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Articles & Insights
Guardian May Not Deduct Fee From Medicaid Recipient's Income
A Florida appeals court rules that the guardian of a Medicaid recipient may not deduct a guardianship fee from the recipient's income because the fee is not medically necessary.  Lutheran Services Florida, Inc. v. Department of Children and Families (Fl. Ct. App., 2ndDist., No. 2D13-5840, Nov. 25, 2015).
Lutheran Services Florida (LSF) is the court-appointed guardian of nursing home resident Larry Peron. LSF's duties include reviewing Mr. Peron's medical treatment and giving consent for medical procedures. When Mr. Peron qualified for Medicaid, he paid the majority of his income to the nursing home as the patient responsibility amount.
LSF obtained a court order authorizing that a monthly $200 guardianship fee be deducted from Mr. Peron's income and petitioned the Department of Children and Families to deduct the guardianship fee from Mr. Peron's patient responsibility amount. The Department denied the petition, determining that the fee cannot be deducted from a Medicaid recipient's income because it is not "medically necessary" under state law.  A hearing officer upheld the determination, noting that state law defines medically necessary as services provided in accordance with generally accepted standards of medical practice and reviewed by a physician. LSF appealed.
The Florida Court of Appeals affirms, holding that the guardianship fee is not medically necessary. According to the court, state law allows only deductions from a Medicaid recipient's income for "medical or remedial care services rendered by a medical professional directly to the Medicaid recipient." The court acknowledges that this result leaves a gap "wherein a guardian of an incapacitated ward who provides the necessary consent for medically necessary treatment cannot be compensated for its services under the state's Medicaid program," and suggests that the legislature look into changing the law. 

Irrevocable Trust Is Available Asset Because Medicaid Applicant Had Right to Use Trust Asset
A Massachusetts trial court rules that a Medicaid applicant's irrevocable trust is an available asset because the applicant still had a right to live in, use, and get income from the condominium owned by the trust. Daley v. Sudders (Mass. Super. Ct., No. 15–CV–0188–D, Dec. 24, 2015).

James and Mary Daley created an irrevocable trust. They conveyed their interest in their condominium to the trust, but retained a life estate in the property. Seven years later, Mr. Daley was admitted to a nursing home and applied for MassHealth (Medicaid) benefits. The state denied him benefits after determining that the trust was an available asset.

Mr. Daley appealed, but after a hearing the state ruled that the trust was an available asset because the Daleys had the right to occupy and use the condo and the trust granted them the right to convert the trust's principal into income. Mr. Daley died during the appeal, and his estate appealed to court.
The Massachusetts Superior Court affirms, holding that the trust is an available asset. The court rules that the main trust asset -- the condominium -- was available to the Daleys because they retained life estates under the deed and continued to use and live in the condo after establishing the trust. In addition, the court holds that the trust is an available asset because the Daleys had the right to income from the condo. 
Trustee's Attorney Does Not Owe Duty to Trust Beneficiary
Rhode Island's highest court rules that an attorney representing the trustee of a trust does not owe a duty of care to the trust beneficiary, so the beneficiary cannot sue the attorney for legal malpractice. Audette v. Poulin (R.I., No. 2015-53-Appeal, Dec. 9, 2015).
Richard Audette was the beneficiary of a charitable trust that included a provision allowing him to live rent-free on trust property. Mr. Audette's parents moved in with him over the trustee's objections. The trustee consulted with attorney David Correira and instituted an action to evict Mr. Audette. Mr. Correira represented the trustee in this matter and other matters relating to the trust.
Mr. Audette sued Mr. Correira for legal malpractice, arguing that Mr. Correira's advice to the trustee led the trustee to mismanage the trust. The trial court ruled that Mr. Correira did not owe a duty of care to Mr. Audette. On appeal, Mr. Audette argued that his claim should be able to proceed because Mr. Correira owed a duty to the trustee and the trustee and Mr. Audette both had a similar interest in the trust.
The Rhode Island Supreme Court affirms, holding that an attorney for a trustee does not owe a duty of care to a beneficiary of that trust. According to the court, because the interests of the trustee and Mr. Audette were adverse, there was no "identity of interest" between the parties.
Bank Not Liable for Improper Withdrawals Made Under a Power of Attorney
A New Jersey appeals court holds that a bank is not liable for improper withdrawals made by a nursing home resident's caregiver under a power of attorney because the resident's signature was on the power of attorney. In re Estate of Yahatz (N.J. Super. Ct., App. Div., No. A-0099-14T1, Dec. 14, 2015).
Michael Yahatz opened a bank account and signed an agreement that provided that the bank would not be liable if Mr. Yahatz failed to notify the bank of suspected problems within 60 days of receiving a bank statement. Mr. Yahatz entered a nursing home where Nydia Davalia was one of his caretakers. Mr. Yahatz signed a power of attorney appointing Ms. Davalia as his attorney-in-fact and authorizing her to make withdrawals from his bank account. Ms. Davalia withdrew $80,000 from the account.
After Mr. Yahatz died, his estate filed a claim against the bank, arguing that it was negligent when it accepted the power of attorney. The trial court granted the bank summary judgment, ruling that the claims were time-barred because Mr. Yahtaz did not notify the bank about the contested withdrawals until more than 60 days after he received the bank statement. The estate appealed, arguing that the power of attorney was invalid on its face because of the way it was signed.
The New Jersey Superior Court, Appellate Division, affirms, holding that the bank was not negligent when it accepted the power of attorney from Ms. Davila because the signature on the power of attorney was Mr. Yahatz's signature. According to the court, "there can be no violation of a duty of ordinary care, or a finding of bad faith, where a bank fails to take action to confirm the authenticity of a signature the customer does not dispute is his own."