What we learned about hogs and pigs from the SBO experience

On the topic of Medicaid planning, John Bos used to famously comment at ICLE programs that “pigs get fat and hogs get slaughtered.”  The idea was that in engaging Medicaid planning strategies, those who pushed the envelope too far, were going to get hammered.  The Department, in those yesteryears, the phrase implied, would only be pushed so far and those who pushed beyond that point did so that their own risk and the risk of their clients.  To some extent this concept is similar to the old legal adage:  bad facts make bad law.

I have heard two stories about how the attack on SBO trusts came about.  I heard one story that the topic came up at a cocktail party and someone with knowledge described to someone of authority at the State a particular case in which and SBO trust was used to shelter millions of dollars.  Another story I heard is that a State formed panel which did a comprehensive review of the SBO issue and calculated the total amount of assets placed in SBO trusts during a single year, and came up with an astounding figure.  I don’t know which, either or if both are true.

Both stories suggest the same thing, either an individual practitioner or the body of planners as a group, pushed the state too far and they reacted.

In discussing the evolution of the SBO situation with a friend and colleague of many years, he said: These days it’s more like “pigs get fat and hogs slaughter all of us.”  His comment gave me pause.

The truth is that there are so many more attorneys planning today, and the Department, and its representatives in the Attorney General’s Office, is/are so much more aware of what we are doing than was the case in years past.  John’s familiar phrase lingers on, and reminds us of the risks we take when we push the envelope.  But it is also true that things we do as a group can no longer slip through the cracks in the process.  In years past, many fewer attorneys were offering advice on this topic, and only a small percentage of Medicaid applicants were taking advantage of planning strategies.   The playing field has changed. Today, when a “good idea” emerges, it is almost immediately implemented by practitioners in hundreds or thousands of cases, and the combined impact of those efforts will sooner or later become an issue in the minds of those who see their role as protecting the public resources.  Without arguing which side wears the white hat, it is interesting that this evolution has occurred.