Medicaid Applicant Entitled to Penalty Reduction for Payments Made to Nursing Home

A Kentucky appeals court rules that a Medicaid applicant is entitled to reimbursement for transferred assets that were privately paid to the nursing home while her application was pending but not yet approved.  Estate of Cooper (Ky. Ct. App., No. 2017-CA-001663-MR, April 12, 2019).

In August 2012, Lennie Cooper became a resident of a nursing home and at the same time she transferred real estate and cash valued at nearly $160,000 to her daughter.  The following month, an application for Medicaid benefits was filed on Ms. Cooper’s behalf.  In October 2012, the state Medicaid agency denied the application due to the asset transfers and because the application failed to include a Qualifying Income Trust. 

However, the denial notice was mailed to the wrong address and was not received by Ms. Cooper.  In 2013, Ms. Cooper’s attorney learned of the denial and Ms. Cooper was given the opportunity to supplement the application with the required information.  Subsequently, the agency approved Medicaid benefits for Ms. Cooper retroactive to June 2014 and she died in July 2014.   While Ms. Cooper’s application was pending, her daughter had paid the nursing home $120,880 from the transferred funds to cover the cost of Ms. Cooper’s care from her admission through May 2014.  Ultimately, the agency determined that Ms. Cooper was entitled to benefits only as of June 2014 because private payments for her care ended in May 2014. 

Ms. Cooper’s estate appealed to a trial court, asserting that the penalty period should have been reduced to account for the transferred resources used to pay for her care.  The trial court determined that the agency’s interpretation of a state statute precluding reimbursement of recipients of Medicaid benefits for private payments made on their behalf was erroneous because Ms. Cooper was an applicant, not a recipient of benefits.  The matter was remanded to the agency to recalculate Ms. Cooper’s benefits based on payments that would reduce the penalty period.  The agency appealed.

The Court of Appeals of Kentucky affirms the trial court, holding that the regulation precluding reimbursement of recipients of Medicaid benefits for covered services paid with private funds does not apply while an application is pending.  The court opines that the agency’s interpretation is illogical, inequitable and would lead to absurd results.  Applicants like Ms. Cooper are placed in a “Catch-22,” the court points out, facing potential discharge if the Medicaid application is denied or paying the nursing home charges without possibility of reimbursement until the agency is reversed or grants benefits. 

For the full text of this decision, go to: https://law.justia.com/cases/kentucky/court-of-appeals/2019/2017-ca-001663-mr.html

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