Backdoor filial responsibility in Georgia

Filial responsibility is a name given to laws that make third parties (usually adult children) responsible for support for indigent family members. These laws are based on English “poor laws” from the 16th Century. Many states, including Georgia, have these laws on the books. Georgia’s version, however, has been a toothless tiger for the most part. The Georgia statute is found at O.C.G.A. § 36-12-3. There, it provides that the “county” providing care for a pauper may bring an action against a father, mother or child to recover support provided to the pauper. These days, however, counties rarely provide support, so it’s difficult to imagine how a claim could be brought.

By contrast, Pennsylvania has a broader filial responsibility statute. In Health Care & Ret. Corp. of America v. Pittas, 46 A.3d 719 (Super. Ct. of Penn. 2012), a nursing home sued a son for his mother’s unpaid nursing home bills. The case went to arbitration, where the son won. However, the nursing home appealed the case and the arbitration award was reversed in the Common Pleas Court, and upheld on appeal. On appeal, the son objected to the Court placing on him the burden to prove he was unable to pay, because other family members were not held liable with him, because the Court refused to consider other potential sources of payment such as Medicaid, and because his mother was not indigent. The Court rejected each of the son’s arguments, but noted that if Medicaid was ultimately approved, then he would have no responsibility to pay the bill.

How, then, might this concept apply in Georgia? Recently, we reported on the case of Key Equipment Finance, Inc. v. Overend. In that case, the 11th Circuit found one spouse (or rather, her revocable trust) liable for the debt of the other spouse. It was not a case of filial responsibility, but rather, a case based on a fraudulent conveyance. There, the court found that a husband transferred his interest in a home to avoid paying his creditors. The creditors were allowed to pursue the asset in the hands of the recipient.

Taking these concepts together, imagine a home-made (or poorly made) Medicaid plan where a parent transfers her home or other assets to her child. The parent then applies for nursing home Medicaid and a transfer of resources penalty is applied. The result is that Medicaid refuses to pay the nursing home bill. Applying the same rationale used in Key Equipment Finance, Inc. v. Overend, a court could easily find that the child who received the home is liable for the applicant’s unpaid nursing home bills.

What is the lesson here? Be wary of home-made plans, or plans constructed by non-attorneys. A mistep can leave you jumping from the frying pan into the fire.