In a recent opinion, Hon. Robert B. Kugler, United States District Judge for the District of New Jersey, denied a motion filed by the State of New Jersey seeking the dismissal of a pending class action lawsuit which my co-counsel, Alan Sklarsky, Esq., and I filed in federal court seeking an injunction barring the State from considering the pension benefits paid by the Department of Veterans Affairs (VA) as countable income in determining an applicant’s eligibility for Medicaid. As a result, the case will proceed and the Court ultimately will decide the case on the merits. Galletta v. Velez , et al., Civil No. 13-532 (November 12, 2013)

My client, the plaintiff in this case, is the widow of a World War II veteran. She applied for benefits through NJ’s “Global Options for Long Term Care” program (Global Options), a program funded by Medicaid that covers care provided at home and in an assisted living facility. In order to be approved for the Global Options program, an applicant must prove she has income and resources below certain maximum levels.

Plaintiff’s income included benefits paid to her through the Veterans Administration Improved Pension (VAIP) program as a result of her late husband’s military service. As part of the application, plaintiff submitted a letter from the VA indicating that, of the $1,094.00 plaintiff received every month at that time in VAIP, $684.00 was designated by the VA as “pension” and $410.00 was designated as “aid and attendance. The Medicaid agency included the $684.00 designated as “pension” as countable income for Medicaid eligibility purposes, and excluded the $410.00 designated as “aid and attendance.” As a result, plaintiff’s application was denied because her income exceeded the maximum income permitted under the Global Options program. Had the portion of the VAIP designated as “pension” not been included in her countable income, plaintiff would have been eligible for Global Options.

Plaintiff contended that the entire VAIP benefit she received resulted from unreimbursed medical expenses, and therefore none of it should have been included as countable income in determining Medicaid eligibility. In January 2013, plaintiff filed a class action complaint against defendants, Jennifer Velez, Commissioner of the New Jersey Department of Human Services, and Valerie Harr, Director of the New Jersey Division of Medical Assistance and Health Services, in federal court, seeking an injunction to prevent defendants from treating VAIP benefits as income for Medicaid eligibility purposes, a re-determination of eligibility, an order granting such eligibility on a retroactive basis to class members who would have been eligible for benefits had VAIP payments not been treated as income, and attorneys’ fees and costs.

In February 2013, after filing her complaint, plaintiff submitted another letter to Medicaid from the VA indicating, contrary to the prior letter issued by the agency, that the entire amount of VAIP benefits, then totaling $1,113.00 per month, constituted “aid and attendance.” Based upon the letter, Medicaid determined that none of the VAIP benefits were countable, and that plaintiff was thus eligible for the Global Options program. Defendants then moved to dismiss the complaint as moot, arguing that plaintiff received all the benefits to which she was entitled. In opposition, plaintiff countered that her claims were not moot because she was not granted all of the relief she sought in her complaint, although Medicaid eligibility was granted.

The Court denied the State’s motion to dismiss. The Court held that the lawsuit was not moot because the State’s policy of counting VA pension in determining Medicaid eligibility had not changed, although it may be wrong as alleged by plaintiff. As a result, plaintiff might be wrongfully denied Medicaid benefits in the future after an annual eligibility review if at that time the VA issues another letter again classifying plaintiff’s VAIP as consisting of a “pension” portion.

Interestingly, the Court also narrowed the issue to be decided on the merits as follows:

Under federal [Medicaid] regulations, payments “from the Department of Veterans Affairs resulting from unusual medical expenses” may not be considered for eligibility purposes. 20 C.F.R. § 416.1103(a)(7). “Unusual medical expenses,” (“UMEs”) in turn, means unreimbursed expenditures exceeding five percent of a person’s annual income. 38 C.F.R. § 3.262(l). The issue, then, appears to be one of [statutory] interpretation …, and whether Plaintiff’s entire VAIP award—not only the aid and attendance portion—“result[ed] from unusual medical expenses.”

The case now proceeds to discovery and ultimately trial.

Judge Kugler’s opinion is annexed here – Galletta v. Velez – Opinion Denying NJ’s Motion to Dismiss

UPDATED ON DECEMBER 11, 2013 – The State of New Jersey filed a motion asking the Court to reconsider the decision summarized above denying its motion to dismiss plaintiff’s case. In sum, the State argued that the case is now moot and should be dismissed because, according to the State, plaintiff’s VA benefits will terminate since she is now eligible for Medicaid and will have no further care costs. Allegedly, Medicaid is paying the costs of all care received by plaintiff. My co-counsel and I will be filing opposition to the motion for reconsideration this month. The papers submitted by the State of New Jersey in support of its motion for reconsideration are annexed here – Motion for Reconsideration by State of New Jersey

UPDATED ON JANUARY 1, 2014:  Plaintiff filed a brief and certification in opposition to the State of New Jersey’s motion for reconsideration of the Court’s recent decision denying the State’s motion to dismiss plaintiff’s lawsuit.  The plaintiff’s opposition brief and certification are annexed here – Brief and Certification in Opposition to NJ’s Motion for Reconsideration

UPDATED ON FEBRUARY 19, 2014: U.S. District Judge Robert B. Kugler filed an Order and Opinion denying the State of New Jersey’s motion for reconsideration of the Order denying the State’s motion to dismiss plaintiff’s lawsuit.

The Court’s Order denying the reconsideration motion is annexed here – Order denying State’s motion for reconsideration

The Court’s Opinion denying the reconsideration motion is annexed here – Opinion denying State’s motion for reconsideration

UPDATED ON FEBRUARY 19, 2014: U.S. Magistrate Judge Ann Marie Donio entered an Order granting plaintiff’s motion for leave to file an amended complaint to add additional plaintiffs as class members. The Order is annexed here – Order Granting Plaintiff’s Motion to Amend Complaint

UPDATED ON FEBRUARY 24, 2014: Plaintiff filed her First Amended Complaint adding party plaintiffs. The Complaint is annexed here –  Galletta First Amended Complaint