Nursing Home Can't Sue Daughter of Resident Who Transferred Money to Herself

A New Jersey appeals court holds that a nursing home does not have standing to bring a claim of conversion or breach of fiduciary duty against a resident's daughter who transferred the resident's money to herself, causing a Medicaid penalty period. Future Care Consultants, LLC v. M.D. (N.J. Super. Ct., App. Div., No. A-4565-17T1, July 5, 2019).

In 2010, M.D. began financially supporting her mother, B.S. She transferred funds from B.S.'s account to an account in her name, supposedly because B.S.'s husband was exhibiting signs of dementia. In May 2013, M.D. became B.S.'s agent under a power of attorney. B.S. entered a nursing home, and M.D. signed a direct debit authorization and Social Security notification on behalf of B.S., but she did not sign anything making her the "responsible party." When B.S. applied for Medicaid, the state imposed a penalty period based on the transfers from B.S. to M.D.

The nursing home sued M.D for conversion and breach of fiduciary duty, seeking reimbursement of the money M.D. withdrew from B.S.'s account. M.D. filed a motion to dismiss based on lack of standing. The trial court granted the motion to dismiss because there was no contract between M.D. and the nursing home. The nursing home appealed.

The New Jersey Superior Court, Appellate Division, affirms, holding that the nursing home did not have standing to bring a claim of conversion or breach of fiduciary duty against M.D. According to the court, because the nursing home never had ownership or possession of the transferred funds, it could not assert a claim of conversion. The court concludes that "there was no written contract between the parties that imposes any liability" on M.D. or creates a fiduciary duty.

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