On appeal from the Department of Human Services, Division of Medical Assistance and Health Services, OAL Docket No. HMA 3292-05.
The opinion of the court was delivered by: Fisher, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Stern, C.S. Fisher and C.L. Miniman.*fn1
This appeal requires our examination of a type of Medicaid planning unlike those previously encountered. See, e.g., H.K. v. Dep't of Human Servs., 184 N.J. 367 (2005); In re Keri, 181 N.J. 50 (2004); J.P. v. Div. of Med. Assistance & Health Servs., 392 N.J. Super. 295 (App. Div. 2007); W.T. v. Div. of Med. Assistance & Health Servs., 391 N.J. Super. 25 (App. Div. 2007); In re Labis, 314 N.J. Super. 140 (App. Div. 1998). Here, B.D., a seventy-seven-year-old woman, conveyed her $259,917 home to her grandson for $10,191.70 in cash, the discharge of a $67,374.89 mortgage, and a lease of part of the home "for life." In focusing on the lease, the Director of the Division of Medical Assistance and Health Services concluded that B.D. did not receive fair market value and, therefore, imposed a Medicaid eligibility penalty period. Because the otherwise unambiguous phrase "for life," which significantly bears on the lease's value, is clouded by its context, and because the lease's true scope cannot be wrung solely from the lease itself, we remand for an evidentiary hearing.
The record reveals that B.D. was deemed eligible to participate in the Caregiver Assistance/NJEASE Homecare Program.
This program was designed to provide services for individuals, who are at risk of nursing home placement, with the opportunity to remain in their homes. Upon learning that B.D. had transferred her home to M.D., her grandson, the Hudson County Board of Social Services reviewed her eligibility to remain in the program and later concluded, because B.D. had "received $10,191.70 for property worth $238,191.70 in net value," that the transfer of her home required the imposition of a thirty-seven-month penalty period.
A hearing was requested and the matter forwarded to the Office of Administrative Law for the development of a record. The parties stipulated to the facts they deemed relevant, provided the administrative law judge (ALJ) with exhibits, and filed briefs. No evidentiary hearing was conducted.
The parties stipulated that, on January 22, 2004, B.D. was a seventy-seven-year-old woman, who owned and had lived in a two-family house in Kearny for many years. The home had been appraised in October 2003 as having a value of $259,917. At that time, $67,374.98 was due on a mortgage encumbering the property. B.D. was also then receiving $1,180 per month in rent for the first floor apartment and $200 per month for rent on part of the second floor from J.D., her granddaughter.
On January 22, 2004, B.D. contracted to transfer the property to her grandson, M.D., for $255,000. To consummate the transaction, M.D. obtained an $80,000 mortgage loan, from which the debt on the existing mortgage and other minor settlement charges were paid; the remainder of the mortgage proceeds, $10,191.71, was given to B.D. As part of this transaction, B.D. also received what has been referred to as a "lifetime lease" for the second floor/attic apartment (the apartment).
The lease stated that the compensation received by M.D. for giving B.D. a "lifetime lease" was $175,000, which purports to represent the remaining value of the property transferred to M.D. The lease defined its duration as "[f]or the life of [B.D.]," but also, within the same sentence, referred to an actuarial table. Although the record on appeal does not contain this actuarial table, the parties' stipulation indicates that B.D.'s life expectancy was then 10.83 years.
The meaning and significance of the lease term rested at the heart of the contested matter before the ALJ. In finding that the transfer was for fair market value, the ALJ provided the following analysis of B.D.'s prepayment of $175,000 in rent for the term of the lease:
At the time of the sale, [B.D.'s] life expectancy, according to the actuarial tables contained in HCFA Transmittal #64, was 10.83 years. As such, if [B.D.] were to live for that amount of time, and rent the apartment for its fair rental value, she would have paid out a total of $194,940 in rent.*fn2 So in effect, the value of her lifetime leasehold, plus the $80,000 cash she received, earned [B.D.] approximately $20,000 more than the property's fair ...