April 28, 2011
DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES, NEW JERSEY DEPARTMENT OF HUMAN SERVICES, RESPONDENT-RESPONDENT.
On appeal from a Final Agency Decision of the Director of the Division of Medical Assistance and Health Services, New Jersey Department of Human Services.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted March 29, 2011
Before Judges Yannotti and Espinosa.
S.S. appeals from a final determination of the Director of the Division of Medical Assistance and Health Services (Division), who found that S.S. was eligible for Medicaid benefits as of March 1, 2009, and the penalty period resulting from her transfer of certain assets for less than their fair market value ran from that date. We affirm.
The relevant facts are not in dispute. S.S. is an elderly person. As of November 2007, S.S. was residing in a nursing home. She became medically eligible for Medicaid Only benefits on January 28, 2008. S.S. claimed that she became financially eligible for such benefits as of September 1, 2008, when her assets purportedly fell below the maximum resource level permitted under the applicable regulations.
It appears, however, that sometime after February 2006 but before September 2008, S.S. transferred $76,570.40 of her monies to her son. From those funds, S.S.'s son used $42,909.75 to pay for S.S.'s care in the nursing home in the period from September 1, 2008, through February 28, 2009. The balance of the transferred funds, $33,660.65, had not been accounted for. Accordingly, the Division was required to impose a 147-day period of ineligibility because S.S. had transferred the $33,660.65 for less than fair market value.
The Division determined that S.S. was medically and financially eligible for Medicaid Only benefits as of March 1, 2009, and the transfer penalty period ran from that date. S.S. filed an administrative appeal challenging that determination, and the matter was referred to the Office of Administrative Law for a hearing before an administrative law judge (ALJ).
The ALJ issued an initial decision dated April 14, 2010, in which she stated that, under the applicable federal law governing the Medicaid program, a penalty for transferring assets for less than their fair market value does not begin to run when the applicant is only financially eligible or only medically eligible. The ALJ wrote that the transfer penalty begins to run "when the applicant meets all of the requirements for Medicaid eligibility[.]"
The ALJ found that, in this case, S.S. was medically eligible for Medicaid benefits as of January 28, 2008, but she was not financially eligible as of September 1, 2008, as she claimed. The ALJ noted that, although it appeared that S.S.'s resources did not exceed the eligibility limits established by N.J.A.C. 10:71-4.5(a) as of September 1, 2008, this was because she had transferred her monies to her son for less than their fair market value, thereby creating a "false financial eligibility[.]"
The ALJ rejected S.S.'s argument that the transfer penalty period should run from September 1, 2008. The ALJ wrote that S.S. was seeking: to have the penalty period of 147 days run concurrently with the period of time when a portion of the transferred funds was being used to pay for her nursing home care, in which case [S.S.] would suffer no financial detriment by virtue of the assets being transferred for less than fair market value, i.e., while the penalty was running, her son would pay the nursing home bills, and then when the penalty expired, the son would cease paying the nursing home bills, and the [Medicaid program] would presumably assume responsibility for [S.S.'s] care. Any funds transferred but not used for nursing home care would thus be protected from being used for [S.S.'s] benefit and would remain divested from her.
The ALJ concluded that such a result would be inconsistent with the statutes and regulations governing the State's Medicaid program. The ALJ stated that Medicaid cannot provide benefits for those who have the resources to provide for their own care but who intentionally impoverish themselves in order to preserve their assets, and thereby become a public charge. [S.S.] attempted to do just that, expecting that her failure to pay a nursing home bill until [October 2008] would establish financial eligibility, thereby entitling her to the immediate imposition of the transfer penalty, and the ability to protect other transferred resources.
The Director issued his final decision in the matter on July 15, 2010. The Director adopted the ALJ's findings of fact and conclusions of law. The Director added, however, that there was no doubt S.S. had impoverished herself as of September 1, 2008, by giving $76,570.40 to her son, with the apparent understanding that he would pay for her nursing home care with some of those funds, after which Medicaid would assume responsibility for the cost of her care.
The Director observed that the transfer created a "false financial eligibility," as the ALJ found. The Director concluded that S.S. did not become financially eligible for Medicaid benefits until March 1, 2009, and the 147-day transfer penalty period, which was calculated based on the $33,660.65 that S.S. had transferred to her son and remained unaccounted for, would begin to run as of that date. This appeal followed.
S.S. argues that the Director erred by finding that the transfer penalty period began to run on March 1, 2009. She contends that the penalty period begins when the applicant is eligible for medical assistance under the State's Medicaid plan, which she claims occurred on September 1, 2008. We disagree.
Medicaid is a federal-state program that was created to provide medical assistance to the poor at public expense. Mistrick v. Div. of Med. Assistance & Health Servs., 154 N.J. 158, 165 (1998). The Federal Government provides financial assistance to states that elect to participate in the program.
Id. at 165-66. Participating states must adopt medical assistance plans that meet the federal Medicaid requirements. Harris v. McRae, 448 U.S. 297, 301, 100 S. Ct. 2671, 2680, 65 L. Ed. 2d 784, 794 (1980). New Jersey has elected to participate in the program pursuant to the Medical Assistance and Health Services Act, N.J.S.A. 30:4D-1 to -42.
Medicaid funding is limited and benefits are only extended to those individuals whose income and non-exempt assets fall below certain specified resource levels. Among other things, federal law requires participating states to determine if an applicant for Medicaid made any transfer of resources for less than fair market value within a specified period. See 42 U.S.C.A. § 1396p(c)(1)(B)(i) (establishing a sixty-month look back period for transfers made after February 8, 2006).
If an applicant has made such a transfer, the applicant is precluded from receiving Medicaid benefits during the prescribed transfer penalty period. 42 U.S.C.A. § 1396p(c)(1)(A). The statute provides the penalty period begins "on the date specified" in 42 U.S.C.A. § 1396p(c)(1)(D), which is: the first day of a month during or after which assets have been transferred for less than fair market value, or the date on which the individual is eligible for medical assistance under the State plan and would otherwise be receiving institutional level care . . . based on an approved application for such care but for the application of the penalty period, whichever is later, and which does not occur during any other period of ineligibility under this subsection.
[42 U.S.C.A. § 1396p(c)(1)(D)(ii).]
Here, the record shows that S.S. transferred $76,570.40 of her assets to her son, and her son applied $42,909.75 of that amount towards the cost of S.S.'s institutional care from September 2008 through February 2009. Although S.S. was medically eligible for Medicaid benefits as of September 1, 2008, she was not financially eligible on September 1, 2008. Although her resources purportedly fell below the level required to establish Medicaid eligibility on that date, this was a "false eligibility" created by the transfer of assets for less than their fair market value. Thus, the Director correctly found that S.S. became financially eligible for Medical benefits as of March 1, 2009, and the transfer penalty period ran from that date.
S.S. argues, however, that she should be deemed eligible for Medicaid benefits as of September 1, 2008, and the transfer penalty period should run from that date. Under this interpretation of the facts, S.S.'s transfer penalty period would run from September 1, 2008, even though S.S.'s son was in possession of her $76,570.40, which he used in part to pay for her care from September 1, 2008, through February 28, 2009.
According to S.S., Medicaid should have assumed responsibility for her nursing care after the transfer penalty period, which would run from September 1, 2008.
The ALJ and Director correctly found, however, that this result would be contrary to the federal law governing the State's Medicaid program because S.S. was not genuinely eligible for Medicaid on September 1, 2008. Her "eligibility" on that date was a "false eligibility" since it was created by the transfer of assets for less than fair market value. Moreover, if accepted, S.S.'s argument would improperly permit her to protect some of the $76,570.40 that she had transferred to her son.
We have considered S.S.'s other contentions and find them to be of insufficient merit to warrant discussion in this opinion. R. 2:11-3(e)(1)(E).
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