Beware that non-lawyer peddling Medicaid planning is illegal

Sandra Reed
Sandra Reed

When Peggy’s Parkinson’s had reached the stage that it was clear she would soon have to be placed in a nursing home, her husband, Moe, began reading about the qualifications for obtaining Medicaid to pay for Peggy’s care.  Then a letter arrived in the mail from a Hank Zimmerman marketing himself as a financial planner who could assist with qualifying a person for Medicaid. Hank Zimmerman was not a lawyer, but he emphasized that his fees were substantially lower than those a lawyer would charge.

It is Illegal for a Non-Lawyer to Assist in Medicaid Qualification and Planning for a Fee

When Moe consulted with Zimmerman, Zimmerman, who wasn’t even licensed to sell annuities, convinced Moe (the spouse who would remain at home) to purchase an annuity which Zimmerman claimed was needed to preserve assets. Too late Moe learned he could have been preserved the same assets in their original investment form without tying them up in the low-paying annuity and incurring the cost to buy it.

In addition, Zimmerman helped Moe prepare the papers to apply for Medicaid and to set up a Miller Trust.  With this trust, except for a small allowance to Peggy, the amount of her income above the amounts allowed by Medicaid would be paid to the nursing home and allow her to qualify for Medicaid which would pay the remainder of the facility’s cost.

 Zimmerman’s Actions Violated Texas Statute

This Mr. Zimmerman may not have been as much a swindler as the Zimmerman in this season’s Fargo, but what he was peddling was illegal. Zimmerman was violating the Texas Human Resources Code §12.001, Prohibited Activities, which provides that a person who is not a licensed attorney commits an offense if, for a fee, he or she represents, assists or aids an applicant in procuring assistance in obtaining Medicaid. Zimmerman’s crime is a Class A Misdemeanor, punishable by a fine of up to $4,000 and/or imprisonment for up to a year.

Zimmerman’s Actions Constitute Unauthorized Practice of Law

Zimmerman’s actions clearly constituted the unauthorized practice of law. Several years ago, a Texas court enjoined Richard Hicks, a non-lawyer, from operating a business providing services similar to those Zimmerman provided to Moe, on the basis that he was practicing law without a license.  

Zimmerman, like most of his ilk, obtained his referrals from social workers, nursing home administrators and hospital discharge planners. In most cases, these sources were trying to be helpful and were unaware of his breaking the law. Zimmerman had obtained Moe and Peggy’s name and address from a social worker who had met with them at one of the facilities they had toured. When applying for Medicaid and taking appropriate actions in connection with Medicaid planning, it is essential to consult with a licensed attorney who is knowledgeable in this specialized area.

Sandra W. Reed is an attorney with Katten & Benson, an Elder Law firm in Fort Worth. She lives and practices in beautiful Somervell County, near Chalk Mountain.