April 11

Medicaid Applicant Who Transferred Assets in Exchange for Promissory Note May Proceed with Suit Against State

A U.S. district court holds that a Medicaid applicant who was denied Medicaid benefits after transferring assets to her children in exchange for a promissory note may proceed with her claim against the state because Medicaid law confers a private right of action and the Eleventh Amendment does not bar the claim. Ansley v. Lake (U.S. Dist. Ct., W.D. Okla., No. CIV-14-1383-D, March 9, 2016).

Beverly Ansley and her husband owned a farm. They loaned their children cash and mineral rights and received a promissory note in exchange. Ms. Ansley applied for Medicaid benefits, but the state denied the benefits due to a lease of the farmland and the promissory note.

Ms. Ansley filed a lawsuit in federal court against the state, asking for retroactive, injunctive, and declaratory relief. She argued that her husband had terminated the farming lease, so it was no longer an issue, and that the promissory note was not a countable resource. The state filed a motion to dismiss, arguing that the statutory and regulatory provisions at issue do not grant an enforceable right under § 1983 and that the Eleventh Amendment barred Ms. Ansley’s claims for relief.

The U. S. District Court, Western District of Oklahoma, denies the motion to dismiss in part. The court holds that federal Medicaid law regarding a Medicaid applicant’s eligibility for Medicaid after transferring assets does confer a private right of action under § 1983. While the court dismisses Ms. Ansley’s claim for declaratory relief, the court holds that the Eleventh Amendment immunity does not bar claims for injunctive or retroactive benefits.

For the full text of this decision, go to: https://scholar.google.com/scholar_case?case=2840169799270331621&hl=en&as_sdt=6&as_vis=1&oi=scholarr

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April 7

No Undue Hardship Waiver for Medicaid Recipient’s Estate that Sold House Before Waiver Was Requested

Reversing a trial court, a Michigan court of appeals holds that the estate of a Medicaid recipient is not entitled to an undue hardship exception to estate recovery applicable to estates with houses of modest value because the house had been sold before the hardship waiver was requested. Ketchum v. Department of Health and Human Services (Mich. Ct. App., No. 324741, March 1, 2016).

Wilma Ketchum received Medicaid benefits until her death. After she died, her house was sold for less than half the average value of other houses in the county. The state filed a claim to recover Medicaid benefits paid on her behalf. Ms. Ketchum’s estate denied the claim, arguing that it was entitled to a hardship waiver. Under state law, an undue hardship exists if the estate consists of a home of modest value. State regulations provide that hardship waivers are temporary and expire when the reason for the waiver no longer exists.

The state denied the estate’s request for a hardship waiver because the house had been sold before the waiver was requested. The estate appealed, and an administrative law judge ruled in favor of the state. The trial court reversed, holding that state law required an exemption for houses valued at equal to or less than 50 percent of the average price of a home, and that regulations limiting that exemption were not valid. The state appealed.

The Michigan Court of Appeals reverses, holding that the undue hardship waiver did not apply because the house had been sold. According to the court, once a house has been sold and “turned to cash, the condition that caused the undue hardship, the presence of a home of modest value, no longer exists and the ability to obtain an undue hardship waiver necessarily expires.”

For the full text of this decision, go to: http://publicdocs.courts.mi.gov:81/OPINIONS/FINAL/COA/20160301_C324741_67_324741.OPN.PDF

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April 4

Medicaid Applicants Entitled to Post-Default Notice Before Case Is Abandoned

A U.S. district court reverses a previous decision and grants a preliminary injunction to a group of Medicaid applicants who argued they are entitled to a post-default notice before their Medicaid application is considered abandoned. Fishman v. Daines (U.S. Dist. Ct., E.D. N.Y., No. 09-cv-5248(JFB)(ARL), Mar. 4, 2016).

Once New York State determines a Medicaid applicant is no longer entitled to Medicaid, it sends a letter notifying the applicant that he or she may request a fair hearing. The state then sends two more letters, notifying applicants that a fair hearing has been requested and scheduled. If an applicant misses the hearing, a default judgment will be entered against him or her.

Two Medicaid applicants initiated a class action against the state of New York, claiming that the state does not provide proper notice before entering a default judgment. The applicants asked for a preliminary injunction, requiring the state to mail a default notice to applicants before their appeals are abandoned. The state Medicaid manual provides that a case is considered abandoned after the applicant misses a hearing and does not respond to a mailing inquiring whether the applicant wishes further action. The U.S. district court denied the preliminary injunction, finding that the applicants received sufficient notice. The applicants appealed, and the U.S. Court of Appeals for the Second Circuit reversed and remanded, ordering the district court to consider whether the rights conferred in the federal regulations governing dismissal of appeals are broader than what is guaranteed by the due process clause.

The U.S. District Court, Eastern District of New York, grants the preliminary injunction, holding that the applicants have shown a likelihood of success on the merits based on federal and state regulations. According to the court, federal regulation requires that the state cannot dismiss a Medicaid fair hearing request without good cause and the state Medicaid manual requires that notice be provided before a claim is abandoned, so before dismissing an appeal as abandoned, the state must send out a post-default notice.

For the full text of this decision, go to: https://www.gpo.gov/fdsys/pkg/USCOURTS-nyed-2_09-cv-05248/pdf/USCOURTS-nyed-2_09-cv-05248-2.pdf

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March 31

Resident’s Son Who Made Improper Transfers Did Not Owe Nursing Home Fiduciary Duty

A Massachusetts appeals court rules that the son of a nursing home resident who breached his fiduciary duty to his mother by transferring assets to himself is not liable to the nursing home for his mother’s unpaid bill because he did not owe the nursing home a fiduciary duty. Merrimack Health Group v. Heroux (Mass. App. Div., No. 15–ADMS–10024, Feb. 25, 2016).

Muriel Heroux named her son, Robert, as her agent under a power of attorney and he transferred money to himself. When Ms. Heroux entered a nursing home, she applied for Medicaid. The state denied benefits based on the transfers to her son.

After Ms. Heroux died without paying the nursing home for two months of care, the nursing home sued Mr. Heroux for breach of contract and breach of fiduciary duty, arguing that he was liable for the nursing home’s unpaid expenses. The trial court dismissed the breach of contract claim, holding that there was not a contract between the nursing home and son, but it found that Mr. Heroux breached his fiduciary duty to the nursing home by transferring money from his mother’s account to himself. Mr. Heroux appealed.

The Massachusetts Appellate Division reverses, holding that Mr. Heroux is not liable for breach of fiduciary duty because he did not have a fiduciary relationship with the nursing home. According to the court, while Mr. Heroux breached his fiduciary duty to his mother, the nursing home must show that Mr. Heroux owed it a fiduciary duty in order to succeed.

For the full text of this decision, click here.

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March 28

Man Doesn’t Have Standing to Challenge Discharge of Brother’s Debt to Nursing Home

The U.S. Court of Appeals for the Third Circuit rules that the son of a nursing home resident does not have standing to challenge the dischargeability of his brother’s debt to the nursing home because he is not a creditor of his mother. In re: Skinner (U.S. Ct. App., 3rd Cir., No. 15-2590, March 4, 2016).

Dorothy Skinner lived in an assisted living facility until she was evicted for non-payment. The facility sued Ms. Skinner’s sons, Thomas and William, under Pennsylvania’s filial responsibility law. The court entered a default judgment against Thomas for $32,224.56. Thomas filed for bankruptcy and sought to discharge the debt.

William filed a claim in the bankruptcy court, arguing that Thomas’s debt was non-dischargeable because it resulted from fraud and embezzlement. William argued that Thomas used their mother’s assets for his personal expenses, so if William was liable to the assisted living facility, he was entitled to be reimbursed by Thomas.  A U.S. bankruptcy court dismissed the claim, holding that William did not have standing because he was not a creditor of the debtor, and a U.S. district court affirmed. William appealed.

The U.S. Court of Appeals, Third Circuit, affirms, holding that William does not have standing to challenge the dischargeability of Thomas’s debts. The court rules that Pennsylvania’s filial support law does not support William’s claim because there is no right of contribution or indemnification under the support law. In addition, the court concludes that William does not have a claim against Thomas under the state’s fraudulent transfer act because he is not a creditor of his mother.

For the full text of this decision, go to: http://www2.ca3.uscourts.gov/opinarch/152590np.pdf

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