By Patricia C. D’Agostino, Esq.
Gauthier v. Director of the Office of Medicaid (Mass. App. Ct., No. 10-P-1585, Nov. 10, 2011)
While upholding MassHealth’s determination that the payment of a lumpsum by a MassHealth applicant to her son constituted a transfer of assets, the Massachusetts Appeals Court vacated the Massachusetts Superior Court’s decision and remanded the case to the agency to assess whether (1) Ms. Gauthier intended to receive fair-market value and (2) whether the transfer-penalty period imposed should be reduced or eliminated based on the value of services received.
By way of background, Ms. Gauthier moved in with her son and daughter-in-law in 2004 because she had Alzheimer’s disease. In March of 2006, Ms. Gauthier executed a personal care agreement with her son under which her son agreed to provide her with room and board, three meals a day, housecleaning, laundry, transportation to and from appointments, bathing, dressing and eating. In exchange for this, Ms. Gauthier would pay him $225,000 in a lump-sum payment up-front (she ended up paying $182,000). This agreement could be cancelled by either party within 90 days for any reason, including if Ms. Gauthier was no longer able to care for herself, but after 90 days there would be no refund to Ms. Gauthier upon termination.
At the same time the care agreement was executed, Ms. Gauthier’s son and daughter-in-law renovated their home to add another bedroom that was handicap accessible and to add a handicap bathroom. They also expanded their septic system to accommodate the additional bathroom. In addition to the renovations to accommodate Ms. Gauthier, they added a deck, two-car garage and remodeled their kitchen.
In May of 2008 Ms. Gauthier entered a nursing home and the Office of Medicaid imposed a transfer-penalty period for the full value of the $182,000 payment to her son under the care contract (682 days).
The Appeals Court here holds that the Board of Hearings was correct in finding that the $182,000 was a disqualifying transfer because it was not for fair-market value. In making its determination, the Court focused on the up-front lump-sum payment in exchange for services over an unascertainable period of time. Further, the agreement could be terminated any time after 90 days with no refund to Ms. Gauthier. In addition, the Court noted that Ms. Gauthier’s son did not provide all of the services called for in the contract. For example, he did not provide his mother with three meals a day because she went to adult day care during the day. The Appeals Court also held that the Board of Hearings had sufficient evidence to support a finding that Ms. Gauthier did not make the transfer for purposes other than to qualify for MassHealth.
However, the Appeals Court finds that the Board of Hearings did not decide whether Ms. Gauthier “intended” to receive fair-market value pursuant to M.G.L. 130 CMR 520.019. The Court distinguishes this question from the question of whether the transfer was made with the intent to qualify for MassHealth because even if “the parties contemplated future nursing home care at State expense, they may have intended to provided her fair compensation for her contribution.” In addition, the Appeals Court finds that MassHealth did not properly calculate the ineligibility period because although this transaction was not for fair-market value, it was for some value. It remands the case to MassHealth to ascertain the value Ms. Gauthier received and whether she intended to pay fair market value for her payment to her son.