## Facts

- Eileen Reed, an elderly nursing-facility resident with significant impairments, sought Medicaid vendor (nursing-home) benefits.
- Reed and her daughter, Sandra Teson, executed a written personal-care contract requiring Teson to provide extensive, individualized services (e.g., assistance with feeding and hygiene, shopping, transportation and attendance at medical appointments, monitoring nutrition and condition, and advocacy with providers and agencies) through the remainder of Reed’s life.
- Teson, acting as Reed’s conservator, filed the contract and a petition for expenses in probate court; the probate court approved an $11,000 payment under the contract.
- A check for $11,000 was issued to Teson; shortly thereafter, Reed’s Medicaid application was submitted with the contract and probate materials.
- The Missouri Department of Social Services, Family Support Division determined the $11,000 was a transfer for less than fair market value and imposed a four-month Medicaid ineligibility penalty, reasoning the services were duplicative of nursing-facility obligations.
- A Division hearing officer affirmed the penalty after an administrative hearing.
- The circuit court reversed, finding fair and valuable consideration supported the payment.
- The Division appealed.

## Issues

1. Whether the $11,000 payment under a court-approved personal-care contract was a transfer for less than fair market value triggering a Medicaid vendor-benefits penalty period.
2. Whether, on judicial review, an agency’s legal characterization of undisputed facts is entitled to deference.

## Decision

- The Missouri Court of Appeals affirmed the circuit court.
- The court held the $11,000 payment was supported by fair and valuable consideration under the personal-care contract and was not a penalizable transfer for less than fair market value.
- The court upheld reversal of the agency’s four-month ineligibility penalty.
- The court treated the dispute as involving application of law to undisputed facts and independently evaluated the agency’s legal conclusion.

## Legal Principles

- Medicaid transfer-of-assets rules impose a penalty period when an applicant transfers property for less than fair market value within the relevant look-back period.
- A bona fide personal-care contract may constitute fair and valuable consideration when the promised services provide real, non-duplicative value to the applicant.
- In administrative review, courts defer to supported agency factfinding, but when the question is interpretation of law and application of law to undisputed facts, the court reaches its own legal conclusions and is not bound by the agency’s interpretation.
- The presence of a family relationship does not, by itself, convert a service-for-payment arrangement into a disqualifying transfer; the actual substance and value of the exchange controls.

## Conclusion

The court concluded that a court-approved, lifetime personal-care agreement requiring substantial individualized services provided fair consideration for the $11,000 payment, so the Medicaid agency improperly treated the payment as a transfer for less than fair market value and could not impose a penalty period.


Reed v. Mo. Dep’t of Soc. Servs., Fam. Support Div., 193 S.W.3d 839 (Mo. Ct. App. 2006)