Posts Tagged ‘nursing home’

Have You Considered Buying Long-Term Care Insurance?

JUNE 6, 2016 VOLUME 23 NUMBER 21
Spoiler alert: the cost of long-term care can be really high. One of the leading national insurance companies (Genworth USA) conducts an annual survey of the actual costs, breaking them down by state and even by major cities within each state. Genworth’s estimate of the cost of a semi-private nursing home bed in Tucson in 2016: $83,045 per year. (You can look up your own community’s figures on the Genworth website.)

That means a nursing home resident can expect to pay a little more than $225 for each day spent in the nursing home. Would it be much cheaper in an assisted living facility? Yes — about $39,900 per year, or almost $110 per day. That’s still a lot of money, and beyond most families’ ability to pay out of pocket, at least for any extended stay.

Maybe you’re thinking you can save some money by staying at home. Unfortunately, the costs of in-home care are somewhere between those two figures — and that doesn’t cover the costs of home maintenance, utilities, food and other costs incurred when you stay at home. The clear message: if you or someone you love requires long-term care, in Tucson or anywhere else in the United States, the costs will probably be high.

How likely is it that you will spend some time in a long-term care facility? According to the best estimates out there, people turning 50 this year have about a 50% chance of spending some time in long-term care. Actually, women have a significantly higher risk, at about 65%.

At least nursing home stays are usually short. The average length of a nursing home stay (nationwide) is about four months for men, and about seven months for women. That masks the reality, though, that about half of nursing home residents stay more than three years.

Many of our clients are adamant: “I’m not going to a nursing home,” some say. They insist that family will take care of them, or hint darkly that they have other plans in mind. Caring for a family member at home, though, is hard work — and may not be good for the failing family member, whose health care needs may be significant. We often remind family members that they do no favors by caring for a family member while destroying their own health or financial status.

One choice you might consider is long-term care insurance. While sales of such insurance have dropped sharply in recent years, there are about seven million Americans with policies designed to cover the costs of their long-term care. Is such a policy right for you?

You might want to talk with your insurance agent about LTCI (the nearly-ubiquitous name for long-term care insurance). You owe it to yourself to at least look into a policy, and figure out whether you can afford it — and whether you would benefit from having such coverage.

Many of the clients we talk with think they are too young to worry about LTCI. According to the industry, though, the ideal new policy purchaser is in his or her mid-50s. The cost of coverage for a healthy 55-year-old is so much lower that the total cost of insurance will be less when the purchase is made early. For a long time, the average age of new policy purchasers was about 70 — but it has more recently dropped to about 60, as consumers figure out they should be looking at the policies at younger ages.

How much will an LTCI policy cost you? The figures vary widely, based on your age at the time of purchase, where you live, how much of a benefit you purchase, and which company you sign up with. But the American Association for Long-Term Care Insurance (an industry trade group) estimates that the average cost of a new policy for a 55-year-old will be about $2,000/year. That premium figure will buy you about $150/day coverage with a 3% annual automatic inflation adjustment and three years’ worth of coverage. Note that the $150/day benefit will only cover about 2/3 of the total nursing home cost in the Tucson area; that’s not necessarily a bad thing, since you’ll probably have some other income available if you do need to be placed in long-term care.

One piece of good news: there are only a relative handful of companies offering LTCI, so you won’t have to talk with (or research) that many. In fact, there are fewer than one dozen companies writing traditional LTCI policies at a frequency that shows a serious commitment to the product.

You need to remember that, once you buy a policy, premium costs can (and do) go up. Those premium increases, though, are keyed to the entire base of participants — and not to your own health changes, or local cost movement. That has been one of the things that scares consumers off from purchasing LTCI, however.

You might ask your insurance agent about hybrid LTCI/Life Insurance policies. They usually require much bigger premiums but for a short period of time (they might, for instance, require $10,000 payments for each of five or ten years). Once the investment is made, though, you have an LTCI benefit and a life insurance policy, so that your estate will get back your investment (and a small return) even if you do not require long-term care.

The bottom line: don’t just ignore this problem. Look into what you need to do to protect against the high cost of long-term care.

Nursing Home Arbitration Provision Voided in Arizona Case

FEBRUARY 1, 2016 VOLUME 23 NUMBER 5

A recent series in the New York Times chronicled the increasingly common practice of including arbitration agreements in all sorts of consumer contracts. The series noted that such provisions are often buried in the fine print of everything from job applications to car rentals to nursing home admission agreements.

Why is this important? Because limiting consumers to arbitration proceedings to resolve disputes means they are likely to recover less, they will have a harder time hiring a lawyer, and they will be unable to sue at all for the kind of small-claim injuries that frequently arise. The very prevalence of arbitration agreements shows just how valuable they are to employers, car rental agencies, nursing homes and other businesses.

One arbitration issue that comes up frequently for the elderly (and their family members and loved ones) is in the care received in nursing homes or other long-term care facilities. Very nearly every nursing home admission agreement we have seen in recent years has included a provision mandating that all disputes must be submitted to arbitration — though the provision is usually buried deep in the admission agreement’s fine print.

Nursing home patients have one advantage not available to most other consumers, however — the nursing home admission agreement usually permits the applicant to decline the arbitration provision. Sometimes that is mandated by state law, and the federal government has indicated an interest in prohibiting mandatory arbitration provisions nationwide. For the moment, though, nursing home patients can usually simply cross out the provision on admission, and breathe more easily because the nursing home can be held to task for any failures in care or management.

When the mandatory arbitration provision is signed, though, the patient and family may not be able to file lawsuits for any later breach by the nursing home. That is not always the case, however, as shown in a new Arizona Court of Appeals decision issued last week.

Arthur Edwards (not his real name) admitted his mother Marta to the Hacienda Nursing and Rehabilitation Center in Sierra Vista, Arizona, in 2010. He later explained that her admission came after he found that he was unable to care for her in his home, and Adult Protective Services let him know that if he did not place her they would initiate proceedings.

By the time Marta arrived at Hacienda, her dementia was already advanced — she could not sign the admission agreement herself. Though Arthur did not have a power of attorney signed by his mother, and was just one of her several children, he signed the admission agreements for her. He also signed a provision agreeing to submit any dispute to arbitration.

Marta died at Hacienda a year later. Arthur believed that her death was hastened by the care she received at Hacienda, and a year after her death he filed a lawsuit on behalf of her estate. Hacienda responded by asking the judge to dismiss the lawsuit and tell Arthur he had to submit the case to arbitration instead.

The trial judge agreed, and dismissed the lawsuit. Arthur appealed, arguing that he didn’t actually have any legal authority to consent to arbitration on his mother’s behalf. Hacienda argued that he was acting on her behalf, that in fact he had authority to act even if he didn’t have a signed power of attorney, and that he had acted on her behalf in other matters, as well.

The Arizona Court of Appeals reversed the dismissal of the lawsuit, and sent it back to the lower court for a trial on the merits. The appellate judges distinguished the facts in Marta’s case from an earlier Arizona case, in which a wife signed her husband into the nursing home (and agreed to a mandatory arbitration provision). Arthur’s legal relationship to his mother was not as clear as the one between spouses, ruled the court. There was insufficient evidence that any of Arthur’s custom of taking care of his mother’s finances and care arrangements amounted to authority to waive her right to have her claims tried in a court. Escareno v. Kindred Nursing, January 29, 2016.

What does Marta’s case mean for consumers in Arizona? First, and most importantly: do not sign a nursing home admission agreement without looking for and crossing out the arbitration provision. Be on the lookout for arbitration provisions on readmission after hospitalization, or in moves between facilities.

Paradoxically, Arthur prevailed partly because he had not done what he should have. He really needed to get some legal authority over his mother’s affairs — whether by a power of attorney or by court proceedings seeking appointment as her guardian and/or conservator. Instead, he basically filled out his mother’s checks and had her sign them until she was unable to, then managed to get her to consent to putting his name on her bank account. If he had gotten a durable power of attorney signed, he would probably have lost his argument that he had no authority to sign the arbitration provision on her behalf.

Is there any other way to avoid mandatory arbitration provisions? Perhaps. The Court of Appeals in Marta’s case was asked to rule that arbitration provisions amount to a “contract of adhesion” — a legal term meaning that consumers are not presented with any real choices and therefore should not be bound by the agreements. The appellate judges took pains to note that that argument might still be available, but that it was unnecessary to reach it in Marta’s case because of the way in which the agreement was signed.

Please note: we are explaining some of the practice and significance of the mandatory arbitration provisions commonly found in admission documents for nursing homes, care homes and other facilities. We have not touched on another pervasive and objectionable practice: asking family members to sign guaranteeing payment of future care costs. There are other problematic provisions in such contracts, and we urge you to seek legal counsel before signing any admission agreement.

“Filial Support” Laws and Nursing Home Collections

We read an interesting article today, posted on the Elder Law Prof Blog. It includes an interview with the child of a nursing home resident — the child (not the resident) was successfully sued for a portion of her mother’s nursing home bill. We thought it would be of interest to our readers, as well.

This is a topic we have discussed here (with the able help of Prof. Katherine Pearson, one of the Elder Law Professors in charge of the blog linked above). It is a worrisome issue, though we have not seen the tactic employed in Arizona.

Nursing Home Arbitration Agreement May Not Be Enforceable

NOVEMBER 17, 2014 VOLUME 21 NUMBER 42

If you have recently signed a family member (or a friend, or yourself) into a nursing home or other care facility, you probably have been presented with an agreement to submit all disputes to arbitration. Such provisions are very popular among the facilities themselves, though most individuals who sign them may not understand or appreciate what they are agreeing to. A recent Arizona appellate decision calls the scope of those provisions into question.

Martha Anderson (not her real name) was admitted to a Phoenix-area nursing home four different times in 2011, as her condition worsened and improved several times. After each of the first two admissions, her daughter Mary signed documents on Martha’s behalf. The documents included an agreement, on behalf of her mother, to submit any disputes that might arise between Martha and the nursing home to the arbitration process. For the third and fourth admissions, no one asked her to sign the arbitration agreements again.

Martha’s condition worsened, and she died in the nursing home in 2012. Mary initiated a probate proceeding and then sued the nursing facility, alleging both that the facility’s care led to her mother’s death and that the care amounted to abuse or neglect of a vulnerable adult. The nursing home moved to dismiss the lawsuits, pointing out that Mary had agreed to arbitration instead of a court trial.

The judge hearing Mary’s lawsuit agreed, and dismissed her case. That meant that Mary would have to submit to binding arbitration. Instead, she appealed the dismissal.

The Arizona Court of Appeals agreed with Mary, at least in part. The appellate court determined that the arbitration agreement was not enforceable as to either of the primary portions of Mary’s lawsuit. First, the judges noted that Mary signed the agreement on her mother’s behalf, not her own — and the wrongful death claim she had brought against the nursing home belonged not to her mother (or her mother’s estate) but to the surviving family members. If Martha had signed the agreement, she could not force her children to submit their claims to arbitration, and so Mary could not bind them when signing on her mother’s behalf.

In the particular facts of Martha’s nursing home admissions, the appellate judges also declined to apply the arbitration agreement to the remaining abuse/neglect claims. Because no new arbitration agreement was signed for the third and fourth admissions, Mary had not agreed to arbitrate her mother’s claims arising during those stays.

Mary had also argued that the arbitration agreements were unenforceable because they were simply unconscionable. The appellate judges rejected that argument, finding that she had not shown that the method of securing her signature, or the cost of arbitration would be an undue burden on her. Of particular importance in this finding: both of the agreements that Mary signed clearly indicated that they were voluntary, that her signature was optional, and that her mother’s admission and care would not be affected if she did not sign the agreements. Estate of Aspeitia v. Life Care Centers, Inc., October 21, 2014.

Why would someone in Mary’s position voluntarily sign an agreement to submit any future claims to binding arbitration? It is not clear, as there are few benefits accruing to the patient in such a situation. Benefits to the facility are much more obvious: the arbitration process is much less expensive, less likely to result in significant awards, and less prone to the strong reactions that jurors sometimes evidence.

This is not the first time Arizona courts have addressed arbitration agreements in nursing home settings. In 2013 we reported on another case, in which the Arizona Court of Appeals ruled that the arbitration agreement was unconscionable. Why was that agreement overturned, while Martha’s agreement was voided only because it was not signed for her last two admissions? Because in the 2013 case, the evidence was clear that the patient (who was still living and filing the lawsuit himself) would have to come up with over $20,000 just to initiate the arbitration proceeding.

What message does Martha’s case have for others? First, it needs to be clear that it is limited to Arizona — other states have addressed similar agreements to submit to binding arbitration, and they have been approved or rejected based on both similar and different theories. State law really does matter.

Perhaps a better question to consider, though, is what you might do when admitting a loved one to a nursing facility. Should you sign an arbitration agreement? What happens if you do not?

First, the arbitration provisions will probably be in a separate document or separately spelled out in a combined agreement (requiring your signature on that section). The arbitration provisions are likely to have language like Mary confronted, too — telling you that your signature on that section (or that separate form) is optional. Don’t sign that provision and you will not be bound by it. We think you ought to go further, in fact. Cross out the arbitration portion. Write “no” next to it. Make it clear that you didn’t just forget to sign, but that you specifically refuse the offer of binding arbitration.

Should you have a lawyer review your nursing home contract before you sign? Yes. Here’s an important benefit: it buys you time, to consider the significance and effect of your signature. Tell the facility that you’ll get the agreement back to them as quickly as you can get with your lawyer and review it.

What you really want, of course, is not to have a claim against the nursing facility at all. In other words, you want your family member’s care to be excellent, and to have no adverse outcome. To that end, keep close tabs on the care at the facility. Challenge staffing levels, care decisions, diagnoses and accommodations made by the facility. You want the caretakers (and, in fact, the facility itself) to view you as a concerned advocate, and not an angry and dissatisfied irritant — but you want to maintain your level of concern and oversight.

Good luck. It is really difficult to have a family member in the nursing facility. It is more difficult for them; help them as ably as you can.

Nursing Home Bills and “the Doctrine of Necessaries”

JULY 8, 2013 VOLUME 20 NUMBER 25
Under the English common law (inherited, to a greater or lesser degree, by all the states of the U.S.), a husband was obligated to support his wife and children. Because women could not legally enter into enforceable contracts, a person who provided goods or services to a woman (or a minor child) on credit might not be able to enforce the collection of the debt. Even if a merchant sold (for instance) food to a married woman on credit, the merchant ran the risk that he might never collect on the debt.

This commercial problem gave rise to a principle of the English common law called “the doctrine of necessaries.” If a merchant provided goods or services to a married woman or minor child, he would be able to collect from the husband/father — if the sale was for “necessaries.” That usually meant food, shelter, clothing, medical care and the like.

Today, where it still exists, the doctrine of necessaries is applied in a gender-neutral way. A husband OR wife might be sued for the “necessaries” provided to his or her spouse. One key step before bringing the action, though, is that the spouse to whom the necessaries were provided must first be determined to be unable to pay for his or her own care.

That neatly sets up the scenario in a recent Indiana Court of Appeals case. Marjorie and Orson (not their real names) were married; Marjorie was admitted to a nursing home. Eventually Marjorie was made eligible for Medicaid, which paid for much of her nursing home care. By the time of her death, though, she had a $5,871.40 unpaid bill at the nursing home.

The nursing home tried to collect from Marjorie’s family. They wrote to her daughter Wilma, who had signed her into the home (and had, incidentally, foolishly signed the admission papers as “guarantor”). They wrote to Orson. They did not get paid. Then they sued Orson and Wilma. When Orson died before the litigation was resolved, the nursing home made a claim against Orson’s estate. The nursing home’s argument: under Indiana’s version of the doctrine of necessaries, he was responsible for his wife’s nursing home bill, and it should be collectible from his estate.

The trial judge denied the nursing home’s claim, reasoning that the home should first have brought legal action against Marjorie (while she was still alive) or her estate. Besides, ruled the trial judge, it was Wilma who had signed her mother into the nursing home, not Orson.

The Indiana Court of Appeals upheld the denial of the claim. The three judges deciding the case first noted that the doctrine of necessaries might no longer be relevant in any event. If it is, though, the person making a claim under it must go through the steps required to pursue the claim. The nursing home should first have sued Marjorie or her estate; as a creditor, they could have opened an estate in Marjorie’s name to officially determine that she died without assets. Just saying that she had nothing, or even that she was a Medicaid patient and so must not have had anything, was not enough. Hickory Creek at Connersville v. Estate of Combs, June 27, 2013.

Let us assume for a moment that Marjorie’s estate was in fact insolvent. If the nursing home had initiated a probate proceeding, determined that she had no assets and then filed against Orson (and later his estate), they might have collected. But now they will be precluded from doing so; the time for presenting claims against Orson’s estate will have expired, and even if a new filing was made to establish Marjorie’s lack of assets there would be no opportunity to pursue the estate.

It is less clear (at least from the Court of Appeals decision) whether the nursing home could still pursue daughter Wilma. She did sign the admission document, and as “guarantor.” The resolution of the claim against her father’s estate does not necessarily resolve the nursing home’s lawsuit against Wilma. The lesson for others is clear: if you sign a nursing home admission agreement for another person (as, say, agent under a power of attorney, or conservator of the estate, or next of kin), make sure you cross out any reference to being a “guarantor” or “responsible party.”

But back to the doctrine of necessaries: does it still exist in Indiana? Yes, according to the Court of Appeals — though its vitality is doubtful.

What about Arizona? Remember that Arizona is a community property state, which means that the obligations of one spouse may not always be the responsibility of the other. Does this mean that the doctrine of necessaries does have vitality in Arizona? Probably not — though there are three reported Arizona Court of Appeals decisions about the doctrine. All three of them, however, involve failed attempts to apply the doctrine to care provided for minor children. In two of them, in fact, the doctrine was raised by out-of-state government agencies who provided welfare benefits to minors, and sought recovery against an Arizona father. Neither court allowed the doctrine of necessaries to apply — but mostly because the agencies have perfectly good rights to recovery under federal child-support rules.

Incidentally, the doctrine of necessaries is different from (even though similar to) so-called “filial support” or “filial responsibility” laws (we have provided information about filial support laws before). The concept of necessaries grew from a common law notion, and was originally applied exclusively to the provision of goods and services to married women and minor children. Filial support laws are state enactments that create a different liability — a child might be liable for an impoverished parent’s care under those newer laws, where they exist.

 

“Filial Support” Laws: Making Children Pay for Their Parents’ Nursing Home

JULY 30, 2012 VOLUME 19 NUMBER 29
When your parents go to the nursing home, could you be liable for their bills? That may seem unlikely, but as the country’s leading authority on the subject (Prof. Katherine Pearson from the Dickinson School of Law at Pennsylvania State University) notes, there are laws on the books in many states which could make children pay for their indigent parents’ care. Prof. Pearson guest-authored this week’s Elder Law Issues, and she explains the problem and trends:

The latest controversial effort to reduce public costs for long term care may come not from the budget cutters at state and federal offices for Medicare or Medicaid, but from nursing homes, assisted living facilities or personal care homes. Pennsylvania is the proving ground for the test – and other states are watching.

Over the course of several years, nursing homes have increasingly turned to Pennsylvania’s filial support law as a tool to compel children to either help a parent qualify for Medicaid — or be at risk of paying for the parent’s bills out of their own pockets. Pennsylvania’s provision dates to colonial times, but a 2005 transfer from the welfare laws to the domestic relations code increased its visibility. The law provides that a child has the “responsibility to care for and maintain or financially assist” a parent, if the parent is deemed “indigent.” The statute does not define the term, but case law has given it a practical meaning by holding a parent is indigent if he or she does not have sufficient means to pay for care.

Occasionally a suit is brought by a needy parent against a child. In 1994, in the case of Savoy v. Savoy, an uninsured mother who had $10,000 in unpaid medical expenses sued her son. The result: a modest award of $125 per month, perhaps more significant for its symbolic value than for the economic effect in the case itself.

Since then, a series of cases and decisions has expanded the importance of the law in Pennsylvania. The latest case was decided by an intermediate appellate court in May, 2012. In Health Care & Retirement Corporation of America vs. Pittas, the Pennsylvania Superior Court affirmed a trial court award of more than $92,000 against the son of a woman who had received six months of care at a facility. The son raised several challenges to the trial court ruling, including the argument his mother could not be deemed “indigent” because she had modest monthly income of $1100. The son argued this income, plus her husband’s retirement income, was enough for the couple if they had not had the auto accident that led to hospitalization and extraordinary costs for her subsequent care in a nursing home. The court rejected the argument and repeatedly cited the “plain language” of the statute as the reason for the harsh result.

The son also argued unsuccessfully that he could not be held solely liable because other family members had not been sued. While the court said it was “sympathetic with the [son’s] obligation to support his mother without the assistance of his mother’s husband or her other children,” it was up to the son to join those individuals in the case if he wanted proportionate relief. The court also rejected the son’s argument that the suit should be stayed or set aside because of a pending Medicaid application, noting that any successful award could reduce his liability. In fact, although not acknowledged in the opinion, the Medicaid application had been denied, apparently because of questions raised during the application process, and the time for appeal had lapsed.

The Pittas opinion is significant because, unlike prior court rulings such as the 2005 ruling in Presbyterian Medical Center v. Budd, the court made no findings that the family had engaged in transfers or other unsuccessful efforts to avoid Medicaid eligibility rules. The court found the son’s claim of “inability” to pay for his mother’s care to be lacking in credibility, noting he had at least $85,000 in net annual income. But the court did not suggest the son was at “fault” for his mother’s indigent status. This was not a case where liability was tied to a family member’s efforts to divert assets.

Could a Pittas-style filial support ruling be coming soon to a state court near you? The answer is already “yes” in South Dakota. In 1994 and again in 1998, South Dakota appellate courts used South Dakota’s filial support law to enforce liability against adult children for health care or long-term care expenses of a parent. However, in those cases, it appears the rulings were tied to attempts to divert or hide the parent’s assets. According to news reports, some states, such as North Dakota, have already expressed interest in the Pittas ruling. Another state, Idaho, went the opposite direction in 2011 by repealing its filial support law entirely, citing the potential for confusion for families with nursing home costs.

Approximately 28 states have some type of civil or criminal filial support law on their books, although the enforceability of many of the state laws have been blocked or limited because of state rules on Medicaid. In most states filial support laws have been largely ignored in recent years. Pennsylvania is one of the few states that expressly provides for suits by care facilities or similar third-parties. The Pennsylvania statute permits a petition to be filed by the indigent person “or any other person . . . having any interest in the care, maintenance or assistance of such indigent person.”

Filial support laws carry various labels, with modern terms tending to suggest moral overtones that emphasize a family’s obligation to share “responsibility” for care. States seeking to provide nursing homes with collection tools that reduce the need for Medicaid may seek to follow the Pennsylvania route to a new frontier. The 2005 transfer of the filial support statute to the domestic relations code was rushed through the Pennsylvania legislature quickly and packaged with a cost-savings statute that tightened the state’s rules for Medicaid eligibility. Interested persons in other states will want to keep their eyes open.

Interested in the area, or wondering what your state’s laws might be with regard to filial support? For a more expansive discussion of such laws, including the roles they play in other countries, see Prof. Pearson’s recent article: “Filial Support Laws in the Modern Era.” As Prof. Pearson notes, these laws are sometimes described in terms of filial “responsibility” — as long ago as 1995 we wrote about an attempt to extend “family responsibility” laws by federal action (it came to nothing, as it turned out), and we have described individual cases attempting to impose filial support concepts before. The trend Prof. Pearson describes, however, could go well beyond previous attempts to hold children liable for their parents’ long-term care costs.

Personal Services Agreement Upheld As Payment for Value

APRIL 2, 2007  VOLUME 14, NUMBER 40

When Mary Brewton entered a Louisiana nursing home in January, 2003, her husband Marvin stayed in their family home. The value of the home was not considered in calculating her eligibility for Medicaid assistance with the nursing home costs, and so she qualified immediately. When her husband moved into the nursing home with her three months later, however, their home went on the market—and ultimately was sold late in the same year.

While the home was listed for sale, the Brewtons entered into a personal services agreement with three relatives. They agreed to pay a lump sum of $150,000 once the home was sold, and the relatives agreed to provide services for as long as either Mr. or Mrs. Brewton should live. A few months after the sale of the home, $118,805.22 was transferred to the relatives, and Mr. Brewton applied for Medicaid assistance with his own nursing home costs soon thereafter.

When the state Medicaid agency considered Mr. Brewton’s application, it realized that the payment could affect Mrs. Brewton’s application for benefits. After deciding that the transfer of her one-half interest in the sale proceeds had been a gift to the relatives, the agency withdrew her Medicaid assistance; she appealed, but an Administrative Law Judge agreed with the agency.

A state judge reversed the agency’s denial of Medicaid. In the judge’s view the promise to perform work for Mr. and Mrs. Brewton for the rest of their lives had some value, and he ruled that the Medicaid agency had not shown that the transfer exceeded that value.

The Louisiana Court of Appeal agreed with the trial judge, over the Medicaid agency’s objections that there could be no valuable services to perform since Mrs. Brewton’s care was being provided by Medicaid Far from taking care of all of her needs, said the appellate judges, Medicaid left a number of tasks to the relatives, including handling the couple’s financial dealings; cleaning up, listing and ultimately selling the house; replacing clothing lost in the nursing home’s laundry; and obtaining replacement hearing aids for Mr. Brewton (who, like many long-term care patients, persistently lost or mislaid his hearing aids).

In addition, the relatives visited the Brewtons regularly and helped ensure that Mr. Brewton cooperated with the nursing home staff despite his growing confusion. On one occasion Mr. Brewton left a hospital and had to be physically returned by the relatives. In short, the personal services contract provided value for the $150,000 payment, and it should not have been treated as a gift. Brewton v. State of Louisiana Department of Health and Hospitals, March 13, 2007.

Compare the Brewton holding, however, to the similar case involving Marion Andrews of Swampscott, Massachusetts. Mrs. Andrews owned her home, a lovely but deteriorating Victorian, which she could not afford to keep after she moved into a nursing home. Her daughter and son-in-law considered offers in the range of $150,000 to $175,000, and obtained the estimate of a real estate agent that they might get as much as $225,000 for the home. Instead, they took leaves of absence from their own work, invested a small amount (about $2,600) in paint and other supplies, and spent the next year working on fixing up the house.

When Mrs. Andrews’ daughter finally completed the work and sold the house, it fetched $429,000. Even as the sale of Mrs. Andrews’ home was closing, her daughter discovered for the first time that her mother could qualify for Medicaid assistance if the net sale proceeds were below a certain level, and so she created a $100,000 “invoice” for her and her husband’s work in fixing up the home. After payment of that invoice amount to themselves, they applied on Mrs. Andrews’ behalf for Medicaid assistance.

The state Medicaid agency denied eligibility, finding that the payment was actually a gift by Mrs. Andrews because there had not been any agreement that her daughter and son-in-law would be compensated for their work. The Massachusetts Superior Court agreed. While Mrs. Andrews’ daughter and her husband clearly “put a great deal of time and effort into the renovations,” there was no indication that Mrs. Andrews intended to pay them for their work from the outset, or even as the work progressed. In fact, ruled the judge, it appeared that the primary motivation for the invoice may have been to secure Medicaid eligibility rather than to compensate Mrs. Andrews’ daughter for any agreed-upon work arrangement. Andrews v. Division of Medical Assistance, February 14, 2007.

What are the combined lessons of the Brewton and Andrews cases? Two points, at least, can be extracted:

  • An agreement for legitimate services, even services to be performed prospectively, can be an appropriate payment from a prospective Medicaid applicant’s funds, and
  • Any such agreement should be prospective (entered into before the work is undertaken), in writing, and for a fair amount considering the work which will actually be undertaken.
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