Monday, November 11, 2013

Nursing Homes Given New Debt Collection Authority in Connecticut: Can Sue over Resident’s Gifts

Recently I’ve written about a new law in New Hampshire that makes gift recipients liable for the nursing home costs of the donor if the gift made the donor ineligible for Medicaid benefits. (The New Hampshire law also creates liability for persons serving as power of attorney or guardian of the resident in some circumstances. Read about it here: http://tinyurl.com/ogpnp6d). 
Now, another state has authorized nursing homes to go after individuals who receive funds transferred from nursing home residents if the transfer rendered the resident ineligible for Medicaid.
Connecticut Public Act 13-234 took effect on October 1, 2013. The Act authorizes nursing home facilities to sue recipients of asset transfers if the gift made a resident ineligible for Medicaid benefits. And, if the action is successful, the transferee may also be liable for court costs and the nursing facility’s attorney’s fees.
   Section 128 of the new law states:
Sec. 128. (NEW) (Effective October 1, 2013) (a) For purposes of this section and sections 129 and 130 of this act, (1) "nursing home facility" means a chronic and convalescent nursing home and a rest home with nursing supervision, and (2) "penalty period" means the period of Medicaid ineligibility imposed pursuant to 42 USC 1396p(c), as amended from time to time, on a person whose assets have been transferred for less than fair market value for the purposes of obtaining or maintaining Medicaid eligibility.

(b) Any transfer or assignment of assets resulting in the establishment or imposition of a penalty period shall create a debt, as defined in section 36a-645 of the general statutes, that shall be due and owing to a nursing home facility for the unpaid cost of care provided during the penalty period to a nursing home facility resident who has been subject to the penalty period. The amount of the debt established shall not exceed the fair market value of the transferred assets at the time of transfer that are the subject of the penalty period.

(c) The provisions of this section shall not affect other rights or remedies of the parties. A nursing home facility may bring an action to collect a debt for unpaid care given to a resident who has been subject to a penalty period, provided (1) the debt recovery does not exceed the fair market value of the transferred asset at the time of transfer, and (2) the asset transfer that triggered the penalty period took place not earlier than two years prior to the date of the resident's Medicaid application. The nursing home facility may bring such action against (A) the transferor, or (B) the transferee.

(d) In actions brought under subsection (c) of this section, a court of competent jurisdiction may award actual damages, court costs and reasonable attorneys' fees to a nursing home facility if such court determines, based upon clear and convincing evidence, that a defendant incurred a debt to a nursing home facility by (1) wilfully transferring assets that are the subject of a penalty period, (2) receiving such assets with knowledge of such purpose, or (3) making a material misrepresentation or omission concerning such assets. Court costs and reasonable attorneys' fees shall be awarded as a matter of law to a defendant who successfully defends an action or a counterclaim brought pursuant to this section. Any court, including a probate court acting under subdivision (3) of subsection (a) of section 45a-98 of the general statutes or section 45a-364 of the general statutes, may also order that such assets or proceeds from the transfer of such assets be held in constructive trust to satisfy such debt.

(e) The provisions of this section shall not apply to a conservator who transfers income or principal with the approval of the Probate Court under subsection (d) or (e) of section 45a-655 of the general statutes.
Section 128 gives the nursing facility a cause of action to recover debts for services rendered during the Medicaid penalty period. The new law also provides nursing facilities with the right to bring suit when a resident is receiving medical assistance (Medicaid) benefits but the resident’s income co-payment is not being remitted to the facility.  Section 129 states:    
Sec. 129. (NEW) (Effective October 1, 2013) (a) For purposes of this section, "applied income" means the income of a recipient of medical assistance, pursuant to section 17b-261 of the general statutes, as amended by this act, that is required, after the exhaustion of all appeals and in accordance with state and federal law, to be paid to a nursing home facility for the cost of care and services.

(b) In determining the amount of applied income, the Department of Social Services shall take into consideration any modification to the applied income due to revisions in a medical assistance recipient's community spouse minimum monthly needs allowance, as described in Section 1924 of the Social Security Act, and any other modification to applied income allowed by state or federal law.

(c) A nursing home facility shall provide written notice to a recipient of medical assistance and any person authorized under law to be in control of such recipient's applied income (1) of the amount of applied income due pursuant to subsections (a) and (b) of this section, (2) of the recipient's legal obligation to pay such applied income to the nursing home facility, and (3) that the recipient's failure to pay applied income due to a nursing home facility not later than ninety days after receiving such notice from the nursing home facility may result in a civil action in accordance with this section.

(d) Pursuant to the notice provisions of subsections (c) and (f) of this section, a nursing home facility that is owed applied income may, in addition to all other remedies authorized under statutory and common law, bring a civil action to recover the applied income, provided the nursing home facility shall not commence such action against a recipient of medical assistance who has asserted that the applied income is needed to increase the minimum monthly needs allowance of the recipient's community spouse, pursuant to 42 USC 1396r-5(e)(2)(B). In such case, the nursing home facility may not commence such action until the recipient, the recipient's community spouse or the legal representative of either has exhausted their appeal rights before the Department of Social Services and in court. A nursing home facility may bring such action against (1) a medical assistance recipient who owes the applied income, or (2) a person with legal access to such recipient's applied income who acted with the intent to (A) deprive such recipient of the applied income, or (B) appropriate the applied income for himself, herself or a third person.

(e) If a court of competent jurisdiction determines, based upon clear and convincing evidence, that a defendant wilfully failed to pay or withheld applied income due and owing to a nursing home facility for more than ninety days after receiving notice pursuant to subsection (c) of this section, the court may award the amount of the debt owed, court costs and reasonable attorneys' fees to the nursing home facility. Court costs and reasonable attorneys' fees shall be awarded as a matter of law to a defendant who successfully defends an action or a counterclaim brought pursuant to this section. The provisions of this section shall not apply to a conservator who transfers income or principal with the approval of the Probate Court under subsection (d) or (e) of section 45a-655 of the general statutes.

(f) A nursing home facility shall not file any action under this section until (1) thirty days after it has given written notice of such action to any person who received notice pursuant to subsection (c) of this section, or (2) ninety-one days after it has given written notice of such action and the information required by subsection (c) of this section to any person who has not received notice pursuant to subsection (c) of this section.
My Thoughts: Section 128 creates a cause of action that seems similar to one that could be brought under Connecticut’s existing law related to fraudulent transfers. Fraudulent transfer laws allow creditors to void a transfer that was made without substantial consideration where the transfer rendered the debtor unable to meet their financial obligations. 
However, Section 128 does add the significant additional sanction of imposing attorney’s fees and court costs on the losing party.
These new laws in New Hampshire and Connecticut may be part of a trend to make perceived “wrongdoers” (i.e. recipients of penalty inducing gifts from nursing home residents) liable for unpaid nursing home costs. They could represent an evolution beyond traditional state filial liability laws that make children liable for their parent’s unpaid nursing home costs even if the children were not “wrongdoer” recipients of any asset transfers.
This trend could spread to other states like Pennsylvania.
Further Reading:

1 comment:

total12 said...

Hampshire law also creates liability for persons serving as power of attorney or guardian of the resident in some circumstances.Uni-source 2000