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Six Charged in Apparent Scheme to Defraud Seniors and Medicaid

Today's Clarion Ledger reports that 6 individuals have been charged with a scam to cheat nursing home residents out of more than $25,000.  Under the scheme, social workers at a nursing home allegedly told seniors whose accounts became too large to remain on Medicaid, to pay the excess money to them or others they directed.  The article does not say whether any services were allegedly provided in exchange for these payments.  The reason for the payments were apparently to reduce the residents' personal needs accounts below the $4,000 allowed by Medicaid.  Spending such funds is what is commonly referred to as "spend down" and there is nothing inherently improper or illegal about spending down one's assets.  In fact, the reason the senior is allowed to have the $4,000 is so it can be spent on their needs. However, what is alleged here is that these social workers supposedly told their senior residents under their care to give the money to them, or to others to whom they directed. 

This scheme, if true, is problematic on a number of levels.  First, the nursing home residents are clearly vulnerable, and especially vulnerable to the social worker staff at the facility, and are likely to simply do what is requested of them by these people in authority without question.  Second, it appears at least from the article, that the payment of funds was gratuitous, with no services provided in exchange for the funds.  Assuming that is correct, the transfers should result in the disqualification of these individuals for Medicaid benefits for some period of time. In other words, the seniors had a duty to report the transfers to Medicaid, and if they did not, then they are also guilty of Medicaid fraud. Third, the real victim here is not just the seniors, who could have presumably spent the money on something that would have benefited them in some way, like a new stereo, new TV, or new clothes, but also Medicaid.  If the funds are not properly spent down, then Medicaid is entitled to have the excess funds used to reduce its burden.

As mentioned earlier, there are certainly legal ways of engaging in a "spend down" plan, but what is alleged to have occurred in this article is clearly not one of them.  This case emphasizes that if families have any questions, a professional should be consulted before any funds are transferred.  The case further emphasizes the important role of family members keeping an eye on their senior loved ones to ensure they are not taken advantage of.  In fact, one has to wonder how this was done without the knowledge of family members, and whether any family members played any role in the scam.   

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