U.S. Court Upholds Denial of Assisted Living Benefits Due to Spousal Support Reduction

A U.S. district court upholds the decision of New Jersey’s Medicaid agency to deny assisted living benefits to a woman who had consented to having her monthly spousal support reduced, finding that the woman had failed to establish any genuine issues of material fact that the reduction was not a disposal of assets for less than fair market value.  Deal v. Velez, et al. (U.S. Dist. Ct., D. N.J., No. 14-6444, Feb. 20, 2018).

In January 2014, Grace Deal applied to the Burlington County Board of Social Services (BCBOSS) for assisted living benefits through a New Jersey Medicaid waiver program.  On March 4, 2014, BCBOSS denied Ms. Deal’s application because on December 13, 2013, she had entered into a consent agreement that reduced the spousal support she received from $2,055 per month to $1,500 per month.  BCBOSS presumed that the consent agreement was intended to bring Ms. Deal’s income within Medicaid’s income limit of $2,163 per month and further found that it amounted to a disposal of assets for less than fair market value.

Following a hearing, an administrative law judge (ALJ) issued a decision affirming the denial of benefits.  New Jersey’s Division of Medical Assistance and Health Services (DMAHS), affirmed the ALJ’s decision.  Ms. Deal responded by suing the commissioner of the New Jersey Department of Human Services, the director of DMAHS and Charles SanFilippo, the director of BCBOSS.

Ms. Deal died on June 28, 2015.  At trial, the executrix of her estate asserted that the denial of assisted living benefits to Ms. Deal violated the Medicaid Act and that Ms. Deal had been wrongfully deprived of benefits of $63,411.28 for the period from July 1, 2014, to February 28, 2015, when benefits were authorized pursuant to a second application.  In March 2017, the trial court dismissed all claims except those asserted against Mr. SanFilippo, who then filed a motion for summary judgment, asserting that as the director of BCBOSS he acted as an arm of the state and was entitled to qualified immunity from lawsuits under the Eleventh Amendment.

The United States District Court, District of New Jersey, concludes that as a county employee and not a state employee, Mr. SanFilippo is not protected from lawsuits by qualified immunity.  However, the court finds that summary judgment is nevertheless appropriate because having been appointed director of BCBOSS in March 2016, Mr. SanFilippo was not involved in the processing of Ms. Deal’s Medicaid applications, and because the estate had failed to produce any evidence supporting its claims of violations of the Medicaid Act.

For the full text of this decision, click here.

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