In the May 19, 2014 J.P. v. Division of Medical Assistance and Health Services decision, New Jersey’s Appellate Division affirmed the final agency decision of the Director of the Division of Medical Assistance and Health Services (“DMAHS”), resulting in the imposition of a transfer penalty on the petitioner’s Medicaid application.

After the ALJ had accepted the Medicaid applicant’s claim that transfers from the applicant were reimbursements of nursing services and repayment of loans, rather than gifts, the DMAHS Director had reversed and imposed a Medicaid penalty. The Director had found that the applicant failed to prove that the transfers were not made for the purpose of acquiring Medicaid eligibility. The Director had found that the note allegedly evidencing the debt was not executed contemporaneously with the loan, bore only an unauthenticated signature, and omitted key provisions, such as a repayment date or interest rate. It remained unenforced for fifteen years, until the applicant entered the nursing home. With regard to the alleged nursing care provided by the applicant’s daughters, there was no contract to show that the services were intended to be compensated.

After commending the Medicaid Director for “carefully considering” the evidence, the Appellate Division affirmed the Director’s decision. Significantly, the Appellate Division opinion concludes by downplaying the deference owed to an ALJ, and emphasizing the deference owed to the Medicaid Director: “We owe substantial deference to the decisions of the administrative agency, not the findings of an ALJ.” The Appellate Division continued that an ALJ is given special deference by the agency and reviewing court “only regarding credibility determinations made based on live testimony.” The Medicaid agency, in turn, is free to reject an ALJ decision as long as it gives “due consideration” to the ALJ findings, supports its decision with “substantial evidence” in the record, and “indicates how it weighed that evidence.”

A copy of J.P. v. DMAHS can be found here: J.P. v. Division of Medical Assistance and Health Services

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