A New York appeals court holds that a continuing care retirement community (CCRC) resident is required to spend the assets disclosed in the CCRC’s admission agreement on nursing home care before applying for Medicaid. Good Shepard Village at Endwell Inc. v. Yezzi (N.Y. Sup. Ct., App. Div., 3^rd Dept., No. 520621, Nov. 5, 2015).

Hazel and Peter Yezzi moved into a CCRC after signing an admission agreement that disclosed their assets. The contract with the CCRC provided that that the Yezzis could not transfer their assets for less than fair market value if it would impair their ability to pay their monthly fees. Mrs. Yezzi entered the nursing home, transferred her assets to Mr. Yezzi, and applied for Medicaid. The CCRC refused to accept the Medicaid payments.

The CCRC sued Mr. Yezzi (Mrs. Yezzi died in the nursing home) for breach of contract and fraudulent conveyance, arguing that the Yezzis were obligated to use the funds disclosed in the CCRC admission agreement before applying for Medicaid. The trial court granted the CCRC summary judgment, and Mr. Yezzi appealed.

The New York Supreme Court, Appellate Division, 3^rd Dept., affirms, holding that Mrs. Yezzi’s transfer of assets for less than fair market value constitutes a breach of contract. According to the court, under federal and state law the CCRC “could require a resident to first spend the resources identified upon admission before applying for Medicaid” because “the essence of the CCRC financial model requires a tradeoff between the resident and the facility, in which the resident must disclose and spend his or her assets for the services provided, while the facility must continue to provide those services for the duration of the resident’s lifetime even after private funds are exhausted and Medicaid becomes the only source of payment.”

For the full text of this decision, go to: http://www.nycourts.gov/reporter/3dseries/2015/2015_08031.htm

A New York appeals court holds that a Medicaid applicant who transferred money when she was in good health and two years before entering a nursing home presented enough evidence to rebut the presumption that she transferred the money in order to qualify for Medicaid. Sandoval v. Shah (N.Y. Sup. Ct., App. Div., 2^nd Dept., No. 2014-11442, 2767/13, Sept. 30, 2015).

Between May 2007 and April 2008, Cecelia Sandoval made several transfers to her children to help them pay bills. She had more than $250,000 in assets remaining after these transfers. In 2010, Ms. Sandoval began exhibiting signs of dementia and entered an assisted living facility and eventually a nursing home. After she depleted her assets, she applied for Medicaid. The state imposed an 11-month penalty period.

Ms. Sandoval appealed the penalty period, arguing that the transfers were not made in anticipation of the need to apply for Medicaid benefits. The state affirmed the penalty period, and Ms. Sandoval appealed to court. 

The New York Supreme Court, Appellate Division, grants her benefits, holding that Ms. Sandoval presented enough evidence to rebut the presumption that she transferred assets in order to qualify for Medicaid. The court rules that the fact that at the time of the transfers, Ms. Sandoval was in good health and living independently and that she still had $250,000 in assets after making the transfers is evidence the transfers were not motivated by a future need for Medicaid.

For the full text of this decision, go to: http://www.courts.state.ny.us/courts/ad2/calendar/webcal/decisions/2015/D46559.pdf

A narrowly divided Ohio Supreme Court rules that the transfer of a home between spouses prior to Medicaid eligibility is an improper transfer and is subject to the community spouse resource allowance (CSRA) cap.  Ohio ElderLawAnswers member Thom L. Cooper of Cooper, Adel & Associates was among those representing the plaintiff. Estate of Atkinson v. Ohio Department of Job and Family Services (Ohio, No. 2013–1773, Aug. 26, 2015).

In 2000 Marcella Atkinson and her husband transferred their home into a revocable living trust. In April 2011, Mrs. Atkinson entered a nursing home and soon applied for Medicaid benefits. In August 2011, following Medicaid’s “snapshot” of the couple’s assets, the home was removed from the trust and placed in Mrs. Atkinson’s name. The next day, Mrs. Atkinson transferred the house to her husband. The state determined an improper transfer had occurred and imposed a penalty period.  Mrs. Atkinson passed away, and her estate appealed to court, arguing that under federal and state statutes a spouse is not ineligible for Medicaid for transferring a home to the other spouse and that an institutionalized spouse may transfer unlimited assets to the community spouse between the date the spouse is institutionalized and the date that the spouse’s Medicaid eligibility is determined. The estate lost at both the trial court and the Ohio Court of Appeals, and the estate appealed.  

In a 4-3 decision, the Supreme Court of Ohio rules that transfers between spouses are not unlimited after the snapshot date and before Medicaid eligibility and that such transfers are proper only up to the amount that fully funds the CSRA. The court rejects the estate’s reliance on the Sixth Circuit Court of Appeals’ holding in Hughes v. McCarthy (6th Cir., No. 12-3765, Oct. 25, 2013) that an annuity purchased by a community spouse before a Medicaid eligibility determination is not an improper transfer, finding that the purchase of annuities are subject to special rules and “not applicable under these facts.”  The court, however, remands the case for review of the penalty imposed because the Medicaid agency may have applied the wrong statute.  “Neither federal nor state law,” the court writes, “supports the agency’s confiscation, after the CSRA has been set, of the entire amount of transferred assets, some or all of which may have already been allocated to the community spouse on the snapshot date.”

A dissent joined by three justices states that “What this family did is and was permitted by state and federal law. . .  the home is explicitly excluded from the definition of ‘resources’ for purposes of establishing the CSRA.” [emphasis in original]

For the full text of this decision, click here.

For an earlier article on the oral arguments in the case and a link to the video of those arguments, click here.

For a brief commentary on the Ohio court’s decision by Penn State Dickinson Law professor Katherine C. Pearson, click here.