My law firm recently was successful on appeal in overturning the denial of Medicaid eligibility for an incapacitated client residing in a nursing home. In R.C. v. Division or Medical Assistance and Health Services and Hudson County Board of Social Services, OAK DKT. NO. HMA 08047 – 10 (Hudson County, October 22, 2010), R.C., through his wife and guardian P.C., applied for nursing home Medicaid benefits in 2010. The state Medicaid agency denied R.C.’s application for Medicaid benefits because R.C. and P.C. transferred $100,000 to their daughter and son-in-law in 2008 in violation of N.J.A.C. 10:71-4.7, which provides, in part, as follows:

An individual shall be ineligible for institutional level services through the Medicaid program if he or she (or his or her spouse) has disposed of resources at less than fair market value at any time during or after the [60] month period immediately before … the date that the individual applies for Medicaid as an institutionalized individual. [The disposition of resources for less than fair market value shall result in the imposition of a penalty period.] The penalty period is the period of ineligibility for Medicaid coverage for institutional level care established for an individual as a result of the transfer of a resource for less than fair market value.

After the Medicaid agency denied his claim for nursing home Medicaid benefits, R.C. appealed. A hearing was held. After the hearing, the administrative law judge (ALJ) found that, in August 2008, R.C. and P.C. refinanced their marital home and gifted $100,000 to their daughter and son-in-law, who were then experiencing financial problems. When the applicant and his spouse provided funds to their daughter and son-in-law, R.C. “was living at home, was well and employed.” Over one year later, in November 2009, the applicant had a stroke. In February 2010, his health declined. He then contracted pneumonia in March 2010, was hospitalized and then admitted to a nursing home. He filed an application for nursing home Medicaid benefits on June 30, 2010 and, on the same day, the application was denied based upon the $100,000 gift.

The ALJ found that, in the usual case, a gift of $100,000 would make an applicant ineligible for Medicaid benefits. In this case, however, the ALJ found that R.C. and P.C. had proven by convincing evidence that the gift was make solely and exclusively for some purpose other than establishing Medicaid eligibility. That is, the applicant proved that he was employed and in good health when the gift occurred, and that the disabling stroke was an unanticipated event that occurred long after the gift was made. As a result, the ALJ found that the applicant had met his burden of proof and was eligible for Medicaid benefits under N.J.A.C. 10:71-4.7(i) and (j), which provide, in part, as follows:

(i) Rebuttal of presumption that the resource was transferred to establish eligibility: All applicants or beneficiaries may rebut the presumption that a resource was transferred to establish Medicaid eligibility. If the individual wishes to rebut such presumption, explain that it will be his or her responsibility to present convincing evidence that the resource was transferred exclusively (that is, solely) for some other purpose. The applicant should be assisted in obtaining information when necessary. However, the burden of proof rests with the applicant. …

*     *     *

(j) Factors which may indicate that the transfer was for some other purpose: The presence of one or more of the following factors, while not conclusive, may indicate that resources were transferred exclusively for some purpose other than establishing Medicaid eligibility.

1. The occurrence after transfer of the resource of:
i. Traumatic onset of disability; …

The case is annexed here – R.C. v. Division or Medical Assistance and Health Services and Hudson County Board of Social Services

UPDATED ON DECEMBER 17, 2010: Valerie J. Harr, the Acting Director of the Division of Medical Assistance and Health Services entered an Order of Remand on December 2, 2010. The Acting Director reversed the ALJ’s Initial Decision, finding that the “Petitioner has not presented a residuum of competent evidence to rebut the presumption that this transfer was done for Medicaid purposes …” As a result, the Acting Director “remanded [this matter] to the Office of Administrative Law so as to permit Petitioner the opportunity to present competent evidence to support his reasons for the $1 00,000 transfer.” Thus, we will be presenting the case to the ALJ again in the near future.