The 18th Annual Elder and Disability Law Symposium was held on September 29, 2015 at the New Jersey Law Center in New Brunswick, NJ. As in past years, I presented the case law update at the opening plenary session. This year I presented 30 elder and special needs law cases. Following is a summary of of my presentation of the noteworthy New Jersey state and federal elder law cases of the past year (September 2014 through August 2015), listed alphabetically: :

ESTATE OF BELTRA V. BELTRA, 2014 WL 8096146, Docket No. A-5768-12T2 (March 10, 2014) (Unpublished)

Holding: Divorce and equitable distribution of marital assets may be ordered after the death of one spouse to prevent unjust enrichment and fraud.

Plaintiff Milagros Beltra filed for divorce from her 34 year marriage to defendant Enrique Beltra. Plaintiff was terminally ill and passed away 6 months later, prior to the entry of a final judgment of divorce. Plaintiff’s executor, the parties’ oldest son, moved to be substituted in the divorce action. The family judge granted the motion and the Estate of Milagros Beltra was substituted in the divorce lawsuit.

A 5-day trial was held to determine the equitable distribution of the assets acquired during the marriage. At the conclusion of the trial, the judge entered a final judgment dividing the couple’s assets and liabilities equally.

On appeal, the appellate division vacated the final judgment, concluding that the entry of an equitable distribution order following plaintiff’s death was contrary to the general principle that death ends a divorce action. However, since the estate claimed that there was evidence of unjust enrichment and fraud because defendant allegedly secreted assets, and since equitable distribution can be ordered after death to prevent unjust enrichment and fraud under New Jersey law, the appellate court remanded the matter back to the trial court for further review.

On remand, the trial judge first found that secreting assets would be an exceptional circumstance requiring the imposition of equitable relief after death to prevent unjust enrichment. Thereafter, the trial judge issued an order “determin[ing] that exceptional circumstances exist that warrant the granting of the equitable relief to [p]laintiff’s estate.” The judge also imposed a constructive trust to protect the estate’s interest in the assets held by defendant.

Defendant appealed from that order, challenging the facts found by the judge allegedly supporting the court’s finding of exceptional circumstances justifying the imposition of equitable relief.

In the second appeal, the Appellate Division held that, under New Jersey law:

[I]f warranted by the evidence, a court may impose a constructive trust and apply principles of quasi-contract to prevent unjust enrichment where equitable distribution under the statute becomes unavailable due to the death of one spouse prior to entry of a judgment of divorce. … [E]quitable relief may be invoked to promote fair dealing between spouses by ensuring that marital property justly belonging to the decedent will be retained by the estate for the benefit of the deceased spouse’s rightful heirs and by preventing unjust enrichment of the surviving spouse. … [T]he Family [Court] must protect the right to claim marital assets in a matrimonial action [which] … should not be extinguished lightly or prematurely simply because a party passed away before the divorce was final.

The appeals court noted that a claim that defendant “secreted” marital assets was included in plaintiff’s divorce complaint. Plaintiff’s estate also asserted that the divorce was not finalized because defendant intentionally delayed the proceeding because he knew plaintiff would soon pass away. After reviewing the evidence presented to the trial judge, the appeals court held that the evidence adequately supported the trial judge’s findings that defendant diverted marital assets. and his conduct justified the conclusion exceptional circumstances required equitable remedies to prevent unjust enrichment.

BERMUDEZ V. KESSLER INSTITUTE FOR REHABILITATION, 439 N.J. Super. 45 (App. Div. Jan. 8, 2015)

Holding: Comprehensive Rehabilitation Hospital Is Not Subject To New Jersey Nursing Home Act

Plaintiff Wilson Bermudez was a patient at Kessler Institute for Rehabilitation’s West Facility for five weeks, during which his treatment included 24-hour rehabilitative nursing “to address complex medical, nursing, and rehabilitative needs.” When Bermudez later sued Kessler for injuries he allegedly sustained, he included claims under the New Jersey Nursing Home Responsibilities and Rights of Residents Act, N.J.S.A. 30:13-1 et seq. (the “Nursing Home Act”).

Kessler argued that its facility was a comprehensive rehabilitation hospital, rather than a nursing home. Bermudez countered that, although the facility was licensed as a comprehensive rehabilitation hospital, it nevertheless met the Nursing Home Act’s broad definition of a nursing home. The distinction was critical because, unlike a traditional negligence action, an action under the Nursing Home Act permits a successful plaintiff to recover attorney fees and treble damages.

Based on its claim that it did not meet the definition of a nursing home, Kessler moved to dismiss the Nursing Home Act claims. Its motion was denied, and Kessler filed an appeal. The Appellate Division reversed the lower court, finding that Kessler did not fall within the definition of a nursing home under the Act.

The Appellate Division relied on the Supreme Court’s recognition that there are “significant differences in the patients, the health-care providers, and the institutional structures of nursing homes and hospitals.” In re Conroy, 98 N.J. 321 (1985). It reviewed the language of the Nursing Home Act itself, and found that the legislative history of the Act contained no evidence of intent to include a rehabilitative hospital within the Act. Consequently, the Appellate Division concluded that a comprehensive rehabilitative hospital such as Kessler did not fall within the statutory definition of a nursing home, and was therefore not subject to the Nursing Home Act’s provisions.

C.C. V. DMAHS, 2015 WL 2458182, Docket No. A-4291-13T4 (App. Div. May 29, 2015) (Unpublished) 

Holding: No Reduction In Medicaid’s Transfer Penalty Unless ALL Transferred Assets Are Returned To The Applicant

Plaintiff applied for nursing home Medicaid benefits which was denied by the Ocean County Board of Social Services. The agency imposed a penalty period, concluding that plaintiff had sold her residence during the look-back period  and gave half the proceeds, $99,233.75, to her nephews. The agency refused to reduce the penalty imposed even though plaintiff’s nephews returned $17,000 to her during the ineligibility period, which was used to pay for plaintiff’s care.

Plaintiff appealed. At the hearing, plaintiff conceded that the transfer penalty imposed by the agency was appropriate; but she argued that the penalty should have been reduced because a portion of the transferred proceeds of the home sale were returned to pay for her care. However, the ALJ determined that no reduction was possible and affirmed the denial. The Director adopted the decision in its entirety, ruling that a reduction of the penalty based on a partial return of transferred assets is in violation of federal and state Medicaid rules.

Plaintiff again appealed, this time to the Appellate Division, arguing that “even if New Jersey law does restrict the return of transferred funds . . . , federal law trumps New Jersey’s law” and thus the $17,000 returned to petitioner should reduce the penalty period.” The Appellate Division disagreed, stating:

Petitioner’s argument ignores that federal and State law are consistent in requiring the return of all assets transferred for less than fair market value in order to reduce the transfer penalty. … [B]oth 42 U.S.C.A. § 1396p(c)(2)(C) and N.J.A.C. 10:71-4.10(e)(6) provide that no transfer penalty shall be applied if “all assets transferred for less than fair market value have been returned” 

Accordingly, the appeals court affirmed the decision of the Director of DMAHS, imposing the 387-day transfer penalty resulting from the gift of the proceeds of the home sale with no reduction for the return of $17,000 by plaintiff’s nephews.

D.W. V DMAHS AND DIVISION OF DISABILITIES, 2014 WL 7010763, Docket No. A-0384-13T4 (App. Div. Dec. 15, 2014) (Unpublished) 

Holding: Reduction in PCA Services is Reversed Because DMAHS Fails to Explain How the Reduction was Warranted 

Plaintiff, D.W., is a 48 year-old woman with Down ’s syndrome and the mental capacity of a 4-year-old. She requires care 24 hours per day, 7 days per week. She resides with her sister, who works full-time.

D.W. participates in the Personal Preference Program (PPP) administered by DMAHS. In 2009, D.W. was approved for a monthly cash grant covering 40 hours per week of PCA services. D.W.’s participation in the PPP program was reassessed in September 2012, and then again in early 2013. As a result, the 40 hours per week in Personal Care Assistant services granted in 2009 was reduced to 25 hours per week. A notice of reduction was issued, and D.W. appealed, requesting a hearing in order to challenge the reduction.

After the hearing, the ALJ concluded that D.W.’s deteriorating medical condition militated against a reduction in benefits. DMAHS took exception to the ALJ’s decision and appealed to the Director of DMAHS, who ultimately issued a final agency decision concluding that 25 hours per week of Personal Care Assistant services was medically necessary and appropriate. D.W. appealed the final agency decision.

The Appellate Division found that the Director’s decision could not logically be sustained in the absence of an explanation of how a reduction of PCA services was warranted where it was undisputed that D.W.’s medical condition had deteriorated since 2009 when the DMAHS had determined that she needed 40-hours per week of support. Accordingly, the Director’s decision was vacated and the matter was remanded for reconsideration.

DESIMONE V. SPRINGPOINT SENIOR LIVING, 2015 WL 2458021, Docket No. A-3387-13T3 (App. Div. May 27, 2015) (Unpublished) 

Holding: Lawsuit May Proceed Against CCRC For Misleading Marketing

The son of a deceased CCRC resident sued the owner/operator and CEO of five CCRCs in New Jersey. The suit, which was brought individually and as a class action, alleged violations of the CCRC Act and the Consumer Fraud Act (“CFA”), in addition to common law claims, based on misleading advertising information regarding the CCRCs’ refund policy.

Mrs. DeSimone had chosen the Monroe Village CCRC and was given the option of two available plans: the “traditional” plan, which was a non-refundable option offered at a lower entrance fee, and the “refundable” plan, which was a 90% refundable option offered at a higher entrance fee. The DeSimone family chose the “refundable” plan, and later sought a return of Mrs. DeSimone’s entrance fee when she was ultimately unable to move into her unit because of her health downturn and death.

The statutorily-mandated disclosure statement provided to the DeSimones stated that the refundable plan allowed for “up to 90%” of the entrance fee to be refunded, and stated that the refundability of that fee was “described in detail” in the Residence and Care Agreement. That agreement, captioned “90% Refundable,” explained that the refund would be “equal to the lessor of the original entrance fee or the subsequent resident’s entrance fee.” The plaintiff claimed that the DeSimone family had relied on the CCRC disclosure statement (which did not contain the “lessor of” language) as well as advertising and sales personnel, and were not informed that the refund could be significantly lower than 90% of the entrance fee if the subsequent resident occupying the unit were given a discounted entrance fee (which occurred in the DeSimones’ case, after Monroe Village began offering discounted entrance fees because of a financial downturn).

The motion court had dismissed the complaint for failure to state a claim on which relief can be granted, after finding that the plaintiff failed to plead that the DeSimones had actually seen the allegedly misleading marketing material. The court also found that amending the complaint would be futile, because the DeSimones could not have seen the marketing material because it was not used until after Mrs. DeSimone’s death.

However, the Appellate Division reversed, finding that the CFA prohibits misleading advertising, whether or not the consumer has in fact been misled. It found that the proposed amended complaint claimed that the DeSimones had relied on a marketing pamphlet that failed to describe the “lesser of” term. The Appellate Division also found that the CCRC Act, which requires that CCRC disclosure statements be “written in plain English” and contain designated information “unless the information is contained in the contract,” could be read to prohibit a disclosure statement or staff statements that “mislead seniors by failing to reveal hidden costs only ascertainable by a lawyer reviewing the contract.”

Because it concluded that the CCRC staff or brochures may have misled the DeSimones regarding the “lesser of” term, it reasoned that the plaintiff may be able to prevail in its causes of action, including violation of the Consumer Fraud Act. Therefore, it reversed the motion judge, restored the complaint, and permitted the plaintiff to amend its complaint.

E.A. v. DMAHS, 2015 WL 4390078, (App. Div. July 20, 2015) (Unpublished)

 Holding: APPELLATE DIVISION AFFIRMS MEDICAID’S REJECTION OF ANOTHER CAREGIVER AGREEMENT

E.A. began residing in a home owned by her adult daughter, B.C., in September 2004. From September 2004 to June 2005, B.C. received no compensation for any caregiver services or lodging provided to her mother. From June 2005 to September 2006, B.C. received E.A.’s Social Security benefits of approximately $1500 per month to offset the cost of care.

Several years before she applied for Medicaid, E.A. executed a document whereby B.C. would receive $3,600 per month for room and board. About one year later, E.A. updated the care agreement to increase the monthly payment to $4,300. The following year, E.A. again updated the care agreement to increase B.C.’s monthly payment to $5,100.

Several years later, E.A. was hospitalized and then discharged to a nursing home. She paid all nursing home costs from her remaining funds. Soon thereafter, B.C. applied for Medicaid benefits on E.A.’s behalf. In support of the application, B.C. submitted the care agreement and E.A.’s bank account statements.

In 2013, the Hunterdon County Board of Social Services determined that E.A. was medically and financially eligible for Medicaid benefits. However, HCBSS also found that E.A. had transferred a total of $244,510 to B.C. during the 5 year Medicaid look-back period for less than fair market value, based on the payments made by E.A. to B.C. under the care agreement. As a result, HCBSS imposed a 936-day period of ineligibility, to begin in the month E.A. applied for Medicaid.

On appeal, the ALJ affirmed. First, the ALJ found that E.A. and B.C. did not abide by the care agreement. Over the years, B.C. had made many large withdrawals from E.A.’s bank accounts beyond the monthly payments she was due under the care agreement. The large withdrawals totaled almost $101,000 more than the payments B.C. was entitled to under the care agreement. Second, B.C. received payments under the care agreement for months in which E.A. was in the nursing home and did not require caregiver services in B.C.’s home. Third, B.C.’s monthly payments were never reduced, even though E.A. made many payments over the years for a home health aide to assist in providing care to E.A. Fourth, B.C. had no records of the services she or others provided to her mother, and she did not report any of the money she received under the care agreements as ordinary income on her tax returns. Fifth, the ALJ found that, although B.C. was paid at the same hourly rate charged by independent care providers, B.C. should have been paid less because she was not trained or licensed and had responsibilities other than caring for E.A. Sixth, the ALJ found that the care agreement did not specify the types of services and terms of compensation for each service provided.

Finally, although the ALJ acknowledged that B.C. provided substantial services to E.A. over many years, he emphasized that it was customary for children to provide many of the services to their parents out of love and affection for no compensation. The Director adopted the ALJ’s decision in its entirety.

The Appellate Division affirmed:

The mere existence of a pre-existing care agreement for services does not automatically establish that the services were rendered for fair market value.  … Notwithstanding a care agreement, the applicant still bears the burden to establish the types of care or services provided, the type and terms of compensation, the fair market value of the compensation, and that the amount of compensation or the fair market value of the transferred asset is not greater than the prevailing rates for similar care or services in the community.  … The care agreement in this case fell short of meeting that burden.

ESTATE OF FINNEGAN V. FINNEGAN,  2014 WL 7506758, Docket No. A-158913T2 (App. Div. Jan. 12, 2015) 

Holding: LITIGATION CHALLENGING ISSUES PREVIOUSLY ACKNOWLEDGED IN A SETTLEMENT IS FRIVOLOUS

The father loaned his son $100,000 at 6.5% interest in July 2001. The son stopped making payments in 2009. He still owed $74,071.86 when he stopped paying. The son claimed that the father forgave the loan. By 2009, the father’s health had declined. His daughter was the father’s power of attorney (POA). The father kept meticulous records including the loan payments and reported the interest from the loan on his tax return. His attorney denied that he forgave the loan and that, instead, the son defaulted. The father’s attorney filed a complaint against the son, who never filed an answer. The son’s attorney filed a motion to dismiss for failure to state a claim, arguing that the loan was forgiven. As evidence, the son’s attorney provided a stipulation of dismissal that the father allegedly “signed” on February 20, 2012. No explanation was provided as to how the stipulation was procured. The witness to the document could not be ascertained by the signature and the son’s attorney rejected the demand to provide the name of the witness. In response, the POA submitted a certification from the father’s treating physician stating that he had examined the father on February 14, 2012 (6 days before the stipulation of dismissal was signed) and that his cognitive abilities were severely compromised.

The judge denied the son’s motion, finding factual disputes at issue concerning the validity of the stipulation, and allowed son to depose the father and have him evaluated for competency. The father died on June 25, 2012 and was never deposed or examined. The complaint was dismissed. The estate attorney refiled an amended verified complaint against the son and claimed that the amount owed has grown to $92,436.32. The son’s attorney filed a second motion to dismiss, again arguing the loan was forgiven. The judge again denied the motion. The case settled. Pursuant to the settlement, the son acknowledged the loan by agreeing to pay the estate $60,000 to satisfy the loan.

Nine days after settling, the son’s attorney filed a motion for frivolous litigation against the estate attorney, arguing that the litigation was pursued in bad faith knowing that the loan had been forgiven. In response, the estate attorney filed a cross-motion against the son’s attorney. The judge found that the litigation was not frivolous and dismissed the son’s motion, but kept in play the cross motion. He also found that the son’s motion was frivolous and brought in bad faith because the settlement terms acknowledged the loan and required the son to repay the loan. The judge also ordered the son’s attorney to pay attorney’s fees and costs in the amount of $2,000 to each attorney.

The Appellate Division affirmed, noting that an attorney may be sanctioned for asserting frivolous claims on behalf of a client. Imposition of sanctions occurs when the attorney files a pleading or a motion with “an improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.”

FLAMINI v. VELEZ, 2015 WL 333300, Civ. No. 12-7304 (D.N.J. Jan. 23, 2015)

Holding: PARTY OBTAINING INJUNCTIVE RELIEF WITH NO JUDGMENT ON THE MERITS IS NOT ENTITLED TO “PREVAILING PARTY” ATTORNEY’S FEES

In 2013, a federal judge in New Jersey granted a preliminary injunction to Elizabeth Flamini, a Medicaid applicant who successfully sued for an injunction preventing the state from counting an annuity owned by Mrs. Flamini’s husband Angelo as an available resource in determining Medicaid eligibility. Flamini v. Velez, Civil No. 1:12-cv-07304 (D.N.J. July 19, 2013).

This year, the same federal judge issued an order denying Mrs. Flamini’s application for attorneys’ fees, ruling that, despite her success in obtaining injunctive relief against New Jersey, Mrs. Flamini was not the prevailing party in the lawsuit, and was therefore not entitled to a fee award.

Elizabeth Flamini entered a skilled nursing care facility in Cherry Hill. At that time, Mrs. Flamini and her husband owned assets which included two IRAs and a tax-qualified savings account. Mr. Flamini liquidated these accounts and used the proceeds to purchase an individual retirement annuity for $215,256.51. The annuity was issued in Mr. Flamini’s name and called for monthly income payments of $3,596.35 for a term of five years. Thereafter, Mrs. Flamini applied for Medicaid. The agency denied eligibility, stating that when the annuity owned by the applicant’s husband was counted as an available asset, she was ineligible for benefits due to excess resources. Mrs. Flamini filed a lawsuit in federal district court seeking a preliminary injunction, which was granted, thereby enjoining the state from considering the annuity in its calculation of countable resources.

After a preliminary injunction was granted, the Medicaid agency issued another denial, finding that Mrs. Flamini was still ineligible for Medicaid even when her husband’s annuity was not counted. Mrs. Flamini then reapplied for benefits. When Mr. Flamini spent down the couple’s assets, the agency approved the application for Medicaid. Once Mrs. Flamini was found eligible for Medicaid, the federal court dismissed the case as moot. Mrs. Flamini then filed a motion for attorneys’ fees, arguing that she was the prevailing party because of her success in obtaining the preliminary injunction.

The U.S. District Court for the District of New Jersey denied the application for attorneys’ fees. The court ruled that Mrs. Flamini failed to prove that she was the “prevailing party” in the lawsuit because there was no judgment on the merits of the case contained in the decision granting the preliminary injunction:

While this Court’s Opinion and Order granting the preliminary injunction with respect to the annuity may have resulted in a finding of Medicaid eligibility once [Mrs. Flamini] spent down her resources, the fact remains that this Court never made a determination on the merits of [Mrs. Flamini]’s claims. Because [she] did not obtain a judgment on the merits of her claim, [Mrs. Flamini] is not entitled to attorney’s fees.

FOX V. LINCOLN FINANCIAL GROUP, 439 N.J. Super. 380 (App. Div. Feb. 24, 2015)

Holding: MARRIAGE DOES NOT CREATE A PRESUMPTIVE RIGHT TO A DECEASED SPOUSE’S LIFE INSURANCE BENEFITS

A New Jersey appeals court rejected a surviving spouse’s public policy argument to adopt a rule that marriage creates a “presumptive right” to a deceased spouse’s life insurance benefits when someone else was designated as the beneficiary of the policy, holding that the creation of any such presumptive right would have to come from the Legislature.

Michael Fox, a truck driver, had a $100,000 life insurance policy from Lincoln Financial. Initially, Michael designated his then-wife, Gail, as primary beneficiary, and his brother, Kenneth, as contingent beneficiary. Michael and Gail subsequently divorced, and Michael executed an insurance company form designating his sister, Mary Ellen Scarpone, as sole beneficiary.

Years later, Michael married Evanisa Fox, a Brazilian national. Michael then began the process of helping Evanisa become a U.S. citizen. He also signed a federal immigration form guaranteeing that he would support Evanisa at 125% of the poverty level. However, Michael did nothing toward changing the beneficiary of the life insurance policy from his sister to his new wife before he died in an accident.

After Michael’s death, Evanisa filed a claim against Scarpone and Lincoln Financial for the life insurance proceeds, claiming it would be extremely difficult for her to survive without Michael’s life insurance proceeds. In lieu of filing an answer, Scarpone moved to dismiss the complaint. Evanisa cross-moved for summary judgment, arguing that the Court should adopt a rule that, where an insured designates someone else as a policy beneficiary, and the insured thereafter marries, there should be a presumption that the insured intended to revoke that earlier policy designation.

The trial court dismissed Evanisa’s complaint, awarding the insurance proceeds to Scarpone, the designated beneficiary under the policy. The court ruled that New Jersey law requires an objective showing that the decedent intended to change the policy’s beneficiary, and that the complaint failed to allege sufficient facts to make the required showing. The court also found no duty obligating Michael to support Evanisa following his death.

Evanisa appealed. She argued for a change in the law such that, as the spouse of the decedent, she is entitled to the proceeds of the insurance policy, even if someone else is the named beneficiary. Evanisa also asserted that Scarpone should bear the burden of establishing that Michael’s failure to change the beneficiary designation was intentional.

The appeals court affirmed, holding that Evanisa’s public policy argument based on her marriage to Michael, without more, is insufficient to defeat Scarpone’s beneficiary status. The court held that a beneficiary designated in an insurance policy will be denied the right to receive the insurance proceeds only under limited circumstances under New Jersey law. For example, (1) there is a presumption in the law that a divorced spouse should no longer be the beneficiary of a deceased ex-spouse’s life insurance benefits, even if he or she was still listed as the beneficiary;  (2) the beneficiary designated in an insurance policy will be denied the insurance proceeds when it can be  shown that the deceased intended to change the policy’s beneficiary, but died before actually changing the beneficiary; and, (3) N.J.S.A. 3B:5-15 provides an intestate share to a surviving spouse omitted from a premarital will because of the presumption that the spouse who wrote the will intended to provide for the spouse. This “omitted spouse” statute applies only to wills, and does not extend to nonprobate assets such as a life insurance policy. The appeals court refused to expand those exceptions in the law. The court indicated that “so drastic a change [in the law should be left] to the Legislature.”

GONG V. JEONG, 2015 WL 1003393, Docket No. BER-C-96-14 (Ch. Div. Mar. 3, 2015)  (Unpublished)

Holding: Parent’s promise to leave assets to an adult child does not give rise to an enforceable claim of interference with anticipated inheritance

A trial court in Bergen County held that a parent’s promise to leave assets to an adult child does not give rise to an enforceable claim of interference with anticipated inheritance since parents are not prohibited from disinheriting their children under New Jersey law notwithstanding promises to the contrary made during the parent’s life.

Chu Ja Kong (“Chu”) and her husband, Chi G. Kong (“Chi”), owned commercial property located on Main Street in Hackensack, New Jersey (the “the property”) as tenants by the entirety. In 2008, Chi and Chu executed their last wills and testament (the “wills”). Each will bequeathed the property to the surviving spouse. Upon the death of the surviving spouse, the wills devised one-half the property to a trust for the benefit their son, the plaintiff, Richard Gong, and the remaining half to their granddaughter, Jenny H. Gong (“Jenny”).

In September 2011, Chi sent a letter to his son advising plaintiff that he would be completing his new will (the “Chi Will”) the following week. In the Chi will, Chi said he would bequeath the property to plaintiff. Shortly thereafter, Chi fell down a flight of stairs and was severely injured. As a result, the Chi Will was never signed. Chi and Chu then began to live with their daughter and her husband.

In 2013, Chi and Chu executed a deed transferring ownership of the property to their daughter Haeyoung and her husband Peter in return for $350,000 (the “2013 deed”). At the time of the deed transfer, the property was worth significantly more than $350,000, perhaps as much as $650,000.  It is undisputed that Chi was suffering from dementia and lacked the capacity to make a valid deed in 2013.  Also, it is undisputed that Chi’s signature was forged on the 2013 deed.

Although Haeyoung was to pay $350,000 for the property transferred to her, Chi and Chu agreed with their daughter and her husband privately that the payment for the property would not be made directly to Chi and Chu. Rather, Haeyoung was to pay $250,000 directly to plaintiff in lieu of transferring the money to her parents. Haeyoung would also receive a $250,000-$300,000 gift from her parents, by way of value of the property that exceeded the purchase price. The remaining $100,000 of the purchase price would be kept by Haeyoung to care for her parents while they lived with her, which would presumably continue until their passing. The plan was set into motion, and Haeyoung transferred $180,000 to plaintiff in 2013. On or about October 1, 2013, Chu instructed Haeyoung to make no further payments to plaintiff.

Chi died in February 2014, and was survived by his wife, Chu. Thereafter, plaintiff demanded that Haeyoung pay him a total of $450,000 for the property or he would initiate a lawsuit. When no payments were forthcoming, plaintiff filed a complaint against his sister Haeyoung, her husband Peter and their daughter Jenny disputing the validity of the 2013 deed by asserting claims of fraud, unjust enrichment, conversion, and the like. After Chu learned plaintiff’s complaint disputed the validity of the 2013 deed, Chu executed a new deed in 2014.  The 2014 deed transferred “any present or future rights” Chu had in the property to the defendants in order to “ratify and confirm the transfer of title made by” the 2013 deed.

Defendants filed an answer and cross-claim. The defendants posited the lawsuit was baseless, founded upon plaintiff’s desire that his parents adhere to the traditional Korean custom that the first born son inherits his parents’ entire estate. One year later, in January 2015, defendants filed a motion for summary judgment. After oral argument, the Court granted defendants’ motion, entered summary judgment in defendants’ favor and dismissed the case.

The Court held that, no matter how plaintiff articulated the claims in the complaint or the number of claims alleged, the basic assertion in plaintiff’s complaint, that the law recognizes an enforceable right in the expectancy of an inheritance, is erroneous. The Court stated that:

A person may freely transfer his/her property as he/she deems appropriate, as “the right to freely alienate property interests is one of the most basic rights guaranteed by law.” … The court has not found a New Jersey appellate or Supreme Court decision finding an aggrieved beneficiary of a contingent devise had a recognized cause of action for tortious interference with their anticipated inheritance when the testator/devisor sold the property during his life. [I]t has long been established that “New Jersey law does not prohibit the disinheriting of an adult child.” … [Further,] neither party has asserted Chu is the subject of pending incapacitation action. As such, she is free to alienate her property as she deems appropriate regardless of any testamentary provision.

Regarding the purported transfer of the property by way of the 2013 will, defendants conceded the 2013 deed was invalid. As a result, Chu became sole owner of the property by operation of law on the date of her husband’s death as the couple owned the property as tenants by the entirety. At the death of a tenant by the entirety, title passes to the surviving spouse outside of probate by operation of law. After becoming sole owner by operation of law, Chu executed the 2014 deed, thereby insuring the property was transferred to the defendants.

HIGGINS V. THURBER, Docket No. A-1577-13T4, 2014 WL 8623329  (App. Div. Apr. 17, 2015) (Unpublished)

 Holding: ESTATE ATTORNEYS MAY OWE A DUTY OF CARE TO NON-CLIENTS

Salvatore John Calcaterra died on April 11, 1996. At that time he was married to his second wife, Donna Calcaterra. He was also survived by five children. Decedent’s first wife was the mother of decedent’s first four children: Laura, Michael, Sally and Robyn. Donna was the mother of decedent’s fifth child, Jenna.

Prior to Sal’s death, Donna, who held a power of attorney from Sal, transferred to herself four of six seats Sal held on the New York Mercantile Exchange (NYMEX). Sal’s Will named his son Michael as executor of his estate. In 1996, Michael, as executor, filed a lawsuit against Donna alleging that Donna had improperly transferred the NYMEX seats and other assets. Following a bench trial, the trial judge ruled that the estate was entitled to four and Donna entitled to two of the NYMEX seats. This decision was affirmed on appeal.

Thereafter, several other lawsuits were filed by the parties against each other. In 2005, Jenna filed suit against Michael, Robyn and the attorneys for the estate and executor. She alleged, among other things, that the defendant-attorneys committed legal malpractice in representing the estate. The legal malpractice action was dismissed by way of summary judgment in 2006.

In 2007, Laura and Robyn filed another legal malpractice action against the defendant-attorneys, who moved to dismiss the complaint. Viewing the motion as seeking summary judgment, the judge dismissed the lawsuit, holding that the legal malpractice claim was barred by the entire controversy doctrine.  On appeal, the dismissal was reversed and the case was remanded for a full trial. The Supreme Court affirmed.

On remand, and after extensive discovery proceedings, the defendant-attorneys again moved for summary judgment. The trial judge again dismissed the lawsuit, concluding that the defendants were the attorneys for the estate and executor only, not for the decedent’s beneficiaries; as such, an attorney representing an estate owes no duty to beneficiaries as a matter of law, since the beneficiaries are not clients. Plaintiffs appealed.

The Appellate Division again reversed and remanded. The appellate court held that an attorney for the estate may owe a duty of care to the estate beneficiaries, even though they are not clients of the estate attorney:

An attorney representing an estate [should] be aware that advice given to an executor may have an impact on the estate’s heirs, [and] the attorney should also be aware that laypersons may not fully grasp the significance of the limits on the scope of the attorney’s role in such matters. To be sure, whether a defendant owes a duty of care presents a question of law for the court, but whether an attorney owes a duty to a non-client will often turn on the surrounding circumstances, which may appear disputed or uncertain. … [A]ttorneys may owe a duty of care to non-clients when the attorneys know, or should know, that non-clients will rely on the attorneys’ representations and the non-clients are not too remote from the attorneys to be entitled to protection.

Interestingly, the New Jersey lawyer sued by the beneficiaries in this case, Mary Thurber, was elevated to the bench in 2009 and now serves as a judge on the Superior Court in Bergen County.

I.B. v. DMAHS & Bergen County Board of Social Services, OAL DKT. NO. HMA 4619-2014; Final Agency Decision, November 3, 2014. 

Holding: TRANSFERS TO CHILDREN BECAUSE OF CHILDREN’S MEDICAL AND PERSONAL PROBLEMS WERE MADE FOR PURPOSES OTHER THAN TO QUALIFY FOR MEDICAID

Petitioner entered the nursing home in April 2013 and died on August 24, 2014. While she was a nursing home resident, petitioner applied for Medicaid. At the time of application Medicaid imposed a penalty for petitioner’s transfer of $24,500 in assets. Petitioner appealed. At the fair hearing, petitioner rebutted the presumption that the transfers were made in contemplation of applying for Medicaid. Petitioner proved that her children were suffering a variety of medical and personal problems during the applicable period and she always provided financial assistance to her children during medical and personal tragedies. The wife of petitioner’s son was diagnosed with early Alzheimer’s disease in her 50’s and he needed money to help with her care. Petitioner’s daughter needed funds to retain a lawyer to divorce her physically abusive husband. Another daughter needed money after losing her job. Petitioner also gave $2,000 to her sister after the sister was diagnosed with pancreatic cancer. The ALJ ruled in petitioner’s favor, and the Director of Medicaid agreed with the ALJ decision.

M.Y. V. UNION COUNTY BOARD OF SOCIAL SERVICES, 2014 WL 7508712, Docket No. HMA-05391-14 (Dec. 17, 2014)

Holding: Medicaid applicant impoverished by husband’s COMPULSIVE gambling is eligible for HARDSHIP WAIVER

 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 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 because it would impose 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 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 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. 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.

I was unable to obtain subsequent history to determine whether the Director affirmed, reversed or modified the ALJ’s decision.

MANAHAWKIN CONVALESCENT V. O’NEIL, 217 N.J. 99 (2014)

Holding: “RESPONSIBLE PARTY” UNDER NURSING HOME ADMISSION AGREEMENT CAN BE SUED

A nursing home resident’s adult child who signs an admission agreement as the “Responsible Party” can be sued in his/her individual capacity for services rendered to the resident, if the adult child fails to use the resident’s financial resources to pay for care provided by the facility.

IN RE ESTATE OF MCCRINK, 2015 WL 135860, Docket No. A-2997-13T2 (Jan. 12, 2015) 

 Holding: EXECUTOR MAY BE LIABLE FOR LOSS IF HE FAILS TO SELL REAL PROPERTY OWNED BY ESTATE WITHIN A REASONABLE TIME PERIOD

Decedent died in November 2011. At that time, the executrix, one of the decedent’s 6 surviving children, still resided in the decedent’s home. The decedent’s Last Will and Testament allowed the executrix to remain in the home after the decedent’s death until the home is sold, with the estate responsible for taxes and maintenance costs until sale. The Will gave any of the decedent’s children the right of first refusal to purchase the home for fair market value. If none of the children wanted to purchase the home, the home was then to be sold. The executrix failed to follow the terms of the Last Will and Testament and list the property for sale. In May 2013, two siblings filed a claim seeking to compel the sale of the property. In June 2013, the court ordered the executrix to list the property for sale within 10 days. The home was listed for $330,000. By September 2013, the price was reduced with court approval to $300,000 and then $270,000. In January 2014, with the executrix still living in the home, the court found that the executrix unreasonably delayed selling the home and was in a conflicted situation, living in the house, not paying rent while still responsible to sell it. The court mandated that the executrix pay the carrying costs on the property from January 1, 2013 forward. Upon appeal, the Appellate Division affirmed, holding that an executor “may be liable for loss if he retains [assets of the estate] beyond a reasonable time for sale.”

R.L.W. V. DMAHS AND OCEAN COUNTY BOARD OF SOCIAL SERVICES, OAL Docket No. HMA-8511-2010 (Final Agency Decision, Jan. 22, 2015) 

Holding: MMMNA INCREASE APPROVED BASED UPON EXCEPTIONAL CIRCUMSTANCES

Petitioner was eligible for Medicaid since February 2010. The community spouse was entitled to a MMMNA of $2,886.21, including $2,804.68 of her own income and $81.53 from petitioner’s income. However, due to family circumstances, petitioner and his wife sought an increase in the MMMNA for the wife. Not only has petitioner been afflicted with Huntington’s disease since his early forties, but his juvenile daughter also suffers from the condition as well. As a result, additional costs were incurred by the family, including electrical repairs to maintain daughter’s life support and specialized care for daughter’s condition. Under 42 USC 1396r-5(e)(2)(B), additional income is allocated to the community spouse when there is a showing of “exceptional circumstances resulting in financial distress.” To meet the “exceptional circumstances” threshold, the Director found that exceptional circumstances are not “every day expenses” but rather are exemplified by medical bills, home repair bills for significant structural problems, or credit card arrears that are related to the medical problem. As a result, the Director accepted the exceptional circumstance standard in this case, but stated that the MMMNA must be reevaluated in at the redetermination. At that time the MMMNA must be calculated in accordance with the current regulations. Petitioner can appeal that determination at that time.

R.M. v. DMAHS & Burlington County Board of Social Services, OAL DKT. NO HMA 7521-2014; Final Agency Decision (October 1, 2014) 

Holding: TRANSFERS OF ASSETS WERE FOR A PURPOSE OTHER THAN TO QUALIFY FOR MEDICAID

In 2005, a mother entered into a 10 year lease with her daughter for a condominium. As a condition of the lease, the mother agreed to pay for all interior damage to the condo resulting from her heavy smoking.

Within the 10 year lease term, the mother entered a nursing home. Thereafter, the daughter repaired the condo, expending $14,463.84 to remove the smoke odor from the walls, replace carpet and repair damage from water heater leaks. The daughter took $11,000 from her mother as reimbursement for the damage to the condo. When the mother applied for Medicaid and Burlington County assessed a penalty of one month and nine days, the mother appealed. The ALJ reversed the penalty, finding that the transfer was not to qualify for Medicaid but to pay for repairs as stated in the lease. The Director agreed with the ALJ, stating that the transfer of $11,000 was for a purpose other than to qualify for Medicaid. 

REUTER V. DMAHS, Docket No. A-0514-13T2, 2014 WL 5285527 (App. Div. Oct. 17, 2014) (Unpublished)

Holding: MEDICAID’S FILING DEADLINE FOR AN APPEAL CAN BE EXTENDED BASED ON “EXTRAORDINARY AND EXTENUATING CIRCUMSTANCES”

In Reuter, the Appellate Division held that an appeal of a claim for Medicaid benefits that was filed late may be considered when the applicant shows that the filing deadline should be extended due to “extraordinary and extenuating circumstances.”

Plaintiff, Greta Reuter, a nursing home resident, applied for Medicaid with the Burlington County Board of Social Services. On March 28, 2013, the Medicaid agency notified the applicant by letter that it approved Medicaid benefits retroactively for the period of June 1, 2012 through September 30, 2012 and also for the month of May 2012, but denied future benefits because of the alleged failure to provide additional information requested by the agency. The letter also notified the applicant that she had twenty days to request a Fair Hearing to challenge the decision.

The Medicaid agency had no proof that the March 28, 2013 letter was either mailed by the agency or received by the plaintiff at her nursing home. In fact, plaintiff claimed that she did not learn of the letter and its contents, including the notice advising her of appeal rights, until months later on July 25, 2013 when the letter was faxed to her counsel by the agency at his request. According to plaintiff, her attorney initiated contact with the agency because neither he nor plaintiff had heard anything from the Medicaid agency for some time.

On August 2, 2013, eight days after he received a faxed copy of the agency’s letter, plaintiff’s attorney faxed and mailed a letter to the Medicaid agency requesting a fair hearing. In that letter, counsel represented that his office had not been notified before July 25, 2013 of the agency’s termination of future benefits. He also represented that plaintiff’s nursing home likewise had not received notice.

Medicaid denied the plaintiff’s request for a fair hearing, claiming that the request was untimely, having been made 127 days after the date of the March 28 letter. Plaintiff appealed, contending that the agency’s denial of her fair hearing request, and its refusal to extend the twenty-day deadline, was arbitrary and capricious.

The appeals court reversed, permitting plaintiff to appeal the denial of Medicaid benefits. The court held that the Medicaid agency acted arbitrarily and capriciously by summarily rejecting appellant’s contention that she did not receive the March 28, 2013 letter from the agency, despite the absence of any proof that the letter was either mailed by the agency or received by the plaintiff.

RIZZOLO V. RIZZOLO, 2014 WL 7928253 (App. Div. Mar. 2, 2015)  (Unpublished)

Holding: DISABLED VET ORDERED INTO VA NURSING HOME AGAINST HIS WISHES SO HIS LIMITED INCOME COULD BE USED TO PAY ALIMONY

In Rizzolo v. Rizzolo, New Jersey’s Appellate Court ruled that, under the appropriate circumstances, it is equitable to require a disabled 89 year old veteran to receive end-of-life care in a VA facility against his wishes rather than at home in order to use his limited income to continue paying alimony to his ex-wives.

Victor Rizzolo married Barbara Jones in 1982. The couple separated in 1989 and divorced in 2006. Plaintiff Victor Rizzolo was 58 years old and defendant 38 years old at the time of their marriage. After a divorce trial, the court ruled that the parties had a long-term marriage, and that defendant was entitled to permanent alimony as a result.

The court awarded defendant $300 a week in alimony. The court also awarded assets to defendant in equitable distribution of the marital estate.

Many years later, when he was 89 years old and in failing health, plaintiff filed a motion to terminate defendant’s alimony. At that time, plaintiff suffered from advanced prostate cancer, acute renal failure and a bone infection arising from a combat wound to his left knee suffered in World War II.

The court held a hearing on the motion. At the hearing, plaintiff’s son, a practicing attorney, testified that plaintiff lived with him due to his poor health. Because he was employed full-time, plaintiff’s son had to hire a full-time caregiver for his father, to whom he paid $1,000 a week. When he hired the caregiver, plaintiff’s son had to stop his father’s alimony payments to defendant, and to his mother, plaintiff’s first wife, in order to pay for his father’s care. Defendant presented evidence that her sole income was the alimony she received from plaintiff.

After the hearing, the court denied plaintiff’s motion. The court found that plaintiff had not done all he could to continue to meet his alimony obligations. Specifically, the court noted that, although he had insufficient income and assets to pay alimony to his two ex-wives and provide for all of his care needs, plaintiff could do so if he entered a VA nursing home.

Plaintiff appealed, arguing that he should have been permitted to present evidence justifying his decision to remain at home receiving end-of-life care instead of entering a VA facility so that he could continue to meet his alimony obligation, and he did not do so at the hearing because no law or case suggested that he should have been prepared to do so, The appellate court agreed, reversing the judgment and remanding the case back to the trial judge. However, the appellate court left open the possibility that, under appropriate circumstances, plaintiff could be ordered to enter a VA nursing home against his will so he could continue to meet his alimony obligation.

ROSENTHAL V. MACALLAN, Docket No.   A-0465-13T1, 2015 WL 1636112  (App. Div. Apr. 14, 2015) (Unpublished)

Holding: Home Care Agency that Failed to Individually Bond Caregivers Held Liable for Caregivers’ Theft, and for Violating the Consumer Fraud Act

After reading about the Macallan Group d/b/a/ Home Care Assistance of Red Bank, New Jersey from a “value pack coupon” she received, Gale Rosenthal contracted with them to provide home aides to assist her in her home. According to the coupon advertisement she received, the aides were bonded and insured. After she discovered that jewelry and cash had been taken from her home, she learned that the aides were neither bonded nor insured. Ms. Rosenthal sued the agency and its principal, Michael Fliegler. Her complaint included counts for consumer fraud and breach of contract.

After a jury trial, Ms. Rosenthal received a verdict awarding her $23,000 to compensate for the stolen property. The trial court tripled that amount, based on the home care agency’s violations of the Consumer Fraud Act, and also awarded legal fees, for a total judgment of $112,409.00 against the agency. The home care agency appealed.

At the trial, Mrs. Rosenthal had testified that, according to the coupon advertisement as well as her conversations with Michael Fliegler and other employees, the agency’s home care aides were bonded. Fliegler had testified that the agency was bonded and had liability insurance. However, he admitted that neither of the aides who worked at Ms. Rosenthal’s home was individually  bonded.

On appeal, the Appellate Division rejected the agency’s claims that the trial court had committed error. It affirmed the trial court’s decision in all respects. 

MATTER OF S.H., 2014 WL 4675005 (App. Div. Sept. 22, 2014) (Unpublished)

Holding: IN APPOINTING GUARDIAN, COURT MAY OVERRIDE “KINSHIP-HIERARCHY PREFERENCE” WHERE RESULT WOULD BE CONTRARY TO BEST INTERESTS OF THE WARD

S.H. was a contested guardianship litigation centering on who should be appointed guardian for S.H., a twenty-eight year old incapacitated woman. S.H. had lived with her mother, who “dutifully and selflessly cared for” S.H. her entire life. However, S.H.’s sister opposed their mother’s appointment, based upon the actions of the mother’s live-in boyfriend. The sister sought to be appointed guardian for S.H., and this application was supported by the mother’s ex-husband (father of S.H. and her sister), as well as Adult Protective Services (“APS”) and the court-appointed attorney for S.H.

The evidence demonstrated that the live-in boyfriend “frequently touched and embraced” S.H. excessively and inappropriately. Although his behavior did not rise to the level of unlawful sexual contact or assault, the trial court found the behavior to be inappropriate, and a source of anxiety to S.H.

Despite numerous opportunities, the court found that the mother failed to shield her daughter from this behavior. Therefore, the court appointed the sister as guardian. The mother appealed.

The Appellate Division acknowledged the “kinship-hierarchy preference” applicable to selecting a guardian for an incapacitated adult: “a court shall prefer the ward’s spouse, or if there is none, the next closest relative.” Nevertheless, that hierarchy preference may be overridden where such appointment would be “affirmatively contrary to the best interests” of the incapacitated person. Consequently, the appeals court affirmed the trial court’s decision to bypass the mother in favor of the sister.

Although it affirmed the trial court’s decision, the Appellate Division noted that the trial court had failed to address S.H.’s stated preferences regarding her living arrangements. S.H. wanted to be with her mother and her father, although the sister planned to place her in a group home for developmentally disabled adults. However, this failure amounted to harmless error, because “the need to protect [S.H.] from [her mother’s boyfriend’s] inappropriate contact overrode any preference [S.H] had to live with her mother.”

The Appellate Division also noted the “unfortunate” reference made by S.H.’s court-appointed attorney to looking out for S.H.’s “best interests,” noting that this is the role of a guardian ad litem.

S.L. v. DMAHS, 2014 WL 4289003, Docket No. A-3520-11T4 (App. Div. Sept. 2, 2014)

Holding: Gifts result in a medicaid penalty unless applicant can prove that they were made exclusively for some purpose other than to qualify for Medicaid

In December 2009, S.L., then 95 years old, entered a nursing home after a fall. S.L. was able to pay for her stay in the facility until she depleted her assets in August 2010. She then applied for Medicaid.

Medicaid imposed a 5.57 month ineligibility penalty because S.L. had made four gifts to her children totaling $40,000 during the look-back period.

The facts showed that S.L. was in good health at the time she made the $40,000 gifts to her children. S.L.’s gifts were reported to the IRS as permissible tax-free gifts. All gift checks written by S.L. were in her own handwriting. She was 93 years old when she wrote her first $10,000 check to her son in 2007, and 95 years old when she gave her daughter the final $10,000 gift in 2009. After making the gifts, S.L. retained approximately $60,000 in her savings account. Neither S.L. nor her children contemplated a nursing home as a probable place for S.L.’s care at the time she made the gifts; they were all convinced S.L. would continue to live independently after making the gifts.

S.L. appealed the CWA’s decision imposing a gift penalty. On appeal, the ALJ issued an initial decision affirming the CWA’s decision. Though he found it was not unreasonable that S.L. wanted to give her children money while she was alive, the ALJ noted S.L.’s age and health, and concluded that S.L. had not overcome the presumption that Medicaid eligibility was a factor in her decision to transfer assets to her children.

The Director adopted the ALJ’s decision, finding that S.L. was not in “excellent health” at the time she made the gifts to her children. As a result, the Director also determined S.L. had not met her burden rebutting the presumption that the gifts were intended to accelerate S.L.’s eligibility for Medicaid.

S.L. appealed to the Superior Court, Appellate Division. The appeals court found that a transfer during the look-back period gives rise to a rebuttable presumption that the transfer was made to establish Medicaid eligibility. The presumption may be rebutted only by showing that a transfer was made exclusively for some purpose other than to qualify for Medicaid. Under the regulations, the presence of one or more of the following factors may indicate that the assets were transferred exclusively for some purpose other than establishing Medicaid eligibility: (1) traumatic onset of disability; (2) unexpected loss of other assets which would have precluded Medicaid eligibility; (3) unexpected loss of income which would have precluded Medicaid eligibility; (4) a court-ordered transfer (when the court is not acting on behalf of, or at the direction of, the individual or the individual’s spouse); or (5) evidence of a good faith effort to transfer the asset at fair market value. The court found none of these factors present in S.L.’s case.

The appeals court affirmed the Director’s decision imposing a gift penalty, finding that S.L. had not rebutted the presumption that the gifts to her children were made to establish Medicaid eligibility. However, the appeals court also encouraged the legislature to consider changing the law:

Our Legislature should seriously consider whether it is truly in the best interests of a just society to penalize a parent for trying to give her children a small part of resources she and her husband accumulated over a lifetime of work. Unfortunately, that public policy decision is not for this branch of government to make.

SACCONE V. POLICE AND FIREMEN’S RETIREMENT SYSTEM, 219 N.J. 369 (September 11, 2014)

Holding: SUPREME COURT PERMITS DISABLED CHILD OF RETIRED FIREMAN TO DESIGNATE SPECIAL NEEDS TRUST AS BENEFICIARY OF STATE PENSION  

The New Jersey Supreme Court ruled that the disabled child of a retired fireman may have his survivors’ benefits paid into a special needs trust rather than directly to the child, thereby allowing the child to maintain eligibility for Medicaid and other public benefits based on financial need.

Thomas Saccone is a retired Newark  firefighter with a severely disabled adult child named Anthony. Anthony lives with his parents, is unable to work, has been found to be totally disabled by the SSA, and for many years has received SSI and Medicaid, which are critical in providing for Anthony’s care.

After he retired, Tom was approved for benefits from the PFRS. In order to structure his estate plan to provide for Anthony after his death without jeopardizing Anthony’s eligibility for needs-based public benefits, Tom executed a will containing a testamentary SNT. Tom asked the PFRS to pay the survivor benefits to which Anthony would be entitled upon Tom’s death to the testamentary SNT. Those death benefits included the payment of pension benefits to the retired member’s widow/er and children (the “pension death benefit”). The PFRS denied the request based on a pension statute which prohibits a retiree from designating a primary or a contingent beneficiary for the receipt of the retiree’s pension death benefits in the event of the retiree’s death.

The decision was affirmed administratively, affirmed by the Appellate Division, but summarily reversed and remanded by the Supreme Court.

On remand, the agency again denied Tom’s request, concluding that Tom could not designate a SNT  as a beneficiary of his pension death benefits. The Appellate Division again affirmed the administrative decision.

The Supreme Court reversed the decisions by the lower courts and administrative agencies, holding that “the disabled son of a retired [PFRS] member … may have his survivors’ benefits paid into a first-party … SNT created for him under 42 U.S.C.A. §1396p(d)(4)(A).”

In re Scuderi, 2014 WL 4112149, Docket No. A-3201-13T3  (July 9, 2015) (Unpublished) 

Holding: Probate Judge Properly Exercised Discretion In Denying Guardianship Objections Without A Hearing

Following a daughter’s application to be appointed as guardian for her father, her brother objected and sought to be appointed as the guardian. Middlesex County Judge Frank M. Ciuffani held a four-day trial, during which it was established that the siblings had a contentious relationship and that the daughter had been named alternate executor under their father’s will. At the conclusion of the trial, Judge Ciuffani questioned the son’s motives for contesting the guardianship, and appointed the daughter as guardian.

In a subsequent application, the daughter/guardian sought permission to sell the ward’s rental property. The son opposed this request, and asked that the court consider removing his sister as guardian based upon alleged “self-dealing” and failure to implement a care plan. He claimed that their father was not thriving at his care facility, and that the guardian had failed to disclose all of their father’s assets. The judge held a hearing on the application and ultimately rejected the son’s objections, thereby permitting the sale of the rental property. The following year, the guardian filed a new complaint in which she sought permission to sell the ward’s personal residence to pay for his long-term institutionalized care. The son again opposed the application and sought his sister’s removal as guardian. He again claimed that the father’s health was declining (although he had been moved to a different care facility).

Judge Ciuffani noted that the ward’s estate had been depleted $60,000 by the cost of the original trial, that the son’s newest counterclaim raised the same arguments as had been previously decided, and that another trial would further deplete the ward’s estate. He therefore dismissed the son’s counterclaim and permitted the sale of the residence, finding that a plenary hearing on the counterclaim was unnecessary.

On appeal, the son claimed that there were genuine issues of material fact that precluded the probate judge from dismissing his counterclaim without a hearing. The Appellate Division disagreed, and affirmed the probate court’s ruling.

The appellate court reviewed the court rules, which dictate that all actions in the Probate Part be brought by order to show cause in a “summary manner,” the purpose of which is to expedite those actions and to avoid plenary hearings. In summary actions, as opposed to summary judgment actions, the court makes findings of fact, the opponent of the action is not granted favorable inferences, and, “if the court is satisfied with the sufficiency of the application, it shall order defendant to show cause why final judgment should not be rendered for the relief sought.” Thus, the probate judge is given broad discretion on summary proceedings “in determining the genuine nature of the factual dispute and whether the issue may merit a plenary hearing.”

The Appellate Division noted that the probate judge had found that the son’s arguments and allegations mirrored those he raised unsuccessfully at the initial guardianship trial and at the first application to sell the ward’s property, and that no new competent proofs had been provided to support the most recent objections. The appellate court concluded that the probate judge had properly exercised his discretion in dispensing with a plenary hearing on the son’s latest claims.

Singer v. Emeritus Senior Living Center, 2015 WL 2465132, Docket No. A-4635-13T3 (App. Div. June 1, 2015) (Unpublished)

 Holding: Malpractice Action Against Assisted Living Facility Dismissed; Plaintiff’s Psychiatrist-Expert Not Qualified To Render Opinion On Assisted Living Standard Of Care

Following a series of falls and the later death of Elizabeth Singer, her family sued the Emeritus Senior Living Residence, claiming that the last of those falls led to Mrs. Singer’s cognitive decline and hastened her death. Plaintiff’s expert was a board certified psychiatrist.

At the conclusion of discovery, the defendant facility moved for summary judgment, claiming that plaintiff’s expert was not qualified to offer an opinion on the standard of care for an assisted living facility, and that the expert could not opine, to a reasonable degree of certainty, that the fall proximately caused the injury and death. The trial court agreed and dismissed the case, finding that the expert psychiatrist had no nursing background or training, and referred to no nursing standard of care in preparing his report. The judge also noted that the expert’s causation opinion was speculative. The plaintiff appealed.

On appeal, the Appellate Division affirmed the summary judgment. It rejected the plaintiff’s argument that dismissal was inappropriate because plaintiff had previously survived a challenge to the expert psychiatrist’s qualifications under the Affidavit of Merit statute. The appellate court noted that the Affidavit of Merit statute merely requires a party to make a threshold showing of merit, but does not address whether the claim can actually be proven.

SLACK V. WELLS FARGO BANK, 2015 WL 3869688, Docket No. A-3650-13T2 (App. Div. June 24, 2015) (Unpublished)

 Holding: Appellate Division Permits Property Owner’s Claims Against Banks To Survive

The plaintiff and her brother held title to their late mother’s home as joint tenants with right of survivorship. In 2006, plaintiff’s brother opened a $100,000 line of credit with Wells Fargo, secured by a mortgage on the property. The parties dispute whether plaintiff was aware of the line of credit. Only her brother signed the mortgage the day it was opened, but the recorded mortgage included an acknowledgment page bearing plaintiff’s signature (plaintiff claimed the signature was forged). Thereafter, it appeared that Wells Fargo assigned the mortgage to Fannie Mae. Plaintiff’s brother later died, and Wells Fargo attempted to collect the debt from the plaintiff.

In 2012, plaintiff filed a verified complaint seeking to have her brother’s estate declared insolvent, and seeking to quiet title on the property. Neither Wells Fargo nor Fannie Mae was named as a defendant, and the mortgage in issue was not specifically identified in the complaint, although Wells Fargo’s encumbrance of the property was mentioned and Wells Fargo and Fannie Mae were given notice of the proceeding.

In 2013, the Chancery Division found that when the brother died, the line of credit also died and “no longer attach[ed] to the real estate.” The court entered default, nunc pro tunc, against Wells Fargo on the mortgage, although Wells Fargo was not a named defendant. The order memorializing the court’s decision entered default against “all defendants,” declared the brother’s estate insolvent, and found that plaintiff was “the sole owner, in fee” of the property.

Later that year, Fannie Mae notified plaintiff that it was asserting a lien on the property. When plaintiff disclaimed the debt and Fannie Mae notified plaintiff of its intent to foreclose, plaintiff filed the instant suit against defendants Wells Fargo and Fannie Mae, including claims under the Consumer Fraud Act and the Fair Debt Collection Practices Act. The defendant banks filed a motion to dismiss, in lieu of an answer, for failure to state a claim on which relief can be granted.

Plaintiff failed to appear for oral argument on the defendants’ motion to dismiss in the Law Division, and the motion was granted. Although on reconsideration the court allowed plaintiff to argue the underlying motion, the Law Division denied the motion for reconsideration and upheld the dismissal of plaintiff’s claims. It indicated that, contrary to the Chancery Court’s oral opinion, its Order had not discharged the mortgage, which survived the brother’s death under Estate of Zahn, 305 N.J. Super. 260 (App. Div. 1997).

On appeal, the Appellate Division reversed and remanded the dismissal of plaintiff’s complaint. It found that, because the motion court had considered matters outside the four corners of the complaint, it should have been converted to a summary judgment motion. Because it was not, and the summary judgment standard was not applied to the motion, a reversal and remand was required. The Appellate Division noted that genuine issues of material fact included whether plaintiff had in fact signed the mortgage, and whether the mortgage had been property assigned to Fannie Mae.

TAFFARO V. TAFFARO, 2015 WL 3511932, Docket No. A-39120-12T2 (App. Div. June 5, 2015) (Unpublished)

 Holding: Property Left at Gravesite is “Abandoned;” Conversion Claim for Removal of Property is Dismissed  

The plaintiff sued his half-sister claiming that she removed decorations and flowers he had placed near their mother’s gravestone. Plaintiff had placed various items at the grave, including a Christmas wreath, a Halloween ghost, and cards, which were “frequently directed towards defendant” and referencing the parties’ previous dispute over their mother’s estate.

After various counts were dismissed based upon the statute of limitations, the remaining count, seeking damages for conversion, was tried without a jury. At the conclusion of plaintiff’s case-in-chief, plaintiff’s complaint was dismissed. The trial judge concluded that plaintiff had abandoned the property in issue, and that he had failed to prove that the defendant had taken them.

The Appellate Division affirmed. It agreed that plaintiff had failed to prove conversion because he had abandoned the items by leaving them at the gravesite. It noted that the cards and decorative items were “ephemeral” in nature, having been made of paper and left outside. It also noted that the items were placed at the grave with the intention of harassing the defendant, rather than to honor their mother’s memory, and that such items were routinely removed by cemetery groundskeepers. Finally, the court found that the trial had judge correctly concluded that there was no evidence presented that the defendant had actually taken the items in issue.

IN RE ESTATE OF VENDOLA, 2014 WL 4744651, Docket No. A-0304-13T2 (App. Div. Sept. 4, 2014) (Unpublished)

Holding: COURT REFUSES TO PROBATE AN UNSIGNED WILL 

A stepmother wanted her stepdaughter to be the beneficiary of her estate. An attorney was contacted to prepare a will leaving everything to the stepdaughter. He prepared the will and the stepmother died. She never saw or read the will and a copy was never sent to her. The stepdaughter and her husband brought suit seeking to probate the unsigned will. Various defendants who would share from the stepmother’s intestate estate answered and counterclaimed. Plaintiffs brought a summary judgment motion. The trial judge would not allow the will to be admitted to probate.

Plaintiffs appealed, seeking to probate the unsigned will. The Appellate Division affirmed, holding that there was insufficient basis for admission of the draft will to probate. For a writing to be admitted into probate, it must be proven by clear and convincing evidence that (1) the decedent actually reviewed the document in question and (2) thereafter gave his or her final assent to it. The court refused to admit the unsigned, unseen, unreviewed will to probate.

In re Zirkle, 2014 WL 4388396 (App. Div. Sept. 8, 2014) (Unpublished)

Holding: Administrator awarded counsel fees based on decedent’s estranged wife’s “dogged pursuit” of “clearly frivolous” claims

Following the decedent’s death, one of his three children applied for summary administration of the estate pursuant to N.J.S.A. 3B:10-4, which governs intestate estates that do not exceed $10,000. More than two years later, the estranged wife of one of the decedent’s children filed an action for probate, claiming that there was a 2005 will in which the majority of the decedent’s estate was left to her daughter (one of the decedent’s grandchildren). The estranged wife also claimed that, prior to the decedent’s death, one of his children had depleted the estate by misappropriating the decedent’s funds as power of attorney.

Following a hearing, the trial judge found the estranged wife’s testimony contradictory and unpersuasive.

With respect to her claim that the decedent’s child, as power of attorney, had improperly disbursed the estate’s assets while the decedent was alive, the judge found that those pre-death distributions included distributions of $10,000 each to the agent herself and to her siblings. The trial judge concluded that those distributions, “while not in accordance with convention,” were “not done for any illegal or devious purpose” and were “not fraudulent.”

The trial court also found that the estranged wife’s attempt to probate the 2005 will was time-barred by R. 4:85-1.

Finally, the trial court awarded the administrator counsel fees based on the estranged wife’s “dogged pursuit” of one of her “clearly frivolous” claims.

The Appellate Division affirmed in all respects the decision of the trial court, noting the deference given to a trial court that has the opportunity to assess the credibility of the witnesses. In affirming the legal fee award, the appeals court noted that fees for frivolous litigation are reviewable based on an “abuse of discretion” standard.

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