Whether benefits paid as a result of an error, not due to misrepresentation or fraud, are "correctly paid" within the meaning of N.Y. Soc. Serv. Law §369(2)(b)(i), and thus not recoverable.

No. An error, whether or not it was due to misrepresentation or fraud, does not estop the Department from subsequent recovery under N.Y. Soc. Serv. Law §106-b(A).

Marion Judson, the beneficiary of a self-settled, irrevocable trust, was a resident of a nursing home for several years until her death. One of her sons applied for Medicaid benefits on her behalf to the Columbia County Department of Social Services (the Department), disclosing her income from the trust. The Department approved her application, but erroneously failed to include the trust principal as an asset belonging to her. Had the Department included the trust principal as an asset, the decedent would not have been eligible for benefits.

The Department sued the trustee, as well as the decedent's sons as co-executors of her estate. Supreme court granted partial summary judgment to the Department on the grounds that, under N.Y. Soc. Serv. Law §369(3), the payments were incorrectly paid. Thus, the Department was entitled to recover from the trustee. The Department and the co-executor cross-appealed. Relying on Matter of Akullian, 167 A.D.2d 596 (N.Y. App. Div. 1990) and the lack of any claim of fraud or misrepresentation, the appellate division held that the benefits were "correctly paid" under N.Y. Soc. Serv. Law §369(2)(b)(i), and therefore that the Department could not recover.

The Court of Appeals granted the Department leave to appeal from the appellate division order. The Court of Appeals reversed the appellate division order and reinstated the supreme court's order.

Overruling Matter of Akullian, the Court of Appeals held that a benefit is not incorrectly paid only if there has been fraud or misrepresentation. On the contrary, the Department may "take all necessary steps to correct any overpayment" and seek repayment of Medicaid benefits whenever it discovers it has made a mistake.