COA Issues Misguided Opinion on Medicaid Planning

By Doug Chalgian on May 22, 2022

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In the end, the only thing that matters about this case is that it is unpublished.  And that’s good.  Otherwise, Conrad v Michigan Department of Health and Human Services serves as a reminder, that there are still plenty of people out there, including judges on the Court of Appeals, who neither like nor understand Medicaid planning.  [Click on the name to read the case.]

In Conrad, Richard is married to Josephine.  Richard goes into the nursing home after a fall.  Josephine petitions for protective order for both income diversion and asset transfers.  Everyone’s favorite Assistant Attorney General shows up, and as usual, presents no evidence but tosses around the usual assortment of nonsense legal arguments and objections.  When she is done, the trial judge grants the requested relief and Josephine files her Medicaid application.

The Assistant AG appeals.

The COA takes up all three of the misguided arguments that many of us have heard before:

  1. The Assistant AG argues that the trial judge lacked jurisdiction because Josephine failed to show by clear and convincing evidence that Richard was unable to manage his own affairs. In fact, the petition alleged that Richard was demented and presumably Josephine testified to same.  More importantly, the trial judge appointed a guardian ad litem who met with Richard (virtually due to COVID restrictions) and who reported that Richard was unable to respond coherently to even the simplest questions.  The Assistant AG presented no evidence on this point, yet this panel of the Court of Appeals holds that the trial judge abused its discretion by finding that Richard was a person who was unable to manage his own affairs.  The COA remands the case and directs the trial judge to pursue medical evidence to support this finding.
  1. As a basis for establishing her need for a support order, Josephine presents a budget laying out her living expenses. The Assistant AG again presents no evidence. But yet again, this panel of the Court of Appeals decides that Josephine has failed to establish sufficient need as required by Vansach (a 2018 published opinion on income diversion protective orders).  This issue is likewise remanded for further development of the record.

And finally,

  1. Josephine presented a list of assets owned by Richard individually and by Richard and herself jointly, along with their values, as a basis for the request for an asset transfer (presumably for the purpose of increasing her protective spousal amount). The Assistant AG also presented no evidence but argued that the information provided lacked the specificity required by Schroeder (a 2020 published opinion on asset transfers through protective orders).  This issue is also remanded for further development of the record.

There is, of course, no law to support that proposition that you can’t establish the fact that someone is unable to manage their affairs without medical evidence.  The GAL report alone would seem to be more than sufficient to support the findings made by the trial court.

Nor is there any law that says that a schedule of assets and the testimony of a petitioner regarding her income and expenses is not sufficient evidence to establish financial need.  If, as the COA insists, Josephine should have provided more detail regarding the needs of her institutionalized spouse, why (we have to wonder) didn’t the Appellant /Assistant AG simply ask Josephine those questions while she was on the stand?

This case seems to be an example of the COA harassing a trial judge for being too helpful to middle class people trying to survive an awful situation. The only explanation I can imagine for this is that they bought into the suggestion (endlessly put forward by the Assistant AG) that Medicaid planning is about rich people abusing the system.

The only thing good about this case is that it is unpublished.

For those who do not do Medicaid planning, protective orders are frequently used to (among other things) alter the amount the nursing home resident pays to the nursing home as their “patient pay amount” vis a vis the amount of their income that can be diverted to support the spouse that is not in the nursing home; and to increase the amount of countable assets that the spouse that is not in the nursing home can keep and still qualify for Medicaid (the so-called “protected spousal amount”).

I have blogged about Vansach and Schroeder (as well as other related cases involving Medicaid planning through protective orders).  To read those posts, click on the name of the case.



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mm By: Doug Chalgian
Doug Chalgian

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