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Maryland Medicaid Agency Settles Multi-Million Dollar Lawsuit

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MARCH 22, 2010  VOLUME 17, NUMBER 10

This week’s Elder Law Issues was written by our friend and Maryland colleague Ron M. Landsman. He describes the resolution of a class lawsuit he initiated in Maryland, challenging that state’s practice of setting Medicaid patients’ co-payment amount too high to allow them to pay nursing home bills incurred while they were waiting for Medicaid eligibility.

Preliminary approval of settlement of a class action suit in Maryland implements protection for nursing home residents who mess up their Medicaid eligibility and run out of money to pay for their care before they actually qualify for Medicaid benefits.

This is a common problem. The nursing home resident who is spending down misunderstands the rules or is careless, and finds himself with too much to qualify for Medicaid but not enough to pay the current nursing home bill.

The way Maryland was calculating residents’ co-payments, he would not have money to pay the old bill. Federal law requires – and the settlement implements – co-payment calculations that allow the resident to pay the old bill.

The resident is relieved of the risk of discharge for non-payment, and the nursing home gets paid for providing services. Legal Aid Bureau lawyers said they were using the new rules, which have been partly in effect while the suit was pending, to protect their clients from involuntary discharge because it gave them a way to pay the old bills once on Medicaid.

The Maryland class action, Eunice Smith, et al. v. John Colmers, et al., is believed to be the largest settlement ever paid by the Maryland Medicaid agency – up to $16 million in 2010-2012 to nursing homes that were underpaid because of the co-payment miscalculation. The nursing homes will then apply the previous resident co-payments to the old nursing home bills. If there is a shortfall and not enough to pay the old bills, the nursing homes receiving payment will have to forgive those old debts. That may amount to up to $64 million in claims against residents forgiven.

The settlement also requires the Maryland Medicaid agency to make comprehensive changes in the way it calculates co-payments so that it does it correctly in the future.

Cy Smith and Bill Meyer of Zuckerman Spaeder LLP in Baltimore, and Ron Landsman of Rockville, represented the plaintiff class. Landsman obtained the federal agency ruling that Maryland’s old rules for co-payments violated federal law, which then triggered the private lawsuit. Smith and Meyer led the negotiations resulting in a complicated 16-page “protocol” for making claims and payments to nursing homes.

The order signed on March 11 gives the settlement preliminary approval as “fair, reasonable, and adequate.” Notice will be sent to all class members, and they can “opt out” of the class action, if they want, to pursue their own claims for corrected co-payment calculations. But those doing so will be subject to a limit of three months for most old bills, which does not apply to the settlement, and they will not automatically have any unpaid portion of their old bills forgiven by the nursing home.

The settlement is scheduled for final approval on May 12, 2010.

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Robert B. Fleming


Robert Fleming is a Fellow of both the American College of Trust and Estate Counsel and the National Academy of Elder Law Attorneys. He has been certified as a Specialist in Estate and Trust Law by the State Bar of Arizona‘s Board of Legal Specialization, and he is also a Certified Elder Law Attorney by the National Elder Law Foundation. Robert has a long history of involvement in local, state and national organizations. He is most proud of his instrumental involvement in the Special Needs Alliance, the premier national organization for lawyers dealing with special needs trusts and planning.

Robert has two adult children, two young grandchildren and a wife of over fifty years. He is devoted to all of them. He is also very fond of Rosalind Franklin (his office companion corgi), and his homebound cat Muninn. He just likes people, their pets and their stories.

Elizabeth N.R. Friman


Elizabeth Noble Rollings Friman is a principal and licensed fiduciary at Fleming & Curti, PLC. Elizabeth enjoys estate planning and helping families navigate trust and probate administrations. She is passionate about the fiduciary work that she performs as a trustee, personal representative, guardian, and conservator. Elizabeth works with CPAs, financial professionals, case managers, and medical providers to tailor solutions to complex family challenges. Elizabeth is often called upon to serve as a neutral party so that families can avoid protracted legal conflict. Elizabeth relies on the expertise of her team at Fleming & Curti, and as the Firm approaches its third decade, she is proud of the culture of care and consideration that the Firm embodies. Finding workable solutions to sensitive and complex family challenges is something that Elizabeth and the Fleming & Curti team do well.

Amy F. Matheson


Amy Farrell Matheson has worked as an attorney at Fleming & Curti since 2006. A member of the Southern Arizona Estate Planning Council, she is primarily responsible for estate planning and probate matters.

Amy graduated from Wellesley College with a double major in political science and English. She is an honors graduate of Suffolk University Law School and has been admitted to practice in Arizona, Massachusetts, New York, and the District of Columbia.

Prior to joining Fleming & Curti, Amy worked for American Public Television in Boston, and with the international trade group at White & Case, LLP, in Washington, D.C.

Amy’s husband, Tom, is an astronomer at NOIRLab and the Head of Time Domain Services, whose main project is ANTARES. Sadly, this does not involve actual time travel. Amy’s twin daughters are high school students; Finn, her Irish Red and White Setter, remains a puppy at heart.

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Matthew M. Mansour


Matthew is a law clerk who recently earned his law degree from the University of Arizona James E. Rogers College of Law. His undergraduate degree is in psychology from the University of California, Santa Barbara. Matthew has had a passion for advocacy in the Tucson community since his time as a law student representative in the Workers’ Rights Clinic. He also has worked in both the Pima County Attorney’s Office and the Pima County Public Defender’s Office. He enjoys playing basketball, caring for his cat, and listening to audiobooks narrated by the authors.