Care Facility Resident’s Estate Was Unjustly Enriched By Fraudulent Medicaid Application

An Oregon appeals court holds that an adult foster care facility could claim unjust enrichment against the estate of a former resident who obtained Medicaid benefits due to her son's fraud, resulting in the facility being paid less than it would have at its private pay rate. Larisa's Home Care, LLC v. Nichols-Shields (Or. Ct. App., No. 173, April 24, 2019).

Isabell Prichard named her son as agent under a power of attorney, and he used the power to transfer funds to himself. Ms. Prichard's son then applied for Medicaid on her behalf, neglecting to mention the transfers in the application. The state approved Ms. Prichard's application and she moved into an adult foster care facility as a Medicaid patient. Ms. Prichard's son was eventually tried criminally for the fraudulent transfers and required to pay a compensatory fine to Ms. Prichard's estate.

After Ms. Prichard died, the foster care facility filed a claim against her estate for unjust enrichment, arguing that because of the fraud, Ms. Prichard unlawfully obtained Medicaid benefits, resulting in the facility being paid less than it would have at its private pay rate. The estate argued that the unjust enrichment claim is barred by state Medicaid law providing that the rate of compensation to a Medicaid provider is considered payment in full. The trial court awarded the facility $48,477, and the estate appealed. The court of appeals reversed, holding that the estate was not unjustly enriched. The Oregon Supreme Court reversed the appeals court’s unjust enrichment decision and remanded to determine whether Medicaid law prevented the lawsuit.

The Oregon Court of Appeals affirms, holding that Ms. Prichard's estate was unjustly enriched by the fraud. The court determines that state law only bars the facility from charging Medicaid-eligible residents more than the Medicaid rate. The court follows the Oregon Supreme Court’s conclusions "that [Ms.] Prichard was ineligible for Medicaid benefits at the time she applied due to the disqualifying transfers made prior to the application, [Ms.] Prichard qualified for Medicaid only because of [her son’s] fraud that was attributable to her, and [the facility], as a third party seeking an equitable recovery, is not bound by the Medicaid eligibility determination that was obtained due to fraud."

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