A New Jersey appeals court rules that a Medicaid applicant whose son used his power of attorney to transfer the applicant's money to himself is not entitled to an undue hardship waiver of the transfer penalty. R.P. v. Division of Medical Assistance and Health Services (N.J. Super. Ct., A.D., No. A-6148-11T3, Oct. 22, 2013).
R.P. entered a nursing home and gave his son, James, a power of attorney. James sold R.P.'s house, transferred money from R.P.'s bank account into his bank account, and stopped paying the nursing home. A guardian was appointed for R.P. The guardian filed a complaint against James and applied for Medicaid benefits. The court entered an order requiring James to pay the nursing home restitution, entering a judgment by default against him for $93,120.01. James began making monthly payments to the nursing home.
The state imposed a penalty period based on the transfer of assets to James. R.P. requested an undue hardship waiver from the transfer penalty, arguing that James stole the money and R.P. made a good faith effort to recover it. The state found that R.P. failed the first prong of the undue hardship waiver test. Under state law, to prove undue hardship, a Medicaid applicant must prove that denial of the waiver would put the applicant's life in danger and that the assets are out of the applicant's control. R.P. appealed to court.
The New Jersey Superior Court, Appellate Division, affirms, holding an undue hardship waiver is not appropriate. According to the court, R.P. produced no evidence at the hearing "that he was deprived of medical care such that his health or life was endangered or that he was deprived of food, clothing, shelter, or other necessities of life." The court also finds R.P. doesn't meet the second prong of the undue hardship waiver test because James was making restitution payments and the amount was recoverable from the default judgment.
For the full text of this decision, go to: https://www.judiciary.state.nj.us/opinions/a6148-11.pdf.
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