New Jersey Court Exceeded Its Authority in Determining Future Medicaid Eligibility

A recent New Jersey Appellate Division opinion determined the limits of a lower court’s jurisdiction with respect to deciding Medicaid eligibility.  The Appellate Division in In re A.N., 430 N.J. Super. 235 (2013), found that the Chancery Division exceeded its jurisdiction in making a Medicaid eligibility determination, holding that only the Division of Medical Assistance and Health Services (“DMAHS”), the designated state Medicaid agency, is authorized to determine Medicaid eligibility.

A.N. is a seventeen year girl old suffering from quadriplegic cerebral palsy who resides with her parents in the family home.  In 2000, her parents established a special needs trust (the “Trust”), funded with the proceeds of a litigation in which A.N. received a monetary award.  Bank of America is the corporate co-trustee of the Trust, along with A.N.’s parents.   No application for Social Security or Medicaid benefits have ever been made on A.N.’s behalf.  In 2006, A.N.’s parents’ sought to have the Trust purchase their home and also sought to receive compensation from the Trust for the care they provided for A.N.  In January 2010, BOA filed a Verified Complaint in the Chancery Division seeking instructions for purchasing the home and approving prior and future payments related to A.N.’s care and for maintenance of the home.  The Verified Complaint also sought instructions regarding A.N.’s Medicaid eligibility with respect to each payment.  Specifically, Bank Of America sought a determination that the subject transactions would not result in a loss of reduction in Medicaid benefits should A.N. seek them in the future.

DMAHS submitted a response to the Verified Complaint stating that it took no position on the relief requested by Bank of America, however, it maintained that “the court lacked jurisdiction to ‘make administrative determinations with respect to a person’s future Medicaid eligibility . . .’ [DMAHS] concluded it possesses the sole authority for making such determinations . . .” 

The Chancery Division held A.N.’s parents could be compensated from the Trust, authorized the Trust to purchase the home and despite DMAHS’ contention, ruled that the subject transactions would not deprive A.N. from receiving Medicaid benefits in the future.  

On Appeal, New Jersey Appellate Division overturned the portion of the Chancery Division’s decision addressing A.N.’s future Medicaid eligibility and determined that the Chancery “court went too far in purporting to render a binding and final Medicaid eligibility determination.” The Appellate Division held that “only the designated Medicaid agency is authorized to determine Medicaid eligibility.”  If A.N. applies for Medicaid benefits in the future and receives an adverse ruling, she would have the right of administrative review, including a fair hearing through the Office of Administrative Law and an appeal of the final agency decision, as of right, to the Appellate Division.   Interestingly, the Appellate Division also found that despite the fact that the Chancery Division does not have jurisdiction to make final Medicaid eligibility determinations, the lower court is permitted to “provide advice that the proposed transaction is consistent with those statutes and regulations and is unlikely to adversely affect Medicaid eligibility.”  There would, however, be no basis for an “advance final and binding Medicaid eligibility determination.”

Accordingly, any determinations regarding Medicaid eligibility made by a Court without a prior final agency determination may be viewed as instructive, but not conclusive or binding on Medicaid.

As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

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