R e s p o n d e n t ,

1
STATE OF MINNESOTA

IN SUPREME COURT

A19-0853

Court of Appeals Chutich, J.
Took no part, Anderson, J.
Robert Pfoser, as special administrator of the
Estate of David Pfoser,

R e s p o n d e n t ,

vs. Filed: January 20, 2021
Office of Appellate Courts
Jodi Harpstead, Commissioner Minnesota
Department of Human Services,

Appellant,

and

Dakota County Human Services,

Respondent Below.

________________________

Laurie A. Hanson, Long, Reher, Hanson & Price, P.A., Minneapolis, Minnesota, for
respondent.

Keith Ellison, Attorney General, Michael N. Leonard, Assistant Atto rney General, Saint
Paul, Minnesota, for appellant.

Margaret M. Grathwol, Chestnut Cambronn e PA, Minneapolis, Minnesota, for amicus
curiae Minnesota Chapter of the National Academy of Elder Law Attorneys.

Ron M. Landsman, Landsman Law Group, Rockville, Mary land, for amicus curiae
National Academy of Elder Law Attorneys.

Brenna M. Galvin, Maser, Amundson & Boggio, P.A., Richfield, Minnesota; and

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David L. Shaltz, Chalgian & Tripp Law Offices, East Lansing, Michigan, for amicus curiae
Special Needs Alliance.

________________________
S Y L L A B U S
A disabled recipient of Medical Assistance for Long-Term Care benefits who is age
65 or older is not subject to a penalty for tr ansferring assets into a pooled special-needs
trust when he made a satisf actory showing that he in tended to receive “valuable
consideration” under Minnesota Statutes section 256B.0595, subdivision 4(a)(4) (2020).
Affirmed.
O P I N I O N
CHUTICH, Justice.
This case requires us to decide whet her the Commissioner of the Minnesota
Department of Human Services correctly impos ed a transfer penalty on David Pfoser, a
disabled Medicaid recipient who resided in a lo ng-term care facility, after he transferred,
at age 65, partial proceeds from the sale of a house into a pooled special-needs trust. State
and federal law impose a penalty on recipients of Medical Assistance for Long-Term Care
benefits if they transfer asse ts for less than fair market value. Mi nn. Stat. § 256B.0595
(2020); 42 U.S.C. § 1396p(c)(1)(A). But no penalty may be imposed if the recipient makes
a satisfactory showing that he “intended to dispose of the assets either at fair market value
or for other valuable consideration.” Minn. Stat. § 256B.0595, subd. 4(a)(4); accord 42
U.S.C. § 1396p(c)(2)(C)(i). The district court reversed the transfer penalty, ruling that
Pfoser received adequate compensation. The court of app eals affirmed the district court,

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concluding that the Commissioner’s decisi on was legally erroneous, arbitrary and
capricious, and unsupported by su bstantial evidence. Because we conclude that Pfoser
made a satisfactory showing that he intended to receive valuable consideration for his
transfer of assets, we now affirm the decision of the court of appeals.
FACTS
David Pfoser had Parkinson’s disease and other me ntal and physical disabilities. 1
Following an injury in 2014, Pfoser moved into a long -term care facility and applied for
Medical Assistance for Long-Term Care benefits , which is part of Minnesota’s Medicaid
program. Fiduciary Services of Minnesota, Inc., served as Pfoser’s guardian and
conservator.2
In 2016, Pfoser’s siblings sold the home that Pfoser had been living in, which had
been their parents’ home, when it was clear th at he would not be able to return there.
Pfoser’s share of the proceeds was $28,010.
In 2017, Pfoser petitioned the district court to transfer the proceeds into a pooled
special-needs trust operated by the non-prof it Lutheran Social Service of Minnesota
(Lutheran Social Service). A pool ed special-needs trust is a tr ust funded by the assets of
disabled beneficiaries, with individual sub-accounts, to pay for Medicaid-ineligible goods
and services that will improve the quality of the beneficiaries’ lives. Ctr. for Special Needs

1 Pfoser died while his appeal was pendin g in the court of appeals. The appeal
proceeded with Pfoser’s brothe r, Robert Pfoser, named as special administrator of the
estate.

2 For simplicity, the acts of Fiduciary Servic es of Minnesota on behalf of Pfoser are
referred to as the acts of Pfoser.

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Tr. Admin., Inc. v. Olson, 676 F.3d 688, 695 (8th Cir. 2012). “Pooled special needs trusts
allow disabled individuals with relatively small amounts of money to pool their resources
for investment and management purposes.” Me. Pooled Disability Tr. v. Hamilton ,
927 F.3d 52, 54 (1st Cir. 2019).
The district court granted Pfoser’s petition for permissi on to transfer the funds.
Pfoser and Lutheran Social Service executed two agreements, a joinder agreement to enroll
Pfoser in the trust, and a standard pooled trust agreement (Trust Agreement) that contained
additional terms and conditions. Pfoser agreed to transfer $2 8,010 into a sub-account of
the trust to be administered solely for his benefit according to the terms of the Trust
Agreement, subject to a $1,000 enrollment fee and certain other management fees owed to
Lutheran Social Service.
The Trust Agreement named Lu theran Social Service as trustee and required that
trust assets be “managed, invested, and disb ursed to promote the comfort and well-being
of each Beneficiary.” All disbursements from the trust were limited to the “sole and
absolute discretion” of Lutheran Social Se rvice as trustee to make distributions as
“necessary or advisable to provide for the supplemental care or supplemental needs of the
beneficiary.” Such needs could include medical, dental, and diagnostic work;
supplemental nursing care; and expenditures for travel or a personal care attendant, which
are not covered by Medicaid.
In the Trust Agreement, Pfoser acknowledged that he had no “further interest, rights
in, or control over” the funds and that Lutheran Social Service had no obligation to support
him. The trust was irrevocable. Notably, the Trust Agreement also provided that up to 90

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percent of any funds remaining in the sub-accou nt at the time of Pfoser’s death must be
paid to the State to reimburse the Medical Assistance program for the costs paid on behalf
of Pfoser. Lutheran Social Service would re tain the other 10 percent in a charitable trust
for the benefit of indigent pooled trust benefi ciaries who had exhausted the funds in their
sub-accounts. By enrolling in th e trust, Pfoser would be elig ible to receive benefits from
the charitable trust if he exhausted the funds in his sub-account.
In accordance with th e agreements, Pfoser transfe rred the funds, which were
credited to his sub-account. He was 65 years old at the time of the transfer.
Two months later, Dakota County Human Services (Dakota County) notified Pfoser
that it was investigating whether the establishment of his trust sub-account may have been
an improper transfer under the statutes governing Medical Assistance for Long-Term Care.
Under those statutes, a recipient “may not give away, sell, or dispose of” any asset for less
than fair market value. Minn. Stat. § 256B.0595, subd. 1(a); accord 42 U.S.C.
§ 1396p(c)(1)(A). But no penalty may be impos ed if the recipient makes a satisfactory
showing that he “intended to dispose of the asse ts either at fair mark et value or for other
valuable consideration.” Minn. Stat. § 256B.0595, subd. 4(a)(4); accord 42 U.S.C.
§ 1396p(c)(2)(C)(i). Dakota Co unty ultimately concluded that Pfoser improperly
transferred assets. It assessed a transfer penalty of 3.94 months of ineligibility for Medical
Assistance for Long-Term Care benefits.
Pfoser appealed the penalty, and a hearing was held before a human services judge.
Pfoser claimed that he had received fair market value for the transfer in the form of future
goods and services that the trust would provide. In support of his position, Pfoser submitted

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copies of the joinder agreemen t and Trust Agreement. He also submitted an affidavit by
the director of the pooled trusts operated by Lutheran Social Service, which included an
assessment of the fair market value of Pfoser’s sub-account.
In her affidavit, the director stated that Lutheran Social Service operates two pooled
trusts containing about 420 su b-accounts. The sub-accounts of the trust in which Pfoser
participated are for clients who are disabl ed as defined by the Social Security
Administration. Although the trust is discre tionary, the director attested that Lutheran
Social Service views its discretion to be limited by contractual and fiduciary obligations to
pay for items or services for beneficiaries “as long as the expenditure promotes the comfort
and well-being of the beneficiaries.” Acco rding to the director, denying a reasonable
request would be in bad faith and a breach of contract.
The fair-market-value assessment of Pfos er’s sub-account estimated that his sub-
account would be depleted in less than 2 years. This assessment reflected specific one-time
expenditures for expensive items like an adap tive recliner, equipment for his wheelchair,
and restorative dental work, which are not covered by Medicaid. It also budgeted for
annual expenses like STEM activity boxes,3 over-the-counter medications not covered by
Medical Assistance, wheelchai r cushions, household goods and personal expenses, and
fees for guardian services. The assessment also calculated Pfoser’s life expectancy at 14.86
years.

3 STEM boxes contain activities in Science, Technology, Engineering and Math that
are designed to address Pfoser’s symptoms of Parkinson’s disease by encouraging him to
engage his brain and use his motor skills.

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Dakota County did not present any eviden ce in response to Pfoser’s expected
expenditures and fair-market-value assessment . At the hearing, the county financial
worker assigned to Pfoser’s cas e testified that, according to the policy of the Minnesota
Department of Human Services, “the addition to a pool[ed] trust by a beneficiary . . . after
the beneficiary . . . reaches age 65 is evaluate d as an uncompensated transfer.” She also
testified, “And that’s where I stopped with my calculation,” after determining that Pfoser
was age 65 at the time of the transfer.
The human services judge found in favor of Dakota County. Because Pfoser had
transferred the cash into an irrevocable trust from which any distributions were
discretionary, the judge concluded that no “reasonable seller/buyer or objective observer”
would consider this exchange to be a transfer for fair market value. Accordingly, the judge
found that Pfoser did not receive “adequate compensation or fair market value” at the time
the transfer was made. The judge also f ound that there was in sufficient evidence of
Pfoser’s intent to receive fair market value under an existing penalty exception. The judge
therefore recommended that the Commissioner of the Department of Human Services
affirm the penalty. The Commissioner adopted the recommendation without change.
Pfoser appealed the agency decision to the district court. The district court reversed,
concluding that Pfoser recei ved “adequate compensation” in the form of his vested
equitable interest in the trust assets.
The Commissioner appealed, and the court of appeals affirmed the district court’s
decision. Pfoser v. Harpstead, 939 N.W.2d 298 (Minn. App. 2020). The court of appeals

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determined that the Commissioner’s decision was “legally erroneous, arbitrary and
capricious, and unsupported by substantial evidence.” Id. at 320.
We granted the Commissioner’s petition for review.
ANALYSIS
The issue before us is whether the Co mmissioner properly imposed a 3.94 month
penalty based on her findings th at Pfoser did not receive ad equate compensation or fair
market value when he transferred $28,010 into the pooled special-needs trust and that a
penalty exception did not apply.4
Judicial review of a decision by the Commi ssioner of Human Services is authorized
by Minnesota Statutes section 256.045 (2020). We may reverse or modify an agency
decision if the decision is affected by an erro r of law, is arbitrary and capricious, or is
unsupported by substantial ev idence. Minn. Stat. § 14.69 (2020). Whether substantial
evidence exists is a question of law. See In re Restorff, 932 N.W.2d 12, 18 (Minn. 2019).

4 Because Pfoser died while his case was pending in the court of appeals, a
preliminary question of mootne ss must be addressed. Alth ough neither party has argued
that the appeal is moot, mootness is a jurisdictional issue that we may raise on our own. In
re Schmalz , 945 N.W.2d 46, 49 n.3 (Minn. 2020) (e xplaining that “the existence of a
justiciable controversy is essential” to the exercise of the court’s jurisdiction).
Generally, “[a]n appeal should be dismissed as moot when a decision on the merits
is no longer necessary or an award of effective relief is no longer possible.” Dean v. City
of Winona, 868 N.W.2d 1, 5 (Minn. 2015). But we may decide a cas e when an issue,
although technically moot, is functionally justiciable and presents an important question of
statewide significance. In re Guardianship of Tschumy , 853 N.W.2d 728, 738 (Minn.
2014). The issue here is functionally justiciable because the record is fully developed, the
issue involves a matter of statutory interp retation, and the issue has been adequately
briefed. See Schmalz, 945 N.W.2d at 49 n.3. The que stion has statewide significance
because it affects disabled persons age 65 or older who wish to transfer assets into a pooled
special-needs trust without incurring a penalty.

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We determine “whether the agency has adequately explained how it derived its conclusion
and whether that conclusion is reasona ble on the basis of the record.” Minn. Power &
Light Co. v. Minn. Pub. Utils. Comm’n, 342 N.W.2d 324, 330 (Minn. 1983). We examine
“the agency’s decision independently and n eed not accord any deference to the lower
courts’ review.” Estate of Atkinson v. Minn. Dep’t of Hum. Servs. , 564 N.W.2d 209, 213
(Minn. 1997).
A.
This appeal concerns the consequences of Pfoser’s transfer of funds into the pooled
special-needs trust in determining his financial eligibility for Medicaid benefits. We begin
with an overview of the Medicaid program and the asset-transfer rule s. Medicaid is “a
cooperative federal-state program.” In re Schmalz , 945 N.W.2d 46, 50 (Minn. 2020).
Known as Medical Assistance in Minnesota, the program “is designed to provide medical
assistance to individuals whose income and re sources are not sufficient to meet the costs
of their necessary care and services.” Estate of Atkinson, 564 N.W.2d at 210; see Minn.
Stat. §§ 256B.01–.85 (2020). The Minnesot a Department of Human Services (the
Department) provides support for long-term care through the Medical Assistance for Long-
Term Care program. See Minn. Stat. §§ 256B.056 (g overning eligibility for Medical
Assistance, including lo ng-term care benefits), .0595 (governing transfers of assets by
recipients of long-term care be nefits), .0625, subd. 2 (provi ding coverage for skilled and
intermediate nursing care services).
Persons qualify for Medical Assistance if they are blind, disabled, or age 65 or older.
Minn. Stat. § 256B.055, subd. 7. Because Medicaid is intende d to be the payor of last

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resort, In re Estate of Barg, 752 N.W.2d 52, 58 (Minn. 2008), persons must be financially
eligible for Medical Assistan ce by having available assets valued below a statutory
threshold amount. Minn. Stat. § 256B.056, subd. 3(a); 42 U.S.C. § 1396a(a)(17). Subject
to certain exceptions, “a person mu st not own individually more than $3,000 in assets.”
Minn. Stat. § 256B.056, subd. 3(a).
Minnesota’s Medicaid program must comply with federal law. See 42 U.S.C.
§§ 1396–1396t. Failure to comp ly may result in a reduction in or loss of federal funds.
42 U.S.C. § 1396c; In re Estate of Turner , 391 N.W.2d 767, 769 (Minn. 1986). At issue
here are the rules governing the transfer of assets into pooled special-needs trusts by
recipients of Medical Assistance for Long-Term Care benefits. See Minn. Stat.
§ 256B.0595; 42 U.S.C. § 1396p.
A disabled person of any ag e can establish an account in a pooled special-needs
trust. See Minn. Stat. § 256B.056, subd. 3b(c) (defining a pooled trust in accordance with
42 U.S.C. § 1396p(d)(4)(C)). A beneficiary’s inte rest in a pooled trust is not considered
an available asset for determining Medical Assistance eligibility if certain requirements are
met. Minn. Stat. § 256B.056, subd. 3b(d); 42 U.S.C. § 1396p(d)(4)(C). One requirement
in Minnesota is that the trust contain a re payment obligation entitling the Department to
any assets “remaining in the beneficiary’s trust account” upon the beneficiary’s death “up
to the amount of medical assistance benefits paid on behalf of the beneficiary.” Minn. Stat.
§ 256B.056, subd. 3b(d); accord 42 U.S.C. § 1396p(d)(4)(C). There is no dispute that the
trust established by Lutheran Social Service meets the requirements of the statutes.

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Although the assets in an exempt trust are not considered available for determining
whether a person is eligible for benefits, transfers into the trust may be penalized with a
period of ineligibility for benefits. Minn. Stat. § 256B.0595, subd. 1(j). A person residing
in a long-term care facility may not “give away, sell, or dispose of” a ssets “for less than
fair market value” when done “for the purpo se of establishing or maintaining medical
assistance eligibility.” Minn. Stat. § 256B.0595, subd. 1(a); accord 42 U.S.C.
§ 1396p(c)(1)(A). A person who transfers assets for less than fair market value is generally
subject to a period of ineligibility for Me dical Assistance benefits. Minn. Stat.
§ 256B.0595, subd. 2(a); 42 U.S.C. § 1396p(c )(1)(A). This sanction is known as a
“transfer penalty.”
Several exceptions to the transfer penalty exist and preclude application of any
penalty. For example, transfers into pooled special-needs trusts for the benefit of a disabled
person under age 65 are automatically exempt fro m a transfer penalty. Minn. Stat.
§ 256B.0595, subd. 4(a)(6); accord 42 U.S.C. § 1396p(c)(2)(B)(iv). But a transfer for the
benefit of a disabled person age 65 or older is not exempt, unless another exception applies.
As relevant here, a person of any age, in cluding those age 65 or older, can avoid a
transfer penalty if the person makes a “satisf actory showing” that the person “intended to
dispose of the assets either at fair market value or for other valuable consideration” (the
intent exception). 5 Minn. Stat. § 256B .0595, subd. 4(a)(4); accord 42 U.S.C.
§ 1396p(c)(2)(C)(i). Because Pfoser was 65 year s old when he transferred $28,010 into

5 Because other transfer exceptions exist in the statute, we ca ll this exception the
“intent exception.”

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the trust, he is subject to a transfer penalty unless he makes one of two showings: that he
actually received fair market value for the transfer, or that he intended to receive fair market
value or other valuable consider ation under the intent exception. 6 See Minn. Stat.
§ 256B.0595, subds. 1(a), 4(a)(4).
B.
To determine whether Pfoser met the intent exception, we consider the meaning of
“valuable consideration” un der Minnesota Statutes section 256B.0595, subdivision
4(a)(4).7 The statute does not define “valuable consideration.” The court of appeals

6 Amici curiae National Academy of El der Law Attorneys an d its corresponding
Minnesota Chapter argue that the rules governing the transfer of assets in the federal statute
do not apply to pooled special-n eeds trusts because the federa l statute contains separate
provisions that specifically address the treatment of trusts. Compare 42 U.S.C. § 1396p(c)
(addressing certain transfers of assets), with 42 U.S.C. § 1396p( d) (addressing the
treatment of trust amounts). Although the ar gument of the amici raises serious questions
about how the federal statute should be interpreted, see Cox v. Iowa Dep’t of Hum. Servs.,
920 N.W.2d 545, 560 –63 (Iowa 2018) (Appel, J., dissen ting), we typically do not reach
issues raised on ly by amici, Kline v. Berg Drywall, Inc. , 685 N.W.2d 12, 23 n.9 (Minn.
2004). Furthermore, the Minnesota statute expressly states that the transfer rules apply to
transfers into pooled trusts. Minn. Stat. § 256B.0595, subd. 1(j).

7 We first address a preliminary questi on of forfeiture. A lthough her petition for
review did not explicitly raise a forfeiture issue, the Commissioner now contends that
Pfoser never argued in his ag ency appeal that he inte nded to receive “valuable
consideration,” and so forfeited the argument.
Pfoser did not specifically contend in his agency appeal that he received valuable
consideration, but the Commissi oner determined that Pfoser failed to prove that he had
received “adequate compensation or fair mark et value.” “Valuable consideration” is
closely related to “adequate compensation.” The statute does not use the term “adequate
compensation”; it uses “fair market value or other valuable consideration.” Minn. Stat.
§ 256B.0595, subd. 4(a)(4). Notably, the Commissioner’s own policy manual uses the
term “adequate compensation” rather than fair market value or valuable consideration. See
Minn. Dep’t of Hum. Servs., Minnesota Health Care Programs Eligibility Policy Manual
§ 2.4.1.3.4 (Jan. 1, 2019) (sta ting that a transfer beneficiary over age 64 must “provide

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applied the definition in the State Medicaid Manual and held that Pfoser satisfied it. Pfoser
v. Harpstead, 939 N.W.2d at 314, 318; see Ctrs. for Medicare & Medicaid Servs., State
Medicaid Manual § 3258.1.A.2 (defining valuable c onsideration as “some act, object,
service, or other benefit which has a tangible and/or intrinsic value to the individual that is
roughly equivalent to or greater than th e value of the transf erred asset”). The
Commissioner argues that valuable consider ation unambiguously means something of
equivalent cash value to the transferred asset, or alternatively, that this court should defer
to agency interpretations, including the State Medicaid Manual. Pfoser responds that the
transfer was adequately compensated under any standard.
We review matters of statutory interpretation de novo. In re Schmalz, 945 N.W.2d
46, 49 n.3 (Minn. 2020). The goal of statutory interpretation is to effectuate the intent of
the Legislature. Minn. Stat. § 645.16 (2020).
The first step is to determine whether th e language of the statute is ambiguous.
Olson v. Lesch, 943 N.W.2d 648, 656–57 (Minn. 2020). “A statute is unambiguous if it
has only one reasonable interpretation.” In re Welfare of Children of J.D.T., 946 N.W.2d
321, 327 (Minn. 2020). When interpreting a statute, we r ead “words and phrases . . .
according to rules of grammar and according to their common and approved usage.” Minn.

proof that adequate compensation was received”). Finally, Pfoser’s position is that all three
standards are essentially the same.
Because the relevant legal standards are closely related, the underlying facts are not
in dispute, and the parties have had an opport unity to fully brief the issue, we address the
valuable-consideration standard on the merits. See State v. Hill, 871 N.W.2d 900, 905 n.4
(Minn. 2015) (reaching an argument not raised below when the question involved a purely
legal issue, the State had briefed the issue, and consideration of the issue did not prejudice
the State).

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Stat. § 645.08(1) (2020). When a statute does not define a term, we may look to lay
dictionary definitions and, where appropriate, to legal definitions to determine the plain
meaning of the term. See Getz v. Peace , 934 N.W.2d 347, 354–55 (Minn. 2018)
(considering both lay and legal definitions when a phrase fre quently appeared as a legal
phrase in statutes).
We also read “[m]ultiple parts of a statute . . . together so as to ascertain whether
the statute is ambiguous.” Christianson v. Henke , 831 N.W.2d 532, 537 (Minn. 2013).
“Whenever it is possible, no word, phrase, or sentence should be deemed superfluous, void,
or insignificant.” Amaral v. Saint Cloud Hosp., 598 N.W.2d 379, 384 (Minn. 1999).
We have stated that “ ‘valuable considera tion, in the sense of the law, may consist
either of some right, interest, profit, or benefit accruing to the one party, or some
forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the
other.’ ” Ketterer v. Indep. Sch. Dist. No. 1 , 79 N.W.2d 428, 436 (Minn. 1956) (quoting
44 Words and Phrases, Valuable Consideration 25). Technical and lay dictionaries offer
similarly broad definitions. See Valuable Consideration, Black’s Law Dictionary (11th ed.
2019) (“[C]onsideration that either confers a pecuniarily measurable benefit on one party
or imposes a pecuniarily measurable detriment on the other.”); Valuable Consideration,
Webster’s Third International Dictionary Unabridged 2530 (2002) (“An equivalent or
compensation having value that is given fo r something (as money, marriage, services)
acquired or promised and that ma y consist either in some right , interest, profit, or benefit
accruing to one party or some responsibility, forbearance, detriment, or loss exercised by
or falling upon the other party . . . .”).

15
The Commissioner’s position that the benefit received must be equal to the value of
the transferred asset is not reasonable in co ntext. The statute allows for a showing under
either the fair-market-value standard “or” the valuable-consideration standard. Minn. Stat.
§ 256.0595, subd. 4(a)(4); see A.A.A. v. Minn. Dep’t of Hum. Servs., 832 N.W.2d 816, 829
(Minn. 2013) (“[W]hen the disjunctive ‘or’ is used, only one of the listed factual situations
needs to be present in order fo r the provisions to be satisf ied.”). These standards cannot
be the same because the stat ute distinguishes fair market value from “other” valuable
consideration.
The Commissioner distinguishes fair market value from other valuable
consideration in section 256.0595, subdivision 4(a)(4), based on the form of the
compensation. She equates fair market valu e to cash and valuable consideration to
something other than cash but of “equivalent market value.” This premise is incorrect
because fair market value and valuable consideration can take the same form. For instance,
like valuable consideration, which may consist of “some right, interest, profit, or benefit,”
see Ketterer, 79 N.W.2d at 436, fair market value need not be money. Dictionaries define
fair market value in relation to “price.” See, e.g. , Fair Market Value , Black’s Law
Dictionary (11th ed. 2019) (“The price that a se ller is willing to accept and a buyer is
willing to pay on the open market and in an arm’s-length transaction . . . .”); Fair Market
Value, The American Heritage Dictionary 635 (5th ed. 2011) (“The price, as of a
commodity or service, at which both buyers and sellers agree to do business.”).
“Price,” in turn, can mean money or other goods. See Price, Black’s Law Dictionary
(11th ed. 2019) (“The amount of money or other consideration as ked for or given in

16
exchange for something else; the cost at which something is bought or sold.”); Price, The
American Heritage Dictionary 1397 (5th ed . 2011) (“The amount as of money or goods,
asked for or given in exchange for somethi ng else.”). Fair market value and valuable
consideration can therefore each take the form of goods and services. Consequently, the
form of compensation—cash versus non-cash—cannot be the critical distinction.8
We conclude instead that the relevant distinction is the measure of compensation:
“valuable consideration” under section 256.0595, subdivision 4(a)(4), is compensation that
is approximately equal to the value of the transferred asset, but may be something less than
fair market value. Interpreting valu able consideration to mean something equal to fair
market value eliminates this distinction a nd makes the valuable-consideration standard
meaningless. This we cannot do. See Amaral, 598 N.W.2d at 384 (“[N]o word, phrase, or
sentence should be deemed superfluous . . . .”).
In context, then, “valuable considerati on” under section 25 6.0595, subdivision
4(a)(4), unambiguously means co mpensation that is approximate ly equal to the value of
the transferred asset. This interpretation refl ects that valuable consideration is distinct
from, and a less stringent standard than, fair market value. It also preserves the force of
the fair-market-value requirement by requiring a penalty when an asset is transferred for

8 The Commissioner cites several federal st atutes to support her position that fair
market value essentially means cash. See, e.g., 11 U.S.C. § 101 (“The term ‘debt relief
agency’ means any person who provides any bank ruptcy assistance to an assisted person
in return for the payment of money or other val uable consideration . . . .” (emphasis
added)). Notably, in all of her examples, Congress chose to use the term “money,” not
“fair market value,” to contrast with “other valuable consideration.” Accordingly, these
examples do not restrict the broader meaning of fair market value cited above.

17
something of substantially less value. See Minn. Stat. § 256B.0595, subd. 1(a) (prohibiting
transfers for less than fair market value); 42 U.S.C. § 1396p(c)(1)(A).
The Commissioner would add another elemen t to the plain meaning of “valuable
consideration” in section 256 .0595, subdivision 4(a)(4). She asserts that valuable
consideration includes only assets that are themselves countable for purposes of
determining Medical Assistance eligibility. Otherwise, she argues, an “asymmetry” occurs
if persons can exchange a countable asset for a non-countable asset while avoiding a
penalty and maintaining eligibility for their bene fits. Even so, the statute contradicts the
Commissioner’s position. The statute does not require the compensation received to be
itself a countable asset. See Minn. Stat. § 256B.0595, subd. 1(c) (applying no penalty to
certain payments for personal services).
Accordingly, under the intent exception to the asset-transfer rules, Minn. Stat.
§ 256.0595, subd. 4(a)(4), we hold that “valuable consideration” means compensation that
is approximately equal to the fair market value of the transferred asset.9
C.
Having defined “valuable co nsideration” under Minnesota Statutes section
256B.0595, subdivision 4(a)(4), we now dete rmine whether Pfoser met his burden of
showing that he intended to transfer the funds into the pooled special-needs trust for

9 Because we arrive at our interpretation from the plain meaning of the statute, we do
not consider the definition in the State Medicaid Manual or other agency statements. See
Staab v. Diocese of St. Cloud, 813 N.W.2d 68, 73 (Minn. 2012) (“If the words are free of
all ambiguity, we apply th e statutory language.”); Schwanke v. Minn. Dep’t of Admin. ,
851 N.W.2d 591, 594 n.1 (Minn. 2014) (stating that “we owe no deference to an agency’s
interpretation of an unambiguous statute”).

18
valuable consideration. The court of appeals held that the Commissioner made three legal
errors in imposing a transfer penalty: failing to consider whether Pfoser received valuable
consideration before, during, or after the transfer ; stating her belief that no “reasonable
seller/buyer or objective observer” would consider Pfoser’s ex change to be adequately
compensated; and relying too heavily on the di scretionary and irrevocable features of the
trust. Pfoser v. Harpstead, 939 N.W.2d at 315–18. The co urt of appeals also concluded
that the Commissioner’s decision was arbitr ary and capricious and unsupported by
substantial evidence as a whole. Id. at 316, 318. The Commissioner argues that Pfoser’s
transfer was not adequately compensated beca use his equitable interest in the pooled
special-needs trust is not equal to $28,010 in unrestricted cash. She also contends that
future goods and services should not be considered when determining the value of Pfoser’s
interest and that exempting Pfoser’s transf er thwarts the purpose and structure of the
Medicaid Act.
We note first that the Commissioner erre d legally by requiring Pfoser to offer
“convincing evidence of intent to receive fair market value.” (Emphasis added.) The
convincing-evidence standard applies when a person transferring assets seeks to show that
the transfer was not “for the purpose of esta blishing or maintaini ng medical assistance
eligibility.” Minn. Stat. § 256B.0595, subd. 1(a). It does not apply to the intent exception
in Minn. Stat. § 256B.0595, subd. 4(a)(4). Under the intent exception, Pfoser needed only
to make a “satisfactory showing” that he “intended to dispose of the assets” for “valuable
consideration.” Id. That standard requires a lesser showing than a convincing-evidence
standard. Accordingly, Pfoser needed to ma ke a satisfactory showing that he intended to

19
receive compensation that is ap proximately equal to the $28,010 that he transferred into
the trust.
The evidence shows that Pfoser intended to receive approximately $28,010 in the
form of his equitable interest in the pooled sp ecial-needs trust. Pfoser’s sub-account was
credited with $28,010, subject to enrollment and management fees, and he became entitled
to the professional investment and management of his trust assets. The record also shows
that Lutheran Social Service car efully designed a plan to us e the funds in Pfoser’s trust
sub-account (1) solely for his benefit, (2) on necessary and specific goods and services that
would not be covered by Medical Assistance but were designed to meet his needs as a
resident of a long-term care facility with Park inson’s disease, and (3) over a period of 2
years, well within Pfoser’s life expectancy of almost 15 y ears. Moreover, the record
contains no evidence that contests the value of the goods and services that Pfoser intended
and expected to receive. Consequently, Pfoser was likely to receive the approximate value
of the funds deposited into his sub-account.
The Commissioner cites various authorities to show that transfers into a pooled
special-needs trust are not for fair market value. For example, the State Medicaid Manual
states that, when a person transfers a non-exclude d asset into a trust, a “transfer of assets
for less than fair market value generally ta kes place” because “[a]n individual placing an
asset in a trust generally gives up ownership of the asset to th e trust.” Ctrs. for Medicare
& Medicaid Servs., State Medicaid Manual § 3259.6.G. Similarly, the Commissioner’s
own agency policy manual states that a transfer into a pooled trust after a disabled person
turns 65 is “evaluated as an uncompensated transfer,” unless the disabled person can

20
“provide proof that adequate compensation was received.” Minn. Dep’t of Hum. Servs.,
Minnesota Health Care Progr ams Eligibility Policy Manual § 2.4.1.3.4. In addition, the
Commissioner cites cases from other states that upheld penalties on similar transfers into
trusts because the courts determined that the equitable interests were not equal to the fair
market value of unrestricted cash. See Cox v. Iowa Dep’t of Hum. Servs., 920 N.W.2d 545
(Ia. 2018); In re Pooled Advocate Tr., 813 N.W.2d 130 (S.D. 2012).
These authorities are not determinative be cause they apply the fair-market-value
standard rather than the va luable-consideration standard, which we conclude is less
stringent.10 Further, the agency statements establish only a presumption that a transfer into
a pooled trust is not for fair market value—a presumption that a disabled person may rebut
with evidence. Given Pfoser’s showing, if we were to accept the Commissioner’s position

10 The cases cited by the Commissioner are lega lly and factually distinguishable. In
the Iowa case, an elderly couple transferred $575,000 into two pooled special-needs trust
accounts but, unlike Pfoser, did not provide an affidavit from the trustee stating when, or
for what purpose, the funds were likely to be used. Cox v. Iowa Dep’t of Hum. Servs. ,
920 N.W.2d 545, 548 (Ia. 2018). The Iowa Supreme Court held that the transfer was for
less than fair market value because, among othe r factors, “[t]he value of readily available
assets is greater than the value of assets that are restricted in a trust for future use.” Id. at
559. Although the court referenced the in tent exception and the valuable-consideration
standard, it did not specifically analyze whet her the transfer was exempt under that
standard. Id. at 557, 559.
In the South Dakota case, an elderly couple transferred $115,000 into a pooled
special-needs trust. In re Pooled Advocate Tr. , 813 N.W.2d 130, 13 6 (S.D. 2012). The
South Dakota Supreme Court concluded that th e beneficiaries did not receive fair market
value because the trustee had sole discretion over disbursement of the funds and because
the beneficiaries had identified “no items or services purchased for them by the trust” that
would demonstrate that their interest had “tangible” and “intrinsic” value. Id. at 147. The
court did not consider whether the couple wa s exempt from a transfer penalty under the
valuable-consideration standard.

21
that Pfoser had not met his burden, it is unc lear whether a disabled person age 65 or over
could ever rebut the presumption.
The Commissioner also contends that the value of future goods and services should
not be considered because Pfoser did not have a “binding agreement” that allowed him to
enforce specific distributions. She asserts that the court of appeals erred by requiring her
to consider evidence of “valua ble consideration received by the recipient before, during,
and after transferring assets to the pooled trust.” Pfoser v. Harpstead, 939 N.W.2d at 313.
Although the Commissioner is correct that Pfoser coul d not enforce specific
distributions because the trust was discretionary and irrevocable, Pfoser’s equitable interest
was still legally enforceable u nder principles of trust law. Under the Minnesota Trust
Code, a trustee has a duty to administer a trust “in good faith, in accordance with its terms
and purposes and the interests of the beneficiaries.” Minn. Stat. § 501C.0801 (2020). The
express purpose of the Lutheran Social Service trust was to provide for the “supplemental
care and special needs” of the disabled beneficiary, and the Trust Agreement required that
the funds “be managed, invested, and disbur sed” to provide for Pfoser’s supplemental
needs. Lutheran Social Service therefore had fiduciary (and contract) obligations to
manage the trust to provide fo r Pfoser’s supplemental needs. In addition, Pfoser could
enforce his interest through equitable remedies , such as suing to co mpel Lutheran Social
Service to perform its duties, to enjoin it from breaching its duties, or to replace it as trustee.
See Restatement (Second) of Trusts § 199 (Am. Law Inst. 1959). Consequently, Pfoser
had a legally enforceable interest.

22
Further, the court of appeals did not err in requiring the Commissioner to consider
evidence of valuable consideration that Pfos er would receive in th e future because the
goods and services that Pfoser expected to receive were ba sed on a legally enforceable
agreement that existed at the time of the transfer. Pfoser v. Harpstead, 939 N.W.2d at 313.
Under the statute, a transfer is not penalized merely because the transferor will not receive
the full benefit of the compensation until a later point. See Minn. Stat. § 256B.0595, subd.
1(f), (h) (exempting the purchase of annuities, promissory notes, and loans, if certain
requirements are met); accord 42 U.S.C. § 1396p(c)(l)(F), (G), (I). We therefore reject the
Commissioner’s position that a valu ation of Pfoser’s interest in the pooled special-needs
trust could not consider goods and services that Pfoser anticipated receiving in the near
future under the Trust Agreement.
Finally, the Commissioner contends that exempting Pfoser’s transfer “subverts the
purpose” of the Medicaid Act by permitting him to preserve assets for his own use and
providing a “roadmap” for others to follow. She also claims that exempting Pfoser’s
transfer under the intent exception nullifies th e automatic exemption for transfers into a
trust established for a beneficiary under age 65. See Minn. Stat. § 256B.0595, subd.
4(a)(6); 42 U.S.C. § 1396p(c)(2)(B)(iv).
We acknowledge that Medicaid is intended to be the payor of last resort. In re Estate
of Barg, 752 N.W.2d 52, 58 (Minn. 2008). Similarly, “[i]t is the public policy of this state
that individuals use all available resources to pay for the cost of long-term care services . . .
before turning to Minnesota h ealth care program funds, and th at trust instruments should
not be permitted to shield available resources of an individual.” Minn. Stat. § 501C.1206

23
(2020). But even if we agreed with the Co mmissioner that exempti ng Pfoser’s transfer
would hinder the legislative purpose, we “will not disregard a statute’ s clear language to
pursue the spirit of the law.” Lee v. Fresenius Med. Care, Inc. , 741 N.W.2d 117, 123
(Minn. 2007).
In any case, we think that the Commissioner’s fears are overstated. Pooled special-
needs trusts are unlikely to be used to hi de great wealth while creating eligibility for
Medical Assistance because of the inherent limitations of these trusts: pooled special-
needs trusts are available only to disabled persons, Minn. Stat. § 256B.056, subd. 3b(c);
the person must give up control of the funds, id.; and any unused fund s will revert to the
State, Minn. Stat. § 256B.056, subd. 3b(d). As a result, those who are likely to benefit
through the use of pooled special-needs trusts are those who, like Pfoser, are disabled and
have only modest assets that they wish to use for basic care not covered by Medical
Assistance. See Lewis v. Alexander , 685 F.3d 325, 333 (3d Ci r. 2012) (stating that the
expenses provided by a specia l-needs trust are things like “books, television, Internet,
travel, and even such necessities as clothi ng and toiletries,” which “would rarely be
considered extravagant”).
In addition, pooled special-needs trusts do not allow disabled persons to divert and
preserve assets for their heirs. Cf. Miller v. Ibarra, 746 F. Supp. 19, 34 (D. Colo. 1990)
(explaining that Congress tightened the asset-counting rules for trusts in 1986 to “prevent
wealthy individuals, otherwise ineligible fo r Medicaid benefits, from making themselves
eligible by creating irrevocable trusts in or der to preserve assets for their heirs”); Lewis,
685 F.3d at 333 (“Individuals have gained access to taxpayer-funde d healthcare while

24
retaining the benefit of their wealth and the ability to pass that wea lth to their heirs.
Congress understandably viewed this as an abuse . . . .”). All pooled special-needs trusts,
including the trust operated by Lutheran Social Service, must contain a pay-back provision
requiring any funds remaining in a sub-account after the beneficiary’s death to be used to
repay the State for the Medical Assistance benefits received by the beneficiary. Minn. Stat.
§ 256B.056, subd. 3b(d); accord 42 U.S.C. § 1396p(d)(4)(C)(iv).
Lastly, exempting Pfoser’s transfer of funds into the pooled special-needs trust does
not nullify the automatic exception in Minnesota Statutes section 256B.0595, subdivision
4(a)(6), which exempts “transfers . . . into a trust established for the sole benefit of an
individual who is under 65 ye ars of age who is disabled as defined by the Supplemental
Security Income program.” Accord 42 U.S.C. § 1396p(c)(2)( B)(iv). The automatic
exception in subdivision 4(a)(6) is just that—automatic. Exempting a disabled person age
65 or older upon a satisfactory showing of the required intent in no way nullifies the benefit
of the automatic exception for disabled pers ons who are under age 65 and need not make
an additional showing.
In sum, we conclude that Pfoser has demons trated that his equitable interest in the
pooled special-needs trust was approximately equal to the value of the $28,010 transferred
into the trust sub-account. Accordingly, we hold that Pfoser made a satisfactory showing
that he intended to receive valuable consideration and was not subject to a transfer penalty.
See Minn. Stat. § 256B.0595, subd. 4(a)(4); 42 U.S.C. § 1396p(c)(2)(C)(i). We therefore

25
conclude that substantial evidence does not support the Commissioner’s decision to uphold
the penalty.11
CONCLUSION
For the foregoing reasons, we affirm the decision of the court of appeals.
Affirmed.

ANDERSON, J., took no part in the consideration or decision of this case.

11 Because we resolve this case under the valuable-consideration standard, we do not
consider whether Pfoser intended to receive, or actually received, fair market value. See
Minn. Stat. § 256B.0595, subd. 4(a)(4) (allowing a showing of the intent to receive fair
market value “or” other valuable consideration); accord 42 U.S.C. § 1396p(c)(2)(C)(i).