A New York trial court holds that the fact that Medicaid wrongly denied benefits to a nursing home resident is not a defense in a breach-of-contract claim against the resident, who died leaving an unpaid bill. East End Healthcare v. Gegenheimer (N.Y. Sup. Ct., Suffolk Cty., No. 12-21672, June 29, 2015).
Anna Amico entered a nursing home and signed an admission agreement guaranteeing payment for services. She had a reverse mortgage, and her niece, Joan Gegenheimer, withdrew money from Ms. Amico's line of credit account shortly after she entered the nursing home. When Ms. Amico applied for Medicaid benefits, the state assessed a penalty period because of the transfer. Ms. Amico died owing money to the nursing home.
The nursing home sued Ms. Gegenheimer in her capacity as executrix of Ms. Amico's estate for breach of contract and fraudulent conveyance. Ms. Gegenheimer argued that she withdrew the money from Ms. Amico's reverse mortgage account for Ms. Amico and did not keep any of the money. According to Ms. Gegenheimer, Medicaid improperly denied coverage to Ms. Amico because it counted the money in the reverse mortgage line of credit as an available resource. The nursing home moved for summary judgment.
The New York Supreme Court, Suffolk County, grants the nursing home summary judgment on the breach-of-contract claim, but denies summary judgment on the fraudulent conveyance claim. The court holds that any mistake by the state in considering Ms. Amico's reverse mortgage line of credit funds as an asset that led to the denial of Medicaid benefits is not a defense because Ms. Amico signed a contract expressly agreeing to make private payments. The court also rules that because there is no evidence that Ms. Gegenheimer kept the money that she withdrew from Ms. Amico's account or that the nursing home sent Ms. Amico a bill for her services, there remains a triable issue of fact as to whether Ms. Gegenheimer or Ms. Amico believed that the use of funds would make Ms. Amico insolvent.
For the full text of this decision, go to: https://www.courts.state.ny.us/Reporter/pdfs/2015/2015_31161.pdf
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