New Jersey Court rejects denial of Medicaid benefits where spouse refused to cooperate

When a married person applies for MLTSS Medicaid benefits, the applicant must provide 5 years of records pertaining to all financial activity of the applicant and their spouse. The applicant also must supply proof of the spouse’s current income and assets. Sometimes, the spouse just refuses to cooperate with the process, creating a dilemna for the Medicaid applicant. In some circumstances, the couple is actually estranges and not living together. Sometimes the spouse actually resides out of state – the couple is still married, but they live separate and apart. In other circumstances, it’s a second marriage and the children of the community spouse don’t wish to cooperate with the process. And sometimes, they live together and the spouse just refuses to produce the evidence. Whether willful or otherwise, the situation is referred to as having a spouse who refuses to cooperate, sometimes called “spousal refusal.” Unlike some other states, New Jersey did not adopt a specific regulation concerning what to do if the spouse refuses to cooperate. However, there is an explicit provision in federal Medicaid law that says that benefits cannot be denied if the applicant has assigned to the State all of the rights he has under state law to support by his spouse, or if denial of benefits would work “an undue hardship.”  In fact on a Medicaid application, the applicant has to sign just such an assignment of rights. The federal law is at 42 U.S.C. § 1396r-5(c)(3)(A)  and (c)(3)(C).

The federal statute says:  “42 USC 1396r-5(c)(3). Assignment of support rights. The institutionalized spouse shall not be ineligible by reason of resources determined under paragraph (2) to be available for the cost of care where—

(A) the institutionalized spouse has assigned to the State any rights to support from the community spouse;
(B) the institutionalized spouse lacks the ability to execute an assignment due to physical or mental impairment but the State has the right to bring a support proceeding against a community spouse without such assignment; or
(C) the State determines that denial of eligibility would work an undue hardship.

A recent case illustrates what can happen in a case where the spouse of the Medicaid applicant simply refuses to cooperate with the process due to disability or emotional distress. N.S. v. Div. of Med. Assistance & Health Servs., N.J. Super. App. Div. (per curiam). NS was 87 and had moved to a nursing home. His 86 year old wife was the community spouse. His daughter was his legal guardian, and she did not have a close relationship with her stepmother. Six written demands for information were sent to NS’s wife, which she didn’t answer, and in 2 personal visits she told NS’ guardian to just stop asking about all of that because “it was causing her stress.” He asked for the hardship waiver based on his wife’s refusal to cooperate.

In this case, the county board of social services refused to approve Medicaid without the records from the spouse, and refused to apply this federal requirement. Evidently the state’s “policy” was that at a minimum, the spouses had to be estranged from one another. A fair hearing took place, and substantial evidence was placed in the record concerning the efforts made to get information and the refusal by the community spouse . Nonetheless, the Administrative Law Judge sustained the county board’s denial, and the state Division of Medical Assistance and Health Services (DMAHS) issued a Final Agency Decision adopting that recommendation. However, the appellate division reversed, holding that that decision was arbitrary and capricious and disregarded the evidence in the case record. The decision was “not approved for publication,” which means it is instructive but is not precedential or binding on other courts.

P.S. There is some interesting discussion at the end of the case (see page 18-19) regarding demands for information that didn’t exist and that had been reasonably explained by N.S.’s guardian in correspondence to the caseworker. For more on THAT type of problem, see our post here.

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