Estate of Resident Who Fraudulently Qualified for Medicaid Not Unjustly Enriched

May 7, 2016

An Oregon appeals court holds that an adult foster care facility that accepted a Medicaid recipient is not entitled to damages from the recipient’s estate for unjust enrichment after it was determined that the recipient qualified for Medicaid based on fraud. Larisa’s Home Care, LLC v. Nichols-Shields (Or. Ct. App., No. 172, April 27, 2016).

Isabell Prichard named her son as agent under a power of attorney, and he used the power of attorney 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 Medicaid 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 adult foster care facility filed a claim against her estate for unjust enrichment, arguing that because of the fraud, Ms. Prichard unlawfully obtained Medicaid benefits, so the facility was paid less than it would have been under a private pay rate. The trial court agreed that the estate had been unjustly enriched and awarded the facility $48,477. The estate appealed.

The Oregon Court of Appeals reverses, holding that the estate was not unjustly enriched. According to the court, the facility “had no expectation of being paid the private-pay rate because it accepted [Ms.] Prichard as a Medicaid client and was under contract with the state to be paid the contracted rate.” The court notes that the facility “is essentially blaming the estate for the bad acts that [Ms. Prichard’s son] committed, and asking that the estate be punished as a consequence.”

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