N.J. Court Gives Guidance on Hiring Aides – Part 2

In my post last week, I set out the facts of a recent Appellate Division case covering a situation I see frequently in my elder law practice – the payment of home health aides and how it affects Medicaid eligibility.

The Medicaid applicant, D.Z. paid her aides almost exactly the way countless people I have spoken to over the years have paid their private aides.  She and her son as her POA paid the aides by check payable to cash with no written agreement as to the services to be provided.  The State assessed a penalty of 21 months on $210,000 of transfers for less than fair value, most of which went to pay the aides.  As I was reading the case, I was very interested to see how the court would view the State’s arguments.  How much deference would the State be given?

The Administrative Law Judge issued a decision modifying the amount of the transfer penalty.  The judge found that D.Z. had provided sufficient evidence to establish that she paid the aides and received equal fair market value in services so that no penalty should be imposed.

The administrative law judge’s decision, however, while binding on the applicant is not binding on the State which has 45 days to accept, modify or reject it.  The State rejected the judge’s conclusion that D.Z. had provided sufficient evidence to show the payments to the aides should not cause a penalty.  Instead, the State found no evidence of any caregiver agreement establishing the services to be provided and the rate of pay or that the aides were certified health aides entitled to be paid at the rate they charged D.Z. for their services.

The State also focused on several other items which we commonly see.  There was no consistent pattern of payments.  The checks were routinely written for differing amounts in part because reimbursement for purchases the aides made was added onto the pay.  The State scrutinized the payments for inconsistencies.  For example, it noted that checks were written to one aide at a time when evidence showed another aide was working as a live in or when D.Z.’s daughter-in-law testified she was providing the care.

In the end, the State agreed to reduce the transfers for less than fair value but only by $3000 which barely reduced the penalty by a third of a month.  The applicant appealed again to the next level, the New Jersey Appellate Court.  The Appellate Division refused to overturn the State’s decision, finding that it was not arbitrary but instead based on substantial credible evidence.  While certainly a bad result for the applicant, the decision provides a road map of how to avoid pitfall for those needing home aides but who may also need Medicaid benefits down the road. Next week I’ll tell you what that road map looks like and how to avoid the situation that D.Z. found herself in.