Notice of Medicaid Ineligibility violates Due Process if it doesn’t specify the Reason

The Superior Court of Massachusetts recently addressed the question of whether a state Medicaid agency had given adequate notice to the Medicaid applicant of the reason for denial of eligibility. What’s useful for New Jersey purposes is the exended discussion of the federal regulations pertaining to Notices of denial, and the explanation given by the Court as to why the Notices in question were deficient.

The case concerned assets that were held in a Trust. An applicant cannot be eligible for Medicaid if his or her non-excluded “countable” resources exceed a certain limit. In this case, each Notice merely stated  that the applicant was ineligible due to having excess resources, but gave no explanation as to why the assets of the Trust were being counted as the applicant’s resources. The Court held that the Notice was deficient; stayed (enjoined) the denial of benefits pending the outcome of the lawsuit, and certified the case to move forward as a class action because the practice had adversely affected all the individuals in the lawsuit class in a similar manner.

Maas vs Sudders et al and Hirvi vs Sudders et al. (Mass Superior Court, 2018)

Federal regulations require that a Medicaid agency give explicit written notice of reasons for an adverse action and of the opportunities for appeal. The notice must be served on the affected individual. The law provides as follows:

§ 431.210 Content of notice.

A notice required under § 431.206 (c)(2), (c)(3), or (c)(4) of this subpart must contain –

(a) A statement of what action the agency, skilled nursing facility, or nursing facility intends to take and the effective date of such action;

(b) A clear statement of the specific reasons supporting the intended action;

(c) The specific regulations that support, or the change in Federal or State law that requires, the action;

(d) An explanation of –

(1) The individual‘s right to request a local evidentiary hearing if one is available, or a State agency hearing; or

(2) In cases of an action based on a change in law, the circumstances under which a hearing will be granted; and

(e) An explanation of the circumstances under which Medicaid is continued if a hearing is requested.”

We have seen situations over the years in which no reason was given for an adverse conclusion by the county Medicaid Agency. For example, the denial of benefits notice might just say “applicant has excess resources” without specifying which resources are allegedly in excess of the limits. There are times that there can be a bona fide legal and factual dispute over whether certain resources are countable or excludable. Or the denial notice might say that “there were transfers of assets in violation of N.J.A.C. 10:71-4.10″ without specifying what is being treated as a “transfer.” In some circumstances, a check that was payable to cash is treated as a gift to a third party (transfer of assets) for no reason other than it was a check payable to “cash.” An applicant needs to know just what the issue is, so that s/he can prepare for an appeal. This is a matter of Due Process, a principal established by the US Supreme Court in 1970 in the landmark case of Goldberg vs. Kelly.

Medicaid applications are a landmine of potential legal problems. Applicants can benefit by legal advice which protects their rights in this process.

For individual senior care advice on protecting your rights, interests and resources, call us at …. 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

 

Recorded Life Estate given priority over later-recorded mortgage

Here’s a situation that came up after parents transferred their home to their daughter and reserved a life estate. The value of the life estate vis-à-vis the whole property is a pro rata percentage based on the age of the life estate holder at the time of the transaction in question. The case is called Ocwen Loan Services, LLC vs. Quinn.

The transfer took place in 2004. A year later, the Quinns and their daughter mortgaged the property and received $260,000. The market was hot and two years later, the daughter alone refinanced that mortgage loan and obtained $380,000, paying off the 2005 mortgage in the process. For some reason, when this new lender (IndyMac)  did its title search, it failed to discover the recorded life estates that were held by the parents, so it didn’t ask the Quinns to co-sign its mortgage documents. The daughter defaulted on the IndyMac mortgage, and IndyMac started foreclosure proceedings against the parents as well as the daughter.

The parents argued that since they had no knowledge of the daughter’s refinance of the mortgage which they had originally co-signed, their life estate should not be subject to the new mortgage. However, the court applied a legal doctrine that is called “equitable subrogation,” and found that it would be inequitable and would unjustly enrich the parents if they were totally relieved of any responsibility for the mortgage, yet at the same time, it would be inequitable for the lender to be able to hold the life tenant liable for the full amount due. The Judge stated: “[Defendants] signed a mortgage in the amount of $260,000 as possessors of a life estate. While [defendants] may have signed the mortgage as an act of kindness and love to their daughter, the fact remains [defendants] were parties to the 2005 mortgage and thus subjected their life estate to this foreclosure action. This [c]ourt sees no procedural or substantive defect which would challenge the validity of the 2005 mortgage.”

Bottom line? The life estates are subject to the IndyMac mortgage up to the $260,000, but the IndyMac mortgage is subordinate to the rights of the life tenants for any excess above that.

Call us for advice about elder care planning including real estate transfer issues …. 732-382-6070

 

Elder penalized for wages paid to family caregiver, due to insufficient evidence

When a person applies for Medicaid to pay for home care or nursing home care, a penalty will be imposed if assets were given away during the preceding five year “look-back” period. There are numerous regulations in federal and state law  concerning “uncompensated transfers,” which are gifts.  A “gift” is distinguished by law from a “payment for goods and services at fair market value.” In general, any transfer of money from a Medicaid applicant to their family members during the look-back period will be suspected to be a gift unless there is credible proof that it was payment for something. For example, the child may be employed by the parent, or the child may have sold something to the parent. The applicant must show that the payment was not a gift.

In situations where the elder is paying their family member on an ongoing basis to provide home care services, the proofs become very important, so as to prove that this is wages and not a “gift.”  Greater scrutiny is given to those situations than to the situation where a non-family member is the paid Aide. Extensive evidence is needed to satisfy the agency that the work was actually done, that there was specified terms of employment, and that the wage was consistent with prevailing wages (i.e. not a wage of $70 an hour for work which is normally paid for at $15 an hour). A written contract isn’t explicitly required, but a recent case strongly suggests that it is needed.

Suppose, though, that the child is being paid now for caregiving services that were allegedly provided in the past? A payment made after the fact to a family member for alleged caregiving services is presumed to be a gift, if services were performed for free before the payment was made and there was no pre-existing written contract spelling it all out.  For such situations, the burden of proof is on the applicant to produce “credible documentary evidence preexisting the delivery of the care or services indicating the type and terms of compensation,” as well as proof that the wage was at “prevailing rates for similar care or services in the community.”  N.J.A.C. 10:71-4.10(b)6.ii.

The recent decision in E.B. vs. DMAHS  illustrates the common problem all too well. The decision is not approved for publication, which means it is non-precedential and is limited to its facts and the parties in the case.

E.B. moved into her daughter’s home, and the daughter began providing some  caregiving services when she was not at her job. After two years,  the daughter quit her job and became the full-time aide. The absence of income began to create a hardship for her. She was the Agent under Power of Attorney for her mother. She did some research about prevailing wage for this kind of work, and then using her mother’s funds,  she began to pay herself $10 per hour for 40 hours a week of home care companionship services plus $25 per week for the two-and-a-half hours she claimed she spent each week to shop for petitioner’s food, medication, and toiletries, “for a total of  $425 per week from April 2011 to May 2013, when petitioner entered the nursing home. J.W. did not keep a ledger of the services she provided and the days and hours she performed them. J.W. claimed that, when lucid, her mother understood and agreed to J.W. paying herself from petitioner’s funds to compensate J.W. for her services.”

When E.B.  applied for Medicaid to pay for her care, she was penalized for the $69,211.90 she had paid her daughter. (note that this amount divided by $425 is just over 36 months, so part of the payment must have reflected post-facto payment for work previously done). After a hearing with testimony and other evidence at the Office of Administrative Law, the penalty was upheld by the Division (DMAHS), and this appeal followed. The Appellate Court upheld the penalty.

The Administrative Law Judge found that (1) there was insufficient proof of the actual tasks performed, (2) there was insufficient proof that  rate selected was prevailing wage, and (3) there was no pre-existing written contract. The Judge held it against her that she began receiving wages when it was “foreseeable that [petitioner’s] advanced age and deteriorating condition would require intensive care and the possibility of entering a nursing care facility.”  This is a completely irrelevant consideration, as a person receiving care in the home would otherwise have to BE in the nursing home!!  The Director of Medicaid affirmed those conclusions.

The primary problem for E.B. was that the Medicaid Agency was not satisfied with the proofs provided.  The Appellate Court emphasized that there was no written agreement specifying terms of employment, and there were no records showing exactly what work was done, when and how. However, the Court was harsh, criticizing the daughter for choosing to be the caregiver rather than hiring somebody outside the family. I find this criticism deeply disturbing and unfair. National and state policy encourages people to take care of their family members, and in fact, the Medicaid home care program is only part time because it is presumed that there is someone available to fill in the gaps. Further, the Court did not distinguish between the payments for ongoing work and the payment for work previously done.  The Court found that “Petitioner did not rebut this presumption. She did not provide the requisite “convincing evidence” the asset was transferred exclusively for some purpose other than to establish eligibility. First, J.W. did not show why she could not have paid a competent professional ten dollars per hour to take care of her mother, which would have freed her up to return to work. As a former claims adjuster, presumably J.W. was capable of earning more than ten dollars per hour and, thus, would have been in a better position to address her budget needs. Further, while a third party may not have been a relative, that does not mean a competent professional caretaker could not have been located to meet petitioner’s needs.amount of proof that this was payment of wages for work that was actually done.”

The lesson here is that it is still perfectly legal for children to be employed by their parents to provide senior care in the home. However, the demands of the Medicaid program for elaborate proofs to disprove the notion that a payment was a gift require the applicant to prepare a strong paper trail coupled with  enough corroborating formal evidence to satisfy a state auditor. Informal verbal arrangements will not be sufficient. Assembling proof beyond a reasonable doubt is the safest approach to take.

Call for advice about home care plans, employment contracts, Medicaid applications and appeals …. 732-382-6070

Great Reasons to Update your Will Once in a While

The years really fly by. I can’t tell you how many times some one has come in to meet with me who signed a Will 25 years before and never updated it. When major changes occur in your life, it’s important to see your lawyer for a “check up” to make sure that your old Plan is still a good Plan for you. Here are samples of situations I have encountered, which required an updated Last Will and Testament and updated beneficiary designations on assets such as life insurance or tax-deferred accounts:

  1. Grandchild has severe disabilities, will be unable to support himself, and depends on programs that require Medicaid eligibility. An outright inheritance could be disastrous.
  2. Child has acquired substantial debt or is in the midst of a divorce.
  3. Beneficiary turns out to be a major spendthrift  and should have somebody controlling and managing his inheritance.
  4. You no longer have a relationship with the people you listed as your Executors.
  5. Your designated Executor or Trustee has passed away.
  6. You want to guarantee that certain charitable bequests will be made.
  7. You want to leave money to your grandchildren as “something special,” even though the rest of your estate will go to your children (their parents).
  8. You have a Will from the 1990’s that left the “credit shelter amount” locked up in a trust for your surviving spouse to minimize estate tax in the estate of the 2nd spouse to die, yet now, there is no NJ estate tax and no federal estate tax for almost everyone
  9. You left a beneficiary’s share in a Trust under your Will, but now she is older and fully capable of managing her own assets.
  10. Your spouse is going into a nursing home and you want to limit the amount s/he inherits if you pass away first.
  11. You got married, gave birth or adopted a child, or you want to leave some assets to your step-children.

Whatever has changed, family estate planning should be an ongoing process throughout your life, starting at age 18 and moving on from there.

Call us to set up a plan that works for you …… 732-382-6070