On appeal from the Department of Human Services, Division of Medical Assistance and Health Services, Docket No. HMA-929-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Skillman and Grall.
Appellant M.M. appeals from a final decision of the Director of the Division of Medical Assistance and Health Services (DMAHS), which upheld respondent Somerset County Board of Social Services' determination that she was subject to a "transfer penalty" that postponed her eligibility for full Medicaid benefits from November 1, 2007 until September 30, 2008.*fn1
M.M. is a ninety-two-year-old female who has been a resident of nursing home facilities since January 2006. Nine months before becoming a nursing home resident, M.M. executed a power of attorney authorizing her children and granddaughter, M.H., to manage her finances, including the making of deposits and withdrawals from her bank accounts.
According to M.H., while M.M. was being treated in a hospital, she directed M.H. to write four checks on her behalf, totaling $24,000, to M.M.'s children and their spouses, which were dated December 25, 2005. Shortly after M.M. became a nursing home resident, she directed M.H. to write four additional checks to these recipients totaling $48,000, which were dated January 20, 2006.
When M.H. wrote these checks, there were insufficient funds in M.M.'s checking account to cover them. Consequently, she asked her children and their spouses to delay cashing the checks and directed M.H. to liquidate her certificates of deposit and transfer the proceeds into her checking account.
According to M.H., officials at the bank in which M.M. maintained the CDs informed M.H. that they were required to forward the power of attorney authorizing her to liquidate the CDs "for legal review" before she would be permitted to complete the requested transaction. M.H. heard nothing further from the bank until February 11, 2006, when she was told that the power of attorney had been approved. On February 13, 2008, she deposited $67,227.44 from the CDs into M.M.'s checking account, increasing the balance in that account to $80,168.85.
After M.H. deposited sufficient funds in M.M.'s checking account to cover the $72,000 in checks previously written to her children and their spouses, four of the checks were cashed on February 17, 2006 and the remaining four were cashed on February 21, 2006. During the period between when M.H. wrote the eight checks and when the checks were cashed,*fn2 significant amendments to the federal statutory provisions governing the Medicaid program were enacted as part of the Deficit Reduction Act of 2005 (DRA), 109 P.L. 171; see generally, N.M. v. Div. of Med. Assistance & Health Servs., 405 N.J. Super. 353, 362-63 (App. Div. 2009), which became effective on February 8, 2006. One of those amendments changed the beginning date of the "transfer penalty" period imposed upon an applicant for Medicaid benefits who transfers assets for less than fair market value.
Under prior law, the penalty period began when an applicant for Medicaid benefits made a transfer of assets for less than fair market value. M.M. did not apply for Medicaid benefits until November 1, 2007, which was more than a year-and-a-half after she made the $72,000 in gifts to her children and their spouses. Consequently, under prior law, the penalty period imposed based on her gifts, which was eleven months, would have expired before she applied for Medicaid benefits.
However, under the DRA, the transfer penalty period imposed on an applicant who has transferred assets for less than fair market value on or after the effective date of this legislation begins on either the date of the transfer or the date on which the applicant would otherwise become eligible for Medicaid benefits, whichever is later. 42 U.S.C.A. § 1396p(c)(1)(D) (ii). M.M. did not become eligible for Medicaid benefits until November 1, 2007. Consequently, under the DRA, the eleven month penalty period would not begin until that date, which would postpone her eligibility for benefits until September 30, 2008. Therefore, the dispositive issue in this case is whether M.M. transferred the $72,000 represented by her eight checks to her children and their spouses when M.H. wrote the checks, which was before the February 8, 2006 effective date of the DRA, or when the recipients cashed the checks, which was after that date.
M.M. appealed the Somerset County Board of Social Services' determination that the penalty period during which she was ineligible for full Medicaid benefits began on November 1, 2007 to the DMAHS, which transmitted the matter to the Office of Administrative Law as a contested case. A hearing was conducted before an Administrative Law Judge (ALJ) at which testimony was presented regarding the facts previously set forth.
The ALJ concluded that the amount in M.M.'s CDs was not "available" to her between January 23, 2006, when M.H. attempted to cash the CDs and deposit the proceeds into M.M.'s checking account, and February 11, 2006, when those funds were released to M.H. and deposited in the checking account, and therefore, those funds should not be treated as a resource in determining M.M.'s Medicaid eligibility. For that reason, the ALJ concluded that the Somerset County Board of ...