Wrong Advice From Eligibility Worker Leads to Loss of Home

APRIL 25, 2005  VOLUME 12, NUMBER 43

The Medicaid worker was helpful, seemed to understand the question and knew the answer. The applicant’s guardian/conservator asked the right question. Unfortunately, the worker’s answer was just plain wrong. When the guardian/conservator relied on that wrong information, he lost out—and lost the Medicaid recipient’s home after her death.

Richard Knori was his grandmother’s guardian (of the person) and conservator (of the estate) because she could not handle her own affairs. He knew that he would have to place her in a nursing facility of some kind, and so he contacted the local Medicaid office about assistance with the cost of her care. Eligibility worker Hazel Staley assured Mr. Knori that his grandmother could qualify for Medicaid while retaining her home, and that the state would not take the home after her death.

Mr. Knori did apply for Medicaid for his grandmother, and she was picked up by the program in April, 1995. By the time of her death in 2001 she had received $259,446.38 in Medicaid assistance. After her death, Mr. Knori moved to probate her estate and dispose of her home, the only significant asset she had been allowed to retain.

The Medicaid agency promptly made a claim against the estate for the value of its services—effectively demanding her home or the entire proceeds from any sale. Mr. Knori objected, pointing out that he had relied on the misinformation he had gotten from Ms. Staley. He maintained that the state should be bound by what he had been told (what in the law is called “equitable estoppel”).

The Wyoming Supreme Court disagreed. Although the state high court did not condone the Medicaid worker’s mistake, it held that Mr. Knori had not shown “affirmative misconduct” on the part of the eligibility worker. In the absence of such a showing, Mr. Knori could not rely on what he had been told by a state employee. Knori v. State Department of Health, Office of Medicaid, April 14, 2005.

What might Mr. Knori have done differently if he had gotten accurate information? He might have been able to sell the home, apply a portion of the proceeds to his grandmother’s nursing home care and use the rest for care needs that would not be provided by Medicaid. He might even (with court approval) have been able to make a gift to family members—especially if any one of them suffered from a disability. He could have purchased an interest in the home himself (again with court approval) in a manner that preserved it after his grandmother’s death.

The moral: you rely on government workers for an explanation of Medicaid and other complicated programs at your own peril. No matter how helpful, friendly and well-informed they are, it makes sense to seek complete information.

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