In a matter involving personal service agreements, five petitioners brought a court action challenging determinations by the Oneida County and Herkimer County Department of Social Services (DSS) which denied Medicaid benefits to applicants who had executed personal service agreements while residing in a nursing home.  In each case, DSS found there had been a transfer of assets for less than fair market value upon execution of the contract.

The Court found that, in each case, there were deficiencies in the personal service agreements. The Court looked at whether the contract included a provision providing for an estate refund upon the death of the Medicaid applicant.  The absence of language providing a refund was indicia that the transfer of assets was for less than fair market value because no refund would be provided to the estate of the Medicaid applicant were he or she to die prior to his/her life expectancy.

The Court also took issue with four of the five personal service agreements that used language providing services on an “as needed” basis.  These contracts lacked specificity with respect to the amount of hours provided by the caretaker.  The Court reasoned that because there was no language providing for services “at least X hours per week”, there is no guarantee that services will be rendered.  The Medicaid applicants “cannot demonstrate that the transfer of assets for prospective services was for fair market value,” because the services “may or may not be rendered.”  This, in conjunction with the absence of language requiring the caregiver to provide a refund to the Medicaid applicant’s estate in the event of death prior to his/her life expectancy period, allows the caregiver a potential windfall if the Medicaid applicant in fact predeceases his/her life expectancy.

Finally, the Court noted that caregiver service logs identified non-compensable duplicative services from compensable non-duplicative services.  The Court cited 10 NYCRR Sections 415.1 – 415.27 to identify duplicative services being provided in a nursing home.

The matter was remanded to DSS in each case to determine Medicaid eligibility from the date of execution of the personal service agreement and a recalculation of the penalty period (specifically, to reduce the penalty period by the value of any non-duplicative services).

Matter of Barbato v. New York State, 65 A.D.3d 821, 884 N.Y.S.2d 525, 2009 N.Y. Slip Op. 06283, N.Y.A.D. 4 Dept., August 21, 2009 (NO. 711, 08-02216)

Source: NY State Bar Association Elder Law eNews (October/November 2009)