Gift or Theft ? (Part 2)
In last week’s post I told you about John’s call about Medicaid for his sister, Mary. During our review of her 5 years of financial records we discovered transfers of funds while their brother, Jerry was handling her finances. Jerry admitted that he took the money without Mary’s knowledge so we have to contend with a transfer of $200,000.
The question then is “how will Medicaid treat these transfers when we apply for Medicaid?” The State will assume that Mary gave the money to Jerry. We can’t simply tell them that Jerry took it – what amounts to theft. If it truly is theft, I explained to John, then he needs to file a criminal complaint. He should also file a civil complaint against his brother, Jerry to try to recover the funds.
Why? Because we must show that we are trying to recover the funds. It does not matter whether we succeed or not. We just need to support our contention that the funds were not a gift – not a transfer for less than fair value – so we can avoid a Medicaid penalty.
John complied with my request. He filed a criminal complaint with the local police department. The police told him the chance of recovery was very unlikely. John also hired an attorney to file a civil action. John told me Jerry said he had a lot of debt and that’s why he took the money. I told John to expect that Jerry could file for bankruptcy and avoid having to pay back anything, however, again, that really isn’t the point. We just want to avoid a Medicaid penalty.
We then went ahead and filed the Medicaid application. Included with the documents we sent were copies of both the criminal and civil complaints. Then the case took a surprising twist. Jerry hired an attorney and made an offer to pay back part of the money he took. So, how would Medicaid treat a partial return of funds? Next week I’ll share with you what they said.