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Monday, August 17, 2020

 Payments to caregivers prior to Medicaid examined here  D.Z v. OCEAN COUNTY BOARD OF SOCIAL SERVICES

                                                         SUPERIOR COURT OF NEW JERSEY

                                                         APPELLATE DIVISION

                                                         DOCKET NO. A-5962-17T3


D.Z.,


          Petitioner-Appellant,


v.


OCEAN COUNTY BOARD

OF SOCIAL SERVICES,


     Respondent-Respondent.

_______________________________


                   Submitted May 28, 2020 – Decided June 23, 2020


                   Before Judges Suter and DeAlmeida.


                   On appeal from the New Jersey Department of Human

                   Services, Division of Medical Assistance and Health

                   Services.


                   NOT FOR PUBLICATION WITHOUT THE

                                APPROVAL OF THE APPELLATE DIVISION

        This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the

     internet, this opinion is binding only on the parties in the case and its use in other cases is limited . R. 1:36-3.





      Petitioner D.Z. appeals from the December 18, 2019 amended final


agency decision of the Division of Medical Assistance and Health Services


(DMAHS) finding her eligible for Medicaid benefits but imposing a penalty of


$207,525.93 for assets D.Z. transferred during the five-year look-back period


established in N.J.A.C. 10:71-4.10. We affirm.


                                        I.


      The following facts are derived from the record. D.Z., through her son


and power of attorney, R.Z., applied to respondent Ocean County Board of


Social Services, a county welfare agency (CWA), for Medicaid benefits. The


CWA found D.Z. eligible for benefits as of August 1, 2016, but imposed an


eligibility penalty for August 1, 2016, to April 25, 2018, because she transferred


$210,579.16 during the look-back period.


      D.Z. requested a fair hearing with respect to the transfer penalty. The


matter was transferred to the Office of Administrative Law, where a fair hearing


was held before an Administrative Law Judge (ALJ). At the hearing, R.Z.


testified that D.Z. hired three health care aides to assist her at her home in the


years before she was transferred to a nursing facility. He identified the aides by





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their full names, although we refer to them as E.D., L.O., and N.L. to protect


D.Z.'s confidential medical records.


      R.Z. testified the aides assisted D.Z. with dressing, ambulating, bathing,


cooking, cleaning, and laundry in rotating shifts of two and one-half days each.


He testified that one aide lived with D.Z. full time for several months.


According to R.Z., E.D. and L.O. were paid approximately $13 to $15 per hour,


and N.L. was paid approximately $700 to $750 per week.


      D.Z. paid the aides by check. On approximately 125 checks, she wrote


"cash" as the payee and the individual aide's first name or nickname in the memo


line. R.Z. testified that D.Z. sometimes wrote checks for more than the aide was


due in pay, with the excess to be used to purchase items for D.Z. In those


instances, the notation in the memo line contained both the aide's first name and


the name of the store at which the purchase was to be made. According to R.Z.,


he had authority to sign his mother's checks and wrote some of the checks


admitted into evidence for the aides' services and other expenses.


      On most of the checks, the handwritten name in the memo section matched


the signed endorsement on the back of the check. However, two of the checks


had only the name of a store written in the memo section, with a signed


endorsement on the back by one of the aides. Two other checks were endorsed



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by someone other than the person listed in the memo section. One check


endorsed by N.L. had no name in the memo section.


      A few additional checks were written to three additional aides identified


by R.Z. as substitutes when one of the three regular aides was unavailable. One


check was written to Sears with a notation in the memo line of "carpet cleaning."


Two checks were written to D.Z.'s homeowners' association for fees and three


checks were written to the township to pay local property taxes on her residence.


      The three aides did not testify at the hearing. R.Z. testified that his attempt


to secure their testimony proved futile.


      On May 11, 2018, the ALJ issued an initial decision modifying the amount


of the transfer penalty. The ALJ found D.Z. proved by a preponderance of the


evidence she paid E.D., L.O., and N.L. for home health care and the payments


were not subject to the look-back penalty because they were exclusively for a


purpose other than to qualify for Medicaid. N.J.A.C. 10:71-4.10(j).


      In addition, the ALJ determined D.Z.'s payment of homeowners'


association fees, local property taxes, and the carpet cleaning expense were


excludable from the transfer penalty. The ALJ ordered that the transfer penalty





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be reduced by the amounts D.Z. paid to the three aides and for personal


expenses.1 This totaled a reduction of $104,425.23 from the transfer penalty.


      On July 12, 2018, the Director of DMAHS issued a final agency decision


adopting in part, and reversing in part, the ALJ's initial decision. The Director


determined D.Z. failed to establish the type of services provided to her, the


compensation she provided for those services, or that the compensation was not


greater than the prevailing rates for similar care or services in the community.


See N.J.A.C. 10:71-4.10(b)(6)(ii) and (j).


      The Director also concluded that although the ALJ's credibility


determination was entitled to deference, the record did not satisfy the residuum


rule. See N.J.A.C. 1:1-15.5(b). That rule provides that when an ALJ relies on


hearsay testimony, "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." Ibid.


      The Director found the record contained no evidence: (1) of a caregiver


agreement establishing the expectations of care and compensation for services


between D.Z. and her aides; or (2) that the aides were certified home health aides




1

  The ALJ found D.Z. did not prove her payments to the temporary aides

constituted payments excluded from the transfer penalty.

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warranting compensation at the rates D.Z. paid.         In addition, the Director


determined the checks in evidence: (1) did not show a consistent pattern of


payments; (2) showed multiple payments to the same aide on the same day in


one instance; (3) demonstrated payments to L.O. at a time R.Z. testified N.L.


lived with his mother fulltime; and (4) were issued at a time when D.Z.'s


daughter-in-law, according to her testimony, was caring for D.Z. The Director


also concluded the record did not establish what services were provided to D.Z.


by the aides during the overnight hours.


      The Director, therefore, reversed the ALJ's initial decision to the exten t it


deducted from the transfer penalty the payments D.Z. claimed were for the


services of the aides. The Director adopted the portion of the ALJ's initial


decision directing the CWA to deduct from the transfer penalty $3,053.23 to


reflect D.Z.'s payments for homeowners' association fees, local property taxes,


and carpet cleaning. This resulted in a transfer penalty of $207,525.93.


      This appeal followed.      D.Z. raises the following arguments for our


consideration:


            POINT I


            RESPONDENT FAILED TO MAKE NEW OR

            MODIFIED FINDINGS OF FACT AS REQUIRED BY

            LAW UPON REJECTING THE ALJ'S FINDINGS OF

            FACT.


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            POINT II


            RESPONDENT FAILED TO GIVE PROPER

            DEFERENCE  TO   THE FACT  FINDER'S

            ASSESSMENT OF THE CREDIBILITY OF

            WITNESSES.


            POINT III


            RESPONDENT REVIEWED AN INCOMPLETE

            RECORD, WITHOUT THE TRANSCRIPT, IN

            ORDER TO ASSESS THE TESTIMONY AND

            EVIDENCE SUBMITTED TO THE COURT.


            POINT IV


            RESPONDENT INCORRECTLY APPLIED THE

            RESIDUUM RULE IN ASSESSING THE ALJ'S

            INITIAL DECISION.


      After D.Z. submitted her brief, the Director moved for a limited remand.


The Director sought to clarify what she described as "a fundamental


misunderstanding caused by a lack of analysis in the" final agency decision. We


granted the motion.


      On December 18, 2019, the Assistant Commissioner of DMAHS issued


an amended final agency decision. The amended final agency decision reiterates


the findings in the earlier final agency decision and concludes D.Z.


            has not been able to rebut the presumption that these

            transfers for less than fair market value were to qualify

            for Medicaid. And, because [D.Z.] has provided


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            inadequate support to rebut the presumption, [D.Z.]

            cannot show that the transfers were not made in order

            to qualify for Medicaid.


      The Assistant Commissioner again reversed the ALJ's initial decision to


the extent it ordered the CWA to reduce the transfer penalty by the amounts D.Z.


claimed to have paid her aides and adopted the portion of the ALJ's initial


decision ordering a reduction in the transfer penalty to reflect D.Z.'s payment of


homeowners' association fees, local property taxes, and personal expenses.


      In a reply brief filed after issuance of the amended final agency decision,


D.Z. raised the following arguments:


            POINT I


            RESPONDENT SHALL NOT EVALUATE THE

            MERITS OF PETITIONER'S TRANSFERS OF

            ASSETS BUT ONLY DETERMINE WHETHER OR

            NOT THE TRANSFER[S'] PURPOSE WAS TO

            ESTABLISH MEDICAID ELIGIBILITY.


            POINT II


            RESPONDENT ACKNOWLEDGES THAT THE ALJ

            FOUND THAT PETITIONER RECEIVED SERVICES

            FROM THE CAREGIVERS FOR HER PAYMENTS,

            WHICH SHOULD REBUT THE PRESUMPTION.


                                       II.


      "An administrative agency's decision will be upheld 'unless there is a clear


showing that it is arbitrary, capricious, or unreasonable, or that it lacks fair


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support in the record.'" R.S. v. Div. of Med. Assistance & Health Servs.,  434 N.J. Super. 250, 261 (App. Div. 2014) (quoting Russo v. Bd. of Trs., Police &


Firemen's Ret. Sys.,  206 N.J. 14, 27 (2011)). "The burden of demonstrating that


the agency's action was arbitrary, capricious or unreasonable rests upon the


[party] challenging the administrative action." E.S. v. Div. of Med. Assistance


& Health Servs.,  412 N.J. Super. 340, 349 (App. Div. 2010) (alteration in


original) (quoting In re Arenas,  385 N.J. Super. 440, 443-44 (App. Div. 2006)).


"[I]f substantial credible evidence supports an agency's conclusion, a court may


not substitute its own judgment for the agency's even though the court might


have reached a different result." Greenwood v. State Police Training Ctr.,  127 N.J. 500, 513 (1992).


      "Medicaid is a federally-created, state-implemented program that


provides 'medical assistance to the poor at the expense of the public.'" In re


Estate of Brown,  448 N.J. Super. 252, 256 (App. Div. 2017) (quoting Estate of


DeMartino v. Div. of Med. Assistance & Health Servs.,  373 N.J. Super. 210,


217 (App. Div. 2004)); see also 42 U.S.C. § 1396-1. To receive federal funding


the State must comply with all federal statutes and regulations. Harris v. McRae,


 448 U.S. 297, 301 (1980).





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      Pursuant to the New Jersey Medical Assistance and Health Services Act,


 N.J.S.A. 30:4D-1 to -19.5, DMAHS is responsible for administering the


Medicaid program in our State. Through its regulations, DMAHS establishes


"policy and procedures for the application process . . . ." N.J.A.C. 10:71-2.2(b).


"[T]o be financially eligible, the applicant must meet both income and resource


standards."   Brown,  448 N.J. Super. at 257; see also N.J.A.C. 10:71-3.15;


N.J.A.C. 10:71-1.2(a).


      Because Medicaid funds are limited, only those applicants with income


and non-exempt resources below specified levels may qualify for government -


paid assistance. To qualify for the Medicaid Only program, an individual


applicant may not have resources that exceed $2000. N.J.A.C. 10:71-4.5(c).


Resources are defined "as any real or personal property which is owned by the


applicant . . . and which could be converted to cash to be used for his or her


support and maintenance." N.J.A.C. 10:71-4.1(b).


      An applicant who transfers or disposes of resources for less than fair


market value during a sixty-month look-back period before the individual


becomes institutionalized or applies for Medicaid is penalized for making the


transfer. 42 U.S.C. §1396p(c)(1)(E); N.J.A.C. 10:71-4.10(m)(1). Transfers


within the look-back period are presumed to be made to obtain earlier Medicaid



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eligibility than that to which the applicant would otherwise be entitled. N.J.A.C.


10:71-4.10(j). The presumption may be rebutted with "convincing evidence that


the assets were transferred exclusively (that is, solely) for some other purpose."


Ibid. If the applicant does not overcome the presumption, a transfer penalty


denies Medicaid benefits during the period the applicant should have been using


the transferred resources for medical care. See W.T. v. Div. of Med. Assistance


& Health Servs.,  391 N.J. Super. 25, 37 (App. Div. 2007).


      If the applicant transfers any resource within the look-back period, the


transfer is reviewed, and the resource's fair market value is ascertained, as is the


consideration received for the transferred resource. N.J.A.C. 10:71 -4.10(c).


The difference between the fair market value of the resource and the


compensation received by the applicant is the "uncompensated value . . . ."


N.J.A.C. 10:71-4.10(c)(2).     If the uncompensated value of the transferred


resources, combined with other countable resources, exceeds the resource limit


for Medicaid eligibility, a transfer penalty is assessed.         N.J.A.C. 10:71-


4.10(m)(1).


      Having carefully reviewed the record and applicable legal principles, we


conclude the agency's decision is supported by substantial credible evidence in


the record as a whole. R. 2:11-3(e)(1)(D). Accordingly, we affirm the Assistant



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                                        11

Commissioner's amended final agency decision for the reasons set forth therein.


We add the following comments.


      The Assistant Commissioner did not reject the ALJ's determination that


R.Z. credibly testified that D.Z. paid aides to assist her.      She concluded,


however, that D.Z. did not establish that the amount she paid the aides reflected


fair market value for the services she received. As the Assistant Commissioner


noted, the record contains no service contract memorializing the aides'


compensation rate, the services they were expected to provide, or that they were


licensed caregivers whose skill warranted the compensation they received. We


acknowledge DMAHS regulations do not require a written contract or licensing


for home health services to qualify as exempt from the transfer penalty.


However, the absence of a contract and proof of licensing here significantly


hindered the agency's ability to determine the services D.Z. received, the rate


she paid for those services, and whether that rate was warranted by the aides'


skill level and training.


      In addition, the evidence was imprecise with respect to the compensation


paid to the aides. Among other things, the checks upon which D.Z. relied were


made out to "cash," in some instances conflated the aides' compensation with


D.Z.'s personal expenses without clear delineation, and were issued at



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                                      12

inconsistent frequencies.   Because the agency could not determine the fair


market value of the services D.Z. received or the amount of compensation she


gave to the aides, the agency could not award a credit against the transfer penalty


commensurate with the fair market value of services rendered. Based on this


record, we cannot conclude the Assistant Commissioner's determination D.Z.


failed to overcome the presumption that the transfers were for a purpose other


than qualifying for Medicaid was arbitrary, capricious, or unreasonable.


      We have reviewed petitioner's remaining arguments and conclude they


lack sufficient merit to warrant discussion in a written opinion.        R. 2:11-


3(e)(1)(E).


      Affirmed.





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