A New York trial court entered judgment against a woman who refused to contribute to her spouse’s nursing home expenses, finding that because she had adequate resources to do so, an implied contract was created between her and the State of New York entitling the state to repayment of Medicaid benefits it paid on the spouse’s behalf. Banks v. Gonzalez (N.Y. Sup. Ct., Pt. 5, No. 452318/15, Aug. 8, 2016).

Evelyn Gonzalez’ spouse was admitted to a nursing home and received $28,235.56 in Medicaid benefits from the Department of Social Services of the City of New York.  At the time of her spouse’s Medicaid application, Ms. Gonzalez’ assets exceeded the resource allowance permitted by Medicaid.  However, she signed a declaration refusing to make her income or resources available to pay for her spouse’s care. This strategy is commonly known as “spousal refusal.”

The “spousal refusal” Medicaid strategy a product of federal law. Federal Medicaid law states that the community spouse can keep all of his or her assets by simply refusing to support the institutionalized spouse. If a spouse refuses to contribute his or her income or resources toward the cost of care of a Medicaid applicant, the Medicaid agency is required to determine the eligibility of the nursing home spouse based solely on the applicant’s income and resources, as if the community spouse did not exist. After awarding Medicaid benefits to the institutionalized spouse, the Medicaid agency then has the option of beginning a legal proceeding to force the community spouse to support the institutionalized spouse. However, this is not always done. If the Medicaid agency chooses not to sue the community spouse for support, it can file a claim for reimbursement against the community spouse’s estate following his or her death.

After a letter to Ms. Gonzalez demanding repayment of the cost of Medicaid benefits paid on behalf of her spouse went unanswered, the agency filed suit.  Ms. Gonzalez neither responded to the summons and complaint nor to the agency’s motion for default judgment.

The Supreme Court of New York, New York County, granted the motion and entered default judgment against Ms. Gonzalez for the cost of benefits provided to her spouse.  The court held that, since Ms. Gonzalez had the income and resources but refused to contribute to her spouse’s care, state law created an implied contract between her and the State of New York allowing recovery of the Medicaid benefits provided by the state.

(Adapted from an article on the ElderLawAnswers website. Mr. Vanarelli is a founding member of ElderLawAnswers.)

For additional information concerning Medicaid applications and appeals, visit: https://vanarellilaw.com/medicaid-applications-medicaid-appeals/