Nursing Home Medicaid Benefits & the Value of Knowing the Obscure

By Sylvius Von Saucken and Jason Wolf

Using a little known safe-harbor rule for clients receiving Nursing Home Medicaid benefits in NY may maximize the net recovery for your client

The Scenario:
Mrs. Adams lives in upstate New York. She is 57 and disabled, living in a nursing home. A few months ago she was injured while in the care of the nursing home. The injuries stemmed from an incident involving two staff members. Her daughter, Kaitlyn, brought a negligence action, on her mother’s behalf, against the nursing home. The parties reach a settlement and after attorney’s fees, Mrs. Adams receives $50,000. The case is dismissed and life goes on, but what happens to the money?

Years ago Mrs. Adams and her family worked long and hard to get her entitled to Medicaid so she could move into a nursing home. The Medicaid (Long Term Nursing Home Care) program has limits requiring income to be less than the cost of care, and a countable resource limit of $4,150.[1] Because of her Medicaid entitlement, she has assigned any rights to a third-party recovery to Medicaid.[2] Her settlement funds are not sufficient to pay for private care for very long; she no longer qualifies for Medicaid, so she loses her benefits. Effectively she must reimburse the Medicaid program for injury related care which consumes the majority of the net proceeds. The few remaining dollars were further reduced by set up fees and management costs of a pooled trust in an attempt to preserve her Medicaid entitlement and to improve her quality of life. The State gained, but Mrs. Adams was significantly injured and enjoyed no benefit at all from the settlement. The prima ry winner in this situation was New York Medicaid. This scenario could have a different outcome if you know the questions to ask and what rules to consider when evaluating health care programs (federal, state and private) in addition to addressing eligibility, right of recovery and subrogation claim and lien issues in this and other cases.

Generally, when representing clients receiving Medicaid benefits, you should identify two issues:(1) What affect will this settlement have on my clients’ Medicaid eligibility? (2) Are there any liens that need to be negotiated because of the settlement? Many nuances are involved when working with Medicaid, as the facts of each case may trigger exceptions to standard rules. Many statutes are involved and not all the rules are located where we logically would expect them to be. In fact, many rules are often overlooked or hard to find. Helpful though they may be, statutes alone are insufficient to navigate the fifty Medicaid seas across the country.

Oftentimes, the Medicaid caseworkers may not have access to, or may not be aware of, all pertinent information that may be of use to you and your clients. However, the burden of knowing that relevant information still rests on your shoulders as attorney. In practice, Medicaid caseworkers will correctly answer questions posed. Where should you look? What questions need to be asked? What other options exist? There are no easy answers to these questions. In our experience they vary with each jurisdiction – at state, county and even caseworker levels.

The Statute:
New York has a virtually unknown law on point. It is found in an out of the way, seldom used section of the Public Health Law under Hospitals. In pertinent part, it reads:

“5. The amount of any damages recovered by a patient, in an action brought pursuant to this section shall be exempt for purposes of determining initial or continuing eligibility for medical assistance under title eleven of article five of the social services law and shall neither be taken into consideration nor required to be applied toward the payment or part payment of the cost of medical care or services available under said title eleven.”[3]

The Policy:
In a dusted off, valid but almost forgotten Administrative Directive[4] from 2002, we find that the New York Medicaid’s official policy offers exceptions from the rule imposing liens on all third-party settlements involving Medicaid recipients. The exception expressly states that “No lien shall be imposed, and no recovery should be made during the lifetime of the recipient.”[5] (It is important to note that Medicaid will seek an estate recovery from these individuals, but that is nothing new, estate recoveries have been mandatory, since the enactment of the Omnibus Budget Reconciliation Act of 1993.[6])

Implications:
Although estate recoveries will occur, clients like Mrs. Adams can have lifetime use of settlement funds to significantly improve the quality of their lives. Set tling nursing home cases absent eligibility or New York Medicaid lien resolution issues is a breath of fresh air in an otherwise stagnant process. Without this law, the net effect of bringing a negligence action against the nursing home would primarily benefit the state. The Medicaid nursing home recipient would receive nothing.

Instead, by ensuring the Medicaid case officers understand and utilize this rule and Administrative Directive, your clients’ net settlement funds can be used to:

Conclusion:
Policy decisions or administrative directives that modify Medicaid statutes can provide an effective compass to understanding your state’s Medicaid policy and can help your clients safely navigate these stormy seas. In the specific case of N ew York nursing home settlements, Section 2801(d)(5), when combined with Administrative Directive 02 OMM/ADM-3 act like a sail that can get your clients to harbor much more quickly if you know where to look for and how to use those tools. And, in providing these rules, New York is demonstrating that rare quality of compassion.

The above fact pattern demonstrates that resolution of health care liens represents a great deal more than merely an administrative function. Lien resolution is now akin to other ancillary areas of personal injury settlements like bankruptcy, probate and disability planning (e.g. special needs trusts).

Personal injury lawyers traditionally develop expertise in litigation and tort law relevant to establishing the plaintiff's personal injury claim. The law and legal processes relevant to vindicating personal injury claims are distinct from developing law and legal processes relevant to evaluating a health care plan's right of recovery and resolving the plan's reimbursement claims and liens. Further, as witnessed in recent settlements, for certain clients the lien resolution strategy may arguably be as important of a factor in the client's final "net" (in pocket) recovery as any other aspect of proving and litigating the case. Equally important, the process also must ensure that plaintiffs' future benefits will not be denied as a direct result of improperly considering the agencies' interest in any settlement.

For perspective on the above points, over the last 5 years The Garretson ResolutionGroup (a practice group within The Garretson Law Firm) has organized a dedicated team of over two dozen professionals, including attorneys with specific experience and knowledge who can chart the lien resolution strategy as well as case workers [with billing, coding and work flow experience] who are capable of carrying out such strategies. The team evaluated and / or resolved Medicare and Medicaid's interest in over 100,000 single?event and mass tort cases last year alone. Indeed, they employ a special skill-set.