November 23, 2010
DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES AND BERGEN COUNTY BOARD OF SOCIAL SERVICES, RESPONDENTS-RESPONDENTS.
On appeal from the Department of Human Services, Division of Medical Assistance and Health Services, Agency Docket No. 02-10-080854-01.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 19, 2010
Before Judges Baxter and Koblitz.
A.D. appeals the denial of Medicaid benefits for a two and one-half year period of time during which Citibank refused to allow her representatives to withdraw money from her two Keogh accounts. Concluding that Citibank's recalcitrance caused those funds to be inaccessible to A.D., we reverse the decision of the Director of the Division of Medical Assistance and Health Services (Director).
A.D., a retired physician, began residing at the long-term nursing facility of Bergen Regional Medical Center (Bergen Regional) in October 2004 when she was eighty years old.*fn1 She began receiving Medicaid benefits in late 2004. The Bergen County Board of Social Services (Board) discovered two Keogh accounts at Citibank in A.D.'s name, advised A.D. that these were not reported on the application, and determined that she was therefore ineligible for Medicaid benefits from December 1, 2005, through May 31, 2008.*fn2 The Board's letter of July 6, 2006, stated:
[A.D.] was the owner of two Keogh*fn3 accounts at Citibank. The balances in the Profit Sharing Keogh and the Money Purchase Keogh accounts totaled over $22,000 in January 2004 and are still active accounts.
As the value of the two accounts was approximately $22,000, A.D.'s income and resources exceeded the allowable amount to maintain her benefits, which was $2000 for an individual applicant.*fn4 N.J.A.C. 10:71-4.5.
In response to its inquiry, the Board received a letter from Citibank on July 27, 2006, stating the two account numbers and detailing three distributions from the accounts on August 9, 2004, September 8, 2004, and February 7, 2005. On August 15, 2006, Citibank wrote the Board again to notify it that Citibank had transferred one account to Smith Barney. These letters were not copied to A.D. by Citibank, nor did the Board provide A.D. or her representative with neither letter, nor any specific account information contained in these letters.
A.D.'s attorney, who did not know the Keogh account numbers, tried on several occasions to withdraw all the funds in these accounts. On November 24, 2006, A.D. signed a Citibank withdrawal slip for her attorney. Counsel forwarded that slip with a notarized letter from A.D. requesting that all of her accounts be liquidated and authorizing Citibank to speak to counsel. Citibank, however, required another more specific withdrawal form. A.D.'s daughter delayed the submission of this form for three months by inadvertently bringing the signed form with her to Italy.*fn5 During this process, Citibank refused to speak to the attorney or to A.D.'s daughter, who had A.D.'s power of attorney. Counsel sent in a copy of the power-of-attorney to Citibank three times to no avail. When Citibank finally issued a check in December 2007, the check only liquidated one account. Ultimately, Citibank informed counsel that the other account had been transferred to Smith Barney, which required its own withdrawal form. The final account was liquidated in May 2008.
The administrative law judge found that the delay in distributing the funds was largely due to Citibank's failure to comply with the liquidation requests and cooperate with A.D's attorney and daughter. He said,
CitiBank failed to comply with its depositor's directions. CitiBank procrastinated, resisted, or ignored [A.D.]'s counsel, and threw unwarranted barriers in the path of [A.D.] . . . CitiBank's obstructionism became exacerbated when it transferred [A.D.]'s second Keogh account to Smith Barney but failed to retrieve the funds and distribute them to [A.D.] upon demand. This dithering caused A.D. potential financial injury each day of delay.
After finding that Citibank caused over two years of delay, the administrative law judge determined "that at all times relevant [A.D.] had access to her [Keogh] accounts which were in the custody of CitiBank, and that the delay in the funds distribution was caused by the custodian and A.D.'s attorney-in-fact."
On September 21, 2009, the Division reviewed the record and adopted the administrative law judge's decision. The Director noted that although A.D. "alleges the funds were inaccessible due to 'stonewalling' by the bank . . . . There were distributions from the accounts from August 9, 2004 through February 7, 2005." The Director found that "at all times [A.D.] had access to the funds in quest[ion]." Accordingly, the Director found that A.D. did not meet the resource standard under N.J.A.C. 10:71-4.1 and N.J.A.C. 10:71-4.5 until June 1, 2008.
Appellant raises the following issues on appeal:
THE BOARD'S DENIAL OF A.D.'S MEDICAID ELIGIBILITY WAS IMPROPER SINCE THE BOARD INCORRECTLY APPLIED THE MEDICAID RESOURCE ELIGIBILITY STANDARDS
A. Medicaid Regulations Define Countable Resources Via A Two Prong Test
B. Available Resources Which Are Not Accessible Are Excluded As Countable Resources
C. DMAHS' Failure to Distinguish Between Available Resources And Accessible Resources Is An Error Of Law
THE BOARD'S DENIAL OF A.D'S MEDICAID ELIGIBILITY WAS IMPROPER SINCE THE BOARD FAILED TO FULFILL THEIR DUTY TO ASSIST IN THE APPLICATION PROCESS, ASSURE THE PROMPT AND ACCURATE SUBMISSION OF ELIGIBILITY DATA TO THE FILE, AND TURN SQUARE CORNERS
DMAHS INCORRECTLY DISREGARDED THE GUIDANCE ON THIS ISSUE PROVIDED BY THE SOCIAL SECURITY ADMINISTRATION'S (SSA) PROGRAM OPERATIONS MANUAL SYSTEM (POMS)
Appellant argues that the Board did not apply the Medicaid Resource Eligibility Standards properly. Appellant argues that Citibank prevented A.D. from accessing her Keogh accounts and therefore those assets were not accessible to her pursuant to N.J.A.C. 10:71-4.4(b)(6).
According to appellant, the accounts were not accessible to A.D. and should be excluded. N.J.A.C. 10:71-4.4(b)(6) excludes "[t]he value of resources which are not accessible to an individual through no fault of his or her own. Such resources include, but are not limited to, irrevocable trust funds, property in probate, and real property which cannot be sold because of the refusal of a co-owner to liquidate." "A resource that is classified as excludable is not considered in determining Medicaid eligibility." Estate of F.K. v. Div. of Med. Assistance & Health Servs., 374 N.J. Super. 126, 134 (App. Div.), certif. denied, 184 N.J. 209 (2005).
Appellant maintains that the Board failed to distinguish between an "available resource" and an "accessible resource." Appellant argues that when determining the second prong addressing accessibility, the Board should exclude any resources which "are not easily obtained." To support this proposition, she relies on I.L. v. N.J. Dep't of Human Servs., 389 N.J. Super. 354, 362 (App. Div. 2006).
I.L., an elderly woman who suffered from dementia and likely Alzheimer's disease, owned three life insurance policies and did not have a guardian to control her assets. I.L., supra, 389 N.J. Super. 354 at 356. Additionally, I.L.'s family refused to cooperate and abandoned her to the care of the nursing home. Id. at 358-60. The administrative law judge found that the policies were not accessible, but through no fault of I.L.'s. Id. at 363. The Director reversed, and on appeal, we found the agency's decision was "arbitrary and unreasonable, and contrary to the underlying purpose of the Medicaid program," because "[I.L.'s] relatives failed to move for authority to access the policies" and "no one else with authority to do so moved either to access the policies or to have a guardian appointed for I.L.'s person and property." Id. at 365-66. Although the policies belonged to I.L., she could not access them through no fault of her own and thus they were excluded. Ibid.
The New Jersey Medical Assistance and Health Services Act (Act), N.J.S.A. 30:4D-1 to -19.5, authorizes New Jersey's participation in the federal Medicaid program. The purposes of the Act are: to provide medical assistance, insofar as practicable, on behalf of persons whose resources are determined to be inadequate to enable them to secure quality medical care at their own expense, and to enable the State, within the limits of funds available for any fiscal year for such purposes, to obtain all benefits for medical assistance provided by the Federal Social Security Act. . . . [B]enefits provided hereunder shall be the last resource benefits notwithstanding any provisions contained in contracts, wills, agreements or other instruments. [N.J.S.A. 30:4D-2.]
The New Jersey regulations outlining eligibility for medical assistance are codified at N.J.A.C. 10:71-1.1 to -9.5. The guidelines were adopted by the New Jersey Department of Human Services, N.J.S.A. 30:4D-7a, and the Division of Medical Assistance and Health Services operates the New Jersey Medicaid program. N.J.A.C. 10:71-1.5. The local county board of social services determines benefit eligibility, and the board will either grant or deny the application. N.J.A.C. 10:71-1.
In New Jersey, for an applicant to be eligible for benefits his or her available resources cannot exceed $2000, N.J.A.C. 10:71-4.5(c). "[A] resource shall be defined as any real or personal property which is owned by the applicant . . . and which could be converted to cash to be used for his/her support and maintenance." N.J.A.C. 10:71-4.1(b). A resource is available to the applicant if her or she has "the right, authority, or power to liquidate" the property. N.J.A.C. 10:71- 4.1(c)(2). Unless it is excluded under N.J.A.C. 10:71-4.4, the resource will be included in the determination of the applicant's eligibility. N.J.A.C. 10:71-4.1(a)(1). Among ten exclusions, the regulations exclude resources "which are not accessible to an individual through no fault of his or her own." N.J.A.C. 10:71-4.4(b)(6). "Such resources include, but are not limited to, irrevocable trust funds, property in probate, and real property which cannot be sold because of the refusal of a co-owner to liquidate." Ibid.
An appellate court will not upset the ultimate determination of an agency unless the agency's action is arbitrary or unreasonable, or it violates legislative policies expressed or implied in the act governing the agency. Campbell v. Dep't of Civil Serv., 39 N.J. 556, 562; see also H.K. v. Div. of Med. Assistance, 379 N.J. Super. 321, 327 (App. Div. 2005). On appeal, the role of the reviewing court is limited to three inquiries:
(1) whether the agency action violates the enabling act's express or implied legislative policies; (2) whether there is substantial evidence in the record to support the findings upon which the agency based application of legislative policies; and (3) whether, in applying the legislative policies to the facts, the agency clearly erred by reaching a conclusion that could not reasonably have been made upon a showing of the relevant factors.
[Ibid. (quoting Public Serv. Elec. v. N.J. Dep't of Envtl. Prot., 101 N.J. 95, 103 (1985)).]
Although not binding, the appellate court should give "great weight" and "ordinarily . . . defer" to an administrative agency's "interpretation of its own enabling statute and of its own regulations," unless the appellate court finds them "plainly unreasonable" or "contrary to statutory authorization." Pressler & Verniero, Current N.J. Court Rules, comment 3.4.1 on R. 2:10-2 (2011).
We find that the agency incorrectly found that the Keogh accounts were accessible to A.D. As the administrative law judge found, Citibank prevented A.D. from accessing the accounts for over two years. Had Citibank properly processed A.D.'s original November 26, 2006, request to liquidate her Keogh accounts, she would have reduced her assets in time to be eligible for Medicaid on January 1, 2007.*fn6 The three-month delay caused by A.D.'s daughter is not relevant to this analysis because it occurred after Citibank began placing obstacles in the way of A.D.'s withdrawal of her own funds. As the administrative law judge found, Citibank had no valid reason for requiring a specialized form to withdraw funds. A.D.'s lawyer sent a general Citibank withdrawal form with a signed and notarized letter from A.D. explaining that she wished to withdraw all her funds.
Respondent acknowledges that the $20,000 ultimately retrieved by A.D. from her Keogh accounts was paid to Bergen Regional for her care. Medicaid was indisputably responsible for A.D.'s nursing home costs as soon as she became eligible by depleting her accounts. Citibank's lack of cooperation was beyond the control of A.D.
A.D. should have been deemed eligible for Medicaid on January 1, 2007. In light of our determination regarding the correct interpretation of accessibility, we need not consider whether the Board violated its duty to assist in the application process by failing to provide A.D. with her Keogh account numbers and information regarding the transfer of one account to Smith Barney.
Appellant also argues that we should consider the definition of liquid assets in the Social Security Administration's (SSA) Program Operations Manual System (POMS), to find that the Keogh accounts were inaccessible to A.D. For the purpose of Social Security eligibility, the POMS defines a liquid asset as one which can be converted to cash within twenty days. Even though this definition is not controlling as to Medicaid eligibility, it is indicative of the amount of time necessary for a financial institution to disburse funds from one of its client's accounts. The fact that Citibank did not respond within twenty days to A.D.'s request to liquidate the asset does not make the asset illiquid; rather, it demonstrates that Citibank's misconduct caused the funds to be inaccessible. Citibank should have been able to provide A.D. with her funds in time for her to qualify for Medicaid thirty-five days later on January 1, 2007.
We reverse and remand for further proceedings consistent with this opinion.