Supreme Court Admonishes Nursing Home

A recent decision of the Supreme Court of New Jersey, entitled Manahawkin Convalescent v. O’Neil, sheds some light on how the courts of this state should view collection efforts by nursing homes against family members of nursing home residents.  When an individual enters a nursing home, the nursing home will often asked a member of his family to sign the nursing home admissions agreement.  The family member signing the agreement may or may not be the power of attorney agent of the nursing home resident.

If, for whatever reason, the nursing home does not get paid, the nursing home often tries to sue the family member who signed the admissions agreement.  The nursing home will often intimidate the family member into paying some or all of what the nursing home claims is owed; the family member will end up using his own money to pay for a bill the nursing home resident incurred.

In the Manahawkin case, the nursing home was owed a paltry $848.  After the death of the nursing home resident, the nursing home sued the family member who signed the nursing home admissions agreement.  In its suit, the nursing home stated the claim was against the family member, not the nursing home resident or the nursing home resident’s estate.

The family member counter-sued, claiming that the nursing home violated various laws.  One of the laws the family member claimed the nursing home violated was New Jersey’s version of the federal Nursing Home Reform Act.  The Nursing Home Reform Act prohibits a nursing home from requiring a family member to sign a guarantee that the family member will pay for the nursing home resident’s bill.

Faced with cogent claims against it, the nursing home dropped its suit against the family member.  In all likelihood, the nursing home was probably caught off guard by such a vigorous defense and offense by the family member, particularly given the small amount of money that was owed the nursing home.

After the nursing home dropped its claim, the family member continued to pursue her claims against the nursing home.

In the end, the Supreme Court held that the nursing home did not violate the Nursing Home Reform Act, but only because the nursing home did not make the family member sign its guarantee of payment document in this case.  It is of some note that the nursing home had such a document at all, since both federal and state law prohibit a nursing home from obtaining a third-party guarantee of private payment.  Given this fact, one would wonder why the nursing home has such a document for family members to sign.

The nursing home also did not find any violations of law based upon the nursing home suing the family member individually, as opposed to the resident or the resident’s estate.  The Supreme Court viewed this aspect of the suit as a close call but gave the benefit of the doubt to the nursing home and thought the nursing home simply worded its suit inartfully.  In other words, when the nursing home’s complaint said it was against the family member, the Supreme Court viewed the suit as being against the resident’s estate, not the family member.

The Supreme Court did specifically admonish attorneys for the nursing home industry to draft nursing home admissions agreements in a manner that would permit residents and their family members to understand their rights.  I think because of the small amount involved in the case, the Supreme Court wanted to get rid of the case but let nursing homes know that they have a duty to be fair with residents and their families.

Cadillac Cost, Yugo Service

Medicaid is a health insurance program for needy individuals.  Unlike most policies of health insurance, Medicaid will pay for the cost of long-term care, such as care in a nursing home.  Nursing homes cost a great deal of money, anywhere from $9,000 to $12,000 a month.

Few people could afford to pay $12,000 a month for very long without bankrupting themselves.  For the family of an individual who requires care in a nursing home, there is the concern that the loved one will receive the care he needs and there is the concern that he will be able to afford the care he needs.

Because of the cost of a nursing home, many individuals who require long-term nursing home care wish to qualify for Medicaid benefits.  The Medicaid program is governed by a very complex series of laws, so people who want to qualify for Medicaid are often confused, intimidated, and scared.

When this happens, people typically seek the advice of other individuals whom they believe have a certain level of expertise and knowledge in the area.  I am a Certified Elder Law Attorney.  Most Certified Elder Law Attorneys have the necessary level of expertise needed to help their clients qualify for Medicaid benefits.

In the past several years, there have been a number of “Medicaid experts” that have opened businesses to assist people in qualifying for Medicaid benefits.  As stated, the Medicaid program is governed by a complex series of laws, yet these so-called Medicaid experts have no legal training whatsoever.

Furthermore, some of these application companies have a very close relationship with the nursing home in which the nursing home resident lives.  Some of the owners of these application companies may even be relatives of the people who own the nursing home, and the nursing home refers the family to the application company.

The fees these companies charge to assist their customers with filing an application for Medicaid benefits are equal to or greater than the fee the family would have paid to retain a Certified Elder Law Attorney.  Sometimes the fee is quoted as a flat fee, sometimes the fee is quoted as an hourly fee, but in the end, the total fees often range between $2,500 and $4,500.

The problems I see with these companies are multi-fold.  For one thing, these companies fail to disclose their relationship with the nursing home to their customers.  When a company is dependent upon the nursing home for its business because the nursing home pushes the families of residents toward the services the company provides, the application company is going to feel a greater loyalty to the nursing home than to its customer.  This is particularly the case if the application company is owned by the same people who own the nursing home or owned by people who are relatives of the people who own the nursing home.

Secondly, Medicaid is a complex law.  If you are not a lawyer and you are providing advice to someone who is seeking to qualify for Medicaid benefit, you are doing that person a disservice.  A non-lawyer cannot effectively provide advice regarding a law as complex as Medicaid to its customers and certainly cannot effectively litigate the improper denial of Medicaid benefits.

Yet, the customer of the application company is paying for Cadillac service and getting Yugo support.  If a nursing home is pushing you to use the services of a company to qualify for Medicaid, you may want to pause for a moment and think about why the nursing home is so keen on your using that company.

Federal Lawsuit Proceeds

 

This week, a federal judge sitting in Camden refused to dismiss a federal class action lawsuit involving the interplay of veteran’s and Medicaid benefits.  This means the case will proceed.  If the plaintiffs in this case prevail, this case could be a big win for many individuals seeking Medicaid benefits.

Medicaid is a health insurance program for needy individuals.  In order to qualify for Medicaid, an individual must have a limited amount of assets and income that is insufficient to pay for the cost of his care.

Unlike most health insurance programs, Medicaid will pay for long-term care services, such as nursing home care, care in an assisted living residence, and long-term care at home (for instance, a home health aide).  Since long-term care can be very expensive, many people who never dreamed that they would need to qualify for Medicaid benefits find themselves wanting these benefits if they require long-term care.

When an individual needs Medicaid long-term care services in the “community,” such as care at home or in an assisted living residence, the Medicaid program in New Jersey imposes an income cap on the Medicaid beneficiary’s income.  For 2014, a Medicaid beneficiary seeking services at home or in an assisted living residence must have no more than $2,163 per month in gross income.  If his gross income exceeds $2,163 per month by even one penny, he will not qualify for long-term care Medicaid benefits at home or in an assisted living residence.

While the Medicaid program is, by far, the most valuable program for which an individual requiring long-term care can benefit, there are other programs that can benefit such individuals.  One of those programs is a Veterans Administration benefit known as Aid and Attendance (A&A).

A&A is a needs-based cash assistance benefit.  It will provide a maximum monthly benefit of approximately $2,100 to a veteran and approximately $1,100 to the widow of a veteran.  The beneficiary must have limited asset and income that is insufficient to meet his care needs.

A problem can arise for those individuals receiving A&A when they seek to qualify for Medicaid benefits at home or in an assisted living residence.  This problem is best illustrated with an example.  Assume that Mr. Smith has Social Security income of $1,000 per month and a pension of $500 per month.  Assume further that Mr. Smith is residing in an assisted living resident that costs $6,500 per month.

When Mr. Smith first entered the assisted living residence, he had $72,000 in assets.  The assisted living residence informed him that he must pay privately for his care for two years before the facility would allow him to qualify for Medicaid benefits, which would then pay for his care at the facility.  (The two-year timeframe is a typical requirement of assisted living residences in this area.)

Mr. Smith applies for A&A and begins receiving $2,000 per month.  Now, his income is $3,500 per month ($1,000 + $500 + $2,000 = $3,500) and his deficit with the facility (the difference between the monthly charge and his income) is only $3,000 ($6,500 – $3,500 = $3,000).  So, Mr. Smith’s $72,000 is sufficient to pay for his care for two years ($72,000/$3,000 = 24).

The problem arises when the two years are up and Mr. Smith needs to qualify for Medicaid benefits.  His income is now $3,500 with the A&A and the Medicaid income cap is $2,163.

The federal lawsuit is to enforce a Medicaid rule that says A&A should not be treated as income in cases such as Mr. Smith.  The Medicaid Office is refusing to honor this rule.  The plaintiffs are suing to compel Medicaid to recognize its own rule.  Personally, I think they will win; I’ll keep you posted.