A Massachusetts appeals court upholds the imposition of a transfer-of-assets penalty assessed against a Medicaid applicant who entered into a lump sum personal care contract with her daughter, determining that the contract's value cannot be ascertained. Forman v. Director of the Office of Medicaid (Mass.App.Ct., No. 10-P-728, April 6, 2011).
Janette Forman entered into a lump sum personal care agreement with her daughter, Fran Rachlin, in which Ms. Forman paid Ms. Rachlin $20,000 in exchange for Ms. Rachlin's agreeing to provide her mother with room, board, meal preparation, housekeeping and transportation. The contract allowed Ms. Rachlin to terminate the agreement and keep the entire lump sum payment if her mother engaged in behavior that was a threat to her own mental or physical health or if Ms. Forman was no longer able to assist with her own personal hygiene needs. The contract did not quantify the number of hours to be worked by Ms. Rachlin and it did not have a specific duration.
One year after signing the contract, Ms. Forman moved into a nursing home and filed a Medicaid application. The state Medicaid agency assessed a two-and-a-half-month transfer penalty based on its determination that the contract was a transfer for less than fair market value and that it was not reasonably enforceable by Ms. Forman or her estate. Ms. Forman appealed and a board of hearings and the Superior Court both upheld the state's decision.
The Massachusetts Court of Appeals upholds the imposition of the transfer penalty, ruling that the contract represented a transfer for less than fair market value. The court explains that it "cannot fairly estimate the value of the contract because it was self-contradictory, sketchy, and skewed in favor of the daughter's retention of the upfront payment regardless of the services provided. . . [i]f the daughter elected to terminate the contract . . . or if the mother died at any point in time following the execution of the contract, the daughter was entitled to retain the full $20,000 regardless of services performed to date." The court does temper its decision by pointing out that "we are not in any way suggesting that all lump-sum prepaid contracts or all contracts between family members for personal services are disqualified. Our decision is limited to those contracts in which compensation does not reflect fair market value, as was the case here." The court declines to address whether the contract was legally and reasonably enforceable.
For the full text of this decision, go to: http://www.elderlawanswers.com/Resources/ArticleAtty.asp?id=9075&Section=9&state=
One year after signing the contract, Ms. Forman moved into a nursing home and filed a Medicaid application. The state Medicaid agency assessed a two-and-a-half-month transfer penalty based on its determination that the contract was a transfer for less than fair market value and that it was not reasonably enforceable by Ms. Forman or her estate. Ms. Forman appealed and a board of hearings and the Superior Court both upheld the state's decision.
The Massachusetts Court of Appeals upholds the imposition of the transfer penalty, ruling that the contract represented a transfer for less than fair market value. The court explains that it "cannot fairly estimate the value of the contract because it was self-contradictory, sketchy, and skewed in favor of the daughter's retention of the upfront payment regardless of the services provided. . . [i]f the daughter elected to terminate the contract . . . or if the mother died at any point in time following the execution of the contract, the daughter was entitled to retain the full $20,000 regardless of services performed to date." The court does temper its decision by pointing out that "we are not in any way suggesting that all lump-sum prepaid contracts or all contracts between family members for personal services are disqualified. Our decision is limited to those contracts in which compensation does not reflect fair market value, as was the case here." The court declines to address whether the contract was legally and reasonably enforceable.
For the full text of this decision, go to: http://www.elderlawanswers.com/Resources/ArticleAtty.asp?id=9075&Section=9&state=
No comments:
Post a Comment