Marinaro secures Court reversal of Medicaid denial where the proof required by DMAHS just didn’t exist

The burden to prove eligibility for Medicaid rests with the applicant, but sometimes, the agency just refuses to accept the evidence they are given. This is demonstrated in a recent New Jersey case in which a denial of benefits was reversed by the Appellate court. The decision is “not approved for publication ,” which means it doesn’t establish a precedent that’s binding on other courts, but it does provide an interesting view of what can happen in a case. L.A. vs DMAHS decision

L.A and her husband established a revocable living trust for their own benefit, and transferred their house into it. Their Social Security numbers were associated with this trust. An attorney wrote the trust. The Asset Schedule  at the back of the Trust document wasn’t filled out, so nothing was shown as to the assets that were placed into the trust. Some years later, in 2012, the trustees transferred the property out of the trust into the names of L.A. and her husband. In 2017, the couple terminated the Trust — which held no assets and apparently no longer had any purpose —  and transferred the house into L.A.’s sole name. Later, a Medicaid application was filed for L.A. They didn’t disclose the Trust when they provided the 60-month look-back documents. For the look-back, one must submit records of all assets held within the prior 60 months. As noted, the Trust had not held any assets during the look-back period. The agency reviewed the Deed and asked for the Trust records. The applicant submitted the trust document, the trust termination document, and a letter from their attorney which stated that the only asset that was ever in the Trust was the house. As noted above, Schedule A to the trust was blank, so no assets were listed on the Trust. The application was denied for “failure to submit required verifications” of the assets in the trust. L.A. requested a fair hearing appeal before the Office of Administrative Law (OAL).

At the hearing before the Administrative Law Judge (ALJ), the attorney who wrote the trust testified in accordance with the letter he had written for the application, and explained that the annexed Schedule was left blank because it called for information not applicable to the situation. Both he and L.A.’s husband testified that the house was the only asset that was ever in the Trust. Tax return evidence was submitted which did not show income from any trust assets.  The ALJ concluded that they were credible, but that the explanation about the blank schedules was inadequate and that plaintiff had indeed failed to submit the “required verifications” to establish Medicaid eligibility, and upheld the denial of benefits. The DMAHS adopted that decision, and L.A. appealed, represented by our Firm. Essentially, the Final Agency Decision stood for the proposition that even when there is no proof of assets, the agency may presume that they exist, and may deny eligibility for failure to prove otherwise.

On appeal, the court reversed, ruling that the final agency decision was not supported by the record. An administrative agency must base its decision on the “substantial credible evidence” in the case record, and the appellate court can overrule an agency decision if it is based on “findings that are contrary to the record.”  The court noted that the agency “reviewed the application with skepticism” despite the explanations,  and despite that information, “speculated” that additional assets were in the trust, leading to a situation in which “L.A. was required to produce information that simply did not exist” The Court reversed the denial, and held that “L.A. supplied all the necessary information for review of her application, and that her benefits should not have been denied because of the omission” of evidence that simply does not exist.

The Medicaid application process is a minefield with many traps for the unwary. As individuals grow older they need to always be looking to the future when they set up their financial arrangements, maintain their paperwork and handle their accounts and trusts, because things can turn on a dime and it just might become necessary to prove one’s eligibility for Medicaid. We’re here to help at every step of the way.

 

Call for advice and representation concerning Medicaid planning, applications and appeals ……. 732-382-6070

Guidebook available regarding common nursing home problems

Justice in Aging is a non-profit organization that is dedicated to fighting for the rights and interests of poor elderly people in the United States. The organization has just released a free guidebook called “25 Common Nursing Home Problems and How to Resolve them.” Click here to find out how to get this publication.

Readers of this blog are aware that skilled nursing facilities/ long-term care facilities are regulated by both federal law and state law. There are numerous protections for the residents of such facilities, but vigilance and vigorous advocacy are often required.

Senior care planning often involves looking at a variety of choices for long-term care and developing both a clinical care plan and a financial plan. The process can be distressing and difficult. Understanding the legal protections for residents and the obligations of the facilities will make you better equipped to help your loved one. Individualized legal advice coupled with publications like this one can be helpful as you navigate this process. Forewarned is forearmed.

For individualized legal advice on the elder care plan that’s right for you, call us at …. 732-382-6070

 

There’s no “income cap” anymore for Medicaid long term benefits

When I first started filing Medicaid applications for my clients back in 1995, a person who needed long-term care services in the home or assisted living but had run out of money could not even apply for Medicaid if their gross monthly income was higher than the “income cap.” Of course, the income cap was well below the amount that was needed to pay for care, which meant that a lot of people couldn’t receive necessary services. Basically it meant that many people who would have done well in a community environment with a home health aide and other support ended up moving into a nursing home, because that was the only setting where Medicaid would pay for them. Or they had to do without care or cobble together a plan in which family members took care of them.

Finally, in 2014 when the State’s Comprehensive Medicaid Waiver went into effect, the income cap was eliminated as a bar to receipt of community & assisted living services. There is a special procedure that the applicant has to use, because the income has to be funneled through a structure called a Qualified Income Trust (QIT), but at least the person can now apply for Medicaid benefits. You can read more about QIT’s in our earlier blogs.

We continue to meet people who haven’t heard this good news. If your family is struggling with how to arrange and pay for long term care, call us for legal advice regarding Medicaid eligibility that fits your specific situation.

For personalized advice about a Medicaid plan call … 732-382-6070

Third Circuit rejects State’s claim that short-term annuities can’t meet Medicaid requirements

The Third Circuit federal Court of Appeals has just issued a precedential decision concerning Medicaid planning strategies that involve the purchase of short-term, immediate, irrevocable, unassignable annuities. Zahner decision The case is called

ANABEL ZAHNER, by her agent Raymond E. Zahner; ESTATE OF DONNA C. CLAYPOOLE, by Mitchell R. Claypool, Executor; CONNIE L. SANNER, by her agent Jamie R. Rybak,Appellants in No. 14-1328, v. SECRETARY PENNSYLVANIA DEPARTMENT OFHUMAN SERVICES, Appellants in No. 14-1406, Case: 14-1328

 

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The Zahner case is out of Pennsylvania and involved two denials of nursing home Medicaid eligibility by the Pennsylvania Department of Human Services. Both of the applicants had transferred assets to their family members (which would trigger a transfer penalty) and used other assets to purchase immediate irrevocable annuity contracts that met all criteria of the federal Medicaid statute but happened to be for relatively short terms. The State argued that because the annuity’s term was quite a bit shorter than the actuarial life expectancy of the applicants, they were sham transactions, or were trust-like devices. As a result, the State sought to either impose a transfer penalty or continue to count the annuity as a resource. That would mean the applicant’s resources exceeded the required levels for eligibility.

Pennsylvania had actually enacted a law voiding any nonassignability clause in an annuity. The Court affirmed the Federal District Court decision which declared that that statute was pre-empted by the federal Medicaid law, under the Supremacy Clause of the US Constitution. The court further embarked on a lengthy detailed analysis of the requirements put in place by federal statute and CMS’ interpretive rulings concerning the purchase of annuities by Medicaid applicants. The Court concluded that if the annuity meets all of the criteria adopted by Congress and CMS, its purchase cannot be penalized, its value cannot be counted as a Resource, and there is no lawful basis to impose any additional criteria concerning the length of the annuity contract.

In New Jersey, careful Medicaid planning with properly structured immediate annuities enables applicants to preserve some assets for their families. Two of my earlier cases, PK and MW, resulted in Final Agency Decisions by DMAHS that confirmed the viability of such planning.

 

CALL US for asset protection in connection with Medicaid applications, and to prepare and file your application … 732-382-6070