Although the petitioner in this case, A.G., succeeded in obtaining Medicaid benefits after filing a complaint in federal court (which I’ve blogged about in the past here, here and here), the State of New Jersey recently denied benefits back to the date of the original application after an administrative appeal was filed in the state agency. A.G. v. Division of Medical Assistance and Health Services and the Bergen County Board of Social Services, OAL Docket No. HMA 1057-12 and OAL Docket No. HMA 5499-13 (Final Agency Decision, April 25, 2014)

A.G. is the widow of a World War II veteran. In 2011, A.G., suffering from ill health, applied for pension benefits from the Department of Veterans Affairs (“VA”) based on her deceased husband’s service record. Eligibility for VA pension benefits is based upon medical and financial criteria. The VA determined that A.G. was medically eligible and “in need of assistance of another person in performing routine activities of daily living.” The VA also determined that petitioner was financially eligible. Petitioner had total yearly income of $18,926.00, and unreimbursed medical expenses (“UMEs”) of $43,039.00 each year, representing the costs of “Medicare premiums, private medical insurance, and caregiver fees,” which reduced her countable income to $0.00. As a result, the VA awarded petitioner $1,094.00, the maximum monthly VA benefit available to the widow of a veteran at that time.

In May 2012, petitioner applied for Medicaid benefits. During the application process, the Medicaid agency asked petitioner to obtain a letter from the VA identifying the amount of the monthly VA benefit categorized as “Pension” and the amount categorized as “Aid and Attendance.” Petitioner complied, and the VA issued a letter confirming A.G.’s total monthly VA benefit as $1,094.00, with $684.00 categorized as “Pension” and $410.00 as “Aid and Attendance.” Based on the VA’s letter, the Medicaid agency counted the pension amount of $684.00 as income in determining eligibility for Medicaid.

Petitioner’s application for Medicaid was denied. By including the $684.00 VA “Pension” as countable income, the Medicaid agency found that petitioner’s total countable income exceeded the $2,094.00 income limit for the Global Options for Long Term Care (“Global Options”) Medicaid program. Petitioner filed an administrative appeal, and the matter was transmitted to the Office of Administrative Law (“OAL”).

In the months following Medicaid’s denial, counsel for petitioner contacted the VA regarding the proper allocation of petitioner’s VA pension benefit. Thereafter, the VA issued an undated letter classifying the entire benefit amount as “Aid and Attendance.” Despite providing this additional VA letter, however, Medicaid refused to grant eligibility.

On January 28, 2013, petitioner filed a federal class action lawsuit against the State of New Jersey. The class action complaint alleged that New Jersey Medicaid improperly denies Medicaid benefits to eligible applicants based upon an inflated and faulty determination of income, by counting as income veterans’ benefits that are specifically earmarked for medical expenses and thus, under federal Medicaid regulations, do not constitute “income.”

After filing the federal class action lawsuit, petitioner’s counsel continued to contact the VA in order to obtain a dated letter. Thereafter, petitioner received a letter from the VA dated February 14, 2013, which classified the entire VA benefit awarded to petitioner as “Aid and Attendance.”

The State of New Jersey responded to the federal lawsuit by granting Medicaid eligibility. Petitioner received a notice from Medicaid concluding that petitioner was eligible for Global Options as of March 13, 2013. However, Medicaid continued to deny benefits for the ten (10) month period between petitioner’s May 2012 application and the March 2013 award.

The State of New Jersey, defendant in the federal class action lawsuit, filed a motion in federal court to dismiss the federal lawsuit, claiming that the March 13, 2013 eligibility determination rendered the federal lawsuit moot. The motion was denied.

The parties filed cross-motions for summary judgment in the OAL in July and August 2013. In opposition to A.G.’s motion, the State of New Jersey cited a New Jersey regulation barring retroactive eligibility for the Global Options program as an excuse for continuing to deny petitioner the Medicaid benefits for which she applied, and was clearly eligible, as of the date of petitioner’s application. The administrative judge ruled in favor of petitioner, however, holding as follows:

Although respondents correctly cite N.J.A.C. 10:49-22.1(b) as proscribing retroactive Medicaid eligibility, this tribunal does not consider any relief awarded to petitioner to be retroactive. Rather, it is the natural consequence of affording a party due-process review of a contested agency decision.

As a result, the administrative law judge concluded that the petitioner’s entire VA benefit was not countable income for Medicaid purposes, and that petitioner was entitled to Medicaid as of May 2012, the date of her original application.

The administrative judge’s decision was reviewed by the Director of the State Medicaid agency, who reversed the initial decision. The Director based her decision on the State regulation prohibiting retroactive Medicaid eligibility, as follows:

Petitioner needed to meet clinical eligibility for [Global Options] waiver programs is set by federal rules. Those rules require an evaluation of need as well as counseling regarding alternatives including the choice of receiving services in a nursing facility or community setting be done prior to entry into the waiver. … Clinical eligibility for [Global Options] waiver services requires that an individual must be assessed by the State and meet nursing facility level of care. … Clinical eligibility is established in real time through an assessment of medical conditions. Additionally, prior to furnishing services under the waiver, there must be a “written plan of care based on an assessment of the individual’s health and welfare need and developed by qualified individuals for each recipient under the waiver.” … In this case, Petitioner’s eligibility is governed by those rules and her eligibility for [Global Options] can only exist after these prerequisites are met. [Citations Omitted]

The Director did not explain how to reconcile her decision with the State’s failure to properly assess A.G.’s financial eligibility, a failure which was the sole reason the clinical assessment of A.G. was not performed. The Director also did not explain how she could fairly interpret an initial decision awarding benefits from the date of the original application as the equivalent of awarding “retroactive benefits.” Despite these omissions, the Director’s flawed decision again prevented another eligible Medicaid applicant, in this case the widow of a wartime veteran, from obtaining the benefits to which she was rightfully entitled.

The decision of the administrative law judge in favor of the petitioner is annexed here – Initial Agency Decision

The decision of the Director of the State’s Medicaid agency reversing the ALJ’s decision is annexed here – Final Agency Decision

For additional information concerning VA compensation and pension benefits, visit: