Williams v. Connolly

Elizabeth WILLIAMS, Plaintiff, v. Elizabeth CONNOLLY, et al., Defendants.

Civil No. 17-1631 (RBK/AMD)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY CAMDEN VICINAGE

November 15, 2017

NOT FOR PUBLICATION

OPINION

KUGLER, United States District Judge:

This matter comes before the Court upon Defendants' Motion to Dismiss (Doc. No. 9), Plaintiff's Opposition (Doc. No. 11), and Defendants' Reply thereto (Doc. No. 17). Plaintiff Elizabeth D. Williams has sued Defendants Elizabeth Connolly, Commissioner of the New Jersey Department of Human Services; Meghan Davey, Director of the New Jersey Division of Medical Assistance and Health Services; and Sara E. Maloney, Deputy Director of the Cape May County Board of Social Services. All have been sued in their official capacities. Plaintiff alleges the State of New Jersey has applied a policy in a state agency's Medicaid hearing that has deprived her of her federal statutory and constitutional rights. Because Plaintiff's claims are barred by the Eleventh Amendment, and because the declaratory relief she also seeks is not tied to any cognizable injunctive or damages claims, Defendants' Motion to Dismiss is GRANTED.

I. FACTS AND BACKGROUND

A. Plaintiff's Illness and the Transfer of Her Home.

In 2011, John C. Davis, Sr., started to notice that his elderly mother, the plaintiff in this matter, was not taking care of herself. Plaintiff had been hoarding items in her home, eating unhealthily with a tell-tale preference for sugar, and, most worrisomely, episodically wandering from her home when she should have been sleeping. Recognizing that the streets of Philadelphia were no place for an 87-year-old parent to be at night, Mr. Davis brought his mother to live with him at his home in New Jersey in January 2012. In his sixties, semi-retired and usually working from home, Mr. Davis and his spouse took care of his mom. Plaintiff could not shop, drive, cook, or pay bills. She could not clean herself, or bathe, or change her diapers, or cut or eat her food. Mr. Davis hired female caregivers to bathe and dress his mom on four out of five weekdays, and he and his wife took the other days, including weekends.

Not long after moving in with her son, Plaintiff was diagnosed with Alzheimer's disease. According to her primary care physician, she was "totally dependent" on her son's care. Plaintiff claims Mr. Davis provided near-constant care for her during this time, approximately 133 of the 168 hours of the week, or 79.16% of the week. Presumably, though, Mr. Davis dedicated at least some of his claimed daily five hours of free time to work and sleep.

After nearly three years of living with Mr. Davis and his family, Plaintiff was admitted to the Shore Memorial Hospital, complaining of pain in her neck and hips. She was diagnosed with leg and neck fractures, and was hospitalized for a few days. She then entered a nursing home. She is now wheelchair bound, and Plaintiff has lived in the nursing home since October 31, 2014.

What brings Plaintiff to court today is a Medicaid exemption for a piece of property. On February 13, 2012, Mr. Davis—who has, and had, power of attorney over his mother—sold hismother his home, the property 3 Gladwyn Drive, Ocean View, New Jersey, for $379,122, a value based on the tax assessment of $389,700. (Compl. Exs. H, M at 4-5.) To purchase the property, Plaintiff liquidated several security or investment instruments:

DWS Investment Account

$123,460.58

Cash

$15,011.99

Federated Investment Account

$86,141.15

Vanguard IRA

$49,918.88

Series EE Savings Bonds

$93,884.00

Total

$368,416.60

(Compl. Ex. J at 2.) A few years later, on December 19, 2014, Plaintiff, who by all accounts appears to be severely disabled, deeded the Ocean View home back to her son for $1.00. (Compl. Ex. I.)

B. Medicaid

To understand the effects of this transfer, some background information is helpful. The Medicaid Act is a cooperative federal-state program that is jointly financed with federal and state funds. Wilder v. Virginia Hospital Ass'n, 496 U.S. 498, 501 (1990). Medicaid covers individuals who are blind, disabled, or 65 or older if they are financially qualified, 42 U.S.C. § 1396a(10), and qualifying individuals are entitled to funding for long-term care in "nursing facility services." 42 U.S.C. §§ 1396d(a), 1396p(c)(1)(C)(i)(I). For an individual to be eligible for Medicaid benefits, a person's income and resources must fall below a certain limit, with certain exceptions. Johnson v. Guhl, 91 F. Supp. 2d 754, 760 (D.N.J. 2000). Section 1396p(c)(1)(A) of the federal Medicaid statute provides that "[i]f an institutionalized individual . . . disposes of assets for less than fair market value" by a "look-back date," "the individual is ineligible for medical assistance" for a set of services, including long-term nursing care. As relevant here, the "look-back date" is defined by the Act as a date that is 60 months before (1) the date an individual became institutionalized andapplied for Medicaid, or (2) the date when a non-institutionalized individual applies for Medicaid or (if later) disposes of assets for less than fair market value. 42 U.S.C. § 1396p(c)(1)(A)-(B).

When an individual seeks benefits for an institutional level of care, transfers of resources are scrutinized. N.J. Admin. Code 10:71-4.10. "If an individual . . . (including any person acting with power of attorney or as a guardian for such individual) has sold, given away, or otherwise transferred any assets," a transfer penalty of ineligibility is assessed. N.J. Admin. Code 10:71-4.10(c). An individual who transfers or disposes of resources for less than fair market value during or after the start of the sixty-month look-back period before the individual becomes institutionalized, or who applies for Medicaid once institutionalized, is penalized for making the transfer. 42 U.S.C. § 1396p(c)(1); N.J. Admin. Code 10:71-4.10(m)(1). The transfer penalty is designed to penalize individuals who use Medicaid benefits when they could use the transferred resources instead. W.T. v. Div. of Med. Assistance & Health Servs., 391 N.J. Super. 25, 37, 916 A.2d 1066, 1074 (App. Div. 2007) ("Transfers of resources within the stated time frame are presumed to be improperly motivated to obtain Medicaid eligibility, a presumption which can be rebutted by proofs 'that the assets were transferred exclusively (that is, solely) for some other purpose' than Medicaid qualifications.") (citing N.J. Admin. Code 10:71-4.10(j)).

There are limited exceptions to the transfer penalty rules, including, as relevant here, the "caregiver" exemption. The federal Medicaid statute, 42 U.S.C. § 1396p(c)(2), provides that an individual may not be subject to the transfer penalty rules when "the assets transferred were a home and title to the home was transferred to . . . a son or daughter" who was residing in that individual's home for a period of at least two years immediately before the date the individual became institutionalized. New Jersey's Medicaid provisions closely track the federal statute, adopting essentially the same exemption:

(d) An individual shall not be ineligible for an institutional level of care because of the transfer of his or her equity interest in a home which serves . . . as the individual's principal place of residence and the title to the home was transferred to . . .

4. A son or daughter . . . who was residing in the individual's home for a period of at least two years immediately before the date the individual becomes an institutionalized individual and who has provided care to such individual which permitted the individual to reside at home rather than in an institution or facility.

i. . . . the care provided by the son or daughter shall have been essential to the health and safety of the individual and shall have consisted of activities such as, but not limited to, supervision of medication, monitoring of nutritional status, and insuring the safety of the individual.

N.J. Admin. Code 10:71-4.10(d).

Importantly, the "care provided by the individual's son or daughter" must exceed "normal personal support activities" like routine transportation or shopping. It must also involve treatment of someone whose physical or mental condition requires "special attention and care." N.J. Admin. Code 10:71-4.10(d)(4). The "receipt of Medicaid benefits is not automatic . . . proof must be forthcoming specifically establishing each requirement of the exception to obtain its application." M.K. v. Div. of Med. Assistance & Health Servs., 2016 WL 2759273, at *7 (N.J. Super. Ct. App. Div. May 13, 2016).

C. The Hearings

On March 10, 2015, Plaintiff filed for Medicaid assistance, seeking eligibility effective March 1, 2015. On August 24, 2015, the Cape May County Social Services - Medicaid Unit, the county welfare agency ("CWA"), granted this application, granting her Medicaid assistance, to be effective July 2, 2018. Plaintiff was found to meet the Nursing Home Medicaid Guidelines for eligibility. However, a penalty had been applied for 1,219 days at a daily rate of $332.59, "due to a transfer of resources" that the CWA did not elaborate on. This sum totaled $405,318.38. Plaintifffollowed up, and asked what the basis for this penalty was. A caseworker provided this breakdown of the transfer penalty calculation by email:

DWS Investment Account

$123,460.58

Granddaughter

$10,000.00

Federated

$86,141.15

Vanguard IRA

$49,918.88

Bonds

$120,578.00

[Certificate of Deposit]

$15,219.77

Total Penalty

$405,318.38

(Compl. Ex. J at 3.) This led to a December 24, 2015 hearing on whether this notice was sufficient under Goldberg v. Kelly, 397 U.S. 254 (1970), which requires a state to provide timely and adequate notice to Medicaid applicants. Administrative Law Judge W. Todd Miller held that notice about the penalty was insufficient because neither the original CWA notice nor the clarifying email mentioned the transfer of Plaintiff's home to her son....