Law Office of Donald D. Vanarelli Blog

Conceding defeat in the courts, the National Association of State Medicaid Directors (NASMD) has sent a letter to the Center for Medicare and Medicaid Services (CMS) requesting that the agency revisit its treatment of community spouse annuities.

In the Omnibus Budget Reconciliation Act of 1993, Congress delegated the treatment of annuities in the Medicaid program to the Secretary of Health and Human Services. CMS then exercised that authority in Transmittal 64 to the State Medicaid Manual which contained the Secretary’s determination that annuities were non-countable resources under Medicaid. The treatment was modified somewhat by the Deficit Reduction Act of 2005 (DRA), but recent federal and state court cases have upheld the Secretary’s decision that the purchase of DRA compliant annuities by community spouses are non-countable, and can protect resources in excess of the Community Spouse Resource Allowance. NASMD now wants CMS to change its rules so that annuities will be treated like trusts which would make them countable resources under the Medicaid rules.

A copy of the NASMD letter is available at: http://www.nasmd.org/home/doc/NASMDlettertoCMSannuityconcerns.pdf

Source: Elder Law Listserv

State v. Kennedy, 61 N.J. 509 (1972) explored the issue of “legally authorized” transfers made by an agent under a power of attorney. Kennedy obtained a power of attorney that was assumed to have been executed by the elderly victim, authorizing Kennedy to draw upon the victim’s bank accounts. Kennedy misappropriated most of the money in those accounts. The New Jersey Supreme Court affirmed a conviction of embezzlement. In so doing, it made the following comments regarding the abuse of a power of attorney:

A power of attorney of course is not an instrument of gift. In itself, it is no more than the term, power of attorney, imports—an authorization to the attorney to act for the principal. Although as between the bank and the principal, the bank was relieved [by the terms of the power of attorney] to inquire as to whether any withdrawal was in the agent’s interest rather than the principal’s, the instrument did not authorize the agent to make off with the principal’s money. In short, the instrument was the means whereby the agent was able to get his hands on the moneys, but when the moneys were thus obtained, the agent received them as agent for the principal, and the fraudulent appropriation of the moneys thus obtained to his own use constituted embezzlement. In other words, it is no defense to embezzlement that the moneys reached the agent with the consent of the principal. On the contrary, such entrusting is the necessary setting for the crime…. [I]t is no defense to embezzlement that the victim trusted the culprit. 61 N.J. at 512-513 (emphasis added).

Two recent non-NJ courts have taken a look at what constitutes “good faith” by a party ordered into mediation, with different outcomes hinging on weather the court viewed the actions of the mediator in reporting a party’s conduct in mediation as a breach of confidentiality.

Anthony vs. Andrews, 2009-Ohio-6378 – In this Ohio medical malpractice case, defense counsel told the mediator that her client would not give her consent to settle the matter and had never done so. The mediator, in his report back to the court, told the court the case did not settle and what defense counsel had stated. The court — sua sponte — issued an Order to Show Cause to determine if the defendant was in contempt of court for violating the order to mediate in good faith. The trial court found the defendant in contempt and ordered defendant to pay plaintiff’s attorney fees, lost wages and costs of attending the mediation session. On appeal, the trial court was reversed. The appellate court found that the mediator’s report to the court violated the confidentiality of the mediation. Costs of the appeal were taxed to the plaintiff.

In re A.T. Reynolds and Sons Inc., Case No. 08-37739 – In this case, the bankruptcy court in the Southern District of New York also looked at good faith participation by a party ordered to mediation. In a detailed opinion, the court wrote:

The issue is whether mere attendance at court-ordered mediation, without active participation in the mediation process, satisfies the requirement to participate in good faith. The Court holds that attendance without active participation is insufficient to constitute good-faith participation in mediation.

The court also looked at what mediation is:

Mediation entails a process, and requires parties to hear each other’s points of view and proposed resolutions to the issue underlying the mediation. Passive attendance at mediation cannot be found to satisfy the meaning of participation in mediation, because mediation requires listening, discussion and analysis among the parties and their counsel. Adherence to a predetermined resolution, without further discussion or other participation, is irreconcilable with risk analysis, a fundamental practice in mediation. While it goes without saying that a court may not order parties to settle, this Court has authority to order the parties to participate in the process of mediation, which entails discussion and risk analysis.

Addressing confidentiality, the court held as follows:

To ensure good faith participation, the mediators are required to report failures to participate in good faith, and they are relieved from rules of confidentiality to the extent necessary to do so.

The court ultimately issued sanctions against Wells Fargo and their counsel for civil contempt and ordered them to pay for all of the costs of the mediation, including the mediator and costs for the other parties to attend.

Social Security’s annual surplus nearly evaporated in 2009 for the first time in 25 years as the recession led hundreds of thousands of workers to retire or claim disability.  Social Security took in only $3 billion more in taxes last year than it paid out in benefits — a $60 billion decline from 2008, according to federal data. The impact of the recession is likely to hit the giant retirement system even harder this year and next. The Congressional Budget Office previously projected that Social Security would operate in the red in 2010 and 2011, but a deeper economic slump could make those losses larger than anticipated. “Things are a little bit worse than had been expected,” says Stephen Goss, chief actuary for the Social Security Administration. “Clearly, we’re going to be negative for a year or two.”  Since 1984, Social Security has raked in more in payroll taxes than it has paid in benefits, accumulating a $2.5 trillion trust fund. But because the government uses the trust fund to pay for other programs, tax increases, spending cuts or new borrowing will be required to make up the difference between taxes collected and benefits owed.  Experts say the trend points to a more basic problem for Social Security: looming retirements by Baby Boomers will create annual losses beginning in 2016 or 2017.

Source:  USA Today (February 8, 2010)

Time for a review of February’s most popular articles posted to the Vanarelli Law Office Blog. The original post date, along with a short summary of the content of each post, are included after each hyperlinked title.

New Tax Basis Rules In Estate And Elder Law Planning – January 14, 2010. This post briefly summarizes the tax law changes that became effective on January 1, 2010, including the elimination of the stepped-up tax basis for assets and the repeal of the federal estate tax.

New Jersey State Bar Association’s 2010 Elder Law Retreat – February 12, 2010. In this post, I provided the agenda for the Elder and Disability Law Retreat scheduled for April 22-23, 2010 in Cape May, NJ. This year, for the first time the Retreat is open to everyone; in prior years attendance was restricted to members of the NJ State Bar Elder and Disability Law Section.

NJ Appellate Court Rules That Awarding Attorneys Fees To The Wrongdoer In An Undue Influence Case Is An “Abuse Of Discretion” – January 28, 2010. This post describes the case of Rossius v. Krasheninnikoff, in which the trial court awarded attorneys fees in favor of defendant even through the court found that defendant exercised undue influence over decedent. The appellate division held that it was an abuse of discretion for the trial court to award attorneys fees to defendant where, as here, the wrongful conduct of one party triggers otherwise unnecessary litigation.

Medicaid Eligibility Denied Based Upon A Home Transfer To A “Caregiver Child” Who Was Employed Full-Time – December 15, 2009. This post summarizes the A.N. v. Division of Medical Assistance and Health Services case, an administrative appeal which affirmed the denial of Medicaid benefits, after the Medicaid applicant, A.N., who I represented in the case, transferred his home to his son T.N., a caregiver child, who was employed full-time outside the home.

Certain “Blue Water” Navy Vietnam Veterans Now Eligible For Agent Orange Presumptive Service-Connected Compensation Benefits – January 23, 2010. This post described a recent change in VA policy permitting certain “blue water” navy Vietnam veterans with designated diseases to receive compensation benefits and medical care from the VA without having to prove exposure to Agent Orange during their military service.

Top 10 New Jersey Family Law Cases Decided In 2009 – February 3, 2010. This post summarizes each of the top 10 family law cases decided by New Jersey courts in 2009.

Superior Court Judge Upholds Her Decision Authorizing The Establishment Of Third Party Special Needs Trusts Within An Intestate Estate – November 20, 2009. In this case. I described a decision by Hon. Patricia Del Bueno Cleary, J.S.C., who authorized my client, the Administrator of his mother’s intestate estate, to establish and fund two Supplemental Benefits Trusts to protect the intestate shares of the estate which passed to the decedent’s two disabled adult daughters, both of whom received needs-based government benefits for which they would have lost their eligibility had their intestate shares been distributed outright. Judge Cleary also denied a motion for reconsideration filed by the State of New Jersey.

In what may be considered a victory of judicial deference over equity, this week our Appellate Division affirmed Medicaid’s denial of eligibility to an incapacitated applicant, based on the applicant’s ownership of assets that she was not aware she owned.

In W.B. v. Division of Medical Assistance and Health Services (“DMAHS”), No. A-5658-07T1 (N.J. App. Div. Feb. 24, 2010), the applicant was a mentally incapacitated person residing in a nursing home. Her adult son was the agent under her power of attorney.

In July 2006, her son applied for Medicaid on W.B.’s behalf. After being denied for excess resources, the son reapplied for Medicaid in November 2006, apparently seeking a December 1, 2006 eligibility date.

In April 2007, while the application was pending, W.B.’s son and other family members discovered that W.B. owned stock worth $6,289.25 (above the $2,000 Medicaid resource limit). Upon this discovery, the son promptly sold the stock and, by the end of April 2007, used all of those funds to pay W.B.’s outstanding nursing home costs. The Board of Social Services determined that W.B. was eligible for Medicaid benefits as of May 1, 2007. The son appealed, contending that the December 1, 2006 eligibility date should apply. After the matter was appealed to an Administrative Law Judge, the ALJ’s decision was reversed by the DMAHS Director, who found that, despite W.B.’s family’s ignorance of the existence of the stock, W.B. had the “right, authority, or power” to liquidate the asset, and that it was therefore a countable resource pursuant to N.J.A.C. 10:71-4.1(c)(1) and 20 C.F.R. §416.1201(a)(1). The Director concluded that W.B. was eligible as of May 1, 2007. The son appealed to the Appellate Division.

On appeal, the son claimed to have no knowledge of the assets, and the opinion makes no suggestion that there was any evidence to the contrary. Nevertheless, the Appellate Division found that it “must accord the Division substantial deference in its areas of expertise,” and concluded that W.B.’s stock ownership through April 2007 provided a “reasoned basis” for the Director’s May 1, 2007 eligibility determination. It relied on the Director’s conclusion that W.B. had the “right, authority, or power” to liquidate the stock, and found that the aforecited regulations “contain no exception for situations in which the applicant, or his or her guardians, profess ignorance of the asset.”

The court acknowledged that the Social Security Program Operations Manual System (“POMS”) Section SI 01110.117 states that, “if an individual is unaware of his or her ownership of an asset, the asset should not be treated as a countable resource ‘during the period in which the individual was unaware of his/her ownership.’” However, it found that the POMS “does not … create any rights enforceable at law by any party in a civil or criminal action.” It distinguished the illustrative examples given in the POMS because, in those examples, the applicant had never known of the existence of his/her property rights. In the instant case, as the court distinguished, “there was no proof adduced … that W.B. herself was oblivious to her original acquisition of the … stock before she became mentally incapacitated.”

In sum, the W.B. court professed its appreciation of the “competing equities” that existed in the case; unfortunately, it failed to consider those equities as they related to W.B. in reviewing Medicaid’s actions.

The W.B. case is annexed here – W.B. v. DMAHS and Hunterdon CBSS

Yesterday, a discussion took place on a New Jersey elder and disability law listserv between several attorneys who regularly handle cases involving Division Of Developmental Disabilities (DDD) clients concerning a recent and significant change to the availability of DDD day program services. I have recreated the listserv discussion below by combining statements made in emails by a number of the participating lawyers. I believe this discussion may aid parents of children with developmental disabilities in understanding the new situation.

Day program services provided by New Jersey’s DDD are critical for adult children with developmental disabilities who are completing their educational entitlement, and their families. These day services allow adult children to remain active outside their home and develop social relationships with others. They also provide families and caregivers with time to pursue their own interests and activities, including a job.

Recently, the DDD posted the following announcement on its website:

ALERT: Change to Day Services policy – February 2010

In response to recent developments in the state’s fiscal situation, DDD announces a change in policy regarding new requests for day services, including self-directed day services.

In addition to meeting the criteria listed above, individuals who are not currently, but would like to receive, day services also will need to show that they have an emergency need for those services. The criteria for emergency can be found in section 10:46C-1.15(d) of Division Circular #8, “Waiting List Procedures.” It reads:

The criteria for an emergency placement in a day program are:

1. The individual has been placed in a Division funded residential placement and does not have a current day program;
2. The individual would become homeless without a day placement; or
3. The individual requires supervision which is not available during the day and is at risk of imminent peril.

Individuals who do not meet the emergency criteria, in addition to all other criteria for day services, will be placed on a day services Waiting List as it is defined in DC#8.

This change will significantly impact children with developmental disabilities who are completing their special education programs in June 2010. Special education eligibility ceases at the close of the school year during which the student attains age 21.

Parents who have children with developmental disabilities should make sure that their children are on the day program waiting list and ask for confirmation in writing.  In addition, parents should immediately request day program services to begin in July, immediately after school ends.  Parents should also start putting together documentation that shows that their child’s situation meets the emergency criteria, e.g., the child will regress (i.e. lose skills), maladaptive behaviors will worsen, there will be serious risk to the health and safety of the child or other family members in the home, etc.

Unfortunately, legal recourse appears to be limited. The only clients of DDD who are legally entitled to day program placement are individuals who reside in community residential programs.  Under N.J.S.A. 30:6D-17 “The department shall ensure that every developmentally disabled person in a community residential facility receives . . . a full daily program of structured activities . . .” Therefore, children with developmental disabilities do not have a legal right to day program activities.

That being said, N.J.S.A. 30:4-25.6 does state that “The commissioner shall, upon proper application for admission, forthwith admit the eligible mentally retarded person, and provide him with appropriate functional service to the extent available. In the event that the functional service which has been specified as most appropriate from time to time is not immediately available, the commissioner shall provide alternate service and, at the request of the applicant, shall also place the eligible mentally retarded person on a waiting list for the preferred service pending its availability.”

DDD has been very careful in its regulations to qualify that all of its services including family support services, day program placements, and residential placements are provided subject to the availability of funding.  See, Family Support Services, N.J.A.C. 10:46A-1.1(d), and Placements (day & residential), N.J.A.C. 10:46B-3.1(c).

However, N.J.S.A. 30:4-25.6 also states that the DDD “shall provide alternate service” when the appropriate service is not available.  DDD’s waiting list regulation as set forth in N.J.A.C. 10:46C-1.7(b) states that:  “If an eligible individual cannot be admitted to the most appropriate service, he or she shall be offered an alternate service,” but then goes on to say in section (c) that: “The availability of a service shall be subject to the limits of the Division’s funding resources for that Fiscal Year,” which seems to mean that the State doesn’t really have to provide an alternate service.

DDD has usually provided day program services as a part of alternate services provided to those awaiting residential placement.  What alternate service the DDD can provide to clients who are waiting for day program services is anyone’s guess.  I think that the failure to provide any services at all could make the DDD vulnerable in an appeal of the denial of day program services.

In any case, DDD fights denial of service appeals tooth and nail.  Litigation is likely to be long and expensive.  Unfortunately, there are not many parents of DDD clients who are able or willing to take on the state agency in protracted litigation of this kind.

The ultimate purpose of the special education laws is “to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and to prepare them for further education, employment and independent living.” Special education laws give families of children with disabilities the right to:

• Have their child assessed or tested to determine special education eligibility and needs;
• Inspect and review school records relating to their child;
• Attend an annual “individualized education program” (IEP) meeting and develop a written IEP plan with representatives of the local school district; and,
• Resolve disputes with the school district through an administrative process.

Do you need a lawyer to help your child get the educational services and resources he or she is entitled to under the special education laws? That depends on many things, like the complexity of the case, your child’s needs, the time and energy you have to devote to the case independently, your finances, and your familiarity with the special education laws, among other things. Frankly, if you have a child in special education and everything seems to be running smoothly and your child is making progress, you may never need a lawyer. But, if the school district or other service provider has denied services, treatments, or equipment you believe your child needs, or if you have questions about the process, it would make sense to hire, or at least consult with, an attorney to help you advocate for your child.

A special education lawyer can help you understand the special education process and advocate for your child in school, at hearings or in court . Many parents start the special education process on their own and consult with an attorney only if obstacles prevent them from moving forward with the school district. Some parents hire an attorney to handle the entire process from start to finish because their child has problems that require immediate attention, the parents choose to have minimal contact with school district education officials, or for some other reason.

Here are some of the specific tasks a special education lawyer can help you with:

• Obtaining your child’s school files;
• Reviewing evaluations and the IEP;
• Analyzing the strengths and weaknesses of the case;
• Researching specific legal issues that apply to your disabled child’s case;
• Requesting additional evaluations or an IEP meeting;
• Preparing for the IEP meeting;
• Attending the IEP meeting;
• Advocating for your special needs child at the IEP meeting;
• Helping you resolve disputes with the school district;
• Writing pre- and post-hearing briefs;
• Preparing a complaint to file with the appropriate educational agency; and,
• Representing your child in court.

The bottom line is this: A special education lawyer will vigorously represent the best interests of the student in the educational process by helping the child with disabilities obtain the educational treatment and services appropriate for the child’s unique needs. The lawyer will also empower, inform, guide and educate parents / guardians and students to strengthen their own advocacy skills. If you need these or similar services, you should hire a special education lawyer to help you advocate for your special needs child.

Sources: Special Needs Advocacy Network; HealthyPlace: America’s Mental Health Channel; Parenting / New Hamshire website; The Nolo Family Law & Immigration Center; and the Lawyers.com website.

Time for our regular review of last week’s most popular articles posted to the Vanarelli Law Office Blog. The original post date, along with a short summary of the content of each post, are included after each hyperlinked title.

Federal Estate Tax Repealed, But “Carryover Basis” Rules Instituted, In 2010 – January 27, 2010. Here, the reader will find a summary of the substantial changes to the federal estate tax laws in 2010 and beyond which resulted from Congress’ failure to repeal the Economic Growth and Tax Reconciliation Act of 2001.

New Jersey State Bar Association’s 2010 Elder Law Retreat – February 12, 2010. In this post, I provided the agenda of speakers and topics planned for the Elder and Disability Law Retreat scheduled for April 22-23, 2010 in Cape May, NJ. This year, for the first time the Retreat is open to everyone; in prior years attendance was restricted to members of the NJ State Bar Elder and Disability Law Section.

Certain “Blue Water” Navy Vietnam Veterans Now Eligible For Agent Orange Presumptive Service-Connected Compensation Benefits – January 23, 2010. This post described a recent change in VA policy permitting certain “blue water” navy Vietnam veterans with designated diseases to receive compensation benefits and medical care from the VA without having to prove exposure to Agent Orange during their military service.

Social Security Adds 38 New Compassionate Allowances Conditions, Including Early-Onset Alzheimer’s Disease – February 15, 2010. Under its Compassionate Allowances Initiative, Social Security is able to quickly target the most obviously disabled individuals for immediate approval of pending disability claims. In this post, I described the agency’s recent announcement that 38 more conditions would be added to the list of Compassionate Allowances conditions. The 38 new conditions range from adult brain disorders to rare diseases that primarily affect children.

Don Vanarelli’s Unofficial List of the
TOP TEN REASONS TO ATTEND
THIS YEAR’S ELDER LAW RETREAT

10.     You’ll be able to hobnob with the attorneys who put the “Elder” in Elder Law.

9.     If you’re in Cape May, you’re not in your office.

8.     Congress Hall hotel has 2 bars and 1 spa.

7.     You’ll learn details of Rutgers Law School Professor Emeritus Norman Cantor’s new book, After We Die: The Life and Times of a Human Cadaver, before its release.

6.     You’ll learn the latest Medicaid planning techniques, trends and case law.

5.     An esteemed panel of judges will appear before you, rather than vice versa.

4.     CLE Credits! CLE Credits! CLE Credits!

3.     You’ll get updates on estate and gift taxation.

2.     Renowned elder advocate and author Eric Carlson will provide tips and trends on protecting nursing home and assisted living residents.

1.     You’ll learn from seasoned elder law attorneys with years of experience (at least a few years more than you have).

New Jersey State Bar Association, Elder and Disability Law Section, Presents:

2010 Elder Law Retreat
Congress Hall Hotel, Cape May, NJ
April 22 & 23, 2010

Register Now: Call NJICLE at (732) 214-8500