New York Spousal Refusal to Contribute to Care Creates Implied Contract to Repay Benefits

In what appears to be a first of it's kind decision, a New York trial court has entered a judgment against a woman who refused to contribute to her spouse’s nursing home expenses, finding that because she had adequate resources to do so, an implied contract was created between her and the state entitling the state to repayment of Medicaid benefits it paid on the spouse’s behalf. Banks v. Gonzalez (N.Y. Sup. Ct., Pt. 5, No. 452318/15, Aug. 8, 2016).  The decision is being reported by ElerderLawAnswers.com.

According to the site, Evelyn Gonzalez’ spouse was admitted to a nursing home and received $28,235.56 in Medicaid benefits from the Department of Social Services of the City of New York.  At the time of her spouse's Medicaid application, Ms. Gonzalez’ assets exceeded the state's Community Spouse's Resource Allowance (CSRA).  However, she signed a "Spousal Refusal" declaration refusing to make her income or resources available to pay for her spouse’s care.  

Spousal Refusal is an aggressive strategy where the community spouse seeks to keep all of his or her assets by simply refusing to support the institutionalized spouse, and is generally not used except in where the states have adopted the federal law in this area, or where a federal court has upheld this right.  Under the law, if a spouse refuses to contribute his or her income or resources toward the cost of care of a Medicaid applicant, the Medicaid agency is required to determine the eligibility of the nursing home spouse based solely on the Medicaid applicant's income and resources, as if the community spouse did not exist.  In 2005, a federal appeals court upheld the right of the wife of a Connecticut nursing home resident to refuse to support her husband. The husband was able to qualify for Medicaid coverage, and assets that he had transferred to his wife were not counted in determining his eligibility.   Morenz v. Wilson-Coker (2nd Cir., No. 04-4107-CV, July 14, 2005).

After a letter to Ms. Gonzalez demanding repayment of the cost of Medicaid benefits paid on behalf of her spouse went unanswered, the Department of Social Services of the City of New York filed suit.  s. Gonzalez did not respond to the summons and complaint, nor to the agency’s motion for default judgment.

The Supreme Court of New York, New York County, granted the motion and entered a default judgment against Ms. Gonzalez for the cost of benefits provided to her spouse.  The court noted that in cases such as this where Ms. Gonzalez has the income and resources but refuses to contribute to her spouse’s care, state law creates an implied contract between her and the state allowing recovery of the cost of the benefits provided during the preceding 10 years.