Now this is SCARY- Filial Responsibility Part 2

Ruth and Earl Linderkamp, parents of Dawn Herrmann and Elden, Louis, Carl, Gene, and Dennis Linderkamp, resided in Four Seasons Healthcare, a nursing home in Forman, ND from 2006 until they died in 2009 and 2010, respectively. In August 2006, two months before the parents entered the nursing home, they signed a contract selling the property to their son, Elden (who had been leasing the land from them and farming on it for 20 years), and his wife Rita, for $50,000. The final deed was signed in November 2006, a month after they entered the nursing home.

After Ruth and Earl passed away, Four Seasons Healthcare sued Elden and Rita for payment of unpaid nursing home care provided to his parents. The nursing home claimed that the transfer of land made by Ruth and Earl was a “fraudulent conveyance,” or an attempt to avoid debt, the amount paid was much less than what the property was worth, and that Ruth lacked capacity to execute the deeds. In addition, the nursing home sought to hold Elden liable for his parents’ cost of care under North Dakota’s filial support law (N.D.C.C. § 14-09-10).

When he found out about the lawsuit, Elden brought a third party claim against his siblings to help contribute to the cost of the nursing home care provided to their parents. The personal representative of the parents’ estates thereafter sued Elden and Rita, claiming that the parents lacked capacity to execute the contract to transfer the land to them. The actions were consolidated, and the district court’s judgment was that Elden was, in fact, liable for his parents’ unpaid nursing home care.

As part of the ruling, the North Dakota lower court voided the deed to the land as a fraudulent conveyance. The Supreme Court affirmed this aspect of the lower court’s decision, authorizing the parents’ personal representative to administer the farmland in the probate of their estates. The judgment also required that Elden pay Four Seasons Healthcare $104,276.62 for his parents’ care and refused to consider whether Elden’s siblings were required to share in this liability.

Elden and Rita appealed the ruling, arguing that the district court erred in deciding that Ruth was not competent enough to execute the deeds and that the land transfer was a fraudulent conveyance. The couple also argued that the court was incorrect in imposing personal liability against Elden for his parents’ nursing home care, and in deciding that his claims against his siblings were moot.

On appeal, the Supreme Court agreed that Elden was responsible for the cost of his parent’s care. It said: “The language of N.D.C.C. § 14-09-10 imposes a duty on children of parents who are unable to support themselves to maintain their parents to the extent of the ability of each child, which may be enforced by any person furnishing necessaries to the parents.”

But the Supreme Court held that the lower court erred in holding Elden solely liable without deciding the extent of the other children’s responsibility under the filial support statute. It returned the case to the lower court for consideration of this issue and apportionment of the debt. The case has been remanded for further proceedings.

Similar to Ruth and Earl Linderkamp, as your parents age, they may spend months or years in a nursing facility. What happens if one of them is in need of long-term care and is unable to pay for it? Currently 30 states, including Virginia, have “filial responsibility” laws that can be used by nursing homes and other long-term care facilities to seek reimbursement for unpaid bills from the children of nursing home residents if the nursing home residents cannot pay the bills themselves. According to these laws, adult children are legally responsible (at least on paper) to pay for necessities like food, clothing, shelter and medical attention for indigent parents.

Even with these laws in place, the practice of nursing homes turning to them to collect unpaid debts is not too widespread, but as you can see from the Linderkamp case, it can happen. For another example, read part one of this series, featuring the case of Health Care & Retirement Corporation of America v. Pittas (Pa. Super. Ct., No. 536 EDA 2011, May 7, 2012).

How can you avoid parental support pitfalls? Medicare may cover short-term rehabilitation in a nursing home if certain conditions are met, but only for a maximum of 100-days.  At that point, residents without long-term care insurance must pay for their own care unless they have done proper Medicaid asset protection planning, which is an absolute necessity if you want to avoid the possible application of Virginia’s filial responsibility law.  Virginia’s law (Virginia Code Section 20-88) states as follows:

“It shall be the joint and several duty of all persons eighteen years of age or over, of sufficient earning capacity or income, after reasonably providing for his or her own immediate family, to assist in providing for the support and maintenance of his or her mother or father, he or she being then and there in necessitous circumstances.”

However, there is additional critical language in Virginia’s statute – it says that this law 

“shall not apply if . . . a parent is otherwise eligible for and is receiving public assistance or services under a federal or state program.”  

In other words, Virginia’s filial responsibility law does not apply if the parent is receiving Medicaid!  This exception is crucial to understand and means that it is essential that adult children help their parents plan to receive Medicaid if these adult children don’t want to wind up being responsible for their parent’s nursing home care as happened in the Linderkamp and Pittas cases.

The result in the Four Seasons case is another stark example of the financial risks children bear in states like Virginia and North Dakota for the cost of care provided to their aging parents. The Linderkamp experience serves as a warning for middle-aged children with parents who are racking up nursing home bills or who may in the future need nursing home care. The only way you can make sure you do not fall victim to a filial support action is by planning ahead. Children have to be proactive regarding how their parents are financing their long-term care. Some families of modest means may assume Medicaid will cover a parent’s care once the parent has depleted savings and other resources. But it’s a huge mistake to assume that Medicaid will be easy to obtain.

Medicaid laws are the most complex laws in existence, with 8 separate bodies of law (4 at the Federal level and 4 at the state level) dealing with Medicaid and Medicaid eligibility.  To do proper Medicaid asset protection planning, families need the help of an experienced elder law attorney, preferably a Certified Elder Law Attorney such as Evan H. Farr.  The best time to do Medicaid Asset Protection planning is now.  Whether your parents are years away from needing nursing home care, are already in a nursing facility, or somewhere in between, the time to plan is now, not when your parents are about to run out of money.  Call The Fairfax and Fredericksburg Elder Law Firm of Evan H. Farr, P.C. today at 703-691-1888 to make an appointment for a consultation.

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About Evan H Farr, CELA, CAP

Evan H. Farr is a 4-time Best-Selling author in the field of Elder Law and Estate Planning. In addition to being one of approximately 500 Certified Elder Law Attorneys in the Country, Evan is one of approximately 100 members of the Council of Advanced Practitioners of the National Academy of Elder Law Attorneys and is a Charter Member of the Academy of Special Needs Planners.

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