In this case, the Superior Court of New Jersey, Appellate Division, held that the state Medicaid agency was not bound by an order for separate support and maintenance entered by a Family Part judge in a case filed by one spouse against the other spouse who later applied for Medicaid benefits when the Family Part action wasn’t contested and proceeded without notice to the Medicaid agency because the order “transgressed the permissible limits of Medicaid planning.” R.S. v. Division of Medical Assistance and Health Services

R.S. and D.S. were married in 1978. In 2010, R.S. began residing in a nursing home, while D.S continued residing in the marital home. R.S. will require nursing home care for the rest of his life.

D.S. filed a lawsuit in the Family Part of the state court for separate support and maintenance. In her complaint, D.S. requested a judgment compelling R.S. to pay her support to enable D.S. “to meet her basic expenses to remain in the marital home . . . [and] maintain a reasonable approximation of the marital standard of living enjoyed prior to the separation of the parties.” D.S. claimed R.S. had “separated … from [D.S.] and … refused and neglected to support [D.S.]. . .” However, neither the Union County Board of Social Services (Board) nor the state Medicaid agency were given notice of the court proceeding, even though D.S.’s complaint stated she was “about to file a[n] application for . . . Medicaid benefits . . . on R.S.’s behalf, and further alleged that R.S. “meets the financial and medical criteria for [Medicaid] eligibility.”

R.S. did not oppose his wife’s action and no hearing was held in the Family Part case. An order issued by the court required R.S. to pay D.S. $3460.20 per month in spousal support, consisting of R.S.’s entire monthly social security and worker’s compensation benefits, less offsets for Medicare premium, supplemental insurance premium and the Medicaid Personal Needs Allowance.

D.S. then filed a Medicaid application for R.S. Although the Board found R.S. eligible for Medicaid, the Board did not recognize the court order of support and maintenance obtained by D.S. Rather, the Board decided that D.S. was entitled to support of $1514.93 per month, limiting her to the minimum monthly maintenance needs allowance (MMMNA) authorized by the Medicaid rules.

R.S. filed an administrative appeal of the Board’s determination, claiming that the Medicaid regulations required the allocation of R.S.’s income consistent with the court order of support rather than in accordance with the MMMNA calculated by the Board.

The Administrative Law Judge (ALJ) assigned to the case rejected R.S.’s contentions, noting that the Board was not provided with notice of the Family Part proceedings nor did it have an opportunity to be heard. Significantly, the ALJ opined that “the issue in Superior Court was not the community spousal support in relation to Medicaid[,] but rather spousal support in relation to the Family Law statutes and regulations.” The ALJ found the appeal represented an attempt to use a support order “to circumvent the Medicaid regulations concerning . . . spousal allowance.” The Director of the state Medicaid agency later issued a Final Decision, adopting the ALJ’s decision.

R.S. filed an appeal to the Superior Court, Appellate Division. On appeal, R.S. argued the Final Decision violated federal and state Medicaid regulations which allow for recognition of court orders for spousal support. In that regard, the applicable New Jersey regulation states:

If a court has entered an order against an institutionalized spouse for monthly income for the support of a community spouse and the amount of the order is greater than the amount of the [MMMNA}, the amount so ordered shall be used in place of the [MMMNA]. [N.J.A.C. 10:71-5.7(f).]

The appeals court affirmed the Director’s Final Decision, holding that it was “consistent with the broad federal and state goals of preventing the impoverishment of community spouses, while ensuring limited Medicaid resources are allocated prudently among those most in need.”

The appeals court also held that the failure to notify Medicaid of the Family Part lawsuit for support was a fatal deficiency, effecting the validity of the Support Order:

[W]hen determining the institutionalized spouse’s obligation for his nursing home care, [we conclude the agency] is not bound to abide by the terms of a Family Part non-dissolution separate maintenance order, entered in a non-contested proceeding, without notice to the Division [and with no hearing held], because the Order was designed to circumvent the regulations governing the [MMMNA].

The case is annexed here – R.S. v. Division of Medical Assistance and Health Services

UPDATED ON JANUARY 29, 2014: From the Elder Law Professor Blog dated January 29, 2014 concerning the meaning of the R.S. case: “The appellate court ruling appears to be strongly influenced by facts suggesting the Family Court award, which was not opposed by the husband, was the result of Medicaid planning advice, rather than a fact-based determination of spousal support among separated or divorcing spouses….. Despite statutory grounds under Medicaid law to “protect” community spouses against “impoverishment” when their husband or wife goes into a nursing home, [the R.S.] ruling permits state calculations of Medicaid allowances to control just how much (or rather, how little) “protection” is available, at least where the allocation occurs at or near the time of nursing home admission.”

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