Medicaid Granted Though Spouse Gambled Away Substantial Inheritance, Leaving Applicant Impoverished

An Administrative Law Judge found a Medicaid applicant eligible for benefits even though the applicant was impoverished because her spouse gambled away a substantial inheritance. M.Y v. Union County Board of Social Services

M.Y., a 96 year old woman, suffered from dementia, could not care for her own needs, and was destitute. She was admitted to Manor Care Nursing Home in Mountainside, NJ in February 2011. M.Y. was married for almost 75 years to G.Y., a compulsive gambler who gambled well into his 90s.

Soon after she was admitted to Manor Care, M.Y. applied for nursing home Medicaid, and claimed that any denial of benefits should be waived as it imposed an undue hardship upon her since she was destitute. By notice dated February 24, 2012, Medicaid found M.Y eligible as of February 1, 2011 but imposed a 33 month and 25 day penalty as a result of the alleged transfer of $246,371.62. No decision was made on M.Y.’s application for an undue hardship waiver.  M.Y appealed the denial of Medicaid eligibility. The denial was affirmed by the administrative law judge (ALJ).

Thereafter, M.Y was served with a Notice of Intent to Discharge from the nursing home due to non-payment. M.Y appealed, and also asked the ALJ to make a decision on the application for an undue hardship waiver. The ALJ remanded the application for an undue hardship waiver back for an initial decision by the state Medicaid agency. The state agency denied the waiver request, and M.Y appealed.

On appeal, the ALJ found that M.Y. inherited $246,371.62 from her sister before she entered the nursing home. The inheritance was never deposited in a bank account. Instead, it was kept in the home M.Y. and G.Y. lived in which was owned by the couple’s son. The home was eventually foreclosed upon and cleaned out by a professional company before the family vacated it.  The inheritance was never discovered. At the hearing, both G.Y. and his son testified that none of the inheritance was transferred to any family member but that it was instead gambled away by G.Y. The son testified that the inheritance was squandered by his father in the casinos.

After analyzing the facts, the ALJ concluded that the Medicaid denial was correct, and affirmed the denial of benefits. The ALJ found that, although it was proven that G.Y. was a compulsive gambler, M.Y. did not prove that G.Y. gambled away the inheritance received from M.Y.’s sister.

However, the ALJ found that M.Y. met the requirements set forth in N.J.A.C. 10:71-4.10(q) for an undue hardship waiver, and waived the transfer of assets penalty because it would impose an undue hardship upon M.Y. In that regard, the ALJ found that the imposition of the transfer of assets penalty would deprive M.Y. of medical care such that her life or health would be endangered, and that the transferred assets were beyond M.Y.’s control and could not be recovered.

This is one of very few cases in which a Medicaid applicant’s request for a waiver of a penalty period based upon the allegation of undue hardship was granted. The case now goes to the Director of the state Medicaid agency who can affirm, reverse of modify the ALJ’s decision in whole or in part.

The initial decision by the administrative law judge is attached here – M.Y v. Union County Board of Social Services

UPDATED ON DECEMBER 30, 2015: The initial decision made by the administrative law judge in this case was later affirmed by the Director of the Division of Medical Assistance and Health Services on  March 19, 2015. The Director’s decision is annexed here – M.Y. – Final Agency Decision

For additional information concerning Medicaid applications and appeals, visit: