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I.G. v. Dep't of Human Services

June 13, 2006

I.G., PETITIONER-APPELLANT,
v.
DEPARTMENT OF HUMAN SERVICES, DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES, RESPONDENT-RESPONDENT.



On appeal from a Final Decision of the Department of Human Services, Division of Medical Assistance And Health Services, Docket No. HMA-993-05.

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

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Submitted May 2, 2006

Before Judges Kestin, Lefelt and R. B. Coleman.

Petitioner I.G., who suffers from Alzheimer's disease and resides in a nursing home, appeals from a final decision of the Director of the Division of Medical Assistance and Health Services (DMAHS) that rendered her ineligible for Medicaid benefits. DMAHS found I.G. ineligible because she did not, upon her husband's death, elect the marital share of his estate, which, by will, passed his entire residuary estate to a testamentary trust that afforded the trustee sole discretion to expend funds for I.G.'s needs. In her appeal, I.G. argues that waiver of the spousal elective share should not constitute a transfer of available resources rendering her ineligible for Medicaid. We disagree and affirm the DMAHS decision.

I.G. was born November 3, 1914, and was initially diagnosed with Alzheimer's disease in the late nineties. I.G. and her husband, E.G., continued to live together in their home until November 3, 2003, when I.G. moved to a nursing home. At some point before I.G. moved into the nursing home, title to the marital home was transferred to E.G. alone. On December 27, 2003, less than two months after I.G. had moved, E.G.'s health deteriorated, and he also moved into the same nursing home.

I.G. and E.G. both applied for Medicaid benefits toward the end of 2003 and were both deemed eligible as of January 1, 2004. However, the marital home had to be sold. After the home was sold for $128,162.21 on May 7, 2004, E.G. was deemed resource ineligible, as the value of his assets exceeded the $2,000 Medicaid limit. His benefits were terminated as of May 31, 2004.

About two months later, on July 26, 2004, E.G. died and his will was admitted to probate on August 6, 2004. J.K., the parties' niece, who held I.G.'s power of attorney, was also E.G.'s executrix under the will. E.G.'s will left the entire residuary of his estate to I.G. "with the provision that said bequest shall be held In Trust [by J.K.] for [I.G.]." E.G.'s will named no subsequent beneficiary for any remainder of the trust upon I.G.'s death.

In an August 11, 2004 letter, the Ocean County Board of Social Services warned J.K. that waiving I.G.'s spousal elective share would "result in termination of Medicaid benefits."

I.G.'s attorney, also acting as J.K.'s counsel, countered by advising the agency that E.G.'s estate "should have no effect" on I.G.'s Medicaid eligibility.

On January 25, 2005, the residuary of E.G.'s estate, $132,971.62, was deposited into a testamentary trust account at a New York bank. The will granted J.K. "sole discretion" over the trust to "pay over the principal and income, or any part thereof, for the needs of [I.G.] as [the trustee] shall determine." On February 15, 2005, Social Services notified I.G. that because her resources exceeded the Medicaid standard her benefits were terminated as of February 28, 2005.

I.G. requested a hearing, and the matter was transmitted to the Office of Administrative Law where an Administrative Law Judge conducted a hearing and issued an initial decision, finding that the agency had properly terminated I.G.'s benefits. The ALJ concluded that I.G. was resource ineligible because she did not elect against her husband's estate. The judge found that one-third of E.G.'s residuary estate, totaling $44,323.87, was countable "rendering [I.G.] resource ineligible for the Medicaid Only program."

The Director of DMAHS adopted the ALJ's conclusions in a final decision. The Director explained that "the issue here is the money used to fund the trust" and concluded that by "consenting to the will, [I.G.] used her 1/3 elective share to fund the trust," and the "refusal to elect against the estate is considered a transfer of assets she ...


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