T.C. v. DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES, et al.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1310-05T11310-05T1

T.C.,

Petitioner-Appellant,

v.

DIVISION OF MEDICAL ASSISTANCE

AND HEALTH SERVICES & BURLINGTON

COUNTY BOARD OF SOCIAL SERVICES,

Respondent.

__________________________________

 

Argued October 23, 2006 - Decided November 20, 2006

Before Judges Lintner and Seltzer.

On appeal from a Final Agency Decision

of the Division of Medical Assistance

and Health Services, HMA-248-05.

Christopher Norman argued the cause

for appellant (Norman Kingsbury & Norman, attorneys; Mr. Norman, on the brief).

Elisabeth Doyle, Deputy Attorney

General, argued the cause for

respondent Division of Medical

Assistance and Health Services

(Stuart Rabner, Attorney General,

attorney; Michael J. Haas, Assistant

Attorney General, of counsel; Ms. Doyle,

on the brief).

PER CURIAM

Petitioner appeals from a final agency decision, adopting an initial decision, that petitioner was ineligible for Medicaid benefits and was required to repay $28,103.34 in "incorrectly paid benefits." We reverse and remand for a hearing at which petitioner may demonstrate that the funds attributed to him by respondent were not owned by, or available to, him.

On May 13, 2004, petitioner applied for benefits through the Medicaid-run assistance program known as "Care in the Community." His application disclosed his monthly income but did not report any assets. On the basis of the information disclosed in his application, the Burlington County Board of Social Services (BCBSS), the agency charged with administering the program, found petitioner eligible, and he began receiving benefits as of May 1, 2004.

Thereafter, BCBSS discovered that petitioner held an account, containing approximately $59,000, with John Hancock Life Insurance Company. BCBSS determined that the account rendered petitioner ineligible for the program, terminated his benefits, and demanded a return of $28,103.34, which it claimed was the amount of benefits improperly paid. Petitioner appealed, and the matter was transmitted to the Office of Administrative Law for a hearing. Immediately before testimony was to commence, BCBSS sought a summary disposition. Petitioner indicated that he intended, as the Administrative Law Judge ultimately explained, "to offer evidence that the funds in the John Hancock Insurance Company trust account are, in fact, gifts made to his daughter by others that he [was] merely holding for her future use."

Although the ALJ spent some time discussing issues of equitable estoppel and resulting trusts, he ultimately concluded that petitioner's proffer was legally irrelevant because "the pertinent language of the regulation indicates that the State intended to preclude exemption of funds in an account owned by the applicant." Since it was not disputed that the account was held in petitioner's name, the ALJ found no genuine issue of material fact, and granted the motion for summary disposition. The ALJ determined that ownership of the John Hancock account rendered petitioner ineligible for participation in the program and liable for repayment of all benefits received by him.

The Director of the Division of Medical Assistance and Health Services (DMAHS), the agency overseeing Medicaid programs in New Jersey, accepted the initial decision of the ALJ. In the final agency decision, the Director explained that resources are to be attributed to an applicant for Medicaid assistance when "the individual has the 'right, authority or power' to the resource pursuant to N.J.A.C. 10:71-4.1(c)." After a review of the record, he found "no support that the doctrine of a resulting trust can apply under Medicaid regulations [and] . . . that it is clear that [petitioner] had unfettered access to the account and was not eligible for Medicaid benefits during the period in question." The director also noted that, after the initial decision, petitioner divided the funds in two parts, retaining $29,000 for his own use to repay Medicaid in accordance with the initial decision and placing the balance in trust for his daughter in accordance with the proffer he had made. This appeal followed.

Medicaid is a jointly funded federal/state program which provides medical assistance to eligible individuals.

42 U.S.C.A., 1396a to 1396v. Once a state determines to participate in the Medicaid program, it "must operate its program in compliance with the federal statute and regulations." United Hosp. Med. Ctr. v. State, 349 N.J. Super. 1, 4 (App. Div. 2002)(citing Harris v. McRae, 448 U.S. 297, 301, 100 S. Ct., 2671, 2680, 65 L. Ed 2d, 784, 794 (1980)). New Jersey participates in the Medicaid program, which is administered by DMAHS, pursuant to the New Jersey Medical Assistance and Health Services Act, N.J.S.A. 30:4D-1 to -19.5. Estate of F. K. v. Div. of Med. Assistance & Health Servs., 374 N.J. Super. 126, 134 (App. Div.), certif. denied, 184 N.J. 209 (2005). New Jersey is, therefore, required to adopt "reasonable standards . . . for determining eligibility for . . . medical assistance under the plan [that] are consistent with the objectives of [the Medicaid program and] provide for taking into account only such income and resources as are . . . available to the applicant . . . ." 42 U.S.C.A., 1396a(a)(17)(A)-(B). See Mistrick v. Div. of Med. Assistance & Health Servs., 154 N.J. 158, 166 (1998) (quoting L.M. v. State, Div. of Med. Assistance & Health Servs.,

140 N.J. 480, 484 (1995)). New Jersey's participation in Medicaid program is governed by the regulations set forth in N.J.A.C. 10:71-1.1 to -9.5.

The requirements for Medicaid eligibility with respect to income are set out in N.J.A.C. 10:71-5.1 to -5.9. The requirements for resource eligibility are set out in 10:71-4.1 to -4.11. To be eligible, an individual may not have resources of more than $2,000. N.J.A.C. 10:71-4.5(c). DMAHS does not suggest that petitioner fails to meet the income eligibility requirements; rather, DMAHS focuses on the resource requirement, contending that the $59,000 account in petitioner's name renders him ineligible because it is more than $2,000.

Resources are defined by N.J.A.C. 10:71-4.1(b) as "any real or personal property which is owned by the applicant . . . and which could be converted to cash to be used for his/her support and maintenance." Accordingly, two conditions must be met for a resource to be counted toward the $2,000 limit. First, it must be "owned by the applicant," and second it must be available to him. DMAHS suggests that New Jersey's requirement of ownership imports a condition of eligibility that contravenes the federal direction that state regulations respecting eligibility be limited to "available" resources. We do not take the New Jersey requirement of ownership, found in N.J.A.C. 10:71-4.1(b), to be inconsistent with the requirement of availability set out in 42 U.S.C.A. 1396a(a)(17)(B). The function of the term "available", as used in the federal statute, "'served primarily to prevent the States from conjuring fictional sources of income and resources by imputing financial support from persons who have no obligation to furnish it.'" Himes v. Shalala, 999 F.2d 684, 689 (2d Cir. 1993) (quoting Heckler v. Turner, 470 U.S. 184, 200, 105 S. Ct. 1138, 1147, 84 L. Ed. 2d 138, 150 (1985)). It seems reasonably clear to us that resources not owned by an individual cannot be "available" to him absent some express or implied authority.

If petitioner is able to establish that he holds the funds in trust for his daughter, they would not be "available" to him any more than a roommate's cash lying on a desk in a shared apartment would be available simply because the money could be physically appropriated. The requirement of "availability" in both the federal statute and N.J.A.C. 10:71-4.1(c), referenced by the Director, implicates a legal, not simply a physical, ability to access the account. This conclusion is supported by the language of the code section cited by the Director. N.J.A.C. 10:71-4.1(c) provides that an asset is "available to an individual when: (1) The person has the right, authority or power to liquidate real or personal property, or his or her share of it[.]" This section does not contemplate the liquidation of any portion of property not owned by the applicant.

The conclusion is also supported by well established principles of trust law. If a trust exists, petitioner holds only legal title to the property for the benefit of his daughter. In re Armour's Will, 33 N.J. 517, 524 (1960). He is bound to follow the directions of the trust. Ibid. See also Moran v. Joyce, 125 N.J.L. 558 (Sup. Ct. 1941), aff'd, 127 N.J.L. 562 (E. & A. 1942). For that reason, the trust property will not be liable for the debt of the trustee. Moran, supra, 125 N.J.L. at 562. This insulation would extend to the trustee's support as well. Accordingly, if petitioner's factual assertions are correct, he would neither own the property nor would the property be available to him.

We recognize that our review of an agency determination is limited. In re Taylor, 158 N.J. 644, 656 (1999). We are not, however, "bound by the agency's interpretation of a statute or its determination of a strictly legal issue." Mayflower Sec. Co., Inc. v. Bureau of Sec., 64 N.J. 85, 93 (1973). Here, the agency determined that there was "no support that the doctrine of a resulting trust can apply under Medicaid regulations." We assume the director's decision represents a determination that the legal ownership of the asset, without regard to the equitable rights of others, controls. This determination is incorrect as a matter of law and is entitled to no deference. To the extent the director determined that there were no facts to support petitioner's claim that he held these funds in trust, we believe the proffer was sufficient.

We recognize that petitioner's subsequent actions with respect to the trust proceeds were inconsistent with his proffer. However, given the opportunity, petitioner may be able to explain his actions, and they do not affect our holding. Petitioner is entitled to a hearing at which he shall be given the opportunity to establish that he held the John Hancock funds in trust for his daughter, in which event Petitioner would remain eligible for Medicaid benefits.

Reversed and remanded for further proceedings in accordance with this opinion.

 

We do not understand petitioner to have claimed a resulting trust. That doctrine is usually applied to reach an equitable result when an asset is purchased with the funds of one person and titled in the name of another. See Weisberg v. Koprowski, 17 N.J. 362, 371 (1955) (citations omitted). We understand petitioner to assert that he held the funds in the John Hancock account pursuant to the terms of an express oral trust.

(continued)

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9

A-1310-05T1

November 20, 2006