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A.K. v. Division of Medical Assistance and Health Services

April 12, 2002

A.K., PETITIONER-APPELLANT,
v.
DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES, AND OCEAN COUNTY BOARD OF SOCIAL SERVICES, RESPONDENTS-RESPONDENTS.



On appeal from the Division of Medical Assistance and Health Services, Department of Human Services, HMA 10214-98.

Before Judges Pressler, Ciancia and Coleman.

The opinion of the court was delivered by: Ciancia, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

OPINION CORRECTED 04/16/02

Submitted March 12, 2002

This appeal from the denial of Medicaid benefits centers on the method used to determine a couple's resource eligibility when one spouse is continuously institutionalized and the other is living in the community. The Division of Medical Assistance and Health Services within the Department of Human Services (DMAHS) issued a final agency decision concluding that A.K., the institutionalized spouse, was not eligible for Medicaid at the time she and her husband W.K. applied for benefits because the couple's resources exceeded the maximum amount allowed by law. We now affirm that decision.

A.K. and W.K. are now both deceased. We assume, but have no specific information, that this litigation is being pursued on behalf of appellant A.K.'s estate. The Division does not raise mootness as an issue or otherwise contend that the deaths of A.K. and W.K. preclude a remedy if appellant's legal arguments are otherwise correct.

The underlying facts are not in dispute. In September 1995, A.K. began continuous institutionalization in a nursing home. On October 1, 1995, the first day of the first full month of continuous institutionalization, DMAHS calculated the couple's total countable resources, although no application for benefits was then made. The calculated resources amounted to $219,725.40. At that time, the "community spouse resource allowance" (CSRA), which is the maximum community spouse's share of resources exempt from total countable resources, was $80,760. As discussed below, that figure is established by a formula set forth in a federal statute tied to the Consumer Price Index. The maximum amount of a CSRA can change annually. For instance, effective January 1, 1999, the figure rose to $81,960. It appears that the CSRA did not change from October 1, 1995 until January 1, 1999. An institutionalized spouse is also allowed to retain resources not in excess of $2,000. N.J.A.C. 10:71-4.8(a)(2). Thus, as of January 1998, this couple was permitted to retain total resources not in excess of $82,760 in order to qualify for Medicaid benefits.

As we understand it, appellant contends that the couple's asset evaluation was fixed and frozen on October 1, 1995. Thus, upon application for benefits in January 1998, they claimed to have been eligible for Medicaid on the theory that during the intervening period they had expended at least $136,965.40, the difference between countable resources on October 1, 1995 of $219,725.40 and $82,760 (the CSRA plus the $2,000 allowed to the institutionalized spouse).

The Division's position is that in order to establish Medicaid eligibility the calculation of assets must be made as of the date of application. Thus, any earlier calculation and subsequent "spend down" in accordance therewith, is not controlling. Here, eligibility could only be established if at the time of application the couple's countable assets did not exceed $82,760.

In the present case, the couple had spent down a considerable portion of their countable assets between 1995 and their 1998 application for Medicaid. However, at the same time there had been asset appreciation, most notably their Mobil stock which had split and increased in value. The heart of the present debate is whether assets acquired, or appreciated, after the date of the original asset calculation may be counted as resources affecting Medicaid eligibility when application is finally made.

It is apparently admitted that as of the couple's first application for Medicaid in January 1998, insufficient resources had been expended even under appellant's theory of eligibility. It was subsequently agreed between the parties that June 1, 1998 would be the date of application for Medicaid. At that point, the couple apparently had expended at least $136,965.40 in resources. They were reluctant to reveal their assets as of that date, but the director of the Division found that they retained countable assets in excess of $82,760. Our own review of the record reveals sufficient credible evidence to support that finding, although an exact figure cannot be achieved. We do not believe appellant explicitly contests the Division's calculation. Appellant's position, rather, is that the couple's assets should be fixed as of the calculation of countable assets made on the first day of the first month of continuous institutionalization.

The relevant statutory and regulatory provisions are hardly a model of clarity. However, in our view, the statutory and regulatory schemes support the position of the DMAHS, which was reached in part by application of the agency's expertise. We also find support in our conclusion from the decision of the Minnesota Supreme Court in Estate of Atkinson v. Minnesota Department of Human Services, 564 N.W.2d 209 (Minn. 1997), that is directly on point and reaches the same result as that espoused by the Division in the present case.

Medicaid is a federal program that provides funds to states so that eligible needy persons may be reimbursed for the cost of medical care. 42 U.S.C.A. § 1396a to -1396v. The states have significant discretion to design programs, but those programs must be consistent with federal law. Wis. Dep't of Health and Family Servs. v. Blumer, ___ U.S. ___, ___, 122 S. Ct. 962, 966, ___ L. Ed. 2d ___, ___ (2002). In New Jersey, the implementing statutory provisions are set forth in the Medical Assistance and Health Services Act, N.J.S.A. 30:4D-1 to -42. The relevant regulations, for purposes of this appeal, are found in N.J.A.C. 10:71-4.1, et seq.

Prior to 1988, the determination of Medicaid eligibility for married applicants, one of whom needed nursing home care, "resisted simple solutions." Blumer, supra, ___ U.S. ___, 122 S. Ct. at 967, ___ L. Ed. 2d at ___. However, in 1988 Congress enacted the Medicare Catastrophic Coverage Act (MCCA), 42 U.S.C.A. § 1396r-5, "to protect community spouses from 'pauperization' while preventing financially secure couples from obtaining Medicaid assistance." Blumer, supra, ___ U.S. at ___, 122 S. Ct. at 966-967, ___ L. Ed. 2d at ___. The goal of the MCCA was to ensure sufficient income and resources for the community spouse, while committing a fair share of their resources to the institutionalized spouse's care. Cleary v. Waldman, 167 F.3d 801, 805 (3d Cir.), cert. denied, 528 U.S. 870, 120 S. Ct. 170, 145 L. Ed. 2d 144 (1999). To that end, the MCCA established a level of income and resources for the community spouse that is protected from inclusion when determining the institutionalized spouse's eligibility for Medicaid and which need not be spent down for the spouse's care. Ibid.

The procedure for calculating income and resource eligibility is set out in 42 U.S.C.A. § 1396r-5(c), which provides:

(1) Computation of spousal share at time of institutionalization

(A) Total joint resources

There shall be computed (as of the beginning of the first continuous period of institu- tionalization (beginning on or after September 30, ...


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