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Legally Speaking: False Medicaid application leads to unjust enrichment claim

June 10, 2018 GMT

The following is based on a case that occurred in Washington County.

An elderly woman named Isabell suffered from dementia. Her son, Richard, arranged for care for Isabell in a foster home and applied for Medicaid benefits to pay for the foster home. Richard completed the Medicaid application on Isabell’s behalf using a Power of Attorney he had for Isabell.

A person applying for Medicaid benefits must disclose any asset transfers made by the applicant within the preceding 60 months. Richard represented on the Medicaid application form that Isabell had not made any transfers in the past 60 months. In actuality, Richard had for years been transferring Isabell’s assets, mostly to himself (or using her funds for his personal benefit). In the 60 months before Isabell’s application for Medicaid, Richard had transferred away over $150,000 of Isabell’s assets.

Because of the transfers during the 60 months before the Medicaid application, Isabell was not legally eligible for Medicaid, and the misrepresentation on the Medicaid application resulted in her being approved for Medicaid when she should not have been approved.

The rates Medicaid pays for foster home care are substantially lower than the rates paid by private pay patients. The foster home where Isabell resided during her lifetime charged approximately $48,000 less for her care because she was on Medicaid than she would have been charged if she had been a private pay patient. After Isabell’s death, Richard’s acts became known. He was criminally prosecuted and was required to pay $195,710 compensation to Isabell’s estate to replace the funds he had taken.

As is normally the case, the state was fully reimbursed from the estate for the Medicaid benefits which had been paid out for Isabell’s care.

The foster home then brought a claim against Isabell’s estate to recoup the $48,000 in discounted care charges for Isabell’s care as a Medicaid patient. The trial court ruled in favor of the foster home and ordered the estate to reimburse the foster home for the $48,000 difference in care costs.

On appeal, the Oregon Supreme Court agreed that Richard had filled out the Medicaid form as Isabell’s agent. In doing so, Richard made a misrepresentation on Isabell’s behalf for the purpose of getting Medicaid benefits. The court further concluded that it would be unjust and inequitable for the beneficiaries of Isabell’s estate to retain the benefits that Isabell had gained through the misrepresentation. The court then ordered the case remanded for further proceedings regarding some technical issues pertaining to federal Medicaid law.

Medicaid applications are completed under penalties of perjury. Misrepresentations on the applications can lead to criminal consequences for those filling out the applications if they are not completely and truthfully filled out. Also, the Medicaid recipient’s estate can be liable for reimbursement of benefits and other claims, as illustrated by this case.