For a promissory note to be used successfully as a strategy for long-term care planning, it must meet certain requirements. 

The Nebraska Court of Appeals filed a Memorandum Web Opinion in 2019 regarding a failed attempt by a Medicaid applicant to use a promissory note to exclude a portion of her assets from eligibility considerations. Appellant argued that the promissory note in question should not have counted towards her Medicaid asset limit. The Court, however, found that the promissory note did not meet the requirements of 42 USC § 1396p(c)(1)(I) regarding acceptable or exempt transfers of assets for Medicaid purposes.

Applicant Lorena Freeman

Freeman entered into long-term care on February 1, 2015. She applied for Medicaid benefits, with the help of her attorney, on March 31. Her income included Social Security payments and an annual income from her interest in a rental. On March 27, she had disposed of more than $12,000 and executed a promissory note, “FOR VALUE RECEIVED,” as a loan to her lawyer for an additional $5,547. She also had other limited resources less relevant to the court’s decision.

We posted a blog relating to arbitration agreements – their validity, and their benefits and challenges. Arbitration agreements can be a useful tool for resolving disputes. They can also create a wall preventing resolution in situations best left to the determination of a jury. Many argue that pre-dispute arbitration agreements are unjust; because, how could one know what troubles lay ahead and the related rights they would be relinquishing? Others argue that arbitration is a cost effective and less burdensome alternative to court proceedings.

Long-term care (LTC) facilities frequently use arbitration clauses as a standard part of the admissions process. Whether a mandatory agreement for arbitration is legal is an issue in flux at the moment. Currently, the Centers for Medicare and Medicaid Services honor a ban on mandatory arbitration agreements, while the Supreme Court has found that valid arbitration agreements are upheld under the Federal Arbitration Act. Valid arbitration agreements require the bound parties to willingly and competently sign in agreement, or to have an authorized agent sign on their behalf. The parties must also understand what rights they are giving up.

“Understanding” Arbitration Agreements

The Eighth Amendment declares that cruel and unusual punishments cannot be inflicted upon prisoners.  This law has been construed to protect some prisoners suffering from delusions and psychotic episodes from execution. Now, this safeguard can also apply to those suffering from dementia and other diseases of the mind.

An egregious murder has been committed. The perpetrator has been caught, tried, found guilty, and sentenced. The sentence is death. This is a pretty standard example of our justice system at work – everything seems arguably fair and judicious (in death-penalty states). Our system permits such punishments for their retributive importance.

Now consider: years later on death row, the aforementioned convict has begun to suffer from psychotic delusions and insanity and cannot fathom why he would be slain. This person can no longer be executed for their crime under the laws of our country. Their execution would now violate the Eighth Amendment of the Constitution.

But what if the prisoner developed a different disease of the mind – one not analogous with insanity? Would this kind of comparable misconception of reality qualify a person to be saved from execution? This is just the question the Supreme Court of the United States recently addressed.

A New Eighth Amendment Question