Update On Federal Class Action Lawsuit To Prevent NJ From Counting VA Pension In Determining Medicaid Eligibility

I. The Facts.

Plaintiff, Alma Galletta, who suffers from a variety of medical impairments, is the surviving spouse of a World War II veteran. Over two years ago, plaintiff began receiving pension benefits from the Department of Veterans Affairs (VA). VA pension benefits are payable to a surviving spouse based on the veteran’s non-service-connected death.  Plaintiff also received a supplement to her basic pension benefit, called “aid and attendance,” because she was found to need assistance in performing routine activities of daily living.

Even with the VA pension benefit and aid and attendance (A&A) supplement, however, plaintiff’s income was insufficient to cover the cost of round-the-clock care.  So she applied for New Jersey’s Global Options for Long Term Care program, a Medicaid benefit for those living in the community with unmet care needs.  Defendants, the New Jersey Department of Human Services, the Division of Medical Assistance & Health Services, and the Camden County Board of Social Services, originally found plaintiff ineligible for Global Options based on their determination that plaintiff’s income, including the VA pension benefit, exceeded the Global Options income threshold. Although the basic VA pension was counted toward the income threshold, defendants did not consider the A&A supplement as “countable income” under the Global Options because A&A, unlike basic pension, is paid based upon substantial unremibursed medical expenses (UMEs), according to defendants.

After being found ineligible for Global Options, plaintiff filed a class action lawsuit in federal court. The lawsuit is based on the claim that defendants improperly included plaintiff’s VA basic pension benefit, and the pension benefits of all those like her, in the Global Options financial eligibility calculation. Plaintiff claimed that defendants should have excluded the basic pension portion of the VA benefit from the eligibility calculation just as they excluded the A&A supplement because both the basic pension and A&A supplement were awarded as a result of plaintiff’s substantial UMEs.

After the federal lawsuit was filed, defendants recalculated plaintiff’s “countable income” and deemed plaintiff to be eligible for Medicaid’s Global Options program. However, defendants concluded that the date of Medicaid eligibility was the date they received a letter from the VA indicating that plaintiff’s entire VA benefit, including both the basic pension and A&A, was paid for “aid and attendance” as a result of UMEs, rather than the date when plaintiff originally filed for Global Options, ten (10) months before.

After awarding plaintiff Global Options eligibility, defendants filed a motion to dismiss the lawsuit due to “mootness.” The federal court denied the motion, determining that plaintiff’s case was not moot since her eligibility for Global Options is reviewed at annual intervals and she could be denied at one of the annual reviews for the same reason that she was erroneously denied originally.  Defendants then filed a motion for reconsideration, which was also denied. Plaintiff’s motion to amend her complaint to add additional plaintiffs as class members was granted, and an amended complaint was recently filed. The parties are now engaged in discovery proceedings.

II. The Law.

Plaintiff satisfied the income requirement for receipt of VA pension benefits because she had substantial UMEs.  Specifically, when plaintiff applied for VA pension benefits she had “countable” annual income which exceeded the limit set by the VA for the receipt of pension benefits by several thousand dollars. Thus, plaintiff would have been ineligible for the any VA pension but for the fact that she also had UMEs which brought her “countable income” down to $0.00.

C.F.R. § 3.272(g)(2)(iii) provides, in pertinent part, as follows:

[U]nreimbursed medical expenses may be deducted from countable income” if during the twelve months preceding the application for benefits those medical expenses exceeded “five percent of the applicable maximum annual income limit . . . .

In short, if plaintiff’s entire VA pension award ‘resulted from “unusual” medical expenses, i.e., expenses which exceeded 5% of her annual income, none of her income is “countable income” for Medicaid purposes.  That is certainly the case for plaintiff and all of the class plaintiffs here.

Further, plaintiff’s unreimbursed medical expenses were “unusual” since her UMEs easily exceed five percent of plaintiff’s annual income.  According to 38 C.F.R § 3.262(l), “[t]he term unusual means excessive. “Excessive” in this context describes the ratio between the amount expended for medical treatment in relationship to the claimant’s resources available for sustaining a reasonable mode of life. Unreimbursed expenditures which exceed 5 percent of the claimant’s reported annual income will be considered “excessive” or “unusual”

Therefore, because plaintiff was eligible for VA pension as a result of her UMEs, and because those expenses were “unusual,” the entire VA pension benefit including the base pension amount and A&A supplement is not countable income for purposes of Global Options eligibility.  §416.1103(a)(7) provides as follows:  “Medical care and services are not income if they are . . . [p]ayments from the Department of Veterans Affairs resulting from unusual medical expenses.” See also, Buchanan v. Whiteman, 877 F. Supp. 571, 574 (D. Kan. 1995)

I posted  articles on this blog about the Galletta case several times in the past. They can be found here,and  here.

(This blog post is based upon an excellent memo summarizing the case prepared by Joseph A. Venti, Esq., of the law firm of Williams Cuker Berezofsky LLC, my co-counsel in the Galletta case.)

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