Criminal Consequences of Deceptive Indiana Nursing Home Medicaid Applications

Alzheimer's disease, stroke, and other health crises send thousands of people to nursing homes each year. People often want to protect assets from expensive healthcare costs when they discover that the average annual cost of Indiana nursing home care exceeds $71,000. Legitimate asset protection strategies exist, but people face stiff criminal penalties when they try to protect assets illegally.

Indiana Code section 35-43-5-7.1 says a person commits Medicaid fraud by knowingly or intentionally making, uttering, presenting, or causing to be presented a Medicaid claim that contains materially false or misleading information concerning the claim. The statute goes on to say that, Medicaid fraud is a Level 6 felony if the fair market value of the offense is at least $750 and less than $50,000, a Level 5 felony if the fair market value of the offense is at least $50,000.

Medicaid law requires every Medicaid applicant to report all assets owned by the applicant or the applicant's spouse, including assets that either person owns jointly with other people. The law also requires the applicant to report every gift or transfer of assets for less than full fair market value made within the 5 years preceding the Medicaid application. Failure to report an asset or transfer constitutes Medicaid fraud.

The average monthly cost of Indiana nursing home care exceeds $5,900, so a fraudulent Medicaid application will always constitute a Level 6 felony if the nursing home resident receives Medicaid for one month or longer. According to Indiana Code section 35-50-2-7, "a person who commits a Level 6 felony shall be imprisoned for a fixed term of between 6 months and 2 ½ years, with the advisory sentence being 1 year. In addition, the person may be fined not more than $10,000."

If a nursing home resident receives Medicaid benefits for 9 months, the benefit value will usually exceed $50,000. If a person applying for Medicaid benefits for such a nursing home resident knowingly fails to report assets or transfers, he or she commits a Level 5 felony, and faces imprisonment under Indiana Code section 35-50-2-6 "...for a fixed term of between 1 and 6 years, with the advisory sentence being 3 years. In addition, the person may be fined not more than $10,000."

Medicaid law is one of the most confusing and poorly documented legal systems in America. The law sometimes uses almost nonsensical terminology that defies common understanding and common sense. The law also changes constantly as legislators, courts, and administrative agencies restate and redefine Medicaid eligibility requirements. Only experienced and reputable elder law attorneys possess the resources to track and understand Medicaid law, so no person should seek Medicaid advice from another source, even if the source is a licensed attorney. In fact, we have heard a few disappointing reports of ignorant lawyers downplaying or ignoring disclosure requirements.

People sometimes respond to our explanation of Medicaid's asset and transfer reporting requirements by asking, "How would the state know?" We offer three responses to that question. First, the state trains its Medicaid caseworkers to study each applicant's financial records (including bank and investment account statements, real estate records, and income tax returns) closely for signs of hidden asset ownership and asset transfers. Second, increasing governmental use of data analysis constantly increases the state's ability to discover fraud. Finally, we take our ethical and moral responsibility seriously, and we do not help people commit crimes.

Jeff R. Hawkins and Jennifer J. Hawkins are Trust & Estate Specialty Board Certified Indiana Trust & Estate Lawyers and Jeff is a Fellow of the American College of Trust and Estate Counsel. Both lawyers are admitted to practice law in Indiana, and Jeff Hawkins is admitted to practice law in Illinois. Jeff is also a registered civil mediator and was the 2014-15 President of the Indiana State Bar Association.