In what may be considered a victory of judicial deference over equity, this week our Appellate Division affirmed Medicaid’s denial of eligibility to an incapacitated applicant, based on the applicant’s ownership of assets that she was not aware she owned.

In W.B. v. Division of Medical Assistance and Health Services (“DMAHS”), No. A-5658-07T1 (N.J. App. Div. Feb. 24, 2010), the applicant was a mentally incapacitated person residing in a nursing home. Her adult son was the agent under her power of attorney.

In July 2006, her son applied for Medicaid on W.B.’s behalf. After being denied for excess resources, the son reapplied for Medicaid in November 2006, apparently seeking a December 1, 2006 eligibility date.

In April 2007, while the application was pending, W.B.’s son and other family members discovered that W.B. owned stock worth $6,289.25 (above the $2,000 Medicaid resource limit). Upon this discovery, the son promptly sold the stock and, by the end of April 2007, used all of those funds to pay W.B.’s outstanding nursing home costs. The Board of Social Services determined that W.B. was eligible for Medicaid benefits as of May 1, 2007. The son appealed, contending that the December 1, 2006 eligibility date should apply. After the matter was appealed to an Administrative Law Judge, the ALJ’s decision was reversed by the DMAHS Director, who found that, despite W.B.’s family’s ignorance of the existence of the stock, W.B. had the “right, authority, or power” to liquidate the asset, and that it was therefore a countable resource pursuant to N.J.A.C. 10:71-4.1(c)(1) and 20 C.F.R. §416.1201(a)(1). The Director concluded that W.B. was eligible as of May 1, 2007. The son appealed to the Appellate Division.

On appeal, the son claimed to have no knowledge of the assets, and the opinion makes no suggestion that there was any evidence to the contrary. Nevertheless, the Appellate Division found that it “must accord the Division substantial deference in its areas of expertise,” and concluded that W.B.’s stock ownership through April 2007 provided a “reasoned basis” for the Director’s May 1, 2007 eligibility determination. It relied on the Director’s conclusion that W.B. had the “right, authority, or power” to liquidate the stock, and found that the aforecited regulations “contain no exception for situations in which the applicant, or his or her guardians, profess ignorance of the asset.”

The court acknowledged that the Social Security Program Operations Manual System (“POMS”) Section SI 01110.117 states that, “if an individual is unaware of his or her ownership of an asset, the asset should not be treated as a countable resource ‘during the period in which the individual was unaware of his/her ownership.’” However, it found that the POMS “does not … create any rights enforceable at law by any party in a civil or criminal action.” It distinguished the illustrative examples given in the POMS because, in those examples, the applicant had never known of the existence of his/her property rights. In the instant case, as the court distinguished, “there was no proof adduced … that W.B. herself was oblivious to her original acquisition of the … stock before she became mentally incapacitated.”

In sum, the W.B. court professed its appreciation of the “competing equities” that existed in the case; unfortunately, it failed to consider those equities as they related to W.B. in reviewing Medicaid’s actions.

The W.B. case is annexed here – W.B. v. DMAHS and Hunterdon CBSS