Court of Appeals Upends Medicaid Caregiver Policy

I started out calling this post, “Court of Appeals Confuses Medicaid Caregiver Policy” – but having reread the case, “Upends” seems to be a more accurate description. The case is Jensen v Department of Human ServicesClick here to read the opinion.  The only good thing about the case is that it is unpublished (not that this will stop the Department from asserting it as settled law).

The history of the case is that caregiving services were provided to an impaired adult by unrelated person under an informal oral agreement.  The caregiver was paid $19,000 for the period before the impaired adult required nursing home placement.  When the Medicaid application was filed, the payment to the non-family caregiver was deemed divestment.  The applicant appealed, and lost at the administrative level, and then appealed to Circuit Court where the divestment penalty was set aside.  The State sought leave to appeal to the Court of Appeals, which leave was granted, resulting in this decision.

The history of the issue is that several years ago DHS initiated a policy to address when payments to caregivers could be treated as divestment.   The department obviously thought some of the strategies being used at that time were abusive.  The reaction from DHS was two-fold.  One policy was implemented to preclude the advance lump sum payment contracts being made to maintain homes after someone qualified for nursing home care.  The second, and more draconian, was implemented to address caregiving provided by family members, and to treat those payments as divestment unless certain very restrictive requirements were met prior to the start of such services.  These policies are recited in the case, and can be found in the BEMs.

In Jensen, the Court of Appeals confuses and combines these two separate policies, and the result is that contracts with non-family caregivers are subject to the same treatment as contracts with family caregivers.  The result appears to be that all payments for caregiving services provided to persons who subsequently apply for long term care Medicaid benefits will be subject to divestment penalties unless the contracts comply with the lengthy and cumbersome requirements of the DHS policy which were initially intended only to impact family caregivers.  And yes, that would include professional homecare companies.

Where we go from here is anyone’s guess.  The Department could simply choose not to impose penalties on persons who hired professional care agencies to provide services.  To me that seems likely. I don’t believe the State wants to undermine its victory by engaging in a losing battle with the homecare industry.  Another possibility is that another case will be brought with the hope of having the Court of Appeals revisit this opinion.  The Elder Law Section, State NAELA section or another interested party, may want to pursue relief at the Federal or State level.  In any event, for the moment, Houston, we have a problem.  I am not aware whether the parties involved have sought leave to the Michigan Supreme Court,  if the Supreme Court would consider hearing such a matter, or if the record is adequate so that if such leave were granted, success would be likely.

I do note, and this is very unusual in the many Court of Appeals cases I’ve read, the Court of Appeals panel prefaces their opinion as follows:  “Were we permitted to review the facts de novo, we likely would have reached a different decision than the Department of Human Services (DHS) regarding the petitioner’s Medicaid eligibility.”  Perhaps some hope of reprieve lies in this statement.

  • howardco

    Doug,
    Thanks for sharing this case. It grows increasingly depressing that, if this is enforced by DHS, people who are largely unwary will get caught up for doing something as normal as hiring a third party caregiver.
    Howard

  • #facepalm