A nursing home fails in its claim that funds transferred by a resident to her son before her Medicaid coverage began was a fraudulent conveyance intended to protect the funds from creditors. The Ellis Nursing Center v. Evelyn Hamelin and Paul Hamelin (Mass. Dist. Ct., Dedham, Civ. Act. No. 0054 CV 1413, Nov. 25, 2003).
Evelyn Hamelin moved to the Ellis Nursing Center ('Ellis') in January 1998. The following month, Mrs. Hamelin paid $14,900 towards the cost of a car for her son, Paul Hamelin. At that time, she had assets totaling more than $60,000. She continued to pay Ellis until she ran out of money in January 1999.
Ellis sued Mrs. Hamelin and her son for $21,600 for four months it was not paid until she qualified for Medicaid. It sought restitution of the $14,900 transferred to her son, arguing that it was a fraudulent conveyance intended to protect the funds from creditors.
A Massachusetts district court finds in favor of the Hamelins, holding that to be a fraudulent transfer the gift had either to have been made while Mrs. Hamelin was insolvent or to have rendered her insolvent. Neither was the case. She remained solvent until she ran through her savings a year later.
What's totally unclear in the decision is why Mrs. Hamelin did not qualify for Medicaid (which the decision calls 'Medicare') for four months after her money ran out. At one point, the decision says that 'Ms. Hamelin did not receive Medicare benefits for over 3 months during the 'look back period,' from February 1, 1999 to May 1, 1999.' But if the transfer was in 1998, any transfer penalty should have occurred then, not a year later.
Apparently Paul Hamelin didn't apply for Medicaid on his mother's behalf until July 1999 and coverage was made retroactive to May 1, 1999. Why he delayed is not explained. Why he didn't get the full three months of retroactive coverage available back to April 1 is not explained.
But, at least, we know that transfers for purposes of Medicaid planning are not considered fraudulent (at least if they do not render the nursing home resident insolvent).
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