CCRC Residents Breached Contract When They Applied for Medicaid

A New York trial court rules that residents of a continuing care retirement community (CCRC) breached their contract when they applied for Medicaid before spending down their assets. Good Shepard Village at Endwell v. Yezzi (N.Y. Sup. Ct., No. 2013-2189, Dec. 22, 2014).

Peter and Hazel Yezzi moved into a CCRC and signed a contract requiring them to spend down their own resources before they applied for Medicaid. When Mrs. Yezzi had to move to the CCRC’s nursing home, she transferred some of her assets to her husband and applied for Medicaid.

The CCRC refused to accept the Medicaid payments and sued the Yezzis, claiming breach of contract and fraudulent transfer. The Yezzis argued that they had the legal right to apply for Medicaid.

The New York Supreme Court, Broome County, grants summary judgment to the CCRC, holding that while the Yezzis had the right to apply for Medicaid, the exercise of that right violated a valid contract. According to the court, to "allow the Yezzis to breach their agreement with [the CCRC], would upend the financial model upon which [the CCRC] was created and authorized." The court also rules that the transfer from Mrs. Yezzi to Mr. Yezzi was a fraudulent conveyance and the assets must be returned to Mrs. Yezzi's estate.

The Yezzis were represented by well-known Medicaid litigator and New York elder law attorney Rene H. Reixach, Jr. of Woods Oviatt Gilman.

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