Watch out for the Rules of Evidence in Medicaid appeal hearings

The first level of appeal when the State Medicaid Agency issues an adverse decision is called a “Fair Hearing” and takes place at the NJ Office of Administrative law (OAL). The Judge is referred to as an Administrative Law Judge or “ALJ.” That Judge issues an initial decision that is subject to review and final decision by the NJ Division of Medical Assistance and Health Services (Medicaid). The burden of proof is on the applicant, and the hearing is conducted generally like a trial — witnesses can be questioned under oath; documents can be introduced in evidence. The formal rules of evidence that govern the New Jersey courts are relaxed somewhat, but there are still requirements to prove each point of the legal case by using some non-hearsay evidence. The following case illustrates what can go wrong when “the i’s aren’t dotted and the T’s aren’t crossed,” as they say.

 B.S. v. Div. of Med. Assistance & Health Servs., was an unsuccessful appeal after an unsuccessful Fair Hearing. The 92-year-old  Petitioner lived in a nursing home and had applied for Medicaid. When her 5 years’ of financial records were submitted for the required “look-back” scrutiny, the county division for social services noticed that there were two large bank withdrawals from her account. The funds had been transferred to her daughter’s account. The daughter was told to provide proof that either (a) all of the transferred money had been actually spent for benefit of the applicant or that (b) the transfer was some kind of purchase at fair market value for goods or services. The requested proof wasn’t supplied and a 224-day “transfer penalty” was imposed. The request for Fair Hearing was then filed.

The OAL has a rule that requires a “residuum” of non-hearsay evidence for each fact to be proven. If the other party won’t stipulate to the fact, then it must be proven through what’s called “competent” evidence – i.e., non-hearsay. Here’s the rule:

1:1-15.5 Hearsay evidence; residuum rule

(a) Subject to the judge’s discretion to exclude evidence under  N.J.A.C. 1:1-15.1(c) or a valid claim of privilege, hearsay evidence shall be admissible in the trial of contested cases. Hearsay evidence which is admitted shall be accorded whatever weight the judge deems appropriate taking into account the nature, character and scope of the evidence, the circumstances of its creation and production, and, generally, its reliability.

(b) Notwithstanding the admissibility of hearsay evidence, some legally competent evidence must exist to support each ultimate finding of fact to an extent sufficient to provide assurances of reliability and to avoid the fact or appearance of arbitrariness.”

Apparently, at the hearing, her evidence was made up of  “unauthenticated bank records” and a power of attorney, ruling that petitioner had failed to submit any competent evidence. The case was scheduled for hearing three times, and neither the Petitioner (nor her attorney) presented any witnesses to testify about what had occurred or to explain any documents that were presented in evidence.  As a result, the ALJ ruled that there was insufficient evidence to show that the transfers were anything other than an outright gift — which causes a penalty under the Medicaid program. The Director affirmed (adopted the decision) and the Appellate Division affirmed.

The burden of proof rests with the applicant in Medicaid cases. Careful detailed preparation is needed to successfully prove a case at an administrative hearing.

Call us for representation on Medicaid applications and appeals of denials …. 732-382-6070


Transfers during the look-back merely raise presumption of intent to qualify for Medicaid

When a medicaid application is processed, five years’ of transactions are examined, and among other things, they look to see if there were uncompensated transfers or “gifts.” The agency then must presume that the transfers were made for the purpose of expediting eligibility, and can impose a transfer penalty  for the gifts. You are entitled to a Fair Hearing at the Office of Administrative Law to try to “rebut the presumption” by providing “convincing evidence” that gifts were made exclusively for a purpose unrelated to potential Medicaid eligibility. Sometimes, life takes a terrible turn and an otherwise healthy person makes gifts to their children but then becomes catastrophically ill and requires Medicaid to pay for their bills. That’s what happened to Mr. and Mrs. M in a case I handled  6 years ago.

Mr. and Mrs. M were in their mid-50’s. He retired at about 57 years of age. Coincidentally, the factory where his  wife worked closed down. They had 2 children. They sold their house in NJ, transferred some of the modest proceeds to their children, and took a long-awaited and prolonged vacation out of the country . Upon their return, staying in their daughter’s apartment as they began looking for a new house to buy, Mrs. M. became desperately ill with a rampaging infectious condition and required lengthy hospitalization. She had no insurance and did not survive the crisis. In processing the Medicaid application, the agency  imposed a transfer penalty for the gifts. We appealed.

Estate of M.M. vs Division of Medical Assistance & Health Services & Union County Board of Social Services, OAL docket no. HMA 13911-08 (2009)

DMAHS’ Final Agency Decision May 2009 adopting the ALJ Initial Decision, reverses County Board’s action that penalized pre-eligibility transfers of assets. The Agency confirmed the ALJ findings that  transfers made to her daughters a year before the application were made exclusively for a reason unrelated to medicaid eligibility.

These cases are all fact-sensitive. Particularly in the case of younger applicants, there is opportunity to “rebut the presumption” with the careful development and presentation of the relevant evidence.

Call us for advice about Medicaid eligibility, planning, applications and appeals … 732-382-6070

Appeal of a Medicaid Denial Must be Filed within 20 days of Notice

When an application for Medicaid benefits is filed with a County Board of Social Services in New Jersey, it may be many months before the applicant hears back from the caseworker who is processing the application. If the applicant is in a nursing home or is suffering with Alzheimers Disease or other dementias it is crucial that they have a representative such as a family member, agent under power of attorney, or lawyer, who can keep in touch with the agency, provide an accessible mailing address,  and send the updated financial records while the eligibility determination is in process and the application is pending. Should there come a time that the agency denies eligibility, it is required to serve the applicant with Notice of a Denial of Benefits. Notice is required in order to preserve the applicant’s constitutional Due Process Rights to appeal a deprivation of Medicaid benefits. The first appeal is called a Request for Fair Hearing, which takes place at the NJ Office of Administrative Law before an Administrative Law Judge.

Once the Notice has been served, the applicant has just twenty (20) days to request their Fair Hearing. N.J.A.C. 10:40-3(a). If there are “extraordinary and extenuating circumstances,” the applicant can request an extension. One of those circumstances could be that the applicant simply never received any Notice of the Denial. In a recent unpublished (non-precedential) decision of the NJ Superior Court Appellate Division called Reuter v Burlington County Board of Social Services and DMAHS, docket no. A-0514-13T2, that is what occurred. The applicant filed a late request for hearing on the 147th day and the request for extension was denied. Since the Agency had no proof that it had actually served Notice of Denial, the refusal of an extension was reversed and the case was remanded for further fact-finding.


For representation on Medicaid application denials and fair hearings, call 732-382-6070