A recent fair hearing appeal argued by Margolis & Bloom partner, Jeffrey A. Bloom, approved a lump sum payment for care provided by the clients’ daughter.
A family facing elder care challenges came to see us several years ago for assistance in MassHealth planning. Due to the parents’ declining health, they had moved out of their home in Hyde Park to live with their daughter. Their son had put considerable work into repairs on the house so that it could be sold.
Upon the sale of the house, we advised the clients to take the following steps to protect the proceeds:
1. They purchased a life interest in the home of their daughter and son-in-law for which they paid fair market value.
2. They paid the son $25,000 for the work and out-of-pocket costs he incurred in fixing up the house for sale.
3. They paid the daughter and her husband $50,000 under a family care agreement, under which they committed to provide care in their home indefinitely.
Several years later, the father passed away and about five years after moving in with her daughter, the mother had to move to a nursing home and applied for MassHealth. She was denied—MassHealth argued that the payment to the son for the work on the house and the payments to the daughter and son-in-law under the care agreement and a portion of the payment for the life estate were uncompensated transfers of assets causing a period of ineligibility for benefits.
On the eve of appeal, after reviewing evidence about the value of the work the son had provided, MassHealth dropped its objection to the payment to him, so that the issues on appeal were whether the parents received fair value when they paid their daughter and son-in-law $50,000 and whether they paid too much for the life estate in their home.
Attorney Bloom presented substantial evidence on both issues, demonstrating the calculation of the life estate value, the care provided by the daughter and son-in-law, and what that care would have cost had the family hired private caregivers. This successfully convinced the hearing officer that no gift was made.
While finding problems with the Family Agreement, the hearing officer did “not conclude that the transfer of $50,000 was intended to be a gift to Rebecca and her husband. . . . in 2005 when decisions were being made . . . the intent from the believable testimony of appellant’s children was ‘to keep appellant home as long as possible’ which turned out to be nearly 5 years.”
In short, the case rested on the intent of the parties, which the hearing officer understood to have been not to make any transfers for less than fair market value. The combination of excellent advocacy by Attorney Bloom, believable clients, and an open-minded hearing officer resulted in a fair and proper decision. If any of those elements were missing, we may have found a different result.
With the advantage of hindsight, the attorneys and clients could have put themselves in a somewhat stronger position had they taken two different steps early on. First, the son and parents should have entered into a contract for the repairs done on the house prior to his starting work with the price based on bids from area contractors.
Second, the family care agreement should have provided for payment to the daughter and son-in-law on an ongoing basis, rather than in advance. While lump sum advance payments are honored by Medicaid in a number of states, they are disfavored by MassHealth. This case was successful because the parties were able to demonstrate that the value of the care provided under the agreement far exceeded the amount paid, but if the mother had had to move to a nursing home earlier, the case may have ended with a different result.