Nursing Home May Recover Unpaid Bills From Transfer Recipients
Nursing Home
May Recover Unpaid Bills From Transfer Recipients
Last Updated: 9/26/2005 Topic: Medicaid
A nursing home may recover a judgment for amounts owed from the daughters of a former resident. The daughters were the recipients of asset transfers that rendered the resident no longer eligible for Medicaid. Beverly Healthcare v. Gammon (Tenn. Ct. App., No. M2003-03117-COA-R3-CV, Aug. 18, 2005). unpublished opinion
Charles Leath was admitted to a nursing home facility operated by Beverly Healthcare on February 28, 1997, and began receiving Medicaid benefits that April. Mr. Leath's home was exempted from the asset calculation because of his intention to return to it. On September 30, 1999, on the advice of elder law attorney Tim Takacs (erroneously spelled "Tackus" in the opinion), Mr. Leath sold his home to his daughter Betty Gammon for its fair market value. Shortly after the sale, Ms. Gammon, who handled her father's financial affairs under a power of attorney, distributed part of the proceeds from the sale to herself and Mr. Leath's other two daughters. In addition, the three daughters entered into a "Service and Life Care Agreement" drafted by Mr. Takacs whereby they agreed to perform certain services for their father for payment of $5,000 each.
In February of 2000, Mr. Leath was found ineligible for Medicaid benefits because the transfers to the daughters were determined to be improper, a decision that was affirmed by a trial court. Mr. Leath remained at the facility until June 25, 2001. Beverly Healthcare obtained a judgment against Mr. Leath for $16,972.45 some two weeks before his death on August 14, 2001.
Unable to collect the judgment from Mr. Leath or his estate, Beverly sought to recover the amount from Mr. Leath's daughters on the basis that the transfers to them were fraudulent because Mr. Leath allegedly intended or believed that debts would accrue beyond his ability to pay. The trial court agreed that the transfers constituted fraudulent conveyances. "The only apparent purpose for the transfers," the court wrote, "was to somehow have Medicare [sic] pay for all of their father's care without having to consume any of their father's assets." The court found the daughters liable for three months of unpaid bills totaling $9,891.92, plus $7,670 in attorney's fees and costs. Two of the sisters appealed.
The Court of Appeals of Tennessee affirms. "The sale of his house," the court writes, "made [Mr. Leath] ineligible for Medicaid and increased his monthly obligation to [the facility]. In that situation, it was to be anticipated that the amounts owed [the facility] would exceed Mr. Leath's assets . . . " The court also rules that the provision governing attorney's fees in Beverly's admission agreement allows the facility to recover attorney's fees not just in litigation against Mr. Leath but also in litigation to collect the judgment.
To download the full text of this decision in WordPerfect format, go to:
http://www.tsc.state.tn.us/opinions/tca/053/BeverlyOpn.wpd.
Last Updated: 9/26/2005 Topic: Medicaid
A nursing home may recover a judgment for amounts owed from the daughters of a former resident. The daughters were the recipients of asset transfers that rendered the resident no longer eligible for Medicaid. Beverly Healthcare v. Gammon (Tenn. Ct. App., No. M2003-03117-COA-R3-CV, Aug. 18, 2005). unpublished opinion
Charles Leath was admitted to a nursing home facility operated by Beverly Healthcare on February 28, 1997, and began receiving Medicaid benefits that April. Mr. Leath's home was exempted from the asset calculation because of his intention to return to it. On September 30, 1999, on the advice of elder law attorney Tim Takacs (erroneously spelled "Tackus" in the opinion), Mr. Leath sold his home to his daughter Betty Gammon for its fair market value. Shortly after the sale, Ms. Gammon, who handled her father's financial affairs under a power of attorney, distributed part of the proceeds from the sale to herself and Mr. Leath's other two daughters. In addition, the three daughters entered into a "Service and Life Care Agreement" drafted by Mr. Takacs whereby they agreed to perform certain services for their father for payment of $5,000 each.
In February of 2000, Mr. Leath was found ineligible for Medicaid benefits because the transfers to the daughters were determined to be improper, a decision that was affirmed by a trial court. Mr. Leath remained at the facility until June 25, 2001. Beverly Healthcare obtained a judgment against Mr. Leath for $16,972.45 some two weeks before his death on August 14, 2001.
Unable to collect the judgment from Mr. Leath or his estate, Beverly sought to recover the amount from Mr. Leath's daughters on the basis that the transfers to them were fraudulent because Mr. Leath allegedly intended or believed that debts would accrue beyond his ability to pay. The trial court agreed that the transfers constituted fraudulent conveyances. "The only apparent purpose for the transfers," the court wrote, "was to somehow have Medicare [sic] pay for all of their father's care without having to consume any of their father's assets." The court found the daughters liable for three months of unpaid bills totaling $9,891.92, plus $7,670 in attorney's fees and costs. Two of the sisters appealed.
The Court of Appeals of Tennessee affirms. "The sale of his house," the court writes, "made [Mr. Leath] ineligible for Medicaid and increased his monthly obligation to [the facility]. In that situation, it was to be anticipated that the amounts owed [the facility] would exceed Mr. Leath's assets . . . " The court also rules that the provision governing attorney's fees in Beverly's admission agreement allows the facility to recover attorney's fees not just in litigation against Mr. Leath but also in litigation to collect the judgment.
To download the full text of this decision in WordPerfect format, go to:
http://www.tsc.state.tn.us/opinions/tca/053/BeverlyOpn.wpd.
