October 5

Ohio High Court Rules That Interspousal Transfer of Home Prior to Medicaid Eligibility Is Improper

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.

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October 1

Efforts to Change Will Using Photocopy and Then Downloaded Form Are Ineffective

In a case that serves as a cautionary reminder to those thinking of changing their estate plan on their own, a Minnesota appeals court rules that a testator’s alleged attempts to revoke her original will by first marking up a photocopy of it and later trying to make a new will using an online form were invalid, and the original will stands.  In re the Estate of Sullivan (Minn. Ct. App., No. A14– 2112,Aug. 17, 2015).

Esther Sullivan validly executed a will on January 19, 2006, that devised 50 percent of her property to a former employee of Ms. Sullivan’s, Tara Jean Johnson, and a contingent share to Ms. Sullivan’s grandson, Joseph VanHale.  On October 11, 2008, Ms. Sullivan allegedly made handwritten changes to a photocopy of the 2006 will, writing her initials next to each alteration and signing and dating the bottom of each page. She allegedly wrote on top of the 2008 photocopy, “[t]he Will dated January 19, 2006 is void and to be replace[d] with this and all written in changes.” Among the changes was that Ms. Johnson was replaced by Mr. VanHale as a 50 percent beneficiary. On October 30, 2010, Ms. Sullivan allegedly attempted to execute another will using a downloaded form and filling in the provisions by hand. This document named Mr. VanHale as Ms. Sullivan’s sole beneficiary. 

Following Ms. Sullivan’s death in 2013, Mr. VanHale contended that the 2010 document was a valid will, while Ms. Johnson argued for the 2006 will. The district court held that the 2008 photocopy and 2010 document were invalid because they did not comply with will formalities. The court held that Ms. Sullivan arguably intended to revoke the 2006 will, but did not successfully “revoke with a properly executed document.” The district court applied the doctrine of dependent-relative revocation because of Ms. Sullivan’s intent to revoke the 2006 will, and admitted it into probate. Mr. VanHale appealed, arguing that Ms. Sullivan clearly intended to revoke the 2006 will and that the 2010 document was valid.

The Court of Appeals of Minnesota admits the 2006 will to probate but on somewhat different grounds. The court finds that the district court did not err by finding that Ms. Sullivan’s alleged attempt to revoke the 2006 will was ineffective and that the 2010 document was not validly executed.  However, the court rules that a revocatory act must be performed on a properly executed will, not a photocopy.  Because Ms. Sullivan never revoked the 2006 will, the court holds that the district court erroneously applied dependent relative revocation to revive it.

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September 28

Nursing Home Can Pursue Breach-of-Contract Claim Against Resident’s Son

A New York trial court rules that a nursing home can pursue a breach-of-contract claim against a resident’s son who signed the admission agreement, agreeing to use his mother’s funds to pay for her care or apply for Medicaid on her behalf. Jewish Home Lifecare v. Ast (N.Y. Sup. Ct., New York Cty., No. 161001/14, July 17, 2015).

Ernest Ast admitted his mother to a nursing home and signed the admission agreement as the responsible party. According to the court, the responsible party was personally liable for ensuring Medicaid coverage, but was not required to use his or her own funds to pay for care. Ernest Ast also signed his brother’s name to the agreement.

After Ernest’s mother died, the nursing home sued Ernest and his brother, Mark, for breach of contract, among other things. The nursing home argued the brothers failed to apply for Medicaid or use their mother’s money to pay the nursing home and that they fraudulently transferred her money to themselves. Mark argued that he could not be liable because he did not sign the contract, and Ernest argued that he couldn’t be personally liable because the contract provided that he was not required to use his own funds to pay for care. The brothers filed a motion to dismiss.

The New York Supreme Court, New York County, denies the motion to dismiss in part, holding that the nursing home could proceed with its breach-of-contract claim against Ernest, but not against Mark. According to the court, “while the agreement does not require [Mark and Ernest] to guarantee payment from their own resources, it requires that they ensure that [the nursing home] is paid from [their mother’s] assets, to the extent that they had control over them, and provides that a failure to do so constitutes a breach of the contract.” The court rules that because Mark did not sign the contract, the nursing home could not pursue a breach-of-contract claim against him.  

For the full text of this decision, go to: http://www.nycourts.gov/reporter/pdfs/2015/2015_31251.pdf

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September 24

Assisted Living Resident May Proceed with Breach-of-Contract Claim Against Long-Term Care Insurer

A U.S. district court in California denies summary judgment to a long-term care insurance company that refused to provide nursing home benefits to a claimant who was residing in an assisted living facility that had a nurse on call 24 hours a day. Gutowitz v. Transamerica Life Insurance Co. (U.S. Dist. Ct., C.D. Cal., No. CV-14-06656 MMM (JPRx), Aug. 14, 2015).

Erwin Gutowitz purchased a long-term care insurance policy in 1991. The policy included a daily nursing home benefit that defined a nursing home in part as a facility with a nurse on call at all times. In 2013, Mr. Gutowitz moved into a facility that was licensed as a residential care facility, not as a nursing home. While the facility did not provide skilled nursing care, there was a nurse on call 24 hours a day. The insurance company refused to cover Mr. Gutowitz’s care because he was not in a nursing home.

Mr. Gutowitz sued the insurance company for breach of contract, breach of good faith, and bad faith denial of insurance benefits. The nursing home filed a motion for summary judgment, arguing that the facility was not a nursing home because it was not licensed to provide nursing services on an ongoing basis.

The U.S. District Court, Central District of California, denies the insurance company summary judgment, holding that the terms of the contract were ambiguous. According to the court “a reasonable insured would have interpreted the policy as covering a facility that employed an on duty or on call nurse to provide nursing services in the facility on a ongoing basis to persons residing there.” The court concludes that there are issues of fact remaining as to whether the insurance company breached its contract, so the case may proceed to trial.

For a summary of the case and brief commentary by Penn State Dickinson Law professor Katherine C. Pearson, click here. 

For the full text of this decision, go to: http://sites.psu.edu/professorkatherinecpearson/wp-content/uploads/sites/17176/2015/08/Order-in-Gutowitz-v.-Transamerica-USDC-Central-District-of-CA-August-14-2015.pdf

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September 21

Medicaid Applicant Not Required to Exhaust Administrative Remedies Before Filing § 1983 Claim

An Ohio appeals court rules that a Medicaid applicant who filed a § 1983 claim in state court was not required to exhaust her administrative remedies before filing the claim, but her claim is dismissed because the state did not violate her due process rights. Rodefer v. McCarthy (Ohio App. Ct., Dist. 2, No. 2015-CA-1, July 31, 2015).

Velma Rodefer transferred a life estate in property to her son for $22,000. When she applied for Medicaid, the state found that the life estate should have been valued at $117,012 and assessed a transfer penalty. Ms. Rodefer challenged the way the penalty period had been calculated and her appeal was denied (Rodefer v. Colbert, Ohio Ct. App., Dist. 2, No. 2014-CA-3, May 22, 2015). 

Ms. Rodefer appealed the decision assessing the penalty period and requested a hearing. At the hearing, the state informed her that her appeal had been dismissed and that the only issue being discussed was a hardship waiver. The state eventually agreed to hold a hearing on the original appeal, a hearing that affirmed the penalty period. Ms. Rodefer filed a claim under 42 U.S.C. § 1983, alleging a violation of due process, among other things. (Ms. Rodefer died while the trial court case was pending.) The trial court dismissed her claim, holding that she needed to exhaust her administrative rights and that the state did not violate due process. Ms. Rodefer’s estate appealed the trial court’s decision.

The Ohio Court of Appeals, 2nd District, affirms, holding that while Ms. Rodefer was not required to exhaust her administrative remedies before bringing a § 1983 claim, her claim for violation of due process should be dismissed. According to the court, “the existence of an administrative appeals system does not preclude [Ms. Rodefer’s] ability to bring her § 1983 claim in state court.” But the court also holds that “although the hearing officers might not have addressed her specific arguments in its decisions, the complaint reflects that [Ms.] Rodefer was provided adequate notices and opportunities to be heard.”

For the full text of this decision, go to: http://www.supremecourt.ohio.gov/rod/docs/pdf/2/2015/2015-Ohio-3052.pdf

Did you know that the ElderLawAnswers database now contains summaries of more than 2,000 fully searchable elder law decisions dating back to 1993?  To search the database, click here.  

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