ARDC Claims That A Fixed Fee For a Medicaid Application Was Unreasonable


The ARDC has brought a claim against a lawyer who handled a Medicaid application for an elderly client. The client, who was 78 and had dementia did have a power of attorney in place and an agent who agreed to pay the $12,500 fee for the Medicaid application.

The lawyer also obtained the agent’s signature on a promissory note, but, allegedly did not advise the agent to seek independent counsel.

The pertinent allegations are as follows:

19. As of April 24, 2015, Respondent had provided no significant services to Matheny other than the completion and submission of her Medicaid application.

20. On July 14, 2015, Matheny’s estate sold her home for $26,000. Respondent obtained $12,500 of the sale proceeds pursuant to the representation contract, promissory note and mortgage described in paragraphs 5 through 8, above.
21. The $12,500 fee that Respondent obtained for the completion and filing of Matheny’s Medicaid application was unreasonable considering the time and labor required, the novelty and difficulty of the questions involved, the skill requisite to perform the legal service properly, the likelihood that the matter would preclude other employment, the fee customarily charged for similar legal services, and the amount of Matheny’s assets involved.
22. At the time Respondent collected the $12,500 fee, he knew that he had provided no significant services to Matheny other than the completion and submission of her Medicaid application.
23. By reason of his conduct described above, Respondent has engaged in the following misconduct:
  1. making an agreement for, charging or collecting an unreasonable fee, by conduct including charging and collecting $12,500 for assisting in Twyla Matheny’s application for Medicaid benefits, in violation of Rule 1.5(a) of the Illinois Rules of Professional Conduct (2010); and
  2. knowingly acquiring an ownership, possessory, security or other pecuniary interest adverse to the client, by conduct including acquiring a promissory note from Twyla Matheny and Juston Vermost as Matheny’s agent, and acquiring a mortgage interest against Matheny’s home and recording the mortgage, without informing Matheny or her agent Vermost in writing that they may seek the advice of independent legal counsel and have a reasonable opportunity to do so, and without obtaining the informed consent of Matheny or Vermost, in a writing signed by Matheny or Vermost, to the essential terms of the transaction and the lawyer’s role in the transaction, including whether the lawyer is representing the client in the transaction, in violation of Rule 1.8(a) of the Illinois Rules of Professional Conduct (2010).

Comment: The ARDC is litigating a case that would not be cost-effective for most lawyers to litigate. A dispute over $12,500 is, unfortunately, too small for most lawyers to accept.

Please note that we are reporting allegations from a complaint, not a finding of fact by a tribunal.

Ed Clinton, Jr.

‘via Blog this’

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