NJ Federal Court Awards Medicaid, Excluding Entire VA Pension Benefit from Countable Income

Hon. Robert B. Kugler, United States District Judge for the District of New Jersey, reversed a denial of an application for Medicaid benefits by ruling that a pension benefit from the Department of Veterans Affairs (“DVA”) may not be counted as income for the purposes of any Medicaid program to the extent that the DVA benefit results from “unusual medical expenses.” Galletta v. Velez, Civil No. 13-532 (D.N.J. June 3, 2014)

Plaintiff, a 93 year old resident of an assisted living facility in New Jersey, applied for Medicaid benefits under the Global Options for Long Term Care program (the “GO” program) operated by the New Jersey Department of Human Services (“DHS”). The GO program is the only Medicaid-funded program in New Jersey that covers assisted living costs. Plaintiff’s application was denied because local county welfare agency, the Monmouth County Division of Social Services (“MCDSS”) determined that her monthly income of $2,594.00 exceeded the maximum income limit at which an applicant can still be eligible for benefits under the GO program, which is $2,130.00 per month. Specifically, MCDSS included as “countable income” benefits of $696.00 per month that plaintiff received from the Veterans Administration Improved Pension program (the “VAIP”). The VAIP is administered by the DVA. If the VAIP benefits were excluded as “countable income,” plaintiff’s income would be below the income limit for the GO program, and she would have been granted the Medicaid benefits she sought.

Due to the denial of Medicaid benefits under the GO program, the monthly amount being paid to the assisted living facility by plaintiff did not cover her assisted living costs in full. As a result, the facility issued a notice to plaintiff in April 2014 indicating that she would be evicted in 30 days if the outstanding balance was not paid. At that time, the facility was owed $21,439.29.

On May 2, 2014, plaintiff filed a petition in federal district court for a preliminary injunction seeking emergency relief to prevent her eviction against Jennifer Velez, Commissioner of the New Jersey Department of Human Services (“DHS”), Valerie Harr, Director of the New Jersey Division of Medical Assistance and Health Services (“DMAHS”), DHS and MCDSS. In the petition, plaintiff indicated that she would be evicted from her assisted living facility if she was not granted eligibility under the GO program. On May 7, the Court held a hearing on the application, and converted the injunction application into a motion for summary judgment. Defendants filed a motion to dismiss.

The federal court found, based on federal and state regulations, that a VAIP pension “resulting from unusual medical expenses” may not be counted as income for the purposes of any Medicaid program. The court then analyzed the basis for the plaintiff’s VAIP award as set forth in the DVA’s award letter and determined that plaintiff was eligible for VAIP pension benefits only because of unusual medical expenses. As a result, the court held the entire VAIP benefit was not “countable income” in determining Medicaid eligibility under the GO program.

The Court recognized, and rejected, defendants’ argument that they properly excluded the portion of plaintiff’s VAIP award that the DVA characterized as attributable to “aid and attendance” from countable income, but correctly counted the remainder of the VAIP award as income:

Rather than questioning whether Plaintiff has demonstrated that she would not receive a VAIP award if not for [unreimbursed medical expenses, defendants’] position appears to be based entirely upon the premise that whenever the DVA classifies benefits paid as “aid and attendance,” it does not count as income, and whenever it is classified otherwise, it does count as income. Defendants have not cited anything in support of this black-and-white approach, yet they posit it throughout their brief as if it is indisputably true. … The Court finds that this dispute … turns on whether payments result from [unreimbursed medical expenses], not whether they should be classified as “aid and attendance” or not… Here, the factual record indicates that Plaintiff receives her entire VAIP award only because of her [unreimbursed medical expenses]. … The issue … is whether [defendants] may count all VAIP benefits as income unless it is explicitly described as “aid and attendance.” The Court finds that under the language of the applicable statutes and regulations, they may not.

As a result of its ruling, the court ordered the defendants to re-determine plaintiff’s eligibility for the GO program, and to exclude the entire amount of plaintiff’s VAIP benefit in the calculation of her countable income.

The opinion is annexed here – Opinion

The order is annexed here – Order

This is a significant victory for Medicaid applicants and recipients in New Jersey who also receive pension benefits from the DVA. It is particularly noteworthy for those of us New Jersey elder law attorneys personally involved as legal counsel. In that regard, I represent the named plaintiffs and the putative class in the Galletta case, along with co-counsel Gerald J. Williams, Alan H. Sklarsky, and Joseph A. Venti of the law firm of Williams, Cuker & Berezofsky. Further analysis of Judge Kugler’s decision appears in other New Jersey law blogs as follows:

The Williams, Cuker & Berezofsky blog: http://www.wcblegal.com/?p=544&preview=true

The Rothkoff Law Group blog: http://rothkofflaw.com/nj-federal-court-excludes-entire-va-pension-from-countable-income-for-medicaid-eligibility/

UPDATED on AUGUST 18, 2014: Co-counsel Joseph Venti, Esq. of the Williams, Cuker & Berezofsky law firm described the precedential effect of unpublished federal district court decisions like Galletta as follows:

Federal district court decisions, like the decision in the Galletta case, bind no one but the parties. This is true whether the decision is published or not. In other words, there is no horizontal stare decisis of the type one sees, for example, with precedential decisions in the 3d Circuit. The only important difference is that published federal district court decisions generally carry greater persuasive weight with the judges in that particular district than do unpublished decisions.

The Galletta decision is unpublished and will not get the superficial persuasiveness bump were it published in the federal supplement. That said, can you imagine another judge reading Judge Kugler’s decision and thinking he got it wrong?

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