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I.M v. Division of Medical Assistance and Health Services and Warren County

June 3, 2011


On appeal from the Division of Medical Assistance and Health Services.

Per curiam.



Argued May 10, 2011

Before Judges Parrillo and Yannotti.

Appellant I.M. appeals from the September 24, 2009 final agency decision of the Division of Medical Assistance and Health Services (DMAHS) reversing the initial decision of the Administrative Law Judge (ALJ) and terminating appellant's Medicaid benefits unless she returns certain funds to the New Jersey Division of Developmental Disabilities (DDD) that she received on behalf of her mentally disabled grandson. For the reasons that follow, we reverse.

The essential facts are not in dispute. I.M. is a seventy-nine-year-old woman and sole caregiver for her twenty-one-year-old grandson, J.M., who is mentally disabled. She has been his primary caregiver since he was three years old. I.M.'s sole source of income is Social Security survivor benefits in the amount of $1468 per month. She has received benefits under the Medicaid Only program since 2005. J.M.'s sole sources of income are Social Security and Supplemental Security (SSI) disability benefits in the total amount of $705 per month, for which I.M. is designated as representative payee. J.M. is also a Medicaid recipient and a client of the DDD, a division within the New Jersey Department of Human Services.

In December 2007, DDD sent I.M. a grant of $2000 to be used to purchase items and services for the benefit of J.M. She spent $500 for J.M.'s special needs and, in February 2008, deposited the remainder into a new PNC Bank account ($1480 balance after $20 deduction for check printing fee), which she intended for use at a later date for J.M.'s needs. I.M. opened that account as a POD or "payable on death" account in the name of "I.M. POD to J.M."

During a standard recertification process, the Warren County Board of Social Services (WCBSS), which administers on a local basis the Medicaid Only program for which appellant had qualified, became aware of this new PNC account. When queried,

I.M. explained that the funds came from DDD and belonged to J.M. However, DMAHS - the statewide administrator of the Medicaid program - considered the $1480 to be I.M.'s countable resource, which, when combined with her other PNC account, exceeded the Medicaid resource limit of $2000. Consequently, in accordance with N.J.A.C. 10:71-4.5(c), DMAHS sent I.M. a benefits termination notice, dated January 21, 2009 and effective March 1, 2009.

I.M. requested a fair hearing and the matter was transferred to the Office of Administrative Law (OAL). In the meantime, on June 11, 2009, I.M., with the assistance of counsel from Legal Services of New Jersey, deposited the $1480 in a new PNC Bank account in J.M.'s name and social security number, with I.M. designated as the representative payee.

At the OAL hearing, Carol Gross, a representative of WCBSS, testified that in February 2009, Lani Hoever, J.M.'s case manager at DDD, advised her that I.M. was to use the DDD money for the benefit of J.M. and return any unused portion to DDD. However, Gross also admitted that she received a letter from Hoever in May 2009 stating that I.M. could continue to hold the $1480 as long as she uses it exclusively for J.M.'s benefit. Despite the apparent contradiction, Gross never called Hoever for clarification. However, Mary Giorlando, Hoever's supervisor at DDD, submitted a sworn statement that I.M. has been an "exemplary caretaker" to her grandson and confirmed that DDD approved of I.M. holding the $1480 in a bank account as long as the funds are used for J.M.'s benefit.

After the close of evidence, the ALJ issued an Initial Decision, concluding that the new PNC account "is not a countable resource that would cause [I.M.] to forfeit her Medicaid eligibility" and that "the remainder of the DDD grant is not owned by [I.M.] and is not legally accessible to her because she serves only in a representative capacity for her disabled grandson." Accordingly, since I.M. was below the $2000 resource eligibility limit, the ALJ concluded that the termination of her Medicaid benefits was improper.

Following the filing of exceptions to the ALJ's Initial Decision, DMAHS concluded otherwise, namely that, as presently titled, the PNC bank account at issue is an available resource and, as such, I.M. would only be able to maintain her Medicaid eligibility if ...

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