In this frightening and unnecessary decision, a U.S. district court has nearly eliminated some guardians’ ability to be fairly compensated. Thanks to this decision many diligent and qualified guardians who are stat
utorily entitled to fair and reasonable compensation will find themselves faced with the decision to either take on the difficult and time-consuming position as guardian for free or turn down the position altogether.  The implications of this decision may be devastating for many incapacitated persons who are on Medicaid and in need of a qualified guardian.  It’s a tough job, and apparently the court thinks someone’s got to do it – for free.

In  Williams v. Shah (E.D.N.Y., No. 12–CV–3953 (RRM)(RML), March 30, 2014), a group of Medicaid recipients who have guardians filed a class action against the state, arguing that guardianship-related fees and expenses should be deducted from their income when calculating the NAMI. The recipients argued that the funds used to pay the guardians must be drawn from assets allocated to the NAMI, which causes the recipients to incur potential liability for nursing home charges. The recipients also argued that since the law provides that a guardian who is appointed by a state court is entitled to reasonable compensation, the lack of funds to pay the guardian as a result of the NAMI will reduce the potential for a qualified guardian.

The U.S. District Court for the Eastern District of New York ruled that the recipients who brought the suit lacked standing. However, the court unnecessarily stated that even if the Medicaid recipients had standing, guardianship expenses are not a part of the personal needs allowance. This means that Medicaid recipients are not entitled to have guardianship fees deducted from their income for the purposes of determining the amount of monthly income available to pay the nursing home.

When Medicaid recipients in New York who live in a nursing home have income that exceeds the Medicaid income threshold, the recipients are required to contribute part of this income to pay for their care. In order to determine what amount must be used to contribute to the recipient’s care, the state deducts certain expenses, including a personal needs allowance, from the recipient’s income. So, the recipient’s monthly income less allowable deductions is the recipient’s net available monthly income (NAMI), and is the amount that the Medicaid recipient is required to pay towards his or her care.

While the court’s analysis of the law in this case seems to be well-reasoned, it should not have ruled on the issue of fees paid to guardians to begin with since the plaintiff’s did not have standing. We need legislative change to ensure that an incapacitated person should not have to lose the much-needed services of a qualified guardian in order to be eligible for Medicaid.

By Eric J. Einhart – Guest Blogger