P.P. had been his mother’s legal guardian, and he was executor of her estate. After her death, Medicaid asserted a statutory lien against her estate in the amount of $132,755, representing the amount of correctly paid medical assistance that had been paid on her behalf.

P.P. requested a waiver or compromise of the lien based on undue hardship. He asserted that his mother’s single-family home was her only asset; that he had provided funds, in the form of personal loans, during her final years to maintain the house and prevent foreclosure; and that he was unaware that DMAHS would request reimbursement for medical assistance provided to his mother.

P.P.’s request was denied by DMAHS. The Office of Administrative Law granted Medicaid’s motion for summary decision upholding the lien. On appeal, the Appellate Division affirmed.

The appeals court noted that federal and state statutes require DMAHS to recover against an individual’s estate for medical assistance benefits correctly paid. By regulation, estate liens to recover the cost of those benefits are imposed “where the deceased recipient leaves no surviving spouse, children under the age of twenty-one, or children who are blind or permanently and totally disabled.” N.J.A.C. 10:49-14.1(a). In this case, the lien was properly imposed.

DMAHS may waive or compromise an estate lien where enforcement of the lien would impose “undue hardship.” However, according to New Jersey regulation, undue hardship “can be demonstrated only if the estate subject to recover is or would become the sole income-producing asset of the survivors, and pursuit of recovery is likely to result in one or more of those survivors becoming eligible for public assistance and/or Medicaid benefits.”

Here, no such demonstration of undue hardship was made. The property in issue was not P.P.’s “sole income-producing asset”; instead, it was a single family home. Moreover, no evidence was presented that enforcing the lien would cause P.P. or one of his siblings to become eligible for public assistance.

P.P. also argued that his mother’s adult daycare facility misrepresented the Medicaid plan by telling him that the family would not be billed for their services. The court rejected this claim because P.P. failed to present evidence from the individual who allegedly made this statement. It also found that P.P. had signed the Medicaid application and other documents explicitly acknowledging that DMAHS could be reimbursed for correctly paid benefits. Although P.P. argued that, at the time of the signing, verbal information was provided that contradicted this information, the court found that he failed to supply evidence of these statements.

P.P. claimed that DMAHS had erroneously failed to consider the caregiver child exemption, because he had lived with and took care of his mother before her death. The court rejected this claim because the caregiver exemption is relevant only to transfer penalties, not to estate liens, and P.P.’s mother did not transfer the property to him during her lifetime.

Finally, P.P. asserted that the personal loans he made to maintain the property and prevent foreclosure should have been considered. The court acknowledged his efforts, but found that these factors did not establish undue hardship for purposes of a waiver or compromise of the estate lien.

A copy of Estate of L.P. v. DMAHS can be found here – Estate of L.P. v DMAHS

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