A recent case illustrates that seniors, their families, and caregivers should not rely upon institutions or the state to plan for their care; the results are often unpredictable and damaging. A New York trial court has held that the fact that Medicaid wrongly denied benefits to a nursing home resident is not a defense in a breach-of-contract claim against the resident, who died leaving an unpaid bill. East End Healthcare v. Gegenheimer (N.Y. Sup. Ct., Suffolk Cty., No. 12-21672, June 29, 2015).
Anna Amico entered a nursing home and signed an admission agreement guaranteeing payment for services. She had a reverse mortgage, and little in the way of resources, so she applied for Medicaid. Her niece, Joan Gegenheimer, withdrew money from Ms. Amico's reverse mortgage line of credit account shortly after Ms. Amico entered the nursing home. The proceeds were placed in a joint bank account between Amico and her niece. The niece withdrew some funds to pay for Ms. Amico's needs at the home. Substantial funds were turned over to Ms. Amico, who, knowing she was terminal, paid off debts to families and friends. When Ms. Amico applied for Medicaid benefits, the state assessed a penalty period because of the transfer. Ms. Amico died owing an amount to the nursing home, which, because of the penalty period, was equal to the amount withdrawn.
Ms. Amico died before the Medicaid determination was made, and therefore, no one filed an appeal of the denial.
Ms. Amico died before the Medicaid determination was made, and therefore, no one filed an appeal of the denial.
The nursing home sued the niece, Ms. Gegenheimer in her capacity as executrix of Ms. Amico's estate, for breach of contract and fraudulent conveyance. Ms. Gegenheimer argued that she withdrew the money from Ms. Amico's reverse mortgage account for Ms. Amico and did not keep any of the money. According to Ms. Gegenheimer, Medicaid improperly denied coverage to Ms. Amico because it counted the money in the reverse mortgage line of credit as an available resource. The nursing home moved for summary judgment.
The New York Supreme Court, Suffolk County, granted the nursing home summary judgment on the breach-of-contract claim, but denied summary judgment on the fraudulent conveyance claim. The court held that any mistake by the state in considering Ms. Amico's reverse mortgage line of credit funds as an asset that led to the denial of Medicaid benefits is not a defense, because Ms. Amico signed a contract expressly agreeing to make private payments. The court also ruled that because there was no evidence introduced that Ms. Gegenheimer kept the money that she withdrew from Ms. Amico's account, or that the nursing home sent Ms. Amico a bill for her services, there remains triable issues of fact as to whether Ms. Gegenheimer or Ms. Amico believed that the use of funds would make Ms. Amico insolvent. The case was remanded to trial court for further proceedings.
For the full text of this decision, go here.
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