October 22, 2013
DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES AND BERGEN COUNTY BOARD OF SOCIAL SERVICES, Respondents-Respondents.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted October 9, 2013
On appeal from the Department of Human Services, Division of Medical Assistance and Health Services.
Law Office of Sharon Rivenson Mark, P.C., attorneys for appellant (Ms. Mark and Rahat A. Chatha, on the brief).
John J. Hoffman, Acting Attorney General, attorney for respondent (Melissa H. Raksa, Assistant Attorney General, of counsel; Molly Moynihan, Deputy Attorney General, on the brief).
Before Judges Simonelli and Haas.
Petitioner R.P. appeals from the July 7, 2012 final agency decision of respondent Division of Medical Assistance and Health Services (DMAHS), which denied his request for an undue hardship waiver for the period of ineligibility for Medicaid benefits imposed due to an asset transfer. We affirm.
In August 2006, R.P., then eighty years old, was placed into a private nursing home. R.P. gave his son, James, a power of attorney. In March 2007, James sold R.P.'s home, netting approximately $150, 000. Between April 2006 and November 2008, James transferred $182, 354.06 from R.P.'s bank account to his own bank account and stopped paying for the nursing home. As a result, R.P. was evicted and placed into a public nursing home.
In June 2009, R.P. was diagnosed with Dementia, Alzheimer's type. In August 2009, the court declared him incapacitated and incapable of governing himself and managing his affairs, and appointed a guardian from the Officer of the Public Guardian for Elderly Adults (OPG). In September 2010, the OPG filed a complaint on R.P.'s behalf against James to recoup R.P.'s money.
The OPG also submitted three applications to the Bergen County Board of Social Services (Board) for Medicaid benefits for R.P. The Board denied the first application for lack of verification of financial documentation. R.P. did not appeal. The Board denied the second application pursuant to N.J.A.C. 10:71-4.7(h) based on a transfer of R.P.'s resources in the amount of $182, 354.06. R.P. did not appeal; rather, he requested an undue hardship waiver of the transfer penalty period. Following a hearing before the Office of Administrative Law (OAL), an Administrative Law Judge (ALJ) determined that R.P. had not satisfied both prongs of the undue hardship waiver test under N.J.A.C. 10:71-4.10(q). The Director of DMAHS adopted the ALJ's initial decision. R.P. did not appeal this decision.
R.P.'s third application is the subject of the present appeal. The Board determined that R.P. was eligible for Medicaid benefits as of December 1, 2010, but imposed a transfer penalty period of ineligibility pursuant to N.J.A.C. 10:71-4.7of seventeen months and five days,  based on a transfer of assets to James in the amount of $123, 183.34 between April 2006 and November 2008.
Plaintiff requested a fair hearing before the OAL on the denial of his request for an undue hardship waiver. Prior to the hearing, on July 15, 2011, a Law Division judge entered an order requiring James to provide an accounting of R.P.'s assets. Thereafter, James began making restitution payments of $750 per month directly to the nursing home. On January 27, 2012, the court entered a final judgment by default against James in the amount of $93, 120.01 after crediting him $29, 913.33 for monies he spent to care for plaintiff from 2005 to 2009.
R.P. presented no evidence at the OAL hearing to support the undue hardship waiver. Instead, relying on N.J.A.C. 10:71-4.4(b)(6), he argued that the $123, 183.34 should be considered an inaccessible resource because James stole the money and he made a good faith effort to recover it. In a March 16, 2012 initial decision, the ALJ found that $93, 120.01, not $123, 183.34, should be considered a countable resource for R.P.'s Medicaid eligibility. Without making any findings that R.P. had satisfied the requirements for an undue hardship waiver, the ALJ concluded that no transfer penalty period should be applied.
The DMAHS Director reversed the ALJ, finding that the prior adjudication of the R.P.'s request for an undue hardship waiver precluded further review. Addressing the merits, the Director found that R.P. failed to establish the first prong of the undue hardship waiver test.
The Director also determined that R.P.'s countable resources should not be offset by $29, 913.33 for R.P.'s care from 2005 to 2009 because this time period preceded the transfer period of April 2006. The Director also found that N.J.A.C. 10:71-4.10(b)(6)(ii) precluded an offset for care and services provided to an applicant because they are presumed to have been intended to be delivered for free. The Director concluded there could be no adjustment to the penalty period absent actual receipts and documentation regarding plaintiff's expenses that were contemporaneous to the transfers. This appeal followed.
On appeal, R.P. contends that DMAHS erred in denying Medicaid benefits and imposing a penalty period for resources that were inaccessible and unavailable to him. R.P. also contends he met the criteria for an undue hardship waiver. We disagree with both contentions.
Our review of an agency decision is limited. In re Anthony Stallworth, 208 N.J. 182, 194 (2011). "In order to reverse an agency's judgment, [we] must find the agency's decision to be 'arbitrary, capricious, or unreasonable, or [ ] not supported by substantial credible evidence in the record as a whole.'" Ibid. (second alteration in original) (quoting Henry v. Rahway State Prison, 81 N.J. 571, 580 (1980)). In determining whether agency action is arbitrary, capricious, or unreasonable, our role is restricted 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 the 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.
[W.T. v. Div. Med. Assistance & Health Servs., 391 N.J.Super. 25, 35-36 (App. Div. 2007).]
Furthermore, "[i]t is settled that '[a]n administrative agency's interpretation of statutes and regulations within its implementing and enforcing responsibility is ordinarily entitled to our deference.'" E.S v. Div. of Med. Assistance & Health Servs., 412 N.J.Super. 340, 355 (App. Div. 2010) (second alteration in original) (quoting Wnuck v. N.J. Div. of Motor Vehicles, 337 N.J.Super. 52, 56 (App. Div. 2001)). "Nevertheless, 'we are not bound by the agency's legal opinions.'" A.B. v. Div. of Med. Assistance & Health Servs., 407 N.J.Super. 330, 340 (App. Div.) (quoting Levine v. State Dep't of Transp., 338 N.J.Super. 28, 32 (App. Div. 2001)), certif. denied, 200 N.J. 210 (2009). "Statutory and regulatory construction is a purely legal issue subject to our de novo review." Ibid. (citation omitted).
Pursuant to N.J.A.C. 10:71-4.7, which was the applicable regulation at the time of R.P.'s third Medicaid application, an individual was ineligible for institutional level services through the Medicaid program if he or she disposed of resources for less than fair market value at any time during or after the thirty-six month "look-back" period. N.J.A.C. 10:71-4.7(a). If the applicant, his or her spouse, or "any person acting with power of attorney" transferred a resource within thirty months preceding the date of the application, the transfer was reviewed by ascertaining the resource's fair market value (FMV) and determining whether any uncompensated value existed. N.J.A.C. 10:71-4.7(c). The uncompensated value is the difference between the resource's FMV and the compensation the applicant received for the transfer. N.J.A.C. 10:71-4.7(b)(2); see also N.J.A.C. 10:71-4.10(b)(7).
The applicant's eligibility for institutional level services would be denied where the uncompensated value of the transferred resource, combined with other countable resources, exceeded the resource limit for Medicaid eligibility. N.J.A.C. 10:71-4.7(h); see also N.J.A.C. 10:71-4.10(i). In that event, a transfer penalty period must be imposed. Ibid.; see also N.J.A.C. 10:71-4.10(i). The transfer of resources rule applied regardless of "whether or not the resource would have been considered an excluded resource at the time of its disposal or transfer." N.J.A.C. 10:71-4.7(d); see also N.J.A.C. 10:71-4.10(d). Although there are exceptions to the rule, none applied in this case. See N.J.A.C. 10:71-4.7(d)-(e); see also N.J.A.C. 10:71-4.10(d)-(e).
It is presumed a transfer of resources for less than FMV was done for the purpose of establishing Medicaid eligibility. N.J.A.C. 10:71-4.7(i); see also N.J.A.C. 10:71-4.10(j). An applicant may rebut this presumption by presenting "convincing evidence that the resource was transferred exclusively (that is, solely) for some other purpose." Ibid.
Here, the Board properly evaluated the transfer of R.P.'s assets pursuant to N.J.A.C. 10:71-4.7, and properly assessed the transfer penalty. James acted with a power of attorney to sell R.P.'s home and thereafter transferred the sale proceeds to himself during the look-back period. It is presumed that James transferred R.P.'s assets in order to establish R.P.'s Medicaid eligibility. R.P. presented no evidence to rebut this presumption.
To obtain an undue hardship waiver of the penalty period, R.P. had to establish each of the following factors:
The application of the transfer of assets provisions would deprive the applicant/beneficiary of medical care such that his or her health or his or her life would be endangered. Undue hardship may also exist when application of the transfer of assets provisions would deprive the individual of food, clothing, shelter, or other necessities of life; and
The applicant/beneficiary can irrefutably demonstrate the transferred assets are beyond his or her control and that the assets cannot be recovered. The applicant/beneficiary shall demonstrate that he or she made good faith efforts, including exhaustion of remedies available at law or in equity, to recover the assets transferred.
R.P. failed to satisfy the first factor; he produced no evidence at the OAL hearing that he was deprived of medical care such that his health or life was endangered or that he was deprived of food, clothing, shelter, or other necessities of life. See N.J.A.C. 10:71-4.10(q). We reject his attempt to satisfy this factor for the first time on appeal.
In addition, R.P. cannot satisfy the second factor. The record reveals that James began making restitution payments of $750 per month, there is no evidence he ceased making the payments, and the assets are also recoverable pursuant to the final default judgment entered against James.