28 May MEDICAID PLANNING BY NON-ATTORNEY IS A CRIMINAL ACT
Adult child of a nursing home resident seeks planning to obtain governmental assistance for costly care. The facility advises the adult child, “Don’t worry, we pay a company that you have to use, that will plan for you and apply for your mom – you don’t have to pay for anything”.
This may sound great for the consumer, but it is actually a criminal act by both the company and the nursing facility under Texas law. The reason for this to be illegal is quite simple – protection of the public. Attorneys have to be licensed and should be knowledgeable in the areas of law in which they practice. It is unauthorized practice of law for any non-attorney to charge a fee for legal services. Laws (including Medicaid planning) are often complex and failure to properly plan could be costly to the consumer.
Consider the facts of the case mentioned in the first paragraph. The company (hired by the facility) applied for Medicaid without finding out about (1) all of the assets of the applicant and (2) the applicant made a transfer within long-term care Medicaid’s 5-year lookback period (which is the anti-fraud provision since the government presumes gifts made within 5 years were purposefully done to reduce assets since there are limits on the amount of resources an applicant can have prior to obtaining governmental assistance for costly long-term care). The average cost of care in Texas is $7500/month. One of the assets of the applicant was a life insurance policy with a cash surrender value. As a result of the cash surrender value (which counts as a resource), there is ineligibility due to the resource limit. If the adult child had gone to an elder law attorney from the beginning, there could have been advice on how to purchase the policy and what the applicant could have done with the proceeds to accelerate eligibility to save on private pay costs. The applicant (and her agent, the adult child) did not discover the option until talking with an attorney four months later (resulting in payment of $7500 for each of the 4 months instead of getting governmental assistance). Furthermore, the company failed to discover the transfer or discuss the option to reduce a transfer penalty resulting therefore. So, the consumer was paying as a result of non-professional advice as recommended by the nursing home. As a result, the nursing home may require to pay privately for each month of continued ineligibility.
According to Texas Human Resources Code Section § 12.001 prohibited actions are:
- A person who is not licensed to practice law in Texas commits an offense if the person charges a fee for representing or aiding an applicant or recipient in procuring assistance from the department (Texas Health and Human Services Commission.
- A person commits an offense if the person advertises or holds himself or herself out for or solicits the procurement of assistance from the department.
- An offense is a Class A misdemeanor, punishable by jail and/or fine.
Some companies have acted independently of facilities and charge a fee directly to the consumer. They try to get around the laws by stating they are under the supervision of an attorney – even if the client never met with the attorney or the attorney only does something minor.
Those damaged as a result should consider a few options including contacting (1) litigator for the damages incurred; (2) the Unauthorized Practice of Law Subcommittee in the area where the action occurred; (3) the district attorney to pursue a criminal action and/or (4) The Texas Chapter of the National Academy of Elder Law Attorneys which may be of assistance if the company is a repeat offender that is damaging consumers.
Often consumers are more focused on what they think is most cost-efficient – until after the damage has been done. Caveat emptor – “let the buyer beware”.
If interested in learning more about this article or other estate planning, Medicaid and public benefits planning, probate, etc., attend one of our free upcoming Estate Planning Essentials workshops by clicking here or calling 214-720-0102. We make it simple to attend and it is without obligation.