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


Nursing Home resident on Medicaid gets second chance to win her bid for a medically necessary power wheelchair

When an individual resides in a nursing home and receives Medicaid benefits, the facility is paid an all-encompassing per diem rate which is designed to cover all of the costs of medically necessary services that the facility provides to the resident. There are times that a facility declines to provide some specialty service or equipment because of its extra cost, or the facility seeks Medicaid reimbursement for the service and is rebuffed by the Division of Medical Assistance and Health Services (DMAHS). The remedy is for an appeal to be taken. The Medicaid recipient is the petitioner, and seeks a Fair Hearing at the Office of Administrative Law. In a recent  case, the nursing home resident had her day in court but the total record was considered insufficient for the Appellate Division, which remanded for further findings. The case is called  M.S. v. Div. of Med. Assistance and Health Serv., App. Div.  (per curiam)  

M.S. was a 73-year-old hemiplegic who resided in a health care facility and used a wheelchair. She asked the Division to  authorize a power wheelchair for her because of her difficulties in operating the one-armed manual wheelchair she was using. The division denied the application, saying that the wheelchair was considered part of the per diem rate paid to the facility under N.J.A.C. 10:59-1.4(a)(4). After her Fair Hearing, the Administative Law Judge (ALJ) reversed the denial, and found that the  deterioration and pain in petitioner’s right shoulder were caused by her manual wheelchair and would be alleviated by a power wheelchair. The Judge found that a power wheelchair was medically necessary. The Director of DMAHS reversed the ALJ. M.S. appealed to the Appellate Division.

The Appellate panel found that: (1) power wheelchairs were “not routinely used” or essential to the facility’s function, and as such they were not considered part of the facility’s per diem rate, and (2) the power wheelchair was not excluded by (a)(4) and could be covered if “required due to the medical need of” petitioner; (3) petitioner showed that a power wheelchair was medically necessary; (4) there was no sufficient, competent and credible evidence to support the director’s conclusion that the facility was required under the Medicaid per diem rate to push petitioner’s wheelchair. However, the Court found the record below to be inadequate because  the ALJ made no finding on whether the purchase of the power wheelchair was a cost-effective solution to petitioner’s increasing difficulty in propelling herself to activities with the manual wheelchair. The decision below was vacated and remanded for further fact-finding proceedings.

As the saying goes, “the squeaky wheel gets the oil” or “don’t ask, don’t get,” and this is certainly true when it comes to advocating for residents’ needs in a nursing home. And when pursuing administrative appeals — especially in the Medicaid context, given the high rate of reversal —  it is particularly important to make sure that you introduce copious evidence  through documents or testimony to substantiate every single fact that would be necessary to support the decision you are looking for.

Call us for representation on Medicaid applications and fair hearings … 732-382-6070