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

December 17

No Penalty Period for Medicaid Applicant Who Sold House for Far Less Than Tax Assessment Value

A New York appeals court rules that the state should not impose a penalty period on a Medicaid applicant who sold her house for less than one-fifth of its tax assessed value because the price was fair market value based on the property’s condition. Matter of Whittier Health Services, Inc. v. Pospesel (N.Y. App. Div., 3rd Dept., No. 520890, Nov. 25, 2015).

A nursing home applied for Medicaid on behalf of a resident. The state determined that the applicant sold her home for less than market value within the look-back period and assessed a penalty period. Tax assessment records showed the property was valued at $143,511, but the applicant sold the home for $23,122.

The nursing home appealed, arguing that the house was sold for fair market value because it needed significant repairs and was sold to someone who was not related to the applicant. After a hearing, the state affirmed the penalty, and the nursing home appealed to court.

The New York Supreme Court annuls the penalty period based on the sale of the house. According to the court, the evidence shows the sale was an arms-length transaction and “a recent arm’s length sale is a more accurate indicator of actual market value of the [applicant’s] property than the tax assessment records relied upon by” the state.

For the full text of this decision, go to: http://www.nycourts.gov/reporter/3dseries/2015/2015_08690.htm

November 30

No Medicaid Transfer Penalty on Sale of House to Granddaughter

Reversing a lower court, an Indiana appeals court rules that the state should not have imposed a transfer penalty on a Medicaid applicant who sold her house to her granddaughter because the evidence shows the house sold for fair market value. Brown v. Indiana Family and Social Services Administration (Ind. Ct. App., No. 87A01-1501-PL-38, Nov. 18, 2015).

Ada Brown and her husband transferred their house to a trust and made the trust irrevocable. Mrs. Brown moved into a nursing home and the trust sold the house to her granddaughter for $75,000. Two years later, Mrs. Brown applied for Medicaid benefits. Based on information from the county assessor that showed the value of the house as $91,900, the state determined that the house was sold for less than fair market value and assessed a transfer penalty.

Mrs. Brown appealed, arguing that the value of the house was reduced due to the need to replace the sewer system. A hearing officer and the trial court affirmed the penalty period, and Mrs. Brown appealed.

The Indiana Court of Appeals reverses, holding that the evidence shows the house was not transferred for less than market value. The court notes that there was no evidence that the tax assessment used by the state reflected the price of the house at the time of the sale. According to the court, “the evidence reveals a willing buyer and seller, albeit with a family relationship, and no evidence that either was under any compulsion to consummate the sale.”

For the full text of this decision, go to: http://www.in.gov/judiciary/opinions/pdf/11181501nhv.pdf

November 23

Resident Who Transferred Assets and Applied for Medicaid Breached CCRC Contract

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., 3rd 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, 3rd 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

November 17

Transfers While Applicant Was Healthy Were Not Made in Order to Qualify for Medicaid

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., 2nd 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