Medicaid is a useful resource for paying for the great expense of long-term care. Only the truly needy qualify; strict Medicaid rules dictate asset and income thresholds, along with penalties for certain transfers.  In addition to the traditional criminal penalties that come with Medicaid fraud, there may be a finding of unjust enrichment in civil court.

An Oregon court recently issued an opinion regarding Medicaid fraud accountability and repercussions. The key players in this case were Larisa’s Home Care LLC, an adult foster care provider (the facility); Prichard, the resident; and Gardener, Prichard’s son and power of attorney.

Prichard was a resident of the facility. Her son, and power of attorney, applied for Medicaid benefits on her behalf and Prichard was approved. These benefits allowed her to receive services from the facility at a discounted rate. Unbeknownst to Prichard, her son had made fraudulent claims on her Medicaid application. Prichard’s son had been transferring funds from his mother, as her power of attorney, to himself over several years, yet stated on her Medicaid application that she had not made any transfers within the look-back period. Upon learning this information, the facility sought equitable relief for the difference between the Medicaid rate and the private pay rate from Prichard’s estate.

Overcoming the presumption of improper transfers within a look-back period may be as simple as a keeping a few receipts.

Every lawyer should recognize the importance of documentation – an original of a client’s will; notes during client meetings or with witnesses; court documents; emails; receipts for travel expenses and expenditures. Access to these records legitimize and provide accurate proof of particular facts and figures. Failure to maintain access to these sorts of documents creates an avoidable challenge, particularly for those in the legal field.

Qualifying for Medicaid

In terms of Medicaid qualification, documentation of expenses can be critical to whether penalties are assessed on applicants for transfers of wealth. Parties assisting applicants may also risk breaching fiduciary duties when they cannot provide evidence of legitimate transfers of assets – above all, when this failure results in a large penalty for the person in need.

Most states have a child caretaker exception to their Medicaid transfer rules.  An elderly parent can transfer their home to an adult child who lived in the home with their parent for the two years prior to that parent entering into a nursing home. Such a transfer of the home would not violate Medicaid look-back rules.  The child must have provided care to that parent that allowed the parent to remain in the home for those two years, instead of the parent needing institutionalized care during that time.  A child, for the purposes of this rule, must either be a biological or adopted child.  Other relatives – stepchildren, grandkids, nephews, etc. – do not qualify. The purpose of this rule is to help keep elderly folks out of a nursing home for as long as possible.