‑3‑803, MCA, was one day late.
   • The probate court denied the claim as untimely and later approved final distribution to Johnson.
2. Independent action in district court (Fourth Judicial District – Missoula County):
   • On May 1, 2024, the Department filed a complaint against Johnson personally, relying on § 53‑6‑167(2), MCA.
   • The theory: Johnson, having received estate property by distribution, is independently liable up to the value of property received or the amount of Medicaid benefits, whichever is less.
   • On cross‑motions for summary judgment, the District Court dismissed the complaint with prejudice.
   • The District Court held that:
     • The four‑month limitation for creditor claims under § 72‑3‑803, MCA, barred the Department’s later suit; and
     • Issue preclusion (collateral estoppel) barred the Department because the probate court had already rejected the Department’s claim involving Pound’s estate.
3. Appeal to the Montana Supreme Court:
   • The Department appealed the dismissal.
   • The case was submitted on briefs October 15, 2025, and decided December 2, 2025.

III. Summary of the Supreme Court’s Decision

The Montana Supreme Court reversed the District Court and remanded with instructions to enter judgment for the Department.

A. Holding on Issue 1 – Independent Action Against Heir Not Barred

The Court held that § 53‑6‑167, MCA, provides alternative and cumulative recovery paths for the Department:

• Under subsection (1), a mandatory duty to file a claim against the decedent’s estate within the probate claim period; and
• Under subsection (2), a separate and distinct authority to pursue a claim against a person who has received property from the deceased recipient “by distribution or survival.”

Subsection (6) expressly allows the Department to seek recovery under subsection (1) or (2), or both, “until its claim is satisfied in full.” The Court concluded that missing the probate creditor’s claim deadline under § 72‑3‑803, MCA, does not bar the Department from later suing the heir under § 53‑6‑167(2), MCA.

B. Holding on Issue 2 – Issue Preclusion Does Not Apply

The Court further held that the later action against Johnson personally was not barred by issue preclusion because:

• The probate court’s ruling concerned only the timeliness of a creditor’s claim against the estate under probate statutes, not the Department’s distinct statutory claim against a person who received property by distribution under § 53‑6‑167(2), MCA.
• A district court sitting in probate has limited statutory jurisdiction and lacks authority to adjudicate the Department’s equitable/statutory recovery claim under § 53‑6‑167(2), MCA.
• Therefore, the “identical issue” element of issue preclusion was not satisfied.

The Supreme Court ordered the District Court to enter judgment in favor of the Department for $5,360.89—the amount of recoverable medical assistance that Pound received and which Johnson indirectly obtained through her inheritance.

IV. Statutory and Doctrinal Framework

A. Medicaid Estate Recovery in Montana

Montana’s Medicaid program, jointly funded by state and federal government, is administered under Title XIX of the Social Security Act. Federal law (42 U.S.C. § 1396p) requires states to adopt estate recovery programs to recoup certain Medicaid expenditures after the death of recipients, especially those over age 55.

Montana’s estate recovery provisions appear in:

• § 53‑6‑165, MCA: Defines “recoverable medical assistance” as payments for services or insurance costs for a recipient who was at least 55 when the service was provided (or as otherwise allowed by federal law).
• § 53‑6‑167, MCA: Establishes two recovery mechanisms:
  1. § 53‑6‑167(1): A mandatory creditor’s claim against the recipient’s estate in probate, to be filed within the time set by the notice to creditors.
  2. § 53‑6‑167(2): A discretionary claim against any person who has received property of the recipient by distribution or survival, up to the lesser of (a) the amount of recoverable medical assistance or (b) the value of the property received. The Department may bring an action in district court to collect.
• § 53‑6‑167(5), MCA: Defines “property of a deceased recipient received by distribution or survival” broadly to include probate distributions and a variety of nonprobate transfers.
• § 53‑6‑167(6), MCA: Authorizes the Department to seek recovery under subsection (1) or (2), or both, “until its claim is satisfied in full.”

B. Probate Creditor Claims and Time Limits

Under Montana’s Uniform Probate Code:

• § 72‑3‑801, MCA: Requires the personal representative to publish a notice to creditors.
• § 72‑3‑803, MCA: Sets a strict time limit (generally four months from first publication) for most claims against the estate to be presented, after which untimely claims against the estate are barred.

Johnson argued that once the Department missed this four‑month window, it was forever barred from recouping Medicaid benefits relating to Pound’s estate, whether from the estate itself or the heir. The Supreme Court rejected that position.

V. Analysis of the Court’s Legal Reasoning

A. Standard of Review and Statutory Construction

The Court reviewed the grant of summary judgment de novo, applying the same standard under M. R. Civ. P. 56(c) as the district court (Pennell v. Nationstar Mortg., LLC, 2022 MT 235, ¶ 7; Denturist Ass’n of Mont. v. State, 2016 MT 119, ¶ 7). Summary judgment is appropriate where there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law.

Interpretation of statutes and the application of issue preclusion are reviewed for correctness (Denturist Ass’n, ¶ 8; Baltrusch v. Baltrusch, 2006 MT 51, ¶ 11).

In construing statutes, the Court reaffirmed several interpretive principles:

• Courts must “ascertain and declare what is in terms or in substance contained” in a statute, not insert what has been omitted or omit what has been inserted (§ 1‑2‑101, MCA; Pennell, ¶ 10; Mont. Vending, Inc. v. Coca-Cola Bottling Co., 2003 MT 282, ¶ 21).
• When the statutory language is plain and unambiguous, the plain meaning controls (Pennell, ¶ 10).
• Statutes should be construed to avoid absurd results if a reasonable interpretation can avoid them (Mont. Shooting Sports Ass’n, Inc. v. State, 2008 MT 190, ¶ 11).
• Statutes on the same subject should be harmonized to give effect to each, and courts presume the Legislature does not enact meaningless or useless legislation (Mont. Shooting Sports, ¶¶ 11, 15).

B. Issue 1 – Independent Heir Action Under § 53‑6‑167(2), MCA

1. The Text of § 53‑6‑167(6), MCA – “or,” “or both,” and “until satisfied in full”

The Court began its analysis with § 53‑6‑167(6), MCA:

“The department may seek recovery under subsection (1) or (2), or both, with respect to a deceased recipient until its claim is satisfied in full. Upon full satisfaction of its claim, the department may not seek further recovery …”

This provision was decisive. It expressly contemplates:

• Two distinct recovery avenues: against the estate (§ 53‑6‑167(1)) and against those who receive property by distribution or survival (§ 53‑6‑167(2));
• The Department’s ability to use one or the other, or both; and
• Continuing recovery efforts “until its claim is satisfied in full,” at which point recovery must cease and releases must be issued.

Johnson argued for a reading under which the Department’s omission in probate (missing the creditor’s claim deadline) closed off all later remedies, including subsection (2). The Court rejected this as inconsistent with the ordinary, disjunctive meaning of “or,” and the explicit phrase “or both,” and as contrary to the statute’s remedial purpose.

To read subsection (6) as authorizing only a single exclusive recovery path—contingent on success in probate—would, in the Court’s view, require ignoring or rewriting statutory language, contrary to § 1‑2‑101, MCA.

2. The Mandatory “Shall” in § 53‑6‑167(1), MCA

Section 53‑6‑167(1), MCA, states that after the recipient’s death, the Department “shall” execute and present a claim against the estate within the time specified in the published notice to creditors.

The Court agreed that “shall” is mandatory, not permissive, citing State v. Knowles, 2025 MT 107, ¶ 21, and State v. Kortan, 2022 MT 204, ¶ 21, which recognize that “shall” and “must” are mandatory terms in Montana statutes.

However, the Court drew a crucial distinction:

• The Department’s duty to attempt a timely probate claim is mandatory; but
• The existence of the alternative statutory cause of action under § 53‑6‑167(2), MCA, is not conditioned on the Department’s perfect compliance with subsection (1).

In other words, the Legislature imposed an obligation on the Department but did not provide that failure to meet that obligation would extinguish the Department’s separate, textually independent remedy against those who receive the decedent’s property.

3. Functional Incompatibility Between Probate Deadlines and Medicaid Billing Cycles

The Court highlighted a practical reason why reading § 72‑3‑803, MCA, as an absolute bar to all Medicaid recovery would be untenable. Under Admin. R. M. 37.85.406(1) (2018), medical providers have up to one year from the date of service to submit claims to the Department for Medicaid reimbursement. By contrast, most estate creditor claims must be presented within four months of the first published notice to creditors (§ 72‑3‑803, MCA).

Because provider billing may extend beyond the four‑month probate window, the Department may not always know the full amount of Medicaid services rendered near the end of a recipient’s life within that timeframe. The Legislature could not have intended the program’s recovery mechanism to be effectively nullified in many cases by this timing mismatch.

Therefore, the Court reasoned, § 53‑6‑167(2), MCA, provides a necessary and intended “alternative vehicle” to fulfill the Department’s statutory duty to recover Medicaid benefits correctly paid to deceased recipients, harmonizing Medicaid program administration with Montana probate law.

4. Breadth of the Heir‑Liability Provision in § 53‑6‑167(2) and (5), MCA

Section 53‑6‑167(2), MCA, authorizes the Department to execute and present a claim:

“against a person who has received property of the recipient by distribution or survival for an amount equal to the recoverable medical assistance paid on behalf of the recipient or the value of the property received by the person from the recipient by distribution or survival, whichever is less. … The department may bring an action in district court to collect upon a claim under this subsection (2).”

Section 53‑6‑167(5)(a), MCA, defines “property of a deceased recipient received by distribution or survival” expansively, including:

• Assets in which the recipient had any right, title, or interest immediately before death;
• Property passing to survivors, heirs, assignees, or beneficiaries via:
  • Joint tenancy;
  • Tenancy in common;
  • Right of survivorship;
  • Life estates;
  • Living trusts; or
  • “other arrangement.”

Section 53‑6‑167(5)(b)(i), MCA, clarifies that “property received by distribution” includes “property from a deceased recipient’s estate distributed through a probated estate,” which is precisely how Johnson received approximately $200,000 from Pound’s estate.

The Court underscored that Johnson’s interpretation—treating the probate bar as wiping out all subsequent claims—would render much of § 53‑6‑167(2) and (5) meaningless, contrary to the canon that legislative enactments are presumed to have effect (Mont. Shooting Sports, ¶ 15).

5. Public Policy and the Nevada Ullmer Decision

The Department relied on the Nevada Supreme Court’s decision in State Dep’t of Human Res., Welfare Div. v. Estate of Ullmer, 87 P.3d 1045 (Nev. 2004), which Montana’s Court favorably cited. In Ullmer, the Nevada court emphasized:

• The federal mandate requiring Medicaid estate recovery as a condition of federal funding;
• The policy concern that Medicaid funding may become insufficient given an aging population; and
• The legitimacy of state efforts to recover correctly paid benefits so that funds are available for other individuals in need.

Montana’s Court invoked Ullmer to illustrate that § 53‑6‑167, MCA, similarly serves a legitimate and important governmental interest: recouping Medicaid expenditures from assets left by the recipient so that limited public funds can continue to support the most vulnerable.

The Court also addressed due process concerns raised by Johnson. It noted that:

• An heir is still fully protected by ordinary litigation safeguards in a district court action under § 53‑6‑167(2), MCA.
• The Department must prove both:
  • That the decedent received “recoverable medical assistance” (§ 53‑6‑165(4)(a), MCA); and
  • That the defendant is a “person who has received property” from the deceased, within the broad statutory definition.

Thus, heirs are not exposed to arbitrary or automatic liability; they may contest whether:

• The assistance was properly characterized as “recoverable” (e.g., age at time of service);
• They in fact received property from the decedent; and
• The value of the property they received supports the amount claimed.

6. The Court’s Ultimate Conclusion on Issue 1

The Supreme Court concluded that construing the four‑month probate claim limit in § 72‑3‑803, MCA, as a bar to recovery under § 53‑6‑167(2), MCA:

• Would contradict the plain and explicit language of § 53‑6‑167(6), MCA (“or (2), or both, until its claim is satisfied in full”);
• Would render the heir‑liability mechanism largely meaningless; and
• Would frustrate the Department’s statutory duty to recover Medicaid payments correctly paid.

Accordingly, the Department’s failure to file a timely creditor’s claim in the probate proceeding does not prevent it from bringing a separate action against Johnson under § 53‑6‑167(2), MCA.

C. Issue 2 – Issue Preclusion (Collateral Estoppel)

1. The General Test for Issue Preclusion

Relying on Denturist Ass’n and Baltrusch, the Court restated the four elements of issue preclusion:

1. The prior adjudication decided the identical issue raised in the present adjudication;
2. The prior adjudication resulted in a final judgment on the merits;
3. The party against whom preclusion is asserted was a party (or in privity with a party) to the prior adjudication; and
4. That party had a full and fair opportunity to litigate the issue in the earlier proceeding.

The first element—identity of issues—requires a substantive examination of the pleadings, evidence, and surrounding circumstances (Baltrusch, ¶ 25; Holtman v. 4‑G’s Plumbing & Heating, Inc., 264 Mont. 432, 872 P.2d 318 (1994)). The bar extends to all questions essential to the judgment and “actively determined” in the prior action (Haines Pipeline Constr., Inc. v. Mont. Power Co., 265 Mont. 282, 876 P.2d 632 (1994)).

2. Limited Jurisdiction of Probate Courts

To analyze whether the probate court’s ruling could preclude the subsequent action, the Court relied on In re Estate of Cooney, 2019 MT 293, ¶ 7, and State ex rel. Reid v. Fifth Jud. Dist. Court, 126 Mont. 586, 256 P.2d 546 (1953). These cases establish:

• A district court sitting in probate has only the special, limited powers expressly conferred by statute.
• Probate proceedings are “special proceedings,” not general civil actions at law or equity.
• A probate court lacks jurisdiction to consider matters “equitable in nature” or otherwise beyond statutory probate administration.

Applying this framework, the Court observed that the probate court’s authority extended only to:

• Administration of the estate;
• Processing timely creditor claims against the estate; and
• Distribution of estate property.

It did not extend to adjudicating the Department’s separate statutory equitable claim against a person who later receives estate property under § 53‑6‑167(2), MCA, and which by statute is to be brought “in district court” as a civil action.

3. Non‑Identity of Issues

Johnson argued that the issues were identical: in both the probate and subsequent action, the Department sought to recover the same Medicaid payments allegedly owed in connection with Pound’s estate. The Court disagreed, distinguishing the issues as follows:

• Probate Proceeding: The issue before the probate court was whether the Department had filed a timely creditor’s claim against the estate under § 72‑3‑803, MCA.
• Later District Court Action: The issue was whether Johnson is “a person who has received property of the recipient by distribution or survival for an amount equal to the recoverable medical assistance paid on behalf of the recipient” under § 53‑6‑167(2), MCA, and whether the Department is entitled to a money judgment against her personally up to that amount.

Importantly, Johnson could not be such a “person who has received property … by distribution or survival” until after:

1. The probate court had approved her final accounting; and
2. The estate’s assets—including the home sale proceeds—had been distributed to her.

Thus, at the time the probate court rejected the late creditor’s claim, Johnson had not yet received the estate property as heir in the final sense contemplated by § 53‑6‑167(2), MCA. The factual predicate for the later statutory cause of action did not yet exist, and the probate court could not have considered or resolved that claim.

Moreover, given the probate court’s jurisdictional limitations, it lacked the legal authority to adjudicate an independent, equitable/statutory recovery claim against an heir, as opposed to a creditor’s claim against the estate itself. For that reason alone, it could not have decided the “identical issue” later presented in the general jurisdiction district court action.

4. Privity Issue Left Unresolved

The Department also argued that Johnson, when acting as personal representative in the probate proceeding, was not in privity with herself as an individual defendant in the later action, because the personal representative owes fiduciary duties to the estate and its creditors, whereas the individual heir’s interest is personal and potentially adverse.

The Court found it unnecessary to decide this nuanced privity question because the “identical issue” element already failed, and the probate court never had jurisdiction to entertain the Department’s § 53‑6‑167(2) claim. The resolution of privity would not change that the issues were distinct.

5. Application to the Merits in the Present Action

On the merits, there was no dispute that:

• Pound received $5,360.89 in Medicaid benefits after age 55—“recoverable medical assistance” under § 53‑6‑165(4)(ii), MCA;
• Johnson inherited approximately $200,000 from Pound’s estate—far exceeding the amount of recoverable medical assistance; and
• Johnson did not challenge the accuracy of the Medicaid expenditures themselves.

Under § 53‑6‑167(2), MCA, the Department is entitled to recover “the lesser of”:

• The amount of recoverable medical assistance; or
• The value of property received by the person from the recipient.

Here, the lesser amount is $5,360.89, so the Court held that the Department had a valid statutory claim for that amount against Johnson personally and directed the District Court to enter judgment accordingly.

VI. Precedents Cited and Their Influence

A. Summary Judgment and Statutory Interpretation Cases

• Pennell v. Nationstar Mortg., LLC, 2022 MT 235 Cited for:
  • De novo review of summary judgment;
  • Plain‑language interpretive rule.
  It reaffirms that where statutory language is clear, Montana courts apply its plain meaning without resort to extrinsic aids.
• Denturist Ass’n of Mont. v. State, 2016 MT 119 Cited both for:
  • The summary judgment standard; and
  • Issue preclusion principles (borrowed from Baltrusch).
• Mont. Vending, Inc. v. Coca-Cola Bottling Co., 2003 MT 282 Cited in support of focusing on legislative intent and giving effect to the statute’s objectives, used here to justify a reading of § 53‑6‑167 that supports Medicaid’s fiscal integrity.
• Mont. Shooting Sports Ass’n, Inc. v. State, 2008 MT 190 Cited for:
  • The presumption against absurd results; and
  • The requirement to harmonize related statutes and avoid surplusage.
  This supports reading § 53‑6‑167(1), (2), (5), and (6) in concert, and rejecting an interpretation that would make key portions meaningless.

B. Mandatory vs. Permissive Language

• State v. Knowles, 2025 MT 107 and State v. Kortan, 2022 MT 204 Both stand for the proposition that “shall” and “must” in Montana statutory usage are mandatory. They support the Court’s conclusion that the Department must file a probate claim when possible, even though failure to do so does not extinguish the separately created remedy in subsection (2).

C. Issue Preclusion and Finality Cases

• Baltrusch v. Baltrusch, 2006 MT 51 A foundational case on issue preclusion, illustrating that the doctrine bars relitigation of issues actually and necessarily determined in a prior valid judgment. Baltrusch is cited for the four‑part test and for the idea that new legal theories closely tied to previously litigated issues may sometimes be precluded.
• In re Raymond W. George Trust, 1999 MT 223 Used for the general definition of collateral estoppel as barring relitigation of issues decided in prior suits involving the same or privy parties.
• Holtman v. 4‑G’s Plumbing & Heating, Inc., 264 Mont. 432, 872 P.2d 318 (1994) and Haines Pipeline Constr., Inc. v. Mont. Power Co., 265 Mont. 282, 876 P.2d 632 (1994) Cited via Baltrusch for the principle that determining whether issues are “identical” requires a substantive comparison of pleadings, evidence, and circumstances, and that the bar covers all questions essential to the prior judgment.

D. Probate Court Jurisdiction Cases

• In re Estate of Cooney, 2019 MT 293 Establishes that probate jurisdiction is special and limited to matters expressly conferred by statute, and that probate courts may not hear general equitable matters. This case is key to the holding that the probate court could not have adjudicated the Department’s § 53‑6‑167(2) claim.
• State ex rel. Reid v. Fifth Jud. Dist. Court, 126 Mont. 586, 256 P.2d 546 (1953) Similarly emphasizes probate’s nature as a special statutory proceeding, neither an action at law nor a suit in equity.

E. Out-of-State Authority: Nevada’s Estate of Ullmer

• State Dep’t of Human Res., Welfare Div. v. Estate of Ullmer, 87 P.3d 1045 (Nev. 2004) This non‑Montana case provides persuasive authority on federal Medicaid policy and the states’ obligation and legitimate interest in estate recovery. It bolsters the Court’s view that § 53‑6‑167, MCA, is a necessary tool to keep the Medicaid program adequately funded and consistent with federal mandates.

VII. Complex Concepts Simplified

A. “Recoverable Medical Assistance”

“Recoverable medical assistance” under § 53‑6‑165(4)(ii), MCA, means Medicaid payments for services (or related insurance costs) provided to a recipient:

• Who was at least 55 years old at the time the services were provided; or
• Younger, if federal law expressly allows recovery for that category.

For someone like Pound—who was over 55 when she received Medicaid services—those payments are automatically within the category the Department has a duty to try to recover from post‑death assets.

B. Creditor’s Claims in Probate (§ 72‑3‑803, MCA)

In Montana probate:

• Creditors must present claims within four months of the first published notice.
• Late claims (after four months) are generally barred against the estate.

That bar protects the estate administration from open‑ended liability and enables timely closure of probate. But this decision confirms that the bar does not automatically extend to separate statutory remedies authorized by other statutes (here, § 53‑6‑167(2), MCA) when those remedies are directed at individuals who received property, rather than the estate itself.

C. Direct Actions Against Heirs Under § 53‑6‑167(2), MCA

Section 53‑6‑167(2), MCA, allows the Department to sue, in general district court, anyone who:

• Received property that belonged to the Medicaid recipient at death, whether through probate or nonprobate transfers;
• Up to the lesser of:
  • the total recoverable medical assistance paid; or
  • the value of property the person received from the decedent.

Example based on this case:

• Medicaid benefits paid after age 55: $5,360.89.
• Heir receives property: $200,000 from sale of decedent’s house via probate distribution.
• Department may recover $5,360.89 (the lesser of the two figures).

If, instead, the heir had received only $3,000, the maximum recovery would be $3,000.

D. Collateral Estoppel (Issue Preclusion) vs. Claim Preclusion

Issue preclusion (collateral estoppel) focuses on whether a specific issue of fact or law has already been decided in prior litigation and cannot be relitigated. It is narrower than claim preclusion (res judicata), which bars entire claims or causes of action that could have been litigated previously.

Here:

• The issue in probate: Was the Department’s creditor’s claim timely?
• The issue in the later suit: Is Johnson liable under § 53‑6‑167(2), MCA, as a person who received property from Pony by distribution, for the amount of recoverable medical assistance?

Because these are distinct issues, and the probate court lacked jurisdiction over the second issue, collateral estoppel does not apply.

E. Probate Court Jurisdiction vs. General District Court

In Montana, district courts have general jurisdiction, but when sitting in probate, they exercise only the powers specifically granted by the probate code. In that role, they:

• Administer estates;
• Determine heirs and devisees;
• Allow or disallow claims against the estate; and
• Oversee distribution of estate property.

They do not have authority to resolve general equitable or statutory claims that fall outside the probate code. That is why the Department’s § 53‑6‑167(2) claim properly belongs in a separate civil action in district court.

VIII. Practical and Doctrinal Impact

A. For the Department and the Medicaid Program

The decision strengthens the Department’s ability to fulfill its statutory duty to recoup Medicaid expenditures after a recipient’s death. It confirms that:

• The Department is not doomed by a single missed deadline in probate, especially when provider billing practices and the timing of death make strict four‑month compliance impractical.
• Recovery can still be pursued against heirs and other recipients of the decedent’s property until the Department’s claim is “satisfied in full.”

This supports the fiscal sustainability of the Medicaid program and helps align Montana practice with federal requirements and policy expectations regarding estate recovery.

B. For Personal Representatives, Heirs, and Estate Planners

The ruling has significant implications for probate practice and estate planning:

• Personal Representatives: Even if a Medicaid creditor’s claim is time‑barred in probate, a personal representative who distributes estate assets to heirs should anticipate that heirs may still face separate litigation under § 53‑6‑167(2), MCA. PRs may wish to:
  • Seek information from the Department before distribution; or
  • Hold back a reserve for potential Medicaid recovery claims.
• Heirs and Beneficiaries: Receipt of estate property does not guarantee immunity from Medicaid estate recovery simply because the estate itself is closed and the probate creditor period expired. Heirs may be sued personally up to the value of their inheritance for the amount of recoverable assistance.
• Estate Planners: Common techniques such as joint tenancies, life estates, and living trusts are all included in the statutory definition of “property … received by distribution or survival.” This decision reinforces that such arrangements do not automatically shield assets from Medicaid estate recovery.

C. On Finality of Probate and Litigation Strategy

While probate finality is still robust as to claims against the estate, this decision clarifies that finality does not preclude separate, later claims against heirs or beneficiaries where specifically authorized by statute.

Future litigation strategies will likely include:

• Heirs contesting whether particular assets fall within the statutory definition of property received “by distribution or survival” (e.g., arguing the decedent had no interest immediately before death).
• Debates over any statute of limitations applicable to § 53‑6‑167(2) actions (an issue not decided in this opinion).
• Potential arguments about hardship or equitable defenses, though the text and purpose of § 53‑6‑167 focus strongly on recovery and program integrity.

D. Doctrinal Clarification

The decision clarifies several doctrinal points in Montana law:

• Independent statutory remedies: A statutory remedy directed at persons other than the estate (here, heirs) is not automatically limited by probate claim‑presentation rules that govern only claims against the estate.
• Scope of collateral estoppel: Issue preclusion requires not merely similar facts or overlapping subject matter, but an identical issue that was actually and necessarily decided in a prior proceeding within the court’s jurisdiction. Probate court decisions on timeliness of creditor claims are not dispositive of all related statutory claims in later civil actions.
• Harmony between probate and Medicaid statutes: Probate limitations and Medicaid recovery statutes must be read together to effectuate both the protection of estate administration and the state’s duty to recoup public funds.

IX. Conclusion – Key Takeaways

DPHHS v. Johnson establishes a clear and important rule in Montana law:

• The Department’s failure to timely file a probate creditor’s claim under § 72‑3‑803, MCA, does not bar it from later bringing an independent action against an heir or other person who received property from a deceased Medicaid recipient under § 53‑6‑167(2), MCA.
• The probate court’s denial of an untimely creditor’s claim does not collaterally estop the Department from pursuing that later statutory remedy, because the issues differ and the probate court lacks jurisdiction over the separate equitable/statutory claim against the heir.
• Section 53‑6‑167, MCA, provides two distinct and cumulative avenues for recovery—against the estate and against persons who receive the decedent’s property—and authorizes use of one, the other, or both until the Department’s claim is satisfied in full.

By enforcing the plain text and purpose of Montana’s Medicaid estate recovery statute and harmonizing it with probate procedures, the Court ensures both:

• The integrity and funding of the Medicaid program; and
• The continued, though limited, protection offered by probate deadlines to estates themselves.

Going forward, heirs and estate planners in Montana must account for the reality that inheritance or survivorship of property from a Medicaid recipient remains potentially subject to post‑distribution recovery actions by the Department, even after probate has closed and estate creditor deadlines have passed.