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On July 2, 2013, SB 138 became law as New Hampshire RSA 151-E:19. This important new law provides long-term care facilities (both nursing homes and assisted living facilities) with another avenue of recovery for costs of care where other, more traditional, avenues have failed or simply proven too expensive to pursue.
SB 138 provides three new areas of recourse. The first, under RSA 151-E:19, II(a), deals with recovery of assets that were the subject of a Medicaid-disqualifying transfer:
[W]hen an asset transfer made on or after the effective date of this section results in a final determination of a Medicaid asset transfer disqualification, the person who received the assets from a resident which resulted in the Medicaid asset transfer disqualification shall be liable under the section to the long-term care facility for all costs of care up to the amount transferred to the person. The person shall be liable at the facility's Medicaid rate for services for the period of asset transfer disqualification.
The import of this provision is that a facility will be able to recover the cost of care (at the reduced Medicaid rate) without the need to prove the existence and breach of a contract or a violation of the Uniform Fraudulent Transfers Act. In light of the expenses incurred generally in pursuing such claims, especially under the Uniform Fraudulent Transfers Act, which usually requires a very fact-intensive inquiry and expensive discovery, SB 138 should provide a facility with an economical means of obtaining a judgment.
Of course, the recipient of such a transfer is not without any possible defense. Under Section II(b), the recipient may challenge an action under Section II(a) by arguing that the asset transfer should not have been a disqualifying event in the first place. The court's determination on this issue will be independent of the prior finding by the Department of Health and Human Services.
The second important new provision is set out in RSA 151-E:19, III:
A fiduciary who possesses or controls the income or assets of a resident of a long-term care facility and has the authority and duty to file an application for Medicaid on behalf of a resident shall be liable under this section to the long-term care facility for all costs of care which are not covered by Medicaid due to the fiduciary's negligence in failing to promptly and fully complete and pursue an application for Medicaid benefits for the resident. Upon a finding of negligence, the fiduciary shall be liable to the facility for the costs of care at the facility's Medicaid rate for services for the period of resulting non-coverage.
In short, under Section III, a fiduciary can incur liability for failing to promptly pursue a Medicaid application. It is expected that the referenced negligence standard will be identical to the standard used in personal injury actions in cases in New Hampshire, i.e., the failure to use reasonable care. It also is worth noting that this section of SB 138 speaks of fiduciaries with the "authority and duty to file an application for Medicaid on behalf of a resident." Defendants in actions under this section could attempt to use this phrase as a defense under the argument that the subject fiduciary never had a duty to pursue a Medicaid application. However, the legislature clearly was assuming the existence of such a duty, probably because a fiduciary is generally charged with protecting the best interests of a resident and the failure to pay a facility's charges can easily result in the issuance of a notice of discharge under state law. Consequently, a court should reasonably be able to find that a fiduciary does indeed have a duty to complete and pursue a Medicaid application where a ward's assets have run dry. To avoid running into any problems with this issue, however, it is advisable that long-term care facilities modify their admissions documents to obtain an agreement from any fiduciary to promptly and fully complete and pursue an application for Medicaid benefits on behalf of the resident ward. In this way, a defendant fiduciary will not have the benefit of even attempting to argue that he or she had no duty to complete and pursue the application.
Facility administrators also should note that they must send written notice of the intent to file an action under Section III to any person who is a potential defendant at least 30 days before filing the action. It is unclear whether, in the absence of such notice, a Court would dismiss a case under Section III or, instead, stay the matter while the statutory notice requirement is satisfied. It also is worth noting that, where a legal guardian is concerned, the Probate Court, not the Superior Court, will have jurisdiction over such negligence actions.
Finally, under RSA 151-E:19, IV:
Any fiduciary or person who has received authority over the income of a resident such as a person who has been given or otherwise obtained authority over a resident's bank account, has been named as or has rights as a joint account holder, or otherwise has obtained or received any control over a resident's bank account or any other income of a resident, shall be liable under this section to the long-term care facility to the extent that any such person or fiduciary refuses to pay the patient liability amount due under Medicaid, provided that the person or a fiduciary is in receipt of written notice from the department of the patient liability amount at the time such income is received by the fiduciary or person, and provided further that the liability of the person or fiduciary shall be for amounts going forward from the receipt of the notice.
In seeking to recover under this provision, a facility will be well-advised to verify through the Department of Health and Human Services that notice of the patient liability amount has been forwarded to the appropriate person (and potential defendant), and to otherwise notify that person of the duty and liability to pay. As with Section III, there is also a 30-day notice requirement in this Section IV.
Although under Section V of the law a facility cannot execute on a judgment obtained in a proceeding under SB 138 while a Medicaid application is pending, attachment and trustee process to secure such actual or potential judgments is nonetheless permitted at the discretion of the Court.
Nothing contained in SB 138 diminishes any other causes of action that exist at common law, under any New Hampshire statutes, or otherwise. Instead, SB 138 is in addition to and not to the exclusion of claims for breach of contract or unjust enrichment, or actions under the Uniform Fraudulent Transfers Act. Furthermore, any action under the new law is by bench trial, which means that the case will be tried before a judge alone, without a jury. This should result in substantial cost savings where trial is necessary, because bench trials can be scheduled more quickly and also take less time than jury trials.
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This is not a legal document nor is it intended to serve as legal advice or a legal opinion. Devine, Millimet & Branch, P.A. makes no representations that this is a complete or final description or procedure that would ensure legal compliance and does not intend that the reader should rely on it as such.
© Copyright 2014 Devine Millimet & Branch, Professional Association
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