Assets Belonging To Incompetent Medicaid Recipient Discovered By Children Who Had Power Of Attorney Held Countable

A North Carolina appeals court recently held that assets owned by an incompetent Medicaid recipient which were discovered by her family after she had been receiving Medicaid benefits for several years were countable and that the family must repay the benefits already paid on the Medicaid recipient’s behalf.

Ella Mae Cloninger suffered from Alzheimer’s disease and her children had power of attorney over her. Mrs. Cloninger entered a nursing home in May 2000 and began receiving Medicaid benefits. In 2005, the children discovered that Mrs. Cloninger had $330,685.18 in insurance policies. The children cashed out the policies and deposited the money in Mrs. Cloninger’s bank account.

After receiving notice of the insurance policies, the state terminated Mrs. Cloninger’s Medicaid benefits and informed the children that the Medicaid funds already spent on Mrs. Cloninger would be treated as an overpayment in the amount of $142,366.44. The trial court agreed and held that Mrs. Cloninger was liable for the repayment of all Medicaid benefits paid on her behalf. The children appealed, arguing that, because they were unaware of the insurance policies, the insurance policies were not “available” resources.

The North Carolina Court of Appeals affirmed, holding that because Mrs. Cloninger owned the insurance policies at the time she applied for Medicaid, she was ineligible for benefits. According to the court, an asset need not be “known” in order to be an available resource:

An applicant’s resources may be excluded from eligibility consideration if the Medicaid recipient is incompetent; however, resources will not be excluded from consideration if a durable power of attorney has been awarded to an individual authorized to exercise that power. … [T]he North Carolina Administrative Code requires only that the resources are “available” and someone acting on behalf of the recipient “can take any necessary action” to make the resources available. … [N]o legal impediment prohibited [the applicant’s] children, acting with the power of attorney, from obtaining the funds.

The court concluded that because Mrs. Cloninger received Medicaid benefits when she was ineligible, she is required to repay those benefits.

For the decision, go to: Cloninger v. N.C. Dept. of Health (N.C. Ct. App., No. COA09-970, April 6, 2010).