The Medicaid Application: Unauthorized Practice of Law
Applying for Medicaid is not an intuitive process, and often those in need of Medicaid benefits cannot complete the application process alone. The federal government requires states, through their Medicaid programs, to allow individuals and beneficiaries to select someone of their choosing to aid in the application process for eligibility or renewal. These non-lawyer volunteers can include friends, family, and even nursing home employees. The problem is that these non-lawyer Medicaid advisors are giving individuals incomplete and incorrect legal advice, costing elderly individuals and their families significant financial loss for faulty Medicaid planning and legal assistance.
Recently, a committee appointed by the New Jersey Supreme Court reviewed this issue as the unauthorized practice of law. The committee looked at opinions published by Florida and Tennessee regarding non-lawyer Medicaid advisors’ activities and declared a clear delineation between mere assistance and giving legal advice. For example, non-lawyer Medicaid advisors may provide information on insurance programs and coverage options, assist the individual in the application or renewal process, assist in collecting required documents, act as a middleman between the agency and the individual, attend hearings with the individual, and review and submit the application or renewal. However, the non-lawyer Medicaid advisor cannot be paid for their services or advise the individual on legal and financial strategies for qualifying for Medicaid, including advice on wills, powers of attorney, guardianships, transfers of assets and property, nursing home laws, the impact of marriage and divorce, and estate administration.
The impact of non-lawyers providing legal advice comes to light when viewed in the nursing home facility setting. Here, individuals caring for an elderly family member must make some difficult decisions, often under emotional distress and within a narrow window of time. This is unfortunately when mistakes get made. Facility employees, specifically the admissions or marketing directors, are under pressure to fill vacant beds. Prior to being accepted into a nursing facility, prospective residents must complete and sign an admission agreement. Such agreements are governed by the nursing home reforms of OBRA 1987, and are subject to 42 U.S.C.A. § 1396r(c)(5)(A)(ii) and N.J.S.A. 30: 13-3.1a(2), which prohibit the use of third-party guarantees and binding arbitration clauses. Nevertheless, these provisions are crammed into most admission agreements with little to no explanation as to the legal effects. Aside from this inherent conflict of interest, facility employees then begin to discuss the resident’s Medicaid eligibility. The nature of the Medicaid application itself makes it hard (almost impossible) to discuss the financial requirements without providing at least some advice on how to qualify. It is this moment which too often results in an elder or their caregiver relying on the advice of a non-lawyer within the facility.
The monthly fees associated with nursing home facilities can range anywhere from $6,000 – $12,000. If an elder requires the use of a ventilator that cost can double. Newly admitted residents usually pay the monthly rate from their private resources, subsequently applying for Medicaid benefits once their personal assets fall to or below $2,000 or $3,000 if married. While the application is pending the facility will continue to bill the resident. Once the applicant is approved the facility recoups a portion of its outstanding billings from Medicaid, and will receive a per diem rate every month thereafter until the resident’s death. The question is, what happens if the resident’s application is denied?
If the resident’s initial application is denied they may appeal the agency’s decision by requesting a fair hearing. If unsuccessful, the elder’s caregiver may be held personally liable for the outstanding debt. Generally, Medicaid applications can take anywhere from 3, 6, or even 9 months before an initial decision is rendered. This means that a caregiver who signed an admissions agreement on behalf of a family member could be responsible for paying a six-figure settlement to the facility. Even worse, the facility can discharge the resident from the premises for failure to pay should the resident remain ineligible for Medicaid after the penalty period.
At this point you may consider contacting a lawyer, however, the inclusion of a binding arbitration clause may limit your ability to apply pressure on the facility to comply with the laws and/or remedy their violations.
In conclusion, find an elder law attorney whom you trust and discuss the risks associated with moving mom or dad into a skilled nursing facility or assisted living facility, as well as the risks concerning their Medicaid eligibility. Having this conversation ahead of time will prevent you from making a rash decision in a moment of crisis, which could make all the difference in getting your loved one the care they need without exposing yourself to unnecessary financial and emotional hardship.
