FTC Warns LTC Institutions: Stimulus Checks Are Not Available Resources So Keep Your Hands Off!

Last week, this blog addressed issues arising from stimulus checks issued to the recently deceased. This week, stimulus checks are again a topic, as some nursing homes and assisted living facilities are requesting or requiring their residents to pay the proceeds to the facility. 

The request or requirement is not lawful.  Accordingly, the Federal Trade Commission cautioned operators of "nursing homes and assisted living residences" that they cannot lawfully require residents on Medicaid to "sign over" their pandemic-inspired stimulus checks to pay down their care bills. These long-term care institutions might misunderstand the Medicaid rules, assume they are like other monies or assets, deem them available resources and require or request that the payment be made to the institution.  That's a mistake, and the law does not consider the payments "available resources:"

According to the CARES Act, those economic impact payments are considered tax credits and tax credits don’t count as “resources” for federal benefits programs like Medicaid. That means that nursing homes and assisted living facilities can’t take that money from residents simply because the resident is on Medicaid. Need some quick cites? Take a look at page 3 of the Congressional Research Services’ COVID-19 and Direct Payments to Individuals: Summary of the 2020 Recovery Rebates/Economic Impact Payments in the CARES Act and 26 U.S.C. § 6409 of the Internal Revenue Code.

Plus the FTC notes this "isn’t just an arcane hypothetical someone has dreamed up. The Iowa Attorney General’s Office and other State AGs have received boots-on the-ground reports this is happening."

Family members of Medicaid-program LTC clients should also be on the lookout.  FTC advises anyone with concerns about inappropriate actions on stimulus checks to contact their state attorney general's office and report the concern to the FTC.  In addition, contact counsel, so counsel can demand prompt repayment.  

States Grant Nursing Homes Legal Protections in Wake of Covid-19

At least 15 states have granted some lawsuit protection to nursing homes and long-term care facilities as a result of laws or governors’ orders. The move comes as Covid-19 deaths in nursing homes and long-term care facilities have reached more than 20,000, according to the Associated Press.  Unclear is whether the AP is reporting actual reported deaths, or estimated deaths, since many claim that nursing home deaths are under-reported.

Protections vary, but they usually protect nursing homes from simple negligence for injuries, deaths and care decisions during the pandemic. Suits are generally allowed for gross negligence, actual malice and willful misconduct.

States that have enacted lawsuit protection include Alabama, Arizona, Connecticut, Georgia, Illinois, Kentucky, Massachusetts, Michigan, Mississippi, New Jersey, New York, Nevada, Rhode Island, Vermont and Wisconsin.

Some states have enacted laws and executive orders that immunize health care providers but don’t specifically mention nursing homes. Protection for health care providers will likely also protect nursing homes.

The new law in New York immunizes hospitals and nursing homes from claims of ordinary negligence for providing care during the COVID-19 crisis.  The facilities are also immune from criminal liability.  Immunity does not apply to willful or intentional criminal misconduct, gross negligence, reckless misconduct, or intentional infliction of harm.  The law specifically says any actions taken as a result of staffing shortages or supply shortages are entitled to protection.

Critics say nursing homes should be held accountable for deficiencies, such as staffing shortages and poor infection control, that were a problem even before the pandemic.  Among the critics is Richard Mollot, executive director of the Long Term Care Community Coalition, which advocates for nursing home residents, NPR reports.

“Providing blanket immunity to nursing homes for any kind of substandard care, abuse or neglect is an extremely poor and dangerous idea anytime, and particularly so in regard to COVID-19,” Mollot told NPR.

Stimulus Checks for the Deceased

Several clients have called our office inquiring what to do with stimulus checks for their deceased loved ones. Many of these checks were delivered even thought the IRS knew the person was deceased.  Indeed they often have designated "DEC'D," after their name.

I wish I had a clear answer, but the answer is that no one knows.  So consider the following:

• Spousal Checks with a Surviving Spouse: Deposit. I am recommending that the spouse deposits the check.  
• Spousal Checks with Neither Surviving: It Depends. (I haven't been asked about this and don't even know that such a creature exists). Is the check already deposited?  Follow the guidance below depending on whether it is or isn't already deposited.   
• You Already Deposited the Check: Plan ahead. I am advising clients that have already deposited the money that they should expect to some day be required to pay it back, but that is based only upon a single statement by the Secretary of the Treasury.  
• You Haven't Deposited the Check: Safekeeping. If they haven't deposited the checks, I have suggested that clients keep it in a safe place so that it might later be returned.  I am not advising destruction of the checks, as apparently some have.  Why?  If there is fraud or misapplication of the funds, without proof that they did not negotiate the check, they may later be responsible for it. Of course, some would ask, isn't the safest place for the money a bank?  Understand that I don't feel I can suggest that you deposit the check if you haven't already.

To understand the complexity, consider the following, a reprint of an article entitled, "Heirs may have to return stimulus money sent to the deceased, but how and when?"

A lot of people who received stimulus payments for their dead parents or spouses are more confused than ever.

 There's new word that they have to return the money. But so far, there's been no official guidance on how to go about it. 

U.S. Treasury Secretary Steve Mnuchin who is quoted in the Wall Street Journal as saying heirs should be returning money that was sent in the name of someone who died. But so far, no one will elaborate.

"I couldn't find any guidance anywhere on what I was supposed to do with this check," said Debbie Carter of Olympia. She recently received a $1,200 stimulus check in the mail for her 79-year-old mother Ann Tate who died nearly a year ago. The check even has the abbreviation 'DECD', for deceased next to Ann Tate's name.Payments to the deceased have been a concern since the stimulus checks started going out. The government is not saying how many dead people received money but consumers are reporting them from across the country.

"I understand that they were trying to be helpful and wanted to get the money out the people as soon as they can to help them," Carter said. "But I think they made more of a mess out of it. We're not the only people, from what I've seen on the internet that have received these checks. And for the Treasury Department to have to go back through and find out who they sent these checks out to and try and get them back- I can't even believe what kind of a mess that's gonna be." 

Despite published reports that the government wants heirs to return economic impact payments sent to the deceased, as of late Wednesday there was no official comment and no information addressing the issue on either the U.S. Treasury or IRS websites.

Carter said her mother, who was an accountant, would consider it a waste.

"I can hear her in my head going, 'I can't believe they did this,'" Carter said.

Carter said she feels for people who really need the money and may have already spent it. She said she and her brothers understand the money is not theirs so they will not cash it. 

"Honestly, I was thinking about holding on to it and keeping it as a historical artifact," Carter said. "Because it's void after one year, so, I'm not taking the money out." 

 People are getting conflicting information from tax professionals about their rights to the money.  

Some people say they were told that if the person was living Jan. 2 their survivors could keep the cash. But in a transcript of a April 17 White House briefing President Trump was asked about checks to dead people. He said, "we'll get that back." 

Bottom line: If you still have stimulus money sent to someone who died, hang on to it if you can, and keep checking the IRS and Treasury websites for guidance on what to do. 

KOMO News reached out this morning to both agencies but neither has replied as of this publication. We'll let you know as soon as we hear anything.

Court Reverses Agency Decision Ignoring Appraised Value of Home for Purpose of Medicaid Penalty

A New Jersey appeals court reversed a final Medicaid agency decision that ignored an appraiser’s testimony that the actual value of an applicant’s house was less than the tax assessed value for purposes of imposing a penalty period. J.B. v. Camden County Board of Social Services (N.J. Super. Ct., App. Div., No. A-5665-17T4, May 5, 2020).

J.B. entered a nursing home. In preparation for applying for Medicaid, her son, acting under a power of attorney, sold her home for $17,500 to an acquaintance who was a realtor. The tax assessed value of the home was $104,700. J.B. applied for Medicaid, and the state imposed a 236-day penalty period because she sold her house for less than the market value.

J.B. appealed, arguing that the house was in poor condition, so $17,500 was fair market value. At a hearing, an appraiser testified that the market value of the house after it was sold and improvements had been made was $78,000, noting the appraisal would have been lower had it taken place either before improvements were made or had she known "the property was a hoarding situation and required a significant amount of repairs." Because there was no evidence of the condition of the house before it was sold, the administrative law judge accepted the appraised value of $78,000 and imposed a 142-day penalty period. In the final agency decision, the director of the state Medicaid agency did not discuss the appraised value and imposed a 329-day penalty period. J.B. appealed.

The New Jersey Superior Court, Appellate Division, reversed in part and remanded the case. The court agreed that the transfer was made for less than market value in order to qualify for Medicaid. The court ruled that the “appraiser's opinion that the fair market value of [J.B.’s] home at the time of the appraisal was $78,000 is well-supported by the evidence on the record as a whole” and the failure of the final agency decision to mention the appraisal “appears to be arbitrary and unreasonable.” The court remanded the case to the director to address this issue.

States Cannot Terminate Medicaid Benefits During Covid Crisis

A provision in one of the coronavirus relief packages signed into law prevents states from terminating Medicaid benefits during the pandemic.

The Families First Coronavirus Response Act (“CV Response Act”), signed into law on March 18, 2020, prevents states from terminating any Medicaid recipients who were enrolled in Medicaid on or after March 18, 2020 even if there is a change in circumstances that would normally lead to termination. All Medicaid recipients’ coverage must continue through the end of the month in which the public health emergency declared by the Secretary of Health and Human Services for COVID-19 ends.

If the state terminated a Medicaid recipient’s benefits after March 18, 2020, the state must make a good faith effort to contact the recipient and encourage him or her to reenroll. States may terminate coverage for individuals who request to be terminated or who are no longer residents of the state.

The continuous coverage requirement does not apply to individuals who were determined to be presumptively eligible for benefits. However, individuals who were determined ineligible before March 18, 2020, but who continue to receive coverage while they appeal the decision are entitled to continuous coverage.

For a description of all of the other benefits and terms of the Act, click here. 

For a list of Frequently Asked Questions (FAQ) about the Medicaid requirements under the law, click here.