A New Jersey appeals court rules that the state Medicaid agency's decision to assess a transfer penalty for an unequal but equitable division of marital assets in a divorce settlement was arbitrary and without basis in law. W.T. v. Div. of M.A.H.S. (N.J. Super. Ct., App. Div., No. A-0089-05T5, March 1, 2007).
W.T. and M.T. were married in 1962. In 1998, W.T., the family's primary breadwinner, took early retirement at age 58. The following year, a routine epidural injection to alleviate chronic neck and shoulder pain left him a permanent quadriplegic who required a respirator to breathe. W.T. eventually entered a nursing home from which he was not expected to leave. A malpractice action was initiated (and had not been resolved as of the date of this ruling).
With New Jersey ElderLawAnswers member Susan L. Goldring representing M.T., the couple petitioned for and were granted a divorce from bed and board, a judicial separation that did not sever the marital bond but afforded each party the same property rights as an absolute divorce. Incorporated into the decree was a property settlement agreement that gave M.T. 63 percent of the couple's assets.
When W.T. later sought Medicaid assistance, the state Medicaid agency imposed a transfer penalty, asserting that the unequal property settlement agreement constituted an impermissible transfer during the look-back period. Following W.T.'s death, an administrative law judge reversed the agency's decision, ruling that the unequal distribution was made in contemplation of M.T.'s greater life expectancy and not to qualify W.T. for Medicaid. The ALJ rejected the agency's practice of treating anything other than a 50-50 division as a per se transfer for less than fair value The director of the state agency reversed and M.T. appealed.
The Superior Court of New Jersey, Appellate Division, reverses, finding the agency's decision to impose a penalty for an unequal but equitable distribution of property to be arbitrary and unsupported by law. The court finds the 50-50 policy to be an improper attempt at rulemaking that conflicts with state marriage laws. As it did in a previous case opinion, the court once again requests that the agency adopt regulations that give clear guidelines as to what is a proper division of assets in the event of divorce. See H.K. v. Dep't of Human Servs., 184 N.J. 367, 379 (2005).
For the full text of this decision, go to: https://lawlibrary.rutgers.edu/courts/appellate/a0089-05.opn.html .
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