A Beacon of Hope for Seniors’ Families: Federal Court Protects Ohio Homeowners from Aggressive Medicaid Debt Collection

For families with loved ones in nursing homes receiving Medicaid benefits, the fear of losing a family home to aggressive debt collection can feel overwhelming. Many seniors and their families already face financial hardship; Medicaid eligibility requires having less than $2,000 in assets. When a loved one passes away, families often expect to inherit little, but they shouldn’t have to worry about losing their home to the state’s improper efforts to recover Medicaid costs. 

A recent decision from the United States District Court for the Southern District of Ohio, Plaisted v. Harper, No. 1:24-cv-634 (May 13, 2025), offers hope by affirming that families can fight back against unfair debt collection practices by state-contracted attorneys under the Fair Debt Collection Practices Act (FDCPA), protecting vulnerable homeowners like surviving spouses or disabled children

. This ruling is a significant step toward protecting vulnerable homeowners—such as surviving spouses, disabled children, or other qualifying individuals from aggressive tactics by lawyers contracted by the State of Ohio to collect Medicaid debts.

The Heart of the Case: Protecting Family Homes

Imagine owning your home with a loved one—your mother or spouse—who relies on Medicaid for nursing home care. After their passing, you become the sole owner through joint ownership with rights of survivorship. Suddenly, you receive a threatening letter from an attorney from a law firm, agents of the State of Ohio Attorney General's office, claiming that the State of Ohio is owed hundreds of thousands of dollars for your loved one’s Medicaid benefits and demanding payment. Worse, the lawyers file a public document with the county recorder’s office, listing your home’s address and suggesting the state has a claim against it. You’re left terrified, believing you might lose your home and end up homeless. This is exactly what happened to Jacqueline Holden and Medardo Funez, two Ohio residents who fought back and won an important legal victory.

Jacqueline, a disabled retiree, owned her home jointly with her mother, who received Medicaid benefits before passing away in 2023. After her mother’s death, Jacqueline became the sole owner. Lawyers working for the State of Ohio sent her a letter demanding $372,435.73 for her mother’s Medicaid costs and filed an affidavit with the county, publicly stating that the state might have a claim against her home. Medardo, a disabled veteran, faced a similar situation after his wife, who also received Medicaid, passed away in 2024. The lawyers sent him a letter claiming $65,398.27 and filed a similar affidavit. Both Jacqueline and Medardo were distressed, fearing they would lose their homes. Jacqueline hired an attorney to clear her home’s title, and the lawyers released the affidavit, but Medardo’s affidavit remained, leaving his home under a cloud.

Fighting Back: The Legal Battle

Jacqueline and Medardo took their fight to federal court in Ohio, arguing that the actions violated the Fair Debt Collection Practices Act (FDCPA), a federal law that protects consumers from unfair debt collection tactics, and amounted to slander of title, a legal claim for damaging someone’s property rights by making false claims about their ownership. They also pointed to federal Medicaid laws (42 U.S.C. §§ 1396p(b)(2) and (a)(2)) and Ohio law, which prohibit the state from placing liens on a home during the lifetime of a surviving spouse or disabled child living in the property.

Importantly, federal Medicaid law also allows other exemptions that protect a home from recovery, such as when the home is transferred to a caregiver child who lived with the Medicaid recipient for at least two years before their nursing home admission and provided care that delayed the need for institutional care (42 U.S.C. § 1396p(b)(2)(B)). Debt collectors may ignore or misrepresent these exemptions, claiming such transfers are “improper” to pressure families into paying.

Jacqueline and Medardo claimed the lawyers’ actions violated these protections by targeting their homes, which they owned outright after their loved ones’ deaths. The lawyers tried to dismiss the case, arguing that Jacqueline and Medardo didn’t have Article III standing—a legal requirement to show they were harmed in a way a court can address. The lawyers claimed the affidavits they filed weren’t technically “liens” under Ohio law and thus couldn’t harm the plaintiffs’ property rights.

The Court’s Ruling: A Victory for Families

The federal court rejected the lawyers' argument, delivering a powerful win for Jacqueline, Medardo, and families like theirs. The court explained that Article III standing requires three things: a concrete and specific injury that is real or imminent, an injury caused by the defendant’s actions, and a way for the court to fix the harm through a ruling, such as awarding damages or ordering the defendant to stop.  

The court found that Jacqueline and Medardo met all three requirements:

    •Injury: The court agreed that the affidavits created a “cloud” on their home titles, making it harder to sell or borrow against their property. This was a real harm, even if the affidavits weren’t formal liens.

    •Cause: The harm came directly from the lawyers' actions—sending threatening letters and filing public affidavits suggesting the state could claim their homes.

    •Redress: The court could fix the harm by ordering the lawyers to remove the affidavits (injunctive relief) or awarding damages for distress and financial impact.

Ultimately, the court rejected the lawyers' claim that the affidavits weren’t liens under Ohio law and thus caused no harm. It clarified that federal law, not Ohio law, determines standing. Under federal law, any encumbrance—a burden or claim on property—can harm property rights, not just formal liens. The affidavits were encumbrances because they publicly suggested the state had a claim against the homes, causing fear and potential financial loss. By recognizing this harm, the court allowed Jacqueline and Medardo’s claims to move forward, denying the lawyers' attempt to dismiss the case.

Why This Matters for Seniors’ Families

This ruling is a beacon of hope for families facing aggressive Medicaid debt collection. Here’s why it’s significant:

    •Protection Against Unfair Tactics: Families often feel powerless against debt collectors backed by the state’s authority. The Plaisted v. Harper decision shows that courts can hold these companies and lawyers accountable under the FDCPA for deceptive or harassing tactics, giving families a fighting chance.

    •Safeguarding Property Rights: Federal Medicaid laws (42 U.S.C. § 1396p) protect surviving spouses, disabled children, and other qualifying individuals—like a caregiver child who lived with and cared for a parent for two years before nursing home admission—from losing their homes to Medicaid recovery during their lifetimes. This ruling reinforces these protections, ensuring debt collectors can’t exploit loopholes by filing affidavits that scare families. 

    •Aging in Place: Seniors and Families can more confidently utilize Medicaid available exemptions protecting the home, encouraging and facilitating effective aging-in-place planning. 

    •Broader Exemptions: Beyond surviving spouses and disabled children, Medicaid law allows home transfers to others, such as a caregiver child, a sibling with an equity interest living in the home, or a minor child, without triggering recovery (42 U.S.C. § 1396p(b)(2)). Debt collectors may overlook or ignore these exemptions and claim they’re “improper” to pressure families.  As demonstrated in Plaisted v. Harper, lawyers will file public documents they later will claim are meaningless or harmless, for the sole purpose of pressuring family members to relenquish or settle their rights.  This decision empowers families to challenge such tactics. 

    •Hope for Justice: Hiring an attorney can be daunting for families with limited means, but Jacqueline’s success in clearing her title shows that legal action can work. The court’s openness to damages could help families recover costs or emotional distress. 

    •A Message to Debt Collectors: By denying the lawyers' motion to dismiss, the court signaled that debt collectors can’t dodge accountability with technical arguments. This decision may deter aggressive tactics and encourage respect for federal and Ohio laws protecting homeowners.

What Families Can Do

If you’re facing Medicaid debt collection efforts, here are steps to protect your home and rights: 

    •Know Your Rights: Federal law (42 U.S.C. § 1396p) prohibits Medicaid recovery from a home during the lifetime of a surviving spouse, disabled child, or other qualifying individuals, such as a caregiver child who lived with and cared for the Medicaid recipient for two years before nursing home admission.  Ohio law also limits estate recovery to protect these exemptions. After death, recovery is limited to the recipient’s estate, making it critical to challenge improper tactics.   

    •Plan ahead:  Consult a lawyer well in advance of need or crisis.  Even if you don't currently qualify for a Medicaid exemption, you or someone in your family might with planning and reorientation, qualify.   

    •Don’t Ignore Letters: If you receive a letter claiming a Medicaid debt or notice a filing with your county recorder, act quickly. These documents can create a “cloud” on your title, complicating sales or refinancing. 

    •Seek Legal Help: Consult an elder law or estate planning attorney familiar with Medicaid recovery and the FDCPA. They can challenge unfair collection efforts, clear your title, or negotiate with collectors. Jacqueline’s success shows legal action can make a difference. 

    •Explore Exemptions: If you’re a caregiver child, sibling with an equity interest, or another qualifying individual, you may be eligible for a home transfer exemption. An attorney can help verify your status and protect your rights. 

    •Document Everything: Keep all letters, affidavits, or communications from debt collectors to support your case in court. 

    •Consider Legal Action: If a debt collector violates the FDCPA or slanders your title, you may be able to sue for damages or injunctive relief, as Jacqueline and Medardo did.

A Path to Protection

For families caring for loved ones on Medicaid, the fear of losing a home to debt collectors adds an unfair burden to an already challenging situation. The Plaisted v. Harper decision offers hope that the law can protect you, whether you’re a surviving spouse, disabled child, caregiver child, or other exempt individual. It shows that courts are willing to stand up for vulnerable homeowners, ensuring debt collectors can’t exploit families with aggressive tactics. 

While the case continues, this early victory is a reminder that you have rights—potentially more than you realize—and the legal system can work to defend themIf you’re facing Medicaid debt collection, don’t lose hope. Reach out to an elder law attorney to explore your options, including exemptions that could protect your home. Decisions like Plaisted v. Harper are paving the way for fairer treatment of seniors’ families across Ohio.

In our next article, we’ll explore what damages families can recover under the FDCPA, including compensation for financial losses, emotional distress, and legal fees.                                                                                                                                        

Understanding Survivorship Claims and Medicaid Liens in Wrongful Death Cases

When navigating elder law, families often focus on protecting assets, ensuring healthcare coverage, and maintaining an independent quality of life. A lesser-known issue that can significantly impact families—especially those relying on Medicaid for long-term care—is how Medicaid estate recovery and liens interact with wrongful death lawsuits, particularly with survivorship claims. A recent case sheds light on this complex intersection, raising important considerations for families and their legal strategies. This article will explore survivorship claims, other components of wrongful death claims, and the implications of Medicaid liens, which can discourage families from pursuing such cases.

The Case: Survivorship Claims Vulnerable to Medicaid Estate Recovery

The case, In re Estate of Leonor R. Dizon, No. A-1724-23 (Apr. 8, 2025), a New  Jersey appellate court ruling,  addressed whether a survivorship claim, part of a wrongful death lawsuit, is considered an estate asset subject to a Medicaid lien. Leonor Dizon received Medicaid benefits from August 2006 to March 2018. She died after falling from her bed and fracturing her neck at the Trinitas Regional Medical Center. In August 2018, the surrogate’s court issued letters of administration to Teresa Finamore, Leonor’s daughter. The Division of Medical Assistance and Health Services (the Division) advised Leonor’s estate (the Estate) of a lien and asserted a claim against the Estate’s assets under 42 U.S.C. § 1396p and New Jersey’s estate asset statute for $214,391.00 expended by the state’s Medicaid program for medical and health-related services on Leonor’s behalf.

In 2019, the Estate filed a medical malpractice complaint that included survivorship claims, and the Division filed a lien against the Estate’s assets, including any award from the pending survivorship actions. The Estate petitioned the court to issue an order extinguishing the lien claim asserted against the Estate’s assets pursuant to the estate asset statute. It argued that a survivorship award was not subject to the Division’s lien under the estate asset statute because the survivorship claims were not assets of the Estate at the time of Leonor’s death. It claimed the Division was only entitled to reimbursement from an award for Leonor’s tort-related medical expenses from third-party medical malpractice defendants under another statute that specifically addressed third-party liability recovery. The court denied the Estate’s application to extinguish the lien, and the Estate appealed.

On appeal, the New Jersey Superior Court, Appellate Division, determined that the estate asset statute broadly defines an estate asset as all interests a Medicaid recipient possesses at death, including any interest in the Medicaid recipient’s medical malpractice claims. The administrator of Leonor’s Estate had the same standing to sue that Leonor had prior to her death; thus, Leonor’s interest in her medical malpractice claims passed to the Estate at her death, and the survivorship claims were estate assets.

The court also found no merit in the Estate’s argument that the third-party liability statute dictated the amount that the Division could recover on its lien because the source of the funds limited its ability to collect through its lien. Rather, a Medicaid recipient’s status as living, not the source of the funds, governs the Division’s authority to attach a lien for reimbursement: The federal anti-lien statute prohibits a lien from being imposed against a Medicaid recipient’s property prior to their death. Under the estate asset statute, the Division was authorized to seek reimbursement against the Estate’s assets for all Medicaid benefits paid on Leonor’s behalf after she turned 55, and it was not limited to reimbursement from recovery for tort-related medical expenses. As a result, the court ruled that the Division’s lien was valid against all the Estate’s assets, including any survivorship action award, under the estate asset statute and affirmed the lower court’s order denying the Estate’s application to extinguish the lien.

This ruling underscores the importance of understanding the components of wrongful death lawsuits and how Medicaid recovery rules apply, especially for families of Medicaid recipients.

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What Is a Survivorship Claim?

A survivorship claim, also known as a survival action, is a legal claim brought by the estate of a deceased person to recover damages the deceased suffered before their death. These damages may include:

• Pain and suffering endured by the deceased due to the injury or negligence that led to their death.
• Medical expenses incurred for treatment of the injury.
• Lost wages or earning capacity if the deceased was unable to work due to the injury.

Unlike a wrongful death claim, which compensates surviving family members for their losses, a survivorship claim seeks to address the harm the deceased experienced. Because these claims belong to the estate, any proceeds are distributed according to the estate’s probate process, making them vulnerable to creditors, including Medicaid liens.

A Wrongful Death Claim Distinguished From a Survival Action

A wrongful death claim, by contrast, is brought by the heirs or beneficiaries of the deceased to recover damages for losses they suffered due to the death. These may include:

• Loss of financial support: Compensation for the income or financial contributions the deceased would have provided to family members.

• Loss of companionship or guidance: Damages for the emotional and relational impact of the loss, such as the absence of a parent’s guidance or a spouse’s companionship.

• Funeral and burial expenses: Costs incurred by the family for the deceased’s funeral.

In many states, wrongful death claim proceeds are not considered estate assets because they belong directly to the heirs, not the deceased’s estate. However, as the New Jersey case illustrates, survivorship claims are treated differently, creating a potential financial risk for estates subject to Medicaid recovery.

Medicaid Liens and Estate Recovery: A Growing Concern

Medicaid, a critical lifeline for many aging adults who require long-term care, is a joint federal and state program that covers nursing home care, home-based care, and other medical services. Federal law requires states to recover certain Medicaid costs from the estates of recipients aged 55 or older after their death, a process known as the Medicaid Estate Recovery Program (MERP). This includes costs for nursing facility services, home and community-based services, and related hospital and prescription drug services. States may also recover additional expenses at their discretion, depending on local laws.

A Medicaid lien is one tool states use to recoup these costs. Liens can be placed on estate assets, including real property (like a home) or monetary assets (like lawsuit proceeds). In the context of survivorship claims, the New Jersey ruling clarified that because these claims are estate assets, they are subject to Medicaid liens. This can result in significant portions of a settlement or award being used to repay Medicaid, potentially leaving little for heirs or other estate beneficiaries.

The size of Medicaid liens can be substantial, especially for recipients who received years of long-term care. For example, monthly Medicaid payments for nursing home care can range from $6,000 to $12,000 or more, accumulating to hundreds of thousands of dollars over time. When a survivorship claim’s proceeds are subject to such a lien, families may find that the financial recovery they expected is drastically reduced.

Implications for Pursuing Wrongful Death Cases

The potential for large Medicaid liens to consume survivorship claim proceeds can discourage families from pursuing wrongful death lawsuits, even when they have a strong case. It may even deter trial attorneys, who work on a contingency fee basis from taking on such cases.  

Here are some key implications:

• Financial Disincentive: If a significant portion of a survivorship claim’s proceeds will go to Medicaid, families may question whether the emotional and financial cost of litigation is worthwhile. This is particularly true for smaller claims, where legal fees and Medicaid recovery could outweigh the net recovery.

• Complexity in Litigation Strategy: Families and their attorneys must carefully structure wrongful death lawsuits to distinguish between survivorship and wrongful death claims. Emphasizing wrongful death damages (which are often exempt from Medicaid liens) over survivorship damages may help preserve more of the recovery for heirs. However, this requires skilled legal counsel familiar with both elder law and personal injury law.

• Impact on Aging in Place Planning: For families planning to age in place, the threat of Medicaid estate recovery can complicate asset protection strategies. For example, a home owned jointly with right of survivorship may bypass probate and avoid Medicaid recovery in some states, but lawsuit proceeds from a survivorship claim do not enjoy the same protection. Families must work with elder law attorneys to anticipate these risks and explore options like trusts or exempt transfers during the Medicaid recipient’s lifetime.

• Emotional and Ethical Considerations: Pursuing a wrongful death lawsuit is often about seeking justice and closure, not just financial compensation. However, the prospect of losing much of the recovery to Medicaid may feel like an additional injustice, discouraging families from holding negligent parties accountable.

Strategies to Mitigate Medicaid Liens

To protect assets and maximize recovery in wrongful death cases, families can consider the following strategies, ideally with the guidance of an elder law attorney:

• Consult an Elder Law Attorney Early: Before applying for Medicaid or pursuing a lawsuit, consult an attorney to understand your state’s Medicaid recovery rules and plan asset protection strategies. For example, transferring assets to a disabled child or setting up a joint bank account with right of survivorship may shield certain assets from recovery.

• Structure Lawsuit Claims Carefully: Work with a personal injury attorney to emphasize wrongful death damages over survivorship damages, as the former are less likely to be subject to Medicaid liens. Ensure that settlement agreements clearly delineate the allocation of proceeds.

• Explore Hardship Waivers: Some states allow heirs to apply for an undue hardship waiver if Medicaid recovery would cause significant financial distress, such as displacing a dependent relative. For example, if a Medicaid recipient’s child provided caregiving and has no other residence, they may qualify for a waiver to protect the home or other assets.

• Use Non-Probate Assets: In states that limit Medicaid recovery to probate assets, titling assets like homes or bank accounts as joint tenants with right of survivorship, or using payable-on-death (POD) or transfer-on-death (TOD) designations, can help assets bypass the estate and avoid liens.

• Consider Medicaid Disenrollment: In cases where Medicaid benefits are minimal, particulalrly on a monthly basis (e.g., limited in-home care), families may consult an attorney about voluntarily disenrolling from Medicaid to avoid a large estate recovery claim later. This decision requires careful analysis of care needs and costs.

Conclusion: Planning Ahead to Protect Your Legacy

The New Jersey case highlights a critical intersection of elder law, Medicaid recovery, and wrongful death litigation. Survivorship claims, as estate assets, are vulnerable to Medicaid liens, which can significantly reduce the financial recovery families expect from a lawsuit. This reality can discourage families from pursuing legitimate claims, impacting both their financial security and their pursuit of justice.

Understanding these risks is essential. By working with an elder law attorney, families can develop strategies to protect assets, navigate Medicaid rules, and structure legal claims to minimize the impact of estate recovery. Proactive planning—whether through exempt transfers, non-probate asset titling, or careful litigation strategies—can help preserve your legacy and ensure that your family’s needs are met, even in the face of complex legal challenges.

If you’re concerned about Medicaid liens or planning for long-term care, contact a qualified elder law attorney in your state to discuss your options. 

PostScript- The Subject No One Wants To Discuss: Impact on Case Value

Before diving into the subject of values of awards and settlements, and how Medicaid Estate Recovery affects these, there is one thing to keep in mind: contingency fees for trial lawyers are usually paid from the gross settlement before satisfaction of any claims or liens.  This means, simply, that your lawyer is not dissuaded, financially, from pursuing a claim simply because a lien or claim against the proceeds exists.  This is very good news. 

The question arises: does Medicaid Resource Recovery potentially impact the more valuable possible recovery?  

Determining whether survivorship claims or wrongful death claims are likely to result in larger judgments depends on the specific circumstances of the case, including the nature of the damages, the evidence presented, and the jurisdiction’s laws. The age and impairment of the injured party, though, play significant roles in shaping the potential value of each type of claim. Below, we explore the factors influencing the size of judgments for each claim type, how age and impairment impact these awards, and practical implications for families navigating these waters.

Survivorship Claims vs. Wrongful Death Claims

Survivorship Claims: Factors Driving Larger Judgments

Survivorship claims are likely to result in larger judgments when the deceased endured significant suffering or incurred substantial costs before death. Key factors include:

• Duration and Severity of Pain and Suffering: If the deceased experienced prolonged or intense pain due to the injury (e.g., weeks or months of suffering from medical malpractice or a severe accident), juries may award significant damages. Pain and suffering awards are often subjective and can be substantial if the evidence is compelling (e.g., medical records or witness testimony).

• Medical Expenses: High medical costs, such as extended hospital stays, surgeries, or specialized care, can increase the claim’s value. For example, a case involving months of ICU care could lead to a large award.

• Lost Earnings: If the deceased was working or had earning capacity before the injury, lost wages from the injury to death can add to the claim. This is less relevant for elderly or fully retired individuals towards judgment amounts in most cases.  

• Evidence of Negligence: Strong evidence of egregious negligence (e.g., a nursing home’s failure to prevent severe bedsores) can lead to higher awards, including punitive damages in some cases.

Wrongful Death Claims: Factors Driving Larger Judgments

Wrongful death claims tend to yield larger judgments when the deceased was a primary financial or emotional provider for their family. Key factors include:

• Economic Dependency: If the deceased provided significant financial support (e.g., a breadwinner supporting a spouse and children), the loss of future earnings or benefits can result in a substantial award. Calculations often consider the deceased’s income, life expectancy, and the duration of dependency (e.g., until children reach adulthood).

• Loss of Companionship or Guidance: Non-economic damages, such as the loss of a parent’s guidance for minor children or a spouse’s companionship, can be significant, especially if the family can demonstrate profound emotional impact. These awards are often higher for younger decedents with long-term familial roles.

• Funeral Expenses: While typically a smaller component, funeral and burial costs can add to the award.

• Jurisdictional Caps: Some states impose caps on non-economic damages (e.g., pain and suffering or loss of companionship), which can limit wrongful death awards. For example, California caps non-economic damages in medical malpractice cases at $500,000 for wrongful death as of 2025 (adjusted for inflation under Medical Injury Compensation Reform Act (MICRA). Cal. Civ Code  § 3333 et seq.

General Trends

Survivorship Claims may yield larger judgments when the deceased suffered extensively before death, particularly if medical costs or pain and suffering were significant. These claims are often stronger in cases of prolonged injury, such as medical malpractice or nursing home neglect, where the deceased endured months of documented suffering.

Wrongful Death Claims often result in larger awards when the deceased was young, employed, or a primary caregiver, as the financial and emotional losses to survivors are greater. These claims are typically more valuable when the deceased had a long life expectancy and significant dependents.

Many cases are include combined claims.  In many wrongful death lawsuits, both survivorship and wrongful death claims are pursued together, maximizing the total recovery. The relative size of each component depends on the case’s facts.

Impact of Age and Impairment

The age and impairment of the injured party significantly influence the potential value of both survivorship and wrongful death claims, as they affect the types and extent of damages.

Younger Deceased: 

• Survivorship Claims: Younger individuals may have smaller survivorship awards if the injury led to a quick death, limiting pain and suffering or medical costs. However, if the injury caused prolonged suffering, awards can still be significant. Lost wages are more relevant for younger, working individuals.

• Wrongful Death Claims: Younger decedents typically lead to larger wrongful death awards because their dependents (e.g., spouse, minor children) face a longer period of lost financial support and companionship. For example, the death of a 40-year-old parent supporting a family could result in millions in lost future earnings, far outweighing a survivorship claim.

Older Deceased: 

• Survivorship Claims: Older individuals, especially those in nursing homes or receiving long-term care, may have stronger survivorship claims if they endured prolonged neglect or malpractice (e.g., untreated infections or falls). Pain and suffering awards can be significant, as elder abuse cases often involve egregious negligence. However, lost wages are rarely a factor for retirees.

• Wrongful Death Claims: Wrongful death awards for older decedents are often smaller because they are less likely to have dependents relying on their income. Loss of companionship damages may still apply (e.g., for a surviving spouse), but these are typically lower than for younger decedents with minor children. Jurisdictional caps on non-economic damages can further limit awards.

Pre-Existing Impairments: 

• Survivorship Claims: If the deceased had significant impairments (e.g., dementia, mobility issues), defendants may argue that their pain and suffering or life expectancy were already limited, potentially reducing awards. However, severe neglect or injury exacerbating these impairments (e.g., untreated pressure ulcers in a bedridden patient) can still lead to substantial pain and suffering damages.

• Wrongful Death Claims: Impairments may reduce wrongful death awards if they limited the deceased’s ability to provide financial support or companionship. For example, if the deceased was fully disabled and not contributing financially, economic damages may be minimal. However, emotional damages for loss of companionship can still be significant, especially for close family members.

Injury-Related Impairments:

• Survivorship Claims: If the injury caused severe impairments before death (e.g., paralysis or cognitive decline from a medical error), pain and suffering damages can be substantial, as the deceased endured significant harm. Medical costs for treating these impairments also increase the claim’s value.

• Wrongful Death Claims: Injury-related impairments may have less direct impact on wrongful death claims, as these focus on the survivors’ losses. However, if the impairment reduced the deceased’s ability to interact with family before death, it could strengthen claims for loss of companionship.

Practical Examples:

• Young, Healthy Deceased: A 35-year-old worker killed in a car accident after a brief hospital stay may have a modest survivorship claim (e.g., $100,000 for pain and suffering and medical costs) but a large wrongful death claim (e.g., $2 million for lost earnings and companionship for a spouse and children).

• Elderly, Impaired Deceased: An 85-year-old nursing home resident with dementia who suffered months of neglect before dying from untreated infections may have a large survivorship claim (e.g., $500,000 for pain and suffering and medical costs) but a smaller wrongful death claim (e.g., $150,000 for a surviving spouse’s loss of companionship).

• Middle-Aged, Disabled Deceased: A 60-year-old with pre-existing mobility issues who died due to medical malpractice after a prolonged ICU stay may have a balanced claim, with a significant survivorship award (e.g., $400,000 for pain and suffering and medical costs) and a moderate wrongful death award (e.g., $300,000 for loss of companionship and limited financial support).

Implications of Medicaid Liens

Survivorship claims are estate assets and thus subject to Medicaid liens, which can be substantial (e.g., hundreds of thousands of dollars for long-term care). This reduces the net recovery for heirs, potentially discouraging families from pursuing these claims, especially if the survivorship component is the primary basis for the lawsuit. Wrongful death claims, often exempt from Medicaid liens, may be more appealing to pursue, as heirs retain more of the proceeds. For elderly or impaired Medicaid recipients, families must weigh the potential award against the lien’s impact, particularly for survivorship claims.

Conclusion

Neither survivorship nor wrongful death claims consistently yield larger judgments; the outcome depends on the case’s facts. Survivorship claims are stronger when the deceased endured prolonged suffering or high medical costs, often seen in elder abuse or malpractice cases involving older, impaired individuals. Wrongful death claims are typically larger for younger, financially active decedents with dependents, due to significant economic and emotional losses. Age and impairment shape these outcomes by affecting life expectancy, earning capacity, and the nature of damages.

For families navigating elder law, the threat of Medicaid liens on survivorship claims can discourage litigation, particularly for elderly Medicaid recipients. Consulting both personal injury and elder law attorneys is crucial to maximize recovery, protect assets, and make informed decisions about pursuing justice.

Original Source: ElderLawAnswers.com, “Survivorship Claims Are Estate Assets Subject to Medicaid Lien.” 

Irrevocable Medicaid Planning Trust Risks: State Refuses to Permit Trust Termination

In April 2011, Don and Marjorie Peterson (the Petersons) established the Peterson Family Irrevocable Trust (the trust). The Petersons’ daughter was the trustee, and their grandchildren were the beneficiaries. The Petersons’ personal residence was the only asset held in the trust. 

The intent in creating the trust was to shield their personal residence from being considered in determining Medicaid eligibility and claims arising from long-term care.  The trust had a common "comfort clause:" 

It is the specific intention of [the Petersons] to create the power in the Trustee and in said Trustee’s sole discretion under this Trust to provide income and support for [the Petersons] and Subsequent Beneficiaries and to protect the assets of the Trust pursuant to the conditions set forth in this Trust Agreement. Said income and support may include, but is not limited to, expenditures for [the Petersons’] and Subsequent Beneficiaries’ health, education, real estate purchases[,] and/or promising business opportunities. In order to protect the Trust assets, the Trustee in her sole discretion, may withhold distribution under circumstances in which [the Petersons] or Subsequent Beneficiaries will not personally enjoy said distribution; said circumstances, including but not limited to, insolvency, pending divorce[,] or other civil litigation and bankruptcy.

While in the control of the Trustee and until actually paid over to [the Petersons] thereof, the interest of [the Petersons] in the income or principal of the Trust shall not be subject to assignment or pledge by [Appellants], the claims of creditors of [the Petersons], or attachment by any legal or equitable procedure.

In re Peterson Family Irrevocable Trust, quoting the underlying court's opinion (brackets included, "Appellants" replaced with 'the Petersons").  

A "comfort clause" is a trust provision comforting the owner that they are not really turning ownership and control of assets over to third party, and that, if absolutely necessary, the trust assets can be used to support the owner. In the best cases these are requested by clients and adopted after careful advice and counsel.  In the worst cases these are deployed by drafters to make the document more "attractive" (read "sellable"), without advising the client of the risks.  "Comfort clauses" can make the owner more comfortable, but they can also threaten the integrity of the plan.  Consider the foregoing language against a more rigorous clause which follows:

The Trustee may, in its sole and absolute discretion, distribute such sums from the trust income and principal that the Trustee deems necessary or advisable to meet the health, education, and/or support needs of the  death/subsequent beneficiaries [in the case of the Petersons, the grandchildren], but shall make no distributions to or for the benefit of the Petersons. Other than the lifetime privilege to reside in any home owned by the trust while the Petersons are able to avail themselves of that privilege, under no circumstances shall the Petersons benefit directly or indirectly from the income or principal of the trust.

The latter is a much harsher statement, but it better comports with the requirements of most state Medicaid rules. 

Complicating matters, when the home was transferred to the trust, there were actual distributions made from the trust to the Petersons' estate.  According to the court, as a result of these transfers, the residence became a countable asset for Medicaid purposes.  Interestingly, neither court decision (lower court or appellate) explains what these transfers were, or how these transfers were possible given that both courts clearly state that the only asset of the trust was the Petersons' home. The courts also don't explain whether the transfers were forbidden under Pennsylvania law in place at the time the trust was settled, or whether they were made forbidden by subsequent changes to the law.

In January 2024, the Petersons filed a petition to terminate the trust, but their granddaughter, a named beneficiary, contested termination.  The Petersons based termination on two grounds.  First, the Petersons argued that the relationship between the Petersons and their daughter, the trustee, had dramatically changed thereby “rendering [the Trust’s] ongoing administration impracticable and wasteful.” Second, the Petersons argued that the trust’s purpose could not be fulfilled because, under the trust’s terms, their residence was a countable asset impacting their eligibility for Medicaid and subject to future healthcare claims under Medicaid.   

After a hearing, the court denied the Petersons’ petition to terminate the trust. On appeal, the Peterson's abandoned their first argument. It is intriguing to consider, though, whether the first argument, which clearly does not constitute grounds to terminate the trust, might be the actual basis of the Petersons' dispute. Unfortunately, disagreement with a trustee does not constitute grounds to terminate a trust; an inherent risk with irrevocable trust planning is that circumstances may change. Seeking removal of a trustee for breach of fiduciary duty or other infirmity would accomplish the same goal without necessitating termination of the trust. I will also note for the interested that the simple drafting solution to this type of scenario is a trust protector- an independent third party that can remove a trustee without cause. See, e.g., Unpacking Trustees- Primary, Successor, and Special Trustees, Trust Protectors and More. Even a decanting provision might have provided an alternate solution making "termination" unnecessary (let me know if you want me to write an article explaining "decanting").  The bottom line is that changes in circumstances won't always justify termination or reformation of a trust instrument. 

The Pennsylvania Superior Court addressed the sole remaining legal basis for termination: whether the Petersons’ mistaken belief that their trust worked for its intended purpose was an “unanticipated circumstance” under Pennsylvania’s Uniform Trust Act, 20 Pa. Stat. and Cons. Stat. Ann § 7740.2(a), which would permit the court to terminate the trust.  The Petersons contend that when they created the trust, their mistaken belief that it would preclude their residence from being considered for Medicaid eligibility and used to satisfy Medicaid healthcare claims was  an unanticipated circumstance.

The Court mostly agreed with the Petersons arguments. In its review, the court stated that a plain reading of section 7740.2(a) revealed that a trust may be terminated if, due to unanticipated circumstances, termination would further the purposes of the trust. The court noted substantial precedent establishing that the intent of a trust’s settlor, as set forth in the language of the trust instrument, must prevail. The court also found that the plain language of the trust agreement demonstrated the Petersons’ intention to create a trust that would provide income and support for their healthcare needs and protect their assets from creditors. Although the trust’s language did not explicitly provide that it was intended to shield the trust assets from Medicaid claims, it did specifically state that it was intended to protect the trust assets from claims arising from the Petersons’ debts or obligations, which would include claims for healthcare services provided by Medicaid.

The court agreed with the Petersons’ assertion that their personal residence may have been exempt from claims asserted under Medicaid if it had remained titled in their names instead of being held by the trust, and that due to the transfer of ownership to the trust, the residence was a countable asset if one or both of them applied for Medicaid.  The court agreed that the trust "no longer" protected the home from healthcare claims made under Medicaid. The court determined, however, that the Petersons’ misunderstanding of the legal consequences of the trust at the time of its creation was a "mistake of law" rather than an “unanticipated circumstance”—i.e., unforeseen facts about the future—that would permit the court to terminate the trust under section 7740.2(a). Accordingly, the court affirmed the lower court order denying the Petersons’ petition to terminate the trust.  

IF either the husband or wife ends up in a nursing home, and is forced to apply for Medicaid, the community (healthy) spouse could lose his or her home, or be forced to spend down its value.  This is a tragic result given that Medicaid protects the home for the community spouse when owned by both spouses.  In other words, if the Petersons had done nothing, the community spouse would have been able to rely upon the home being there for him or her for as long as they could enjoy it.  

More, the trust may have encouraged, rather than discouraged, family discord.  Rather than representing a unifying plan for the best interest of the Petersons and their family, the planning may have played a role in fracturing familial relationships.  The evidence is that a grandchild contested termination of the trust, in essence opposing their grandparents' wishes.  This is always a possibility with or without any estate plan, but family discord should always be a consideration, and granting grandchildren interests, rights, and privileges should always be considered carefully.  Without knowing the circumstances, it is difficult to make hard assessments, but one has to wonder why a daughter was made a fiduciary of the parent's assets, but not a beneficiary.  This anomaly might be well justified, or a warning sign of future problems, which might have been resolved with reconsideration of the plan or alternate drafting.          

Bottom line: irrevocable trusts have advantages and disadvantages, costs, expenses, and risks.  My experience is that these are rarely discussed thoroughly  or considered carefully.  Extra care must be taken when planning while both spouses are alive and healthy, especially given the protections built into Medicaid to protect spouses.  Any planning to avoid Medicaid spend down puts assets at risk of losing the already existing protections.  

It was not clear whether the subject trust was drafted by an attorney.  If it was drafted by an attorney, it may have been crafted or drafted poorly, or it may have been thoroughly misunderstood by the clients.  Even when provided clear written explanations of the limitations, risks, and costs of plans, sometimes clients misunderstand.  

If the Petersons drafted the trust themselves, or utilized a drafting service such as those available on the internet, they received the product they paid for.  Irrevocable trusts, like any complex legal document, should only be crafted and drafted by a competent lawyer representing YOU after s/he understands YOUR goals, circumstances and needs.  YOU deserve legal representation. YOU deserve to have YOUR rights and interests protected.  IF these rights and property interests are so valuable that you choose a complex plan to protect them, retain a lawyer to protect you. A computer, some software, a nameless, faceless representative behind a website, or an "estate planning professional" at a seminar  do not, and cannot serve this role.  Read the disclaimers!  

For more about the case: In re Peterson Family Irrevocable Trust, No. 772 WDA 2024, 2025 Pa. Super. 60 (Pa. Super. Ct. Mar. 13, 2025)(last accessed 4/3/2025).  

For more about the dangers of comfort clauses: 

• Irrevocable Trust Assets Found Available Resources for Medicaid in Arkansas 
• Irrevocable Trust Fails to Protect Assets from Availability for Medicaid 
• "Comfort Clauses" Hobble an Irrevocable Trust for Medicaid Planning 

Ohio Department of Medicaid Changes Treatment of Retirement Plans- Eases Burden of Planning

The Ohio Department of Medicaid (ODM) has finally adopted a change that means retirement accounts will no longer be counted  as resources for determining Medicaid eligibility. This means that Ohio law now comports with existing federal law,"[a]fter six suspenseful years," as one law firm characterized the change,  Understanding the change, and its impact, requires some appreciation of  Medicaid and its role in paying for long-term care.

As most know, Medicare provides no real long-term care benefit. Medicare does not cover the cost of any care in a nursing home when a person requires only custodial care. Custodial care includes the following services:

• bathing
• dressing
• eating
• going to the bathroom

Generally, if the care or services that a person requires can be provided by another person without a degree or certification, Medicare does not cover the service.  There is no licensing required for one person to assist another to bathe, or to dress themselves.  There is, of course, licensing required for dispensing medical care, or providing certain rehabilitative care services such as physical therapy and occupational therapy.  

Further, non-custodial care is not fully covered by Medicare.  The best Medicare will do is pay for acute or rehabilitative care for a short period of time following a three-day hospitalization.  The Medicare benefit provides payment for twenty (20) days of institutional care following hospitalization, and additional payments for necessary care up to a total of one hundred (100) days.  After that one hundred (100) days, if a person needs long-term care (in-home assistance, assisted living, or a nursing home), that care is not paid for by private health insurance or by Medicare. 

Nursing home care can cost, on average, $8-12,000/month. Most people cannot afford to pay out of pocket such a large amount for long, so many turn to Medicaid to cover these costs.

Medicaid will pay for the cost of a nursing home or assisted living facility, provided that the institution accepts Medicaid reimbursement, but Medicaid benefits are limited to the impoverished.  That means that:

• A single person can have no more than $2000 to their name (in addition to a home and a car);
• A married couple is limited to a maximum of $139,000 and often less if the combined estate is less that $278,000 (the Community Spousal Resource Allowance or CSRA is one-half of the estate up to $139,000 but only one-half whatever the estate is valued at if the estate is less than $278,000).

To qualify, Medicaid applicants must "spend down," a euphemism for impoverishing themselves, especially since the person receiving their benefits may have to contribute their income to their cost of care.

Taxes and Retirement Accounts Under The Old Rules

For many people, retirement accounts (IRAs, 401ks, 403bs, deferred compensations, Roths, etc.), have replaced the home as the most valuable asset in their estate. Retirement accounts are owned by human beings (for example, trusts or LLCs cannot own retirement plans), and cannot be transferred between people except by death or divorce. Except for Roth IRAs, the taxes haven’t been paid on the accounts, so if individuals want to cash it out, they’ll incur significant income tax. 

Safeguarding the home or after-tax investments from spend-down ahead of time under the Medicaid rules is and has been fairly straightforward. Simply, to protect the retirement accounts, the account would be liquidated and the tax  incurred and paid.  In addition to the tax consequence, liquidation often meant losing the future benefits of tax deferred growth.  The options for safeguarding retirement accounts were limited, complex, expensive, and, for most people and advisors, frustrating. 

Many people would simply leave their retirement assets exposed to spend-down risk, choosing to forego the tax incurred and necessary, and protect their home and other assets.  Imagine a senior paying the cost and expense necessary to protect their $200,000 home, only to lose their $500,000 IRA left exposed. Those who chose against protecting the IRA in advance would, in crisis situations, end up with a severe tax consequences liquidating their IRA to either pay for care, or to protect other assets.

Under the old rules, if a couple had $500,000 in retirement assets, that amount counted toward their asset limit. They would have to spend their money until they reached $139,000 in total countable assets, incurring taxes along the way.  Retirement accounts were not treated any differently than checking or brokerage accounts for eligibility purposes.

Taxes and Retirement Accounts Under The New Rules

Starting in 2016, Ohio changed how it takes Medicaid funding from the federal government. As part of that change, it had to align Medicaid with Social Security disability asset rules. Under Social Security rules, retirement accounts are not counted as assets if they pay out regular, periodic payments – those payments are counted as income instead. In other words, as long as you take your required minimum distribution, or set up a recurring distribution that looks like a required minimum distribution, then Medicaid wasn't supposed to consider how much is in that account, just how much those distributions are.

After four years, the Ohio Department of Medicaid finally started talking about making the change. Some counties adopted these rules consistently, others inconsistently, and some not all. Finally, after more than a year of promising guidance, ODM published Medicaid Eligibility Policy Letter 164 on May 26, 2022. This letter clarified how the Social Security rules applied to Ohio and confirmed that retirement account payouts should be treated as income, and the principal should not be counted.

The change means seniors won't be forced to cash out their retirement accounts in order to qualify for Medicaid. It will save taxes and allow more money for the applicant or the healthy spouse. 

Some folks believe, and are being led to believe that the new rules completely protect retirement accounts.  That is not true.  The income is still countable, but estate planning can provide a solution in the form of a Qualified Income if the income is excessive.  Even then, and more fundamentally Medicaid estate recovery still exists.  Medicaid estate recovery permits Ohio to recover money paid in benefits from a Medicaid recipient’s estate.  

Regardless, the change will make planning much comfortable for people with large retirement accounts. 

Scrivener’s Error and Limited Power of Appointment Do Not Make Property Available to State to Recoup Medicaid Benefits

A recent Massachusetts land court ruling is instructive regarding the extent to which states will go in attempting to collect resources for Medicaid. 

Athena and Sotirios Koutoukis hired an attorney to transfer ownership of their real estate to their daughters, creating and retaining a life estate for their benefit.  They also  retained a power of appointment to convey the property to their children. Mr. Koutoukis received MassHealth (Medicaid) benefits before he died. After Mr. Koutoukis’s death, the attorney for the estate discovered that the deed included the words “tenants in common for life and further,” which was an error.

The estate filed an action in probate to correct the scrivener’s error, and the state filed a claim against the estate in order to recoup the Medicaid benefits paid on Mr. Koutoukis’s behalf. The state filed for summary judgment, arguing that because Mr. Koutoukis left property in his will to his wife, he did not intend to create a life estate and that the power of appointment in the deed made the property a countable asset. The estate also filed for summary judgment. The Massachusetts Land Court, Department of the Trial Court, granted summary judgment for the estate benefitting the Koutoukis family, holding that the deed can be reformed to correct the mistake, and the state cannot recoup benefits from the property.  Estate of Koutoukis v. Secretary of the Executive Office of Health and Human Services (Mass. Land Ct., Dept. of the Trial Ct., No. 20 MISC 000004 (RBF), Sept. 17, 2021). 

The court held that the power of appointment in the deed is a limited power that did not permit the Koutoukises to grant the property to themselves, so the property was not a countable asset for Medicaid purposes.  More importantly, the court wrote that the evidence clearly established that the Koutoukises intended to create a life estate, and the state did not provide any evidence to the contrary:

On a motion for summary judgment, the nonmoving party cannot create a dispute of material fact simply by declaring that it disputes the material fact. The nonmoving party is supposed to provide some evidence that disputes the fact; that is, some evidence that, if credited, would support the opposite of the claimed undisputed fact. On these cross-motions for summary judgment, the defendant Secretary of the Executive Office of Health and Human Services (EOHHS) has attempted to forestall summary judgment on the plaintiffs’ claim for reformation of a deed due to a scrivener’s error by the simple expedient of saying the affidavits provided by the plaintiffs do not support the claim, without providing any evidence of its own to the contrary.

As the affidavits do support the claim for reformation, there is no dispute of material fact. Based on the undisputed material facts and the applicable law, summary judgment shall enter reforming the subject deed to clarify that the parties’ intent was to create a life estate, and declaring that the life estate and the limited power of appointment in the deed do not make the subject property a 

The court noted that state "has denied many of the asserted facts relating to the claim of scrivener’s error in the subject deed without providing any affidavits or other evidence whatsoever."  

Estate of Koutoukis, at p. 4.  

The court concluded that the state cannot recoup Medicaid benefits from a Medicaid recipient’s property, left in a life estate notwithstanding a scrivener’s error,  and a limited power of appointment. Estate of Koutoukis v. Secretary of the Executive Office of Health and Human Services (Mass. Land Ct., Dept. of the Trial Ct., No. 20 MISC 000004 (RBF), Sept. 17, 2021). 

Federal Law Preempts Minn. Law Treating Irrevocable Trusts as Revocable for Medicaid Purposes

Filial responsibility laws make children legally responsible to support and care for indigent parents.  Under these laws, a child's assets are recoverable by the state if a senior receives Medicaid to pay for long-term care, such as a nursing home.  The state is not limited to recovering only inheritance, or return of lifetime gifts, but can recover assets that a child has worked to acquire for his or her family. 

Filial responsibility is a general concern for most estate planning clients, but the prospect of a parent becoming a financial burden to children is particularly troubling for those seniors aging in place and/or implementing asset protection from nursing home spend down (Medicaid planning).   

Filial responsibility is one tool that the Centers for Medicare & Medicaid Services (CMS) has long advocated States adopt and enforce in order to financially support Medicaid.  CMS is a federal agency within the U.S. Department of Health and Human Services (HHS) that administers the Medicare program and works in partnership with state governments to administer Medicaid.  

Despite CMS' support, states that have implemented such laws have visited upon their citizens familial discord, hardship, chaos, and inequity.  In addition, these laws even threaten the financial safety net of some seniors by making parents responsible financially for their adult children, ironically making them more likely to need Medicaid!  These problems helps explain why many states have resisted pressure from to fundamentally change their Medicaid resource recovery systems.  

Many states have, nonetheless, employed various alternative methods to fulfill the spirit of the CMS campaign, by, for example, expanding the assets recoverable by Medicaid to "augmented estates," permitting nursing homes to "work around" federal law prohibiting a home from soliciting a guarantee of payment from family members, and restricting legitimate planning options to reduce Medicaid resource recovery or shielding assets from nursing home spend-down.    

One such effort, courtesy of the Minnesota legislature was recently invalidated by a Minnesota appeals court.  The Court ruled that a statute "deeming" irrevocable trusts to be revocable for the purposes of a Medicaid eligibility determination is preempted by federal law governing irrevocable trusts.  See, Geyen v. Commissioner Minnesota Dept. of Human Services (Minn. Ct. App., No. A20-1300, July 12, 2021).

In 2011, Dorothy Geyen created two irrevocable trusts that named her children and grandchildren as beneficiaries. The trust agreements provided that the trustee was specifically precluded from loaning assets or making distributions to Ms. Geyen. In 2019, Ms. Geyen applied for Medicaid benefits. The state denied her application on the basis of her having excess assets; the court determined that under the state law, her irrevocable trusts were revocable when she applied for benefits. Minnesota law provided that when making a determination about eligibility for Medicaid benefits, any irrevocable trust containing the assets that were formerly the applicant's becomes revocable for the purpose of that eligibility determination.  The effect of the law is to invalidate completely transfers to irrevocable trusts specifically permitted by federal law. 

Ms. Geyen appealed the denial, arguing that state law conflicts with federal law. The state affirmed the denial, and Ms. Geyen appealed to court. The district court determined that under federal law, the trusts were not available assets and federal law preempted state law. The state appealed, arguing that the funds in the trust were available to Ms. Geyen under federal law and that the trusts became revocable under state law.

The Minnesota Court of Appeals affirmed, holding that the trusts are not available assets under federal law and that federal law preempted state law. According to the court, “because the trust agreements did not permit the trustees to make payments to or for the benefit of [Ms.] Geyen under any circumstances,” they were not available assets. The court further held that by “deeming irrevocable trusts to be revocable” for the sole purpose of a Medicaid eligibility determination, the state law “conflicts with the federal requirements governing the treatment of irrevocable trusts.”

This holding is a great and welcome result.  Citizens of the State of Minnesota should be outraged at the colossal assault by their legislature on their rights to lawfully plan and orchestrate their affairs, and for the waste of public resources dragging a family through protracted litigation in a craven effort to save pennies rather than supporting a person (and system) in need.  

The only bad news is that as states fail to succeed in efforts to implement alternatives to filial responsibility, filial responsibility becomes more likely.  Good planning is the best and most secure means of avoiding unnecessary and avoidable institutionalization and filial responsibility.