Medicaid Applicants Must Receive Full and Fair Notice of the Reasons for a Decision to Deny Benefits

In this case, the Court considered whether a Medicaid applicant received full and fair notice of the reasons for the agency’s decision to deny benefits prior to holding a hearing on the applicant’s appeal. E.W. v. Cape May County Board of Social Service, OAL Docket. No. HMA 14667-15 (OAL December 24, 2015)

In 2012, E.W., a Medicaid applicant, purchased a home from J.D., her son and power of attorney, for approximately $380,000.00. Thereafter, E.W. and J.D. resided in the home for over two years.  During that time, J.D. provided E.W. with long-term care services, which averted the need for petitioner to enter a nursing facility.

In 2014, E.W. deeded the home back to her son for less than fair market value, asserting that the transfer of the home to her son was exempt from any Medicaid penalty based upon the “caregiver child” exemption found at N.J.A.C. 10:71-4.10(d)(4) which provides as follows:

A son or daughter of the [Medicaid applicant] who was residing in the [Medicaid applicant’s] home for a period of at least two years immediately before the date the [Medicaid applicant] becomes an institutionalized individual and who has provided care to such [Medicaid applicant] which permitted the [Medicaid applicant] to reside at home rather than in an institution or facility. 

The care provided by the [Medicaid applicant’s] son or daughter … shall have exceeded normal personal support activities (for example, routine transportation and shopping). The [Medicaid applicant’s] physical or mental condition shall have been such as to require special attention and care. The care provided by the son or daughter shall have been essential to the health and safety of the [Medicaid applicant] and shall have consisted of activities such as, but not limited to, supervision of medication, monitoring of nutritional status, and insuring the safety of the individual.

Several months later, E.W. filed for Medicaid benefits. The Medicaid agency denied eligibility, and imposed a penalty. The denial of benefits notice provided, in pertinent part, as follows:

This notice is to advise you of the following decision concerning Elizabeth Williams’ eligibility for the Medicaid program.

 Eligible effective – July 2, 2018

This action was taken because: Applicant, otherwise, has been found to meet the Nursing Home Medicaid Guidelines for eligibility for March 1, 2015, but a penalty has been applied for 1,219 days due to a transfer of resources … .

E.W. requested specific details as to the penalty calculation that were lacking in the original denial notice, and the caseworker provided a breakdown of the penalty calculation in a subsequent notice sent via email. However, neither notice made any mention of the transfer of petitioner’s home to her son. In addition, neither notice rejected E.W.’s claim for an exemption under the “caregiver child” exemption in the Medicaid law.  E.W. appealed the denial of benefits.

A hearing was scheduled. During a pretrial conference, a Medicaid agency representative asserted that the agency intended to raise all issues necessary to justify the penalty, including the transfer of petitioner’s home to her son and a rejection of the caregiver exemption. Petitioner was surprised that Medicaid was challenging these issues given the vagueness of the agency notices. In response to the notice confusion, the parties were asked to brief the requirements of adequate notice as it applied to the present case.

After briefs were submitted, the Court held that, under the law, a Medicaid notice must be “fair, timely, and informative. It must include explicit reasons for the [Medicaid agency’s] decision.” Under 42 CFR §435.913, the Medicaid agency must send each applicant a written notice of the agency’s decision on his application, and, if eligibility is denied, the reasons for the action, the specific regulation supporting the action, and an explanation of his right to request a hearing.

The Court held that the Medicaid’s notice did not meet the legal standards set forth above. The notice did not mention E.W.’s transfer of her home to her son. In addition, the notice offered no analysis of the “caregiver child” exemption. Moreover, the Medicaid agency did not find that J.D. failed to meet the criteria as a “caregiver child” during the two-year period he lived with his mother.

As a result of the notice deficiencies, the Court adjourned the hearing, ruling that, before the hearing is rescheduled, the Medicaid agency must 1) supply E.W. with a revised notice explaining in detail which transactions it contends resulted in a transfer for less than valuable consideration or uncompensated value, and 2) explain why E.W. was not eligible for the “caregiver child” exemption. The notice must contain a factual basis and detailed explanation why E.W.’s submissions were rejected including medical reports or statements offered in support of the “caregiver child” exemption.

The case is annexed here – E.W. v. Cape May County Board of Social Service
For additional information concerning Medicaid applications and appeals, visit: https://vanarellilaw.com/medicaid-applications-medicaid-appeals/

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