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Judge Rules on Granny Advisers Law

September 23, 1998

ALBANY, N.Y. (AP) _ A federal judge has struck down a law that bans advising financially secure people on how to shed assets to qualify for taxpayer-funded Medicaid benefits.

In his ruling Tuesday, U.S. District Court Judge Thomas McAvoy said the 1997 federal law is unconstitutional and places lawyers, accountants and other financial advisers in the quandary of having to obey the law while providing clients with complete representation.

New York State Bar Association had argued in court that the so-called ``Granny’s Adviser Goes to Jail″ statute struck at the heart of free speech and the attorney-client privilege.

The law applied to anyone who was paid to advise clients about lawful transfer of assets to qualify for Medicaid. It was punishable by up to a $10,000 fine and a year in jail.

A spokeswoman for the U.S. Department of Justice, which argued in favor of the law, said officials there had not yet reviewed the judge’s decision.