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Date: 11-09-2017

Case Style:

Larisa's Home Care, LLC v. Karen Nichols-Sheilds

Case Number: CC C124865CV; CA A154950; SC S064120)

Judge: Nakamoto

Court: Supreme Court of Oregon

Plaintiff's Attorney: Hafez Daraee

Defendant's Attorney: Ross Day and Matthew Swihart

Description: The issue presented is whether an adult foster care
provider claiming unjust enrichment may recover the reasonable
value of its services from a defendant who, through
fraud, obtained a lower rate from the provider for the services.
We conclude that, generally, a defendant who obtains
discounted services as a result of fraud is unjustly enriched
to the extent of the reasonable value of the services. We therefore
reverse the contrary holding by the Court of Appeals.
Because the fraud here occurred in the context of a person
being certified as eligible for Medicaid benefits, however, we
remand for the Court of Appeals to consider whether certain
provisions of Medicaid law may specifically prohibit plaintiff
from recovering in this action.
I. BACKGROUND
The facts leading to this action revolve around the
Medicaid application of decedent Isabell Prichard and the
services that Prichard received at Medicaid rates from plaintiff,
Larisa’s Home Care, LLC, during the last months of her
life. Because the trial court ultimately granted judgment
for plaintiff, we set out the facts and all inferences in the
light most favorable to that party. See James v. Clackamas
County, 353 Or 431, 433-34, 299 P3d 526 (2013) (so noting
and citing authorities).1
A. Background on the Medicaid Program
For context, we begin with some background on the
Medicaid program. Medicaid “is a cooperative endeavor in
which the Federal Government provides financial assistance
to participating States to aid them in furnishing health care
to needy persons.” Harris v. McRae, 448 US 297, 308, 100
S Ct 2671, 65 L Ed 2d 784 (1980). Although the Medicaid
program is partly financed by the federal government, each
state administers its own program. 42 CFR § 430.0. To do so,
each state creates its own “state plan.” See 42 USC § 1396a
(setting out requirements for state plans); 42 CFR § 430.10
1 The Court of Appeals declined to exercise its discretion under ORS 19.415(3)
to determine the facts de novo in this equitable action. Larisa’s Home Care, LLC
v. Nichols-Shields, 277 Or App 811, 813 n 2, 372 P3d 595 (2016).
118 Larisa’s Home Care, LLC v. Nichols-Shields
(describing state plans). Oregon’s state plan is administered
by the Department of Human Services (department). See
ORS 409.010(2)(b) (department is responsible for programs
and services relating to elderly and persons with disabilities);
ORS 410.070 (department’s duties regarding same);
ORS 411.060 (authority to adopt and enforce rules).2
The department requires an application to determine
a person’s eligibility for Medicaid benefits. See OAR
461-115-0700 (requiring that “all eligibility factors must
be verified at initial application”). As relevant here, a person
applying for Medicaid benefits must disclose any asset
transfers made within the past 60 months. That disclosure
permits the department to determine whether those
transfers disqualify the person from receiving benefits for
a period of time. If the applicant has made transfers within
the 60 months preceding the application for benefits, and
if those transfers were “in whole or in part for the purpose
of establishing or maintaining eligibility for benefits,” then
the person will be disqualified from receiving benefits for a
period of time. OAR 461-140-0210(2), (5). The length of the
disqualification period depends on the amount transferred:
the greater the amount, the more months the person will
have to wait to receive benefits. See OAR 461-140-0296(2)
(as applicable here, disqualification period in months is
determined by dividing amount transferred by $5,360).
B. Plaintiff’s Services to Prichard at Medicaid Rates
Plaintiff owns two adult foster homes for the elderly.
Plaintiff had contracted with the department to provide services
in a home-like setting to patients who qualified for
Medicaid. For those patients, the rates charged would be
those set by the department.
Prichard, an elderly woman who suffered from cognitive
difficulties and dementia, became one of plaintiff’s
patients in June 2007. Prichard then resided and received
2 Except as otherwise noted, all references to sections of the Oregon Revised
Statutes are to current versions of those statutes, which have not been modified
since 2007 in any way dispositive as to the issues presented here. By contrast,
and except as otherwise noted, all references to rules for Oregon’s state plan are
to the versions of the Oregon Administrative Rules in effect on April 17, 2007, the
date that Prichard applied for Medicaid.
Cite as 362 Or 115 (2017) 119
care in one of plaintiff’s adult foster homes until her death
in November 2008. Because Prichard had been approved to
receive Medicaid benefits, plaintiff charged Prichard the
rate for Medicaid-qualified patients: approximately $2,000
per month, with approximately $1,200 of that being paid by
the department.
Plaintiff’s Medicaid rates were substantially below
the rates paid by plaintiff’s non-Medicaid patients, or “private
pay” patients. For private pay patients, the rate varied
depending on the level of care. During Prichard’s stay, plaintiff
charged private pay patients $4,000 per month for Level 2
care, and for more intensive Level 3 care, plaintiff charged
private pay patients $5,700 per month. Prichard received
Level 2 and Level 3 care during her stay in plaintiff’s facility.
If Prichard had not been approved for Medicaid benefits
and had instead been a private pay patient, she would have
paid plaintiff over $48,000 more for her care.
C. Prichard’s Medicaid Application
Prichard’s application for Medicaid benefits, as with
her other affairs, was handled by her son, Richard Gardner.
Prichard had given Gardner a power of attorney to act on
her behalf back in 2004. Exercising his authority to apply
for Medicaid benefits on behalf of Prichard, Gardner completed
the application form on April 17, 2007. Gardner affirmatively
represented on Prichard’s application that she had
not given away or transferred any cash or other property to
anyone in the preceding 60 months. As a result, the department
approved Prichard for Medicaid benefits.
Prichard’s affairs were not as represented on the
form, however. Her application form was false in its representation
that there had been no transfers in the past 60
months. In actuality, Gardner had for years been transferring
Prichard’s assets, mostly to himself (or using those
funds for his personal benefit). In the 60 months before
Prichard’s application for Medicaid, Gardner had transferred
away over $150,000 of Prichard’s assets.
Gardner’s misconduct was discovered by another of
Prichard’s children: defendant Karen Nichols-Shields, who
was appointed the personal representative for Prichard’s
120 Larisa’s Home Care, LLC v. Nichols-Shields
estate. In 2009, defendant contacted the police and reported
her brother for theft.
Ultimately, Gardner pleaded guilty to three counts
of criminal mistreatment in the first degree.3 Gardner’s sentence
included an obligation to pay a compensatory fine to
Prichard’s estate in the amount of $195,710.11. Gardner has
complied with that obligation and paid the estate. Thus, the
amount that Gardner took from Prichard was restored to
Prichard’s estate.
D. Plaintiff’s Action Against Prichard’s Estate
After defendant, in her capacity as personal representative,
denied plaintiff Larisa’s Home Care, LLC’s claim
against Prichard’s estate, plaintiff filed this action.4 In its
complaint, plaintiff sought equitable relief for unjust enrichment.
Essentially, plaintiff asserted that Prichard had been
qualified for Medicaid through fraud and that Prichard
should have been charged as a private pay patient. It sought
restitution from the estate for the difference between the
amount Prichard would have paid as a private pay patient
and the amount that plaintiff actually received for Prichard’s
care at plaintiff’s adult foster home.
After a bench trial, the trial court ruled in favor of
plaintiff, concluding that there was unjust enrichment. The
court explained:
“[A]s a whole, there is no reason why, as we look at this
case as a[n] equitable one and fundamental fairness, that
because of that fraud, the fraud on the applications, the
3 Criminal mistreatment in the first degree is defined in ORS 163.205. One
of the ways in which a person commits the crime is when, “in violation of a legal
duty to provide care for a dependent person or elderly person,” or having undertaken
that care, the person “intentionally or knowingly”:
“Hides the dependent person’s or elderly person’s money or property
or takes the money or property for, or appropriates the money or property
to, any use or purpose not in the due and lawful execution of the person’s
responsibility[.]”
ORS 163.205(1)(b)(D).
4 The Court of Appeals correctly noted that an action against Prichard’s
estate is properly brought against its personal representative, defendant. Larisa’s
Home Care, LLC v. Nichols-Shields, 277 Or App 811, 814 n 4, 372 P3d 595 (2016);
see ORS 115.305 (“All causes of action or suit, by one person against another,
survive * * * against the personal representative of the latter.”).
Cite as 362 Or 115 (2017) 121
fraud on all the paperwork that was presented, that the
estate of Ms. Prichard should not now be basically paying
[the] debt.
“[The estate] cannot now benefit from all that has come
before to this particular point. It would be unfair for the
plaintiff to be left holding the bag * * * and for the estate to
now benefit from the fraud.”
The court also concluded that Medicaid law did not prevent
plaintiff’s recovery. Accordingly, the court entered judgment
in favor of plaintiff for $48,477.
Defendant appealed to the Court of Appeals. She
presented two arguments, broadly speaking: (1) there was
no unjust enrichment; and (2) regardless, Medicaid-related
law (statutes, rules, and the terms of plaintiff’s contract
with the department) prohibited plaintiff from recovering
from defendant. Without reaching the Medicaid issues, the
Court of Appeals agreed with defendant that there was no
unjust enrichment. Larisa’s Home Care, LLC v. Nichols-
Shields, 277 Or App 811, 372 P3d 595 (2016).
The Court of Appeals began with its precedent concerning
the elements of a “quasi-contractual claim of unjust
enrichment.” Id. at 815 (internal quotation marks and citation
omitted). The elements that the Court of Appeals has
long used are “ ‘(1) a benefit conferred, (2) awareness by the
recipient that she has received the benefit, and (3) it would
be unjust to allow the recipient to retain the benefit without
requiring her to pay for it.’ ” Id. The court quoted its decision
in Cron v. Zimmer, 255 Or App 114, 130, 296 P3d 567 (2013),
which in turn had restated the elements that the court first
articulated in Jaqua v. Nike, Inc., 125 Or App 294, 298, 865
P2d 442 (1993).
The Court of Appeals also relied on Jaqua for the
legal standard used in determining when it is “unjust” for
the defendant to retain the benefit. Larisa’s Home Care,
LLC, 277 Or App at 816. The court explained that its precedent
required plaintiff to prove at least one of the following
circumstances:
“ ‘(1) the plaintiff had a reasonable expectation of payment;
(2) the defendant should reasonably have expected to pay;
122 Larisa’s Home Care, LLC v. Nichols-Shields
or (3) society’s reasonable expectations of security of person
and property would be defeated by non-payment.’ ”
Id. (quoting Jaqua, 125 Or App at 298). None of those three
forms of unjust enrichment, the court concluded, were
proved in this case.
As to the first form of unjust enrichment, the court
determined that plaintiff did not have a reasonable expectation
of payment. Prichard had been qualified for Medicaid,
and plaintiff thus was contractually obligated to charge
her only the Medicaid rate. Plaintiff’s reasonable expectation
was to receive the Medicaid rate payment and nothing
more. Larisa’s Home Care, LLC, 277 Or App at 816-18. As for
defendant’s expectation to pay, the second form, the Court of
Appeals held that there was no evidence in the record that
would permit a finding that Prichard reasonably should
have expected to pay the private pay rate. Id. at 818.
Finally, as to the third form of unjust enrichment,
the Court of Appeals held that societal expectations would
not be defeated by the estate’s nonpayment. The court
based that holding on two different conclusions. First, the
court derived from Medicaid law certain underlying policies
that, it concluded, reflected a societal expectation that
Medicaid providers would not seek to recover funds beyond
what Medicaid allowed. Id. at 818-19 (for example, ORS
443.739(16), a “bill of rights” for residents of adult foster
homes, states that a provider “may not solicit, accept or
receive money or property from a resident other than the
amount agreed to for services”). Second, the court concluded
that the wrongdoer was Gardner, not Prichard, who
was blameless, and that therefore her estate should not be
required to pay for Gardner’s wrongdoing. Id. at 819-20.
Having concluded that plaintiff had failed to adduce
sufficient evidence that Prichard’s estate had been unjustly
enriched in any of the three ways reflected in its case law,
the Court of Appeals reversed the judgment of the trial
court. Id. at 820. Plaintiff then sought review in this court.
II. ANALYSIS
Before turning to our analysis, we note the scope of
this opinion. When we allowed review, we did so to address
Cite as 362 Or 115 (2017) 123
the unjust enrichment question only, not the issues of
Medicaid law that the Court of Appeals did not reach due
to its holding. As we will explain, we conclude that plaintiff
did show that Prichard’s estate has been unjustly enriched.
We therefore remand for the Court of Appeals to address
in the first instance whether certain provisions of Medicaid
law may nevertheless prohibit recovery.
A. Arguments on Review
On review and throughout the litigation, plaintiff
has offered several different theories of misconduct—not
just by Gardner, but by defendant as well—that it claims
would justify its recovery on its claim of unjust enrichment.
We find it necessary to address only one, because it is dispositive.
That theory, based on fraud, can be broken down
into three components: First, the false representations on
Prichard’s Medicaid form caused her to be wrongfully qualified
for Medicaid benefits; she would have been disqualified
had the misrepresentations not been made. Second,
Gardner acted as Prichard’s agent in making those misrepresentations,
and Prichard was legally responsible to third
parties for those misrepresentations, even though she had
not made them herself. Third, Prichard’s estate was unlawfully
enriched by those false representations, and so it is
subject to restitution. In sum, plaintiff argues, because of
fraud, plaintiff charged Prichard a lower rate and the estate
now has nearly $50,000 more money than it would have had,
but for the fraud. Arguing that fraud is a recognized basis
for a claim of unjust enrichment, plaintiff asserts that the
Court of Appeals erred in holding that there was no unjust
enrichment here.
Defendant asserts that the Court of Appeals correctly
identified and analyzed the three circumstances
from Jaqua in which a benefit or enrichment is considered
“unjust.” In support, she argues that Gardner’s transfers
would not disqualify Prichard from receiving Medicaid
benefits and that Prichard was innocent of, and not liable
for, Gardner’s misconduct. Thus, defendant asserts, plaintiff
had no reasonable expectation of payment, and defendant
should not be expected to pay. Defendant further contends
that societal expectations have been satisfied because
124 Larisa’s Home Care, LLC v. Nichols-Shields
the department has never changed its determination that
Prichard was eligible for Medicaid benefits; the department
was reimbursed from the estate for Medicaid benefits it
provided to Prichard; and the department paid plaintiff for
Prichard’s care at Medicaid rates.
Thus, the parties initially square off over the legal
standards that govern a claim of unjust enrichment, with
plaintiff asserting that fraud is sufficient to establish liability
for unjust enrichment and defendant asserting that the
factors listed in Jaqua for determining an “unjust” benefit
should govern. The parties also dispute whether, under any
theory of unjust enrichment, plaintiff proved its claim.
B. Restitution and Unjust Enrichment Generally
Before addressing the legal standards governing
plaintiff’s claim of unjust enrichment, we observe that, for
several reasons, restitution and unjust enrichment have
been notoriously difficult to conceptualize and to summarize.
That background helps to explain this court’s historical
case-by-case approach to restitution cases.
One difficulty is the current state of development of
the law of restitution and unjust enrichment. The concept of
restitution and unjust enrichment as a single area of the law
was largely the creation of the American Law Institute with
its publication of the first Restatement of Restitution in 1937.
See Andrew Kull, Rationalizing Restitution, 83 Cal L Rev
1191, 1192 (1995) (attributing the “modern law of restitution”
to the first Restatement, “in the sense that the law of contracts
and the law of torts were invented by the nineteenthcentury
treatise writers”); Peter Birks, Unjust Enrichment
and Wrongful Enrichment, 79 Tex L Rev 1767, 1768 (2001)
(agreeing about importance of first Restatement).
Though the concepts of restitution and unjust
enrichment long predated the first Restatement, they were
not treated as a coherent whole. Instead, they were a collection
of individualized forms of action and remedies. See
Restatement (Third) of Restitution and Unjust Enrichment,
Reporter’s Introductory Memorandum, xv (Discussion Draft
2000) (prior state of law was “a miscellaneous assortment
(part legal, part equitable) of forms of action and remedial
Cite as 362 Or 115 (2017) 125
devices, familiar in some of their particularized applications
but never described or understood as parts of a coherent
whole”); Birks, 79 Tex L Rev at 1768 (“the fragments [of
pre-Restatement law] had acquired a life of their own, moving
ever further apart”). The drafters of the first Restatement
themselves noted in a contemporary law review article that
the law at that time was “scattered through many sections
of the digests and in treatises on apparently diverse subjects.”
Warren A. Seavey & Austin W. Scott, Restitution, 54
LQ Rev 29, 29 (1938). The purpose of the first Restatement
was to identify the underlying principles of an area of law
that “has never been dealt with as a unit and because of this
has never received adequate treatment.” Id.
It is safe to say that the law of restitution remains a
work in progress, with some principles recognized but with
some theoretical underpinnings yet to be settled. Indeed,
despite attempts by scholars to articulate basic legal principles
governing restitution and unjust enrichment in the
ensuing 80 years since the first Restatement, at least one
foundational principle remains the subject of disagreement.
Professor Kull has explained that, while the “modern consensus
puts unjust enrichment at the heart of liability in
restitution,” it is unclear whether restitution includes anything
else. 83 Cal L Rev at 1193-94; see Restatement (Third)
of Restitution and Unjust Enrichment § 1 comment a (2010)
(“Restatement (3d) Restitution”) (noting disagreements
among authorities). Professor Birks explains that, at “the
beginning of the twenty-first century, a schism divides the
scholars who write on the modem law of restitution,” with
some who think that “restitution and unjust enrichment
are different names for the same area of law,” while others
maintain that a right to restitution “may be triggered by
one of a number of distinct causative events,” including at
least “wrongs and unjust enrichment.” 79 Tex L Rev at 1769-
70. The current Restatement sums it up: “It is by no means
obvious, as a theoretical matter, how ‘unjust enrichment’
should best be defined; whether it constitutes a rule of decision,
a unifying theme, or something in between; or what
role the principle would ideally play in our legal system.”
Restatement (3d) Restitution § 1 comment a, at 4. The current
status of the law of restitution may be analogous to tort
126 Larisa’s Home Care, LLC v. Nichols-Shields
and contract law in the nineteenth century, when treatise
writers were first defining those areas of the law. Kull, 83
Cal L Rev at 1194-95.
Another difficulty with this area of law is the terminology
itself, which can give rise to disordered thinking
about the concepts. Professor Kull has noted “[t]he linguistic
confusion that bedevils the law of restitution—necessitating
laborious definitions before anyone can understand what
you are talking about.” 83 Cal L Rev at 1191-92. As a legal
term, “restitution,” for example, is broader than the ordinary
meaning might suggest. It is not limited to those circumstances
in which a defendant must give back something
that had previously belonged to the plaintiff; it may also
sometimes require a defendant to give to the plaintiff something
the plaintiff never had. Restatement (3d) Restitution
§ 1 comment a; see George E. Palmer, 1 Law of Restitution
§ 1.1, 4 (1978) (“The term [‘restitution’] is not wholly apt
since it suggests restoration to the successful party of some
benefit obtained from him.”).
As a term, “unjust enrichment” also can be misleading,
suggesting that liability turns on vague notions of
injustice. The traditional definition is that coined by Lord
Mansfield: whether a party, “upon the circumstances of the
case, is obliged by the ties of natural justice and equity to
refund the money.” Moses v. Macferlan, 2 Burr 1005, 1012,
97 Eng Rep 676, 681 (KB 1760), quoted in Restatement (3d)
Restitution § 1 comment b, at 4. Yet “natural justice and
equity” is a standard that provides little guidance for individual
decisions and has been criticized as “an open-ended and
potentially unprincipled charter of liability.” Restatement
(3d) Restitution § 1 comment b, at 5. In actuality, the question
of when enrichment is unjust does not turn on whether
one has been unjustly enriched in some abstract sense of
moral judgment; the law of restitution has developed with
greater specificity based on articulated legal standards:
“In reality, the law of restitution is very far from imposing
liability for every instance of what might plausibly be
called unjust enrichment. The law’s potential for intervention
in transactions that might be challenged as inequitable
is narrower, more predictable, and more objectively
Cite as 362 Or 115 (2017) 127
determined than the unconstrained implications of the
words ‘unjust enrichment.’ ”
Restatement (3d) Restitution § 1 comment b, at 5. See also
Dan B. Dobbs, 1 Dobbs Law of Remedies § 4.1(1), 552 (2d
ed 1993) (noting that the “substantive question” for unjust
enrichment is “whether the defendant is unjustly enriched
by legal standards” (emphasis added)); Michael Traynor, The
Restatement (Third) of Restitution & Unjust Enrichment:
Some Introductory Suggestions, 68 Wash & Lee L Rev 899,
900-01 (2011) (“The enrichment must be ‘unjustified’ under
the law, not simply ‘unjust’ because you as a judge, scholar,
or lawyer might think so.” (Footnote omitted.)).
C. Approach by Oregon Courts to Unjust Enrichment Cases
In keeping with the state of restitution and unjust
enrichment as a developing area of the law, this court recognized
several years ago that our case law has addressed
unjust enrichment in a practical way, by matching the circumstances
presented in the case to those patterns already
recognized in the case law, without explaining an overarching
doctrine. In Tupper v. Roan, 349 Or 211, 220, 243 P3d 50
(2010), the court stated:
“Although our cases refer to a substantive ‘doctrine’ of
unjust enrichment, none provide any really comprehensive
exposition of that doctrine. Instead, the cases simply
describe the kinds of actions and circumstances that
would constitute unjust enrichment warranting imposition
of a constructive trust, and then observe that the concept
extends to other similar acts and circumstances.”
In Tupper, the plaintiff was seeking to impose a constructive
trust on a named beneficiary’s life insurance proceeds when
the deceased was required by court order, but failed, to name
the plaintiff as a beneficiary of his life insurance. Id. at 213.
The court undertook the task of identifying the elements
needed to prove an unjust enrichment claim in those and
similar circumstances and did not attempt to state elements
that would more widely apply. See id. at 223.
As Tupper indicates, the approach taken in this
court’s unjust enrichment cases can be described as incremental
rule development on a case-by-case basis, based on
128 Larisa’s Home Care, LLC v. Nichols-Shields
recognized grounds for imposing liability. See Suitter v.
Thompson et ux, 225 Or 614, 625, 358 P2d 267 (1961) (quoting
equity treatise for proposition that constructive trust would
be imposed in various identified situations “or under any
other similar circumstances” (internal quotation marks and
citation omitted)). In that respect, the open-ended nature of
unjust enrichment reflects the nature of equity itself. See
Teachers’ Ret. Fund Ass’n v. Pirie, 150 Or 435, 445, 46 P2d
105 (1935) (“[H]uman ingenuity and human affairs can not
create a condition which the long arm of the court of equity
can not reach if injustice or wrong would otherwise result.”).
That incremental approach accords with the approach
advocated by various commentators who assert that courts
should determine whether any particular enrichment is
unjust by examining whether the case type matches already
recognized forms of unjust enrichment. E.g., Palmer, 1 Law
of Restitution § 1.7 at 41 (“the usual approach is to search
for some particularized reason or ground for finding that
the retention of the enrichment would be unjust”). The
Restatement (3d) Restitution is organized for that approach.
It contains a statement of four general principles, see id.
§§ 1-4, and then 44 sections addressing the types of circumstances
in which liability in restitution is recognized. Those
include, for example, benefits conferred by mistake, §§ 5-12;
cases involving defective consent or authority on the part
of the transferor, §§ 13-19; and benefits acquired by tort or
other breach of duty, §§ 40-48. The reporters for the first
Restatement of Restitution offered an observation in their
law review article that may serve to explain rule development
in this area of the law: “It requires an extensive set
of individual rules to spell out what is meant by ‘unjust,’
especially since we are met with the fact that in certain
situations, due in part to historical accident, a person who
has obviously benefited another is not entitled to recover.”
Seavey & Scott, 54 LQ Rev at 36.
As earlier noted, the Court of Appeals used, and
defendant supports, a formulation of unjust enrichment first
articulated in Jaqua to apply to any claim of unjust enrichment
based on quasi-contract, i.e., an “obligation implied in
law” that accomplishes “substantial justice by preventing
unjust enrichment,” Derenco v. Benj. Franklin Fed. Sav. and
Cite as 362 Or 115 (2017) 129
Loan, 281 Or 533, 557, 577 P2d 477, cert den, 439 US 1051
(1978). See also Arthur Linton Corbin, 1 Corbin on Contracts
§ 19, 46 (1963) (quasi-contract “is created by the law for reasons
of justice, without any expression of assent and sometimes
even against a clear expression of dissent”). This case
presents a quasi-contract theory of recovery.5
Although plaintiff’s claim of unjust enrichment is
based on quasi-contract, we conclude that the Court of Appeals
should not have applied the formulation of unjust enrichment
used in Jaqua, including its set of factors for determining
when enrichment is unjust. As we will explain, the
formula in Jaqua is unhelpful as an all-purpose statement
of the elements of a claim of unjust enrichment, and it is also
ill-suited to the circumstances of this case.
Under Jaqua, an unjust enrichment claim based
on quasi-contract requires a showing of three elements:
“a benefit conferred, awareness by the recipient that a benefit
has been received and, under the circumstances, it would be
unjust to allow retention of the benefit without requiring the
recipient to pay for it.” 125 Or App at 298. Those elements
derived from the 1992 supplement to 3 Corbin on Contracts
§ 561 (1963). See Jaqua, 125 Or App at 298 (so noting). We
note that the description of the elements of an unjust enrichment
claim were not in section 561 of the original bound
volume of Corbin on Contracts, nor were they incorporated
into the 2002 interim edition or the 2010 revised edition.
However, another contract law treatise recites a similar trio
of elements based on holdings from a variety of courts:
“Three elements must be established in order that a
plaintiff may succeed in a claim based on unjust enrichment.
These elements are:
“(1) a benefit conferred on the defendant by the
plaintiff;
5 A quasi-contract or obligation implied in law is distinct from an implied-infact
contract. In an implied-in-fact contract, the parties’ agreement is inferred, in
whole or in part, from their conduct. Restatement (Second) of Contracts § 4 comment
a (1979). This court has explained that a contract implied in fact can arise
“where the natural and just interpretation of the acts of the parties warrants
such conclusion.” Owen v. Bradley, 231 Or 94, 103, 371 P2d 966 (1962). Plaintiff
does not contend that, by virtue of conduct, Prichard through her agent agreed to
pay for services at the private-pay rate and so must be held to her bargain.
130 Larisa’s Home Care, LLC v. Nichols-Shields
“(2) an appreciation or knowledge by the defendant of
the benefit; and
“(3) the acceptance or retention by the defendant of the
benefit under such circumstances as to make it inequitable
for the defendant to retain the benefit without payment of
its value.”
Richard A. Lord, 26 Williston on Contracts § 68:5, 62 (4th ed
2003) (footnote omitted).
The formula noted in Jaqua and in Williston on
Contracts was roundly criticized in the Restatement (3d)
Restitution. “Formulas of this kind are not helpful, and
they can lead to serious errors. They lend a specious precision
to an analysis that may be simple or complicated but
which at any rate is not susceptible of this form of statement.”
Id. § 1 comment d, at 8. As a former president of
the American Law Institute noted, “The Reporter wisely
advises you to avoid the temptation of formulaic checklists,
which if you are not careful, could turn into formulaic jury
instructions that advance neither comprehension nor clarity.”
Traynor, 68 Wash & Lee L Rev at 901-02 (footnote
omitted).6
The Restatement (3d) Restitution specifically takes
issue with both the second and third elements in the formula.
It provides the following critique of the second
element—the recipient’s awareness of the benefit:
“If the requirement is taken to mean that a defendant cannot
be liable in restitution for benefits of which the defendant
was unaware—or for benefits that the defendant
attempted to refuse—it is plainly incorrect. If it refers to
defensive limitations on a liability based on unjust enrichment,
it is both redundant (in light of the third element)
and an awkward summary of several features of the law of
restitution that protect the defendant’s economic liberty.”
Restatement (3d) Restitution § 1 comment d, at 8. We agree
that an element that requires awareness by the recipient
6 For essentially that reason, the Court of Appeals itself recently questioned
the three Jaqua elements of an unjust enrichment claim. See Cumming v. Nipping,
285 Or App 233, 238-39, 395 P3d 298 (2017) (noting criticism by Restatement (3d)
Restitution).
Cite as 362 Or 115 (2017) 131
that a benefit has been received does not accurately apply to
all unjust enrichment claims. An unjust enrichment claim
based on mistake, for example, can allow imposition of liability
by operation of law, regardless of such awareness. See
McKay v. Horseshoe Lake Hop Harv., 260 Or 612, 613-14, 491
P2d 1180 (1971) (in plaintiffs’ action to recover possession
of land, allowing defendant to recover in unjust enrichment
for improvements it had made to plaintiffs’ real property,
even though both plaintiffs and defendant had mistakenly
believed that defendant occupied land under 99-year lease);
Stirewalt v. Chilcott, 236 Or 128, 134, 387 P2d 351 (1963)
(finding unjust enrichment and imposing constructive trust
when deed mistakenly conveyed more land to defendant
buyers than buyers and sellers had intended; court rejected
assertion that question was whether defendant buyers had
known of sellers’ mistake).
According to the Restatement (3d) Restitution, the
third element is overbroad because it “incorporates the whole
of the question presented, making the rest of the formula
superfluous.” Restatement (3d) Restitution § 1 comment d,
at 8. That criticism of the third element, standing alone, is
valid. However, the Court of Appeals has historically added
three factors, any one of which permits the determination
that enrichment is unjust:
“ ‘(1) the plaintiff had a reasonable expectation of
payment;
“ ‘(2) the defendant should reasonably have expected
to pay; or
“ ‘(3) society’s reasonable expectations of security of
person and property would be defeated by non-payment.’ ”
Jaqua, 125 Or App at 298 (quoting 1 Corbin, Contracts § 19A
(Supp 1992)).
The discussion above explains why those factors
are substantively incorrect. The factors added by the Jaqua
court would substitute entirely for any reference to established
categories of unjust enrichment, and they are underinclusive
of all the circumstances in which a plaintiff may
establish an unjust enrichment. Moreover, the unadorned
factors are vague, as this action illustrates.
132 Larisa’s Home Care, LLC v. Nichols-Shields
In part, the parties argued over the application of
the first and third Jaqua factors. By its terms, the third
factor based on societal expectations is subject to wide-ranging
interpretations. Plaintiff’s arguments concerning that
factor focus on the ill effects of requiring it to bear the cost
of what amounts to Medicaid fraud: it would encourage further
fraud, an issue of vital importance to healthcare and
long-term care facilities as well as patients and Oregon
taxpayers. But the Court of Appeals looked at provisions of
Medicaid law to conclude that they reflected societal expectations
that apply generally, regardless of fraud: a care facility
cannot exploit residents by extracting payments beyond
Medicaid rates when the residents are deemed Medicaideligible.
The court concluded that allowing recovery in this
action would defeat those expectations. Larisa’s Home Care,
LLC, 277 Or App at 818-19.
Even the first factor—whether plaintiff had a reasonable
expectation of payment—leads to very different
interpretations in its application. The Court of Appeals concluded
that, for plaintiff to have a reasonable expectation of
receiving the private-pay rate of payment under the first factor,
plaintiff had to prove that the state had determined that
Prichard was not Medicaid-eligible. Id. at 817. Otherwise,
the court concluded, plaintiff could only reasonably expect
to be paid in accordance with the terms of its contract with
the state. Id. Thus, the Court of Appeals viewed the first
factor as applying regardless of the fraud and plaintiff’s lack
of knowledge concerning that state of affairs when plaintiff
accepted Prichard as a Medicaid resident pursuant to
its contract with the state. Plaintiff, on other hand, argues
that, under the proper view of that factor, plaintiff can reasonably
expect its residents to pay at the rate that they are
properly—not fraudulently—qualified to pay.
Accordingly, we conclude that the formula for unjust
enrichment in Jaqua is inadequate to the task, and we
reject it. In lieu of applying the formula in Jaqua, Oregon
courts should examine the established legal categories of
unjust enrichment as reflected in Oregon case law and other
authorities to determine whether any particular enrichment
is unjust.
Cite as 362 Or 115 (2017) 133
D. Legal Standards Applicable in this Case
As we noted at the outset, at least one of plaintiff’s
allegations in this action falls squarely within the
categories recognized by Oregon case law and treatises to
involve unjust enrichment: plaintiff alleges that Prichard’s
estate has been benefited by fraud. “A conclusion that one
party has obtained benefits from another by fraud is * * *
one of the most recognizable sources of unjust enrichment.”
Restatement (3d) Restitution § 13 comment a, at 166.
Specifically, plaintiff alleges that the particular fraud
here involved false representations on Prichard’s Medicaid
form that led to Prichard being charged only Medicaid rates.
The Restatement states the general rule regarding transfers
induced by fraud as follows:
“A transfer induced by fraud or material misrepresentation
is subject to rescission and restitution. The transferee
is liable in restitution as necessary to avoid unjust
enrichment.”
Id. § 13(1).
The comments to section 13 include an illustration
analogous to the facts at issue here—a person who obtained
services by falsely claiming to be indigent:
“County appoints public defender to represent Defendant
charged with burglary, relying on Defendant’s affidavit of
indigence. It transpires that Defendant owns substantial
property. County is entitled to recover from Defendant the
reasonable value of the services provided.”
Restatement § 13 comment c, illustration 4, at 168.
Case law accords with that conclusion. This court
itself addressed a case very similar to this one, where a person
had obtained benefits by falsely claiming impoverishment,
and the provider of the benefits subsequently sought
to recover from the person’s estate under a theory of unjust
enrichment.
In In re Anderson’s Estate, 157 Or 365, 71 P2d 1013
(1937), a former employee of a bank, Joseph Anderson, had
asked his former employer for money. Anderson told the
134 Larisa’s Home Care, LLC v. Nichols-Shields
bank that he was destitute, but his representations were
false; he actually had substantial savings. Id. at 369-70.
The bank, not knowing of Anderson’s deceit, gratuitously
paid Anderson $25 per month until his death, for a total of
$2,500. Id. at 368-69.
Anderson’s fraud was discovered after he died, and
the bank sought to recover the amounts it had paid from
Anderson’s estate. This court agreed that the estate had
been unjustly enriched:
“It is plain and uncontroverted that Joseph Anderson
obtained the payment of the sum of $2,500 upon different
dates by means of false representations and deceit and that
the bank paid the money in ignorance of the facts, of which
they had no means of ascertaining the truth. Under such
circumstances the bank is entitled to recover the money
paid, with interest[.] Likewise where a donor has been
induced through misrepresentation, fraud and deceit, exercised
by the donee to make a gift, the donor may recover
on the principle that no one shall be allowed to obtain any
benefit arising from his own fraud or wrongful act[.]”
Id. at 374-75 (citations omitted).
Other jurisdictions have held similarly. In Old Men’s
Home, Inc. v. Lee’s Estate, 191 Miss 669, 4 So 2d 235 (1941),
a charitable home had taken care of Lee based on Lee’s false
representations that he was destitute, when unknown to
the home, Lee had some $5,000 in the bank. The Supreme
Court of Mississippi upheld the home’s claim against Lee’s
estate for the value of its services. 191 Miss at 681, 4 So 2d
at 236. See also Jones v. Stearns, 97 Vt 37, 122 A 116 (1923)
(allowing couple to recover value of support they had rendered
to decedent, based on decedent’s false representation
that she was destitute); Eggers v. Anderson, 63 NJ Eq 264,
272-73, 49 A 578, 582 (NJ 1901) (allegations would support
equitable relief requiring executor “to pay out of the estate
such sum as will recompense [a charitable group] for the
money and property which they were induced to furnish to
and for Mrs. Stager because of her fraudulent pretence of
poverty”).
In short, both the Restatement (3d) Restitution and
our case law are in accord that a person—and his or her
Cite as 362 Or 115 (2017) 135
estate—have been unjustly enriched if the person obtains
benefits by making false representations about his or her
financial state. Accordingly, we turn to whether the particular
facts of this case fall within that category of unjust
enrichment.
E. Application
Defendant contends that plaintiff’s case fails at
two points. First, she essentially challenges causation:
She asserts that the false representations on Prichard’s
Medicaid application would not have disqualified her from
Medicaid. If Prichard would have qualified for Medicaid
benefits without regard to whether the form disclosed the
numerous transfers of her assets, then there could be no
enrichment at all. Plaintiff would have been required to
charge Prichard only the Medicaid rate. Second, defendant
argues that the false representations were by Gardner, not
Prichard, and Prichard should not be held responsible for
those misrepresentations.
Before we turn to the specifics of defendant’s
causation argument, we provide a brief overview of the relevant
disqualification law. As noted, the Medicaid application
filled out by Gardner required the disclosure of all transfers
made within the previous 60 months. Generally, transfers
are disqualifying if they are “made in whole or in part for the
purpose of establishing or maintaining eligibility for benefits.”
OAR 461-140-0210(2). Many transfers are not disqualifying,
however; a second rule, OAR 461-140-0220, identifies
those nondisqualifying transfers. For example, a transfer is
not disqualifying if the asset is “sold or traded” “for compensation
equal to or greater than fair market value.” OAR
461-140-0220(2)(a).
Defendant does not dispute that the undisclosed transfers
here were generally disqualifying as transfers made in
whole or in part to establish eligibility for benefits.7 Both
sides also either agree or assume that—if the undisclosed
transfers were disqualifying—then the disqualification period
7 In particular, the evidence shows that substantial sums were transferred
to defendant and the other children at defendant’s suggestion and explicitly for
the purpose of establishing Prichard’s eligibility for Medicaid benefits.
136 Larisa’s Home Care, LLC v. Nichols-Shields
would have extended through the remainder of Prichard’s
life and covered the entirety of her stay at plaintiff’s facility.
Defendant instead asserts that the undisclosed
transfers here were not disqualifying, because they fell
under an exception to the general rule. Under OAR 461-
140-0220(7), a transfer is not disqualifying if the “client
was a victim of fraud * * *, and legal steps have been taken
to recover the asset.” Prichard was the victim of Gardner’s
fraud in making the transfers, and legal steps have now
been taken—successfully—to recover those transfers. Thus,
defendant maintains, Prichard would not have been disqualified
from receiving Medicaid, so Prichard correctly
paid only Medicaid rates while at plaintiff’s facility.
Defendant’s argument fails to recognize, however,
that the disqualification rules are written to address the
situation at a specific point in time: they are forward looking.
They presume that an applicant has just applied for
Medicaid, and they set out the method that the department
will use to determine how far into the future an applicant
will be disqualified from benefits (if at all). Thus, OAR 461-
140-0296(2) explains how to calculate the length of the disqualification
period, starting with the “initial month”—the
month that the applicant is “first * * * eligible for a program
benefit,” OAR 461-001-0000(31).
The time-dependent nature of the rules is even more
clearly illustrated in OAR 461-140-0300(2), which provides
that “the disqualification ends if the transfer that caused
the disqualification is rescinded.” The fact that rescission
merely causes the disqualification to “end” at that time does
not match defendant’s position, which would imply that
rescission would retroactively qualify the applicant for benefits
for months that have already passed.
When we examine the facts as they existed on
April 17, 2007—the date Prichard applied for Medicaid—we
see that no steps had been taken to recover any of Gardner’s
wrongful transfers. Thus, the requirements of OAR 461-
140-0220(7) had not been met. If the transfers had been disclosed
on the form, then Prichard would have been disqualified
from receiving Medicaid benefits while she stayed at
plaintiff’s facility. The false representations on the Medicaid
Cite as 362 Or 115 (2017) 137
form thus enabled Prichard to pay the discounted Medicaid
rates, when she otherwise would have had to pay the higher
private-pay rates.
We turn, then, to defendant’s second argument:
Was Prichard legally responsible for Gardner’s false representations?
Defendant asserts that she was not. Under standard
agency principles, however, we conclude that Gardner
acted as Prichard’s agent when he filled out the Medicaid
application for her. As to third parties, Prichard was legally
responsible for Gardner’s false representations.
Defendant’s argument turns on Prichard’s incapacity.
Defendant admits that Prichard, through her power of
attorney, had given Gardner authority to act as her agent.
Defendant notes, however, that Prichard had become incompetent
by the time Gardner filled out the Medicaid application
form. Defendant maintains that Prichard’s incompetency
had terminated Gardner’s agency.
We disagree. Prichard’s power of attorney expressly
stated that Gardner’s authority to act would apply “regardless
of my subsequent disability or incompetence.” Such a provision
is lawful and valid. When Gardner filled out Prichard’s
Medicaid application, ORS 127.005(1)(c) (2005) provided
that, unless the principal’s written designation stated otherwise,
the “powers of the attorney-in-fact or agent shall be
exercisable by the attorney in-fact or agent on behalf of the
principal notwithstanding the later disability or incompetence
of the principal at law.” See also Restatement (Third)
of Agency § 3.08(2) (2005) (“Restatement (3d) Agency”) (“A
written instrument may make an agent’s actual authority
effective upon a principal’s loss of capacity, or confer it irrevocably
regardless of such loss.”). Defendant cites no authority
to the contrary. Thus, Prichard’s incompetence did not
end Gardner’s agency.
Gardner filled out the Medicaid form as Prichard’s
agent. In doing so, Gardner made a misrepresentation on
Prichard’s behalf and for the purpose of getting her Medicaid
benefits. He represented on the form that Prichard had
made no transfers, knowing that that representation was
false. Because Gardner made a false representation while
138 Larisa’s Home Care, LLC v. Nichols-Shields
acting as Prichard’s agent and on her behalf, Prichard is
liable for the fraud.
“A principal is liable to third persons for frauds, deceits,
concealments, torts and omissions of duty of his agent,
when acting in the course of his employment, although the
principal did not authorize or justify or participate in, or
indeed know of such misconduct, or even if he forbade the
acts or disapproved of them.”
White v. Gordon et al., 130 Or 139, 143, 279 P 289 (1929)
(internal quotation marks and citation omitted)). See
Barnes v. Eastern & Western Lbr. Co., 205 Or 553, 588, 287
P2d 929 (1955) (“[A] principal, who commits to an agent a
duty, in the performance of which the agent will be required
to make representations, is liable for misrepresentations
made by [the agent] in the discharge of the duty which
he employed in his efforts to serve his principal.”); ORS
127.005(2) (2005) (“All acts done by the attorney-in-fact or
agent under the power of attorney during any period of disability
or incompetence of the principal at law shall have
the same effect and shall inure to the benefit of and bind
the principal as though the principal were not disabled or
incompetent.”); Restatement (3d) Agency § 7.08 (“A principal
is subject to vicarious liability for a tort committed by
an agent in dealing or communicating with a third party
on or purportedly on behalf of the principal when actions
taken by the agent with apparent authority constitute the
tort[.]”).
The Court of Appeals noted that Prichard was
Gardner’s victim. That statement is certainly true, insofar
as Gardner misappropriated Prichard’s assets. Gardner was
convicted of committing a crime against Prichard, and we
do not question that Prichard’s estate could have obtained a
verdict in an appropriate civil action against Gardner. But
an agent’s actions may make a principal liable to a third
party, even if the agent’s actions are themselves a breach
of the agent’s duty to the principal. See Restatement (3d)
Agency § 2.01 comment f, at 85 (noting that agent’s actions
may make principal liable to third party, even though agent
is liable to principal for having breached duty). The issue
concerns third-party liability—whether Prichard is liable to
Cite as 362 Or 115 (2017) 139
plaintiff as principal for the misrepresentation of her agent,
not whether Gardner is liable to Prichard for breaching his
duties to her as principal. From the perspective of third parties
such as plaintiff, Prichard is liable for false representations
by her agent, Gardner.8
The facts in this case thus support a determination
of unjust enrichment. Prichard (through Gardner) made
false representations specifically for the purpose of obtaining
Medicaid benefits. Plaintiff provided valuable care
to Prichard at a substantially discounted rate, precisely
because of those false representations. Prichard’s estate is
substantially larger because Prichard did not have to pay
plaintiff the private-pay rates. It would be unjust and inequitable
for Prichard’s beneficiaries to retain the benefits
that Prichard had gained through the misrepresentation.
We conclude that the Court of Appeals erred in holding that
there was no unjust enrichment. Accordingly, we reverse
that determination.
8 The Restatement (3d) Restitution suggests that Prichard’s estate might be
subject to restitution even if Gardner was not her agent and Gardner’s fraud was
not attributable to her:
“A transfer induced by fraud or material misrepresentation is subject
to restitution, whether the representation is made by the transferee or by a
third party.”
Id. § 13 comment g, at 171 (emphasis added). The Restatement then offers the
following example:
“13. Corporation pays $45 million in bonuses to its President, based on
its reported net income during a five-year period. It is subsequently revealed
that Corporation’s net income for the period was artificially inflated, in consequence
of an accounting fraud perpetrated by certain officers and directors.
(Corporation was actually operating at a loss.) Corporation has a claim in
restitution against President to recover $45 million plus interest. Restitution
from President does not depend on proof that President participated in the
fraud, or that President had notice that earnings were overstated.”
Id. § 13 comment g, illustration 13, at 172 (emphasis added). See also Tupper, 349
Or at 224 (noting in constructive trust context that prior decisions by this court
suggest that unjust enrichment may be found even when recipient is innocent).
The Restatement does indicate that the innocence of the recipient can affect
the results of the case. An innocent recipient may be entirely protected against
restitution by affirmative defenses. See id. § 13 comment g, at 171. The recipient’s
innocence may also limit the amount of restitution. See id. § 50 (setting out
principles for determining amount of restitution where recipient was innocent).
In this case, however, we need not decide whether an innocent recipient would be
subject to restitution, because Prichard was liable as principal for the misrepresentations
of her agent, Gardner.
140 Larisa’s Home Care, LLC v. Nichols-Shields
III. MEDICAID-SPECIFIC ARGUMENTS
Subject to defendant’s arguments specific to the
Medicaid context, plaintiff is entitled to restitution. We
address one of those arguments and remand the case to the
Court of Appeals for its determination as to the second of
those arguments.
Before the Court of Appeals, defendant first asserted
that plaintiff’s action is an improper collateral attack on the
department’s exclusive right under ORS 410.070(1) to make
Medicaid eligibility decisions.9 Based solely on the citation
to ORS 410.070, she contends on review that the department’s
original decision to qualify Prichard for Medicaid is
legally binding on plaintiff in this action, unless and until
the department itself overturns it or plaintiff successfully
challenges it in an unspecified administrative proceeding
brought against the department.
In essence, defendant contends that, in light of the
department’s charge to administer Medicaid in Oregon,
plaintiff cannot invoke the assistance of an Oregon court
of equity. We reject that contention and agree with plaintiff’s
arguments in the Court of Appeals. First, ORS
410.070 does not contain a provision barring equitable
actions by Medicaid service providers. Furthermore, given
9 In part, ORS 410.070(1) provides:
“(1) The Department of Human Services shall:
“(a) Serve as the central state agency with primary responsibility for the
planning, coordination, development and evaluation of policy, programs and
services for elderly persons and persons with disabilities in Oregon.
“* * * * *
“(e) Receive and disburse all federal and state funds allocated to the
department and * * * enter into contracts with private entities for the purpose
of providing or contracting for case management services for long term care
insurance for the benefit of elderly persons and persons with disabilities in
this state.
“* * * * *
“(k) Conduct regulatory functions with regard to program operation, by
adopting rules for providing social services, including protective services,
to elderly persons and persons with disabilities who need services that the
department or area agencies are authorized to provide and rules for standard
rate setting and quality assurance.”
Cite as 362 Or 115 (2017) 141
ORS 411.630,10 which establishes that it is unlawful for
recipients of public assistance to use fraud to obtain benefits,
there is no reason to infer from ORS 410.070 that, when
a recipient commits fraud against a Medicaid service provider,
the provider is barred from recovering from the fraud
feasor in equity.
Defendant’s second Medicaid-specific argument in
the Court of Appeals was that plaintiff is barred from recovering
because of plaintiff’s contract with the department and
Medicaid law concerning acceptance of payment for services.
Specifically, defendant cited ORS 443.739(16) (adult foster
care resident has a right to be “free from financial exploitation”
and provider “may not solicit, accept or receive money
or property from a resident other than the amount agreed
to for services”) and OAR 411-050-0435(1)(d) (“The rate of
compensation established by the [department] is considered
10 ORS 411.630 provides:
“(1) A person may not knowingly obtain or attempt to obtain, for the benefit
of the person or of another person, any public assistance or medical assistance
to which the person or other person is not entitled under state law by
means of:
“(a) Any false representation or fraudulent device, or
“(b) Failure to immediately notify the Department of Human Services
or the Oregon Health Authority, if required, of the receipt or possession of
property or income, or of any other change of circumstances, which directly
affects the eligibility for, or the amount of, the assistance.
“(2) A person may not transfer, conceal or dispose of any money or property
with the intent:
“(a) To enable the person to meet or appear to meet any requirement of
eligibility prescribed by state law or by rule of the department or the authority
for any type of public assistance or medical assistance; or
“(b) Except as to a conveyance by the person to create a tenancy by the
entirety, to hinder or prevent the department or the authority from recovering
any part of any claim it may have against the person or the estate of the
person.
“(3) A person may not knowingly aid or abet any person to violate any
provision of this section.
“(4) A person may not receive, possess or conceal any money or property of
an applicant for or recipient of any type of public assistance or medical assistance
with the intent to enable the applicant or recipient to meet or appear
to meet any requirement of eligibility referred to in subsection (2)(a) of this
section or, except as to a conveyance by the applicant or recipient to create a
tenancy by the entirety, with the intent to hinder or prevent the department
or the authority from recovering any part of any claim it may have against
the applicant or recipient or the estate of the applicant or recipient.”
142 Larisa’s Home Care, LLC v. Nichols-Shields
payment in full and licensees must not accept additional
funds or in-kind payment[.]”). Defendant also noted that
the contract between plaintiff and the department provided
that plaintiff agreed to accept the “rate authorized by [the
department] plus the established room and board payment
as payment in full, and will not charge the client any additional
amounts for these services.” Defendant contended
that plaintiff both agreed to and was required to accept payment
at the Medicaid rates as “payment in full.”
The Court of Appeals did not reach that contention
in its opinion. Although defendant briefly reasserts
her argument in this court, she does not flesh out why her
reading of the statute and the rule is correct in the context
of a recipient’s fraudulent receipt of the Medicaid rate, and
plaintiff did not address it in its briefing in this court. That
Medicaid-specific issue may well involve consideration of
federal law, and it has not been briefed on elementary matters
of statutory and rule construction. Under those circumstances,
we decline to decide the issue as a matter of initial
impression. We remand to the Court of Appeals so that it
may consider that Medicaid-specific argument in the first
instance.

Outcome: The decision of the Court of Appeals is reversed,
and the case is remanded to the Court of Appeals for further
proceedings.

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