Penalty Imposed For Medicaid Applicant’s Transfer of Assets To Disabled Veteran

Federal court rules that federal law does not require a State to disregard a transfer of a life estates by a Medicaid applicant to a disabled veteran.   Pike ex rel. Estate of Pike v. Sebelius (D. R.I., No. CA 13-392 S, July 16, 2015).

The late mother of plaintiff F. Norris Pike transferred of two life estates, valued at $294,995.32, to her granddaughter. The granddaughter was a disabled veteran. Later, Mrs. Pike was admitted to a nursing home in Rhode Island and applied for Medicaid benefits. The application was denied and a penalty was assessed based upon the transfer of the life estates to the granddaughter. Mr. Pike appealed the denial of benefits on behalf of his mother, but the appeal was also denied.

Mr. Pike then filed a lawsuit in federal court against defendants Rhode Island Department of Human Services (“DHS”) and South County Nursing and Rehabilitation Center, Inc. In the lawsuit, Mr. Pike claimed that, because the granddaughter was a disabled veteran, DHS should have applied the Medicaid “undue hardship” exemption to the transfers. If applied to the life estate transfers, the “undue hardship” exception would have exempted the transfers from consideration by Medicaid, resulting in the approval of Mrs. Pike’s application for Medicaid benefits. In response, the State of Rhode Island filed a motion to dismiss for failure to state a claim upon which relief could be granted.

The U.S. District Court for the District of Rhode Island dismissed the federal claims, holding that federal law does not require that a “hardship exemption” be allowed for a transfer to an applicant’s disabled granddaughter based upon her status as a veteran. Thus, the Court granted DHS’s motion to dismiss the plaintiff’s federal claims.

The Estate of Pike case is annexed here – Pike ex rel. Estate of Pike v. Sebelius

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