State Wrongly Required Medicaid Applicant to Provide Information that Didn't Exist to Verify Assets

A New Jersey appeals court holds that the state wrongly required a Medicaid applicant to produce information that did not exist to verify her assets and that the state should not have denied benefits for that reason. L.A. v. Division of Medical Assistance and Health Services (N.J. Super. Ct., App. Div., No. A-3368-17T3, Sept. 4, 2019).

L.A. and her husband transferred their home to a revocable trust. L.A. entered a nursing home and applied for Medicaid. L.A. did not disclose the trust when she first applied for benefits, but once the Medicaid agency discovered the trust, it requested verification regarding trust assets. The attorney who drafted the trust provided a letter that stated that the home was the only asset in the trust. L.A. also provided a trust termination document. Because the trust schedules and appendices attached to the trust document were left blank, the agency denied L.A.'s application for failure to provide the paperwork necessary for an eligibility determination.

L.A. appealed, arguing that the blank documents were intended to record gifts and loans, but no gifts or loans had occurred. L.A.'s attorney testified that any income produced by the trust would appear on L.A.'s tax return. The Medicaid agency determined that because L.A. did not provide all the requisite verifications, the application should be denied. L.A. appealed to court.

The New Jersey Superior Court, Appellate Division, reverses, holding that L.A. provided the necessary information for review of her application. The court rules that the Medicaid agency "failed to address important, unrefuted evidence" that there were no other assets in the trust other than the home. According to the court, just because "the trust paperwork could have accommodated additional assets or transactions is not equivalent to a factual finding that it did so."

For the full text of this decision, go to: https://njcourts.gov/attorneys/assets/opinions/appellate/unpublished/a3368-17.pdf?c=EF7

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