The answer is that it depends on how you report the payment.

It is illegal for a non-lawyer to practice law without a license. O.C.G.A. § 15-19-51. For that reason, a non-lawyer cannot legally give you anything of value if he or she is charging you for services that are considered the practice of law. Because the non-lawyer’s contract is illegal, Medicaid should treat your payment as if you made a gift to the non-lawyer.

Georgia law provides that the practice of law includes: (1) To practice or appear as an attorney at law for any person other than himself in any court of this state or before any judicial body; (2) To make it a business to practice as an attorney at law for any person other than himself in any of such courts; (3) To hold himself out to the public or otherwise to any person as being entitled to practice law; (4) To render or furnish legal services or advice; (5) To furnish attorneys or counsel; (6) To render legal services of any kind in actions or proceedings of any nature; (7) To assume or use or advertise the title of “lawyer,” “attorney,” “attorney at law,” or equivalent terms in any language in such manner as to convey the impression that he is entitled to practice law or is entitled to furnish legal advice, services, or counsel; or (8) To advertise that either alone or together with, by, or through any person, whether a duly and regularly admitted attorney at law or not, he has, owns, conducts, or maintains an office for the practice of law or for furnishing legal advice, services, or counsel.

In Huber v. State, 234 Ga. 357 (1975), the Georgia Supreme Court upheld a criminal conviction for the unauthorized practice of law. In doing so, it found: “[W]e are of the opinion that the practice of law . . . [is] not confined to practice in the courts of this State, but [is] of larger scope, including the preparation of pleadings and other papers incident to any action or special proceeding in any court or other judicial body, conveyancing, the preparation of all legal instruments of all kinds whereby a legal right is secured, the rendering of opinions as to the validity or invalidity of the title to real or personal property, the giving of any legal advice, and any action taken for others in any matter connected with the law.” (Emphasis added).

So, what’s the result? If a non-lawyer charges you a fee for legal services (which would be illegal services), you cannot report payment of that fee as part of your Medicaid spend-down. The contract is illegal, see O.C.G.A. § 15-19-51, it is void and has no value. O.C.G.A. § 13-8-1. Since you paid for something with no legal value, your payment is a “[disposition] of assets for less than fair market value” within the meaning of 42 U.S.C. § 1396p(c)(1)(A). You must report the payment as a gift and pay a transfer of resources penalty. If you report the payment as part of your spend-down instead of as a gift, then in our opinion you’ve probably committed Medicaid fraud.

For more information regarding the unauthorzed practice of law, see our article on The Unauthorized Practice of Law.