The New Jersey Superior Court, Appellate Division, affirmed a lower court’s ruling denying the application of a Medicaid recipient’s estate to extinguish the state Medicaid agency’s lien against the estate, holding that a survivorship claim was an asset of the estate and could be subject to a lien under the estate asset statute. In re Estate of Leonor R. Dizon, No. A-1724-23 (Apr. 8, 2025).
Leonor Dizon received Medicaid benefits from August 2006 to March 2018. She died after falling from her bed and fracturing her neck at the Trinitas Regional Medical Center. In August 2018, the surrogate’s court issued letters of administration to Teresa Finamore, Leonor’s daughter. The Division of Medical Assistance and Health Services (the Division) advised Leonor’s estate (the Estate) of a lien and asserted a claim against the Estate’s assets under 42 U.S.C. § 1396p and New Jersey’s estate asset statute for $214,391 expended by the state’s Medicaid program for medical and health-related services on Leonor’s behalf.
In 2019, the Estate filed a medical malpractice complaint that included survivorship claims, and the Division filed a lien against the Estate’s assets, including any award from the pending survivorship actions. The Estate petitioned the court to issue an order extinguishing the lien claim asserted against the Estate’s assets pursuant to the estate asset statute. It argued that a survivorship award was not subject to the Division’s lien under the estate asset statute because the survivorship claims were not assets of the Estate at the time of Leonor’s death. It claimed the Division was only entitled to reimbursement from an award for Leonor’s tort-related medical expenses from third-party medical malpractice defendants under another statute that specifically addressed third-party liability recovery. The court denied the Estate’s application to extinguish the lien, and the Estate appealed.
On appeal, the New Jersey Superior Court, Appellate Division, determined that the estate asset statute broadly defines an estate asset as all interests a Medicaid recipient possesses at death, including any interest in the Medicaid recipient’s medical malpractice claims. The administrator of Leonor’s Estate had the same standing to sue that Leonor had prior to her death; thus, Leonor’s interest in her medical malpractice claims passed to the Estate at her death, and the survivorship claims were estate assets.
The court also found no merit in the Estate’s argument that the third-party liability statute dictated the amount that the Division could recover on its lien because the source of the funds limited its ability to collect through its lien. Rather, a Medicaid recipient’s status as living, not the source of the funds, governs the Division’s authority to attach a lien for reimbursement: The federal anti-lien statute prohibits a lien from being imposed against a Medicaid recipient’s property prior to their death. Under the estate asset statute, the Division was authorized to seek reimbursement against the Estate’s assets for all Medicaid benefits paid on Leonor’s behalf after she turned 55, and it was not limited to reimbursement from recovery for tort-related medical expenses. As a result, the court ruled that the Division’s lien was valid against all the Estate’s assets, including any survivorship action award, under the estate asset statute and affirmed the lower court’s order denying the Estate’s application to extinguish the lien.
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