Your question is a little unclear and has multiple issues attached. The first issue is that of a penalty associated with the withdrawal. Because you have filed the application, I am assuming that your mother was otherwise eligible to receive benefits. That means that she had spent her assets down below the $2,000 threshold. If that is the case, the withdrawal may not be penalized as she was allowed to have the $2,000 and she distributed a portion of her assets that she was permitted to retain. That said, you may still need to explain the withdrawal, which could very well result in a problem if the case worker asks for subsequent bank statements that reflect the withdrawal.
Obviously, if the withdrawal was for your mother’s needs or expenses, that also should not be a problem.
However,, it sounds like the money taken was in fact needed to pay additional expenses and now you may not be able to pay those expenses. That also is problem; however, the reason for the withdrawal will play into how the situation is resolved. If the withdrawal was for a legitimate purpose, then you will need to negotiate with the nursing home as to how their invoice will be paid. If the withdrawal was for illegitimate purposes, i.e., your brother took the money, now you have a bigger issue on your hands. He has a fiduciary duty to act in your mother’s best interest. It also sounds like there might have been some court action that requires him to act in a particular way. I would suggest that you contact the attorney that represented you and discuss the matter with him. You may need to petition the court for a conservatorship to void his power of attorney.
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Since he had your mother's POA, he had access to the money. (I am assuming it is a POA to handle her finances.) It really depends upon what he used the money for. If he spent it on her needs, then there probably isn't going to be a problem. If he spent it on something or someone other than your mother, than there probably will be. Either way he eventually will need to explain what he did. I would suggest to him that if he doesn't cooperate and talk to the people at Medicaid, he may end up talking to Adult Protective Services and be trying to explain why his withdrawal doesn't constitute exploitation of a vulnerable adult.
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It seems obvious that if your brother spent your mom's money on your mom you wouldn't have much of a problem with that... so I'm assuming that he took the cash for his own purposes. If the financial power of attorney allows brother to make gifts to himself, you've got a divestment problem with MassHealth that may lead to your mother having a penalty period before the nursing facility will be paid by the state. If the power of attorney does not authorize brother to play Santa for himself, your brother committed fraud and elder financial abuse. Neither is good, so let's hope there are many cases of Depends piled up in his garage...
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If your mother's assets were "spent down" to $1,600 prior to the application, removal of any portion of that funds following the application should not trigger a problem as it is not supposed to be part of the review.
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