Court Refuses to Help Man Get Back Oil Rights He Gave Away in Order to Defraud Medicaid

[This article was originally published on December 27, 2007.  The links were updated on August 16, 2018.]

A Mississippi man who transferred oil interests on his property to his girlfriend in order to conceal them from Medicaid is not entitled to get the interests back, a state appeals court has ruled.

Following his father's death, Rickey Ellzey inherited some property. In 1994, Mr. Ellzey had a heart transplant and he qualified for Medicaid. While he was receiving Medicaid benefits, he learned that an oil well on the inherited property was beginning to produce and that he soon would be receiving royalty checks. Believing that these checks might "have a detrimental effect on his overall health" by affecting his Medicaid eligibility, Mr. Ellzey executed a deed giving his mineral interests in the property to his girlfriend, Sherry James, with the intent that she would return the interests back to him after 14 months.

Ms. James did sign a deed to return the mineral interests, but it was never recorded and the original of this document was lost. After the 14 months had passed, Ms. James refused to give the interests back to Mr. Ellzey, and he filed a complaint in court, asking for their return. The court noted that it could accept a copy of the deed but that it would not do so in this case because that would "help him recover what he lost by defrauding the State of Mississippi." Mr. Ellzey appealed.

The Mississippi Court of Appeals agrees with the lower court, holding that Mr. Ellzey is not entitled to have a court remedy a problem that he created by his own fraudulent act. According to the court, Mr. Ellzey could not use the court's "hands to draw equity from a source his own hands ha[d] polluted."

To download the full text of this decision, Ellzey v. James (Miss. Ct. App., No. 2006-CA-00758-COA, November 20, 2007). in PDF format, go to: https://www.mssc.state.ms.us/Images/Opinions/CO44777.pdf.

(If you do not have the free PDF reader installed on your computer, download it here.)

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