Michigan Court of Appeals Rules Caregivers Can Be Compensated for Providing Care, without a Written Contract

On March 26, 2026, the Court issued its opinion and order in the case  reversing the Michigan Department of Health and Human Services (DHHS)  decision denying Medicaid benefits to Charla Brown because she paid for needed care by her daughter and friend without first having a written contract that met the Department’s little known requirements. The case is Estate of Charla Brown  v Michigan Department of Health and Human Services

The case involves multiple appeals of circuit court and DHHS decisions which we will not detail here.   In March 2019 Charla Brown, the decedent, had triple bypass surgery and was hospitalized for almost two months before being admitted to a nursing home. In July 2019, the decedent returned where she was cared for by her husband, Harold Brown, her daughter, Lynette Brown, and a family friend, Loreen Hills. Two years later, in July 2021, she was again admitted to a nursing home and applied for Medicaid coverage. During the time she was at home she and her husband paid the two caregivers a total of $54,427.39. The Department denied the application for the sole reason that there was no notarized contract supported by a doctor’s recommendation. That Department determined that the payments were “divestment” which means that Ms. Brown did not “fair market value” in exchange for the payments. Essentially the Department considered the payments given away and received nothing in return. The hours of service that Ms. Brown and Ms. Hills were of no consequence to the Department.

The court reversed the DHHS decision and remanded for a DHHS determination whether she received “fair market value” for the payments. The court reversed on the ground that the Department’s position created an “irrebuttable presumption” which means that in a trial a party cannot contest the decision. The Court remanded the case back to the agency for a factual review of the care given and the amount paid.

There is an alternate reason the Court could have used to reverse the Department’s decision. The Michigan Medicaid program is an “SSI related” That means it uses the same methodology to determine eligibility as does the Social Security Administration SSI program. The pertinent policy is stated in the SSA’s Program Operations Manual System (POMS).

The applicable POMS item is SI 01150.005, “Determining Fair Market Value.” It states in Item A. Introduction: “If the claimant or recipient (or spouse, if any) received FMV for the transferred resource, the period of ineligibility does not apply.” Fair Market Value is determined by the then current “market cost” of services received if provided by a commercial provider. If for example Ms. Brown paid her daughter more that the amount she could have paid to a commercial provider, the amount in excess is considered funds transferred for less than FMV and results in a “penally period of ineligibility.” See 42 USC 1396a(c). This is the other reason the Court could have remanded for a determination under “the correct legal standard.”

Compensation also may include in-kind support and maintenance or services to be provided to the individual because of the transfer. ”Fair market value” is the current market FMV is the current market value (CMV) of a resource at the time the resource transfers. The CMV of such services is the going price that it can be reasonably expected to sell on the open market in the geographic area involved.

Conclusion
An applicant for Medicaid benefits in Michigan may pay for caregiver services as long as those are necessary and the payment was the then current market value for the services.