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Nursing Home Sues Son-In-Law for Sloppy Medicaid Application

When counseling our clients regarding Medicaid planning and uncompensated transfers, we often say that nursing homes are unlikely to sue residents' adult children or others to recover gifts that were made.

However, we should also be advising our clients to review any nursing home admission agreements before they are signed. A nursing home resident's son-in-law signed an admission agreement as his father-in-law's "designated representative," and was later sued by the nursing home for a $61,000 shortfall in Medicaid benefits.

In Wedgewood Care Center, Inc., vs. Hemda Sassouni & Ben Youdim, 68 A.D.3d 979 (2d Dept. 2009) (http://www.courts.state.ny.us/courts/ad2/calendar/webcal/decisions/2009/D25374.pdf), the son-in-law signed an admission agreement that required him to provide the nursing home "with all relevant information and documentation regarding all potential third-party payors, and that he timely apply and meet the requirements of third-party payors, including Medicaid." There was also a clause that the son-in-law "could be held personally liable if any acts or omissions on his part caused or contributed to the nonpayment of Wedgewood's fees." Of course, the agreement also "explicitly stated that the execution of the Agreement did not serve as a third-party guarantee of payment, which is prohibited by law."

The father-in-law's Medicaid application was initially denied, based on "failure to verify and document large withdrawals from [his] bank account...and the failure to provide certain mutual fund statements." Because of this initial denial, and the delay in obtaining Medicaid benefits for the father-in-law, the nursing home "sustained a shortfall in payment of approximately $61,000," after which it sued the son-in-law for breach of the admission agreement.

The son-in-law argued that he had complied with the admission agreement, and Supreme Court, Nassau County, agreed with him, but the Appellate Division reversed, finding that the nursing home had raised triable issues of fact regarding whether the son-in-law had cooperated fully in the Medicaid application process.

It remains to be seen who will prevail in the underlying action, but this case is definitely a wake-up call to practitioners. Our clients should, whenever possible, review admission agreements with us before signing. And the bar needs to look at draconian nursing home admission agreements and see if either negotiation or lobbying can effect some changes. 

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