Reversing a district court, a U.S. appeals court rules that a promissory note held by an Oklahoma Medicaid applicant's wife is not an available resource because the note cannot be transferred or sold. Gragert v. Lake (10th Cir., No. 12-6137, Oct. 8, 2013).
George Gragert and his wife sold a rental property to their son for $28,000 in exchange for a promissory note given to Mr. Gragert's wife. The note provided that it could not be sold or assigned. When Mr. Gragert entered a nursing home and applied for Medicaid, the Oklahoma Health Care Authority found the promissory note was an available resource and denied him benefits.
Mr. Gragert sued the state in federal court. The district court granted summary judgment to the state after looking at the definition of resources and finding that according to federal law, promissory notes are ordinarily liquid resources. Mr. Gragert appealed.
The U.S. Court of Appeals for the 10th Circuit reverses, holding that the promissory note is not an available resource. The court rules that the promissory note in this case is different from an ordinary promissory note because it cannot be sold. According to the court, "[i]f a promissory note cannot be transferred, as appears to be the case here, then it is not convertible to cash and therefore not a resource."
For the full text of this decision, go to: https://www.ca10.uscourts.gov/opinions/12/12-6137.pdf.
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