The question before the Massachusetts Court of Appeals in Forman vs. Director of the Office of Medicaid (Mass. App Ct. No. 10-P-728, 4/6/11) is whether the payment of $20,000 by Janette Forman to her daughter, Fran Rachlin, in exchange for Fran’s commitment to provide certain care services was a gift or a reasonable payment for services.
Fran was a full-time teacher, but slept at her mother’s house, prepared meals, bathed her mother, and performed housekeeping chores.
A little more than a year after the contract was executed, Mrs. Forman had to move to a nursing home. She applied for MassHealth coverage, which was approved, subject to an ineligibility period based on the $20,000 payment. She appealed.
The Superior Court agreed with MassHealth, finding that the payment was a gift because the contract “was not reasonably enforceable” and “had no ascertainable fair market value."
Here, the Court of Appeals agrees that the contract has no ascertainable fair market value, which it finds is sufficient to uphold the prior decisions without determining whether it is legally enforceable. It finds that its value cannot be determined because “it was self-contradictory, sketchy, and skewed in favor of the daughter’s retention of the upfront payment regardless of the services provided.”
Among its specific findings, the Court is struck by the fact that the contract does not specify a particular number of hours that Fran must provide care nor the length of time the care must be provided. The fact that Fran may keep the money under the contract, even if her mother must move out for safety reasons, further undermines its value in the eyes of the Court.
The Court concludes, however, that “we are not in any way suggesting that all lump-sum prepaid contracts or all contracts between family members for services are disqualifying.” The implication is that elder law attorneys should be able to study this decision carefully to advise clients and draft personal care agreements that will pass muster.