Lack of Personal Care Agreement Makes Reimbursements to Relatives an Improper Transfer

Reversing a trial court, a Louisiana appeals court determines that a nursing home resident improperly transferred close to $50,000 to his caregiver nephew and the nephew’s wife because the payments were not made pursuant to a valid personal care agreement.  David v. State of Louisiana Department of Health and Hospitals (La. Ct. App., 1st, No. 2014 CA 0791, Dec. 23, 2014).

Widley David entered a Louisiana nursing home in 2008.  Between 2008 and 2010, Mr. David wrote six checks to his nephew and his nephew’s wife totaling $49,195.  According to Mr. David, the checks were intended to repay his closest living relatives for the daily care that they provided him in the nursing home.  When Mr. David applied for Medicaid in December 2010, the Louisiana Department of Health and Hospitals (DHH) assessed a nearly 15-month penalty period due to the transfers. 

Mr. David did not appeal the initial imposition of a penalty period, but in July 2011 he requested a change in status from private pay to full Medicaid pay.  DHH denied this request, stating that pursuant to the initial denial, Mr. David was ineligible for Medicaid until January 2012.  Mr. David appealed the denial of his change in status, arguing that the payments to his relatives were reimbursement for care provided and not to qualify for Medicaid.  DHH claimed that the payments would be valid only if made pursuant to a written personal care agreement, which Mr. David had never executed.  After a trial court found in favor of Mr. David, the state appealed.

The Louisiana First Circuit Court of Appeal reverses the trial court, finding that the lack of a personal care agreement made the transfers to the relatives improper.  The court states that a “payback arrangement or personal care agreement was necessary to validate this alleged arrangement; however, Mr. David did not offer any type of tangible or documentary evidence of an agreement, contract, or Personal Care Agreement to substantiate and validate his argument. The record is void of any evidence that complied with Medicaid eligibility requirements to validate the resource transfers.”

In Maryland you need to use a Personal Care Contract.

David Wingate is an elder law attorney, and practices in Frederick and Montgomery Counties, Maryland. Services include Medicaid, asset protection, wills and trusts.