Opinion
DOCKET NO. A-2290-14T2
10-26-2016
E.S., Petitioner-Appellant, v. DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES, Respondent-Respondent, and BERGEN COUNTY BOARD OF SOCIAL SERVICES, Respondent.
William I. Strasser argued the cause for appellant (Strasser & Associates, P.C., attorneys; Mr. Strasser, of counsel; Gregory D. Emond, on the briefs). Stephen J. Slocum, Deputy Attorney General, argued the cause for respondent (Robert Lougy, Acting Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Mr. Slocum, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Rothstadt and Currier. On appeal from the Division of Medical Assistance and Health Services, Docket No. 021017637501. William I. Strasser argued the cause for appellant (Strasser & Associates, P.C., attorneys; Mr. Strasser, of counsel; Gregory D. Emond, on the briefs). Stephen J. Slocum, Deputy Attorney General, argued the cause for respondent (Robert Lougy, Acting Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Mr. Slocum, on the brief). The opinion of the court was delivered by ROTHSTADT, J.A.D.
E.S. (Elaine) appeals from the Division of Medical Assistance and Health Services' (DMAHS) December 11, 2014 final decision reversing an administrative law judge's (ALJ) initial determination that the Bergen County Board of Social Services (Board) erred when it applied a transfer penalty to Elaine's application for Medicaid benefits. On appeal, Elaine contends that the agency's decision was without factual or legal support, the transfers it relied upon were not made so as to qualify Elaine for benefits, the assets transferred did not belong to Elaine, and the agency improperly considered her life estate in her family's home as an available resource. We disagree and affirm.
We use pseudonyms to protect the privacy of those involved in this matter.
The record discloses the following facts. Elaine, who is now eighty-seven years old, has been a resident of a nursing home since February 2013. Previously, she resided in her family's home in Paramus, which she owned by the entirety with her late husband, W.S. (Walter). When he died in 2003, Walter bequeathed all of his residuary estate to their daughter, L.R. (Laura), leaving no money to Elaine.
Upon Walter's death, Elaine obtained title to the family home and held it in her own name until 2006 when she conveyed title to Laura, but reserved a life estate for herself. After Elaine relocated to the nursing home, Laura sold the home to a third party in an arm's length transaction, conveying both her and, pursuant to a power of attorney, her mother's interest. Elaine did not receive any of the sale's proceeds.
On February 11, 2014, Elaine applied to the Board for Institutional Medicaid. In response, the Board advised her that she became financially eligible for Medicaid benefits as of March 1, 2014, but she was subject to a transfer penalty because she had transferred assets at less than fair market value within the five-year look-back period prior to applying for benefits. The Board imposed a penalty as well as a thirty-four month and twenty-two day period of ineligibility.
Elaine challenged the Board's determination and requested a hearing by the Office of Administrative Law (OAL). An ALJ presided over the hearing on September 18, 2014, at which two witnesses testified: Laura and the Board's representative.
Laura testified as to her and her mother's resources. She explained that Walter left her as the sole beneficiary of his residual estate, which totaled approximately $500,000 when she received it. Laura testified "to the best of [her] knowledge" that she divided the money she received and deposited it into two bank accounts held in her and Elaine's names as joint owners. Laura did not, however, give any testimony or produce any documents that established how long after her father's death in 2003 she created the joint accounts with her mother. The only bank statements produced were from 2011 and 2013.
The two accounts — one savings and one checking — listed Elaine as the first name on the accounts and were "or" accounts, meaning either one of them could access the funds on deposit. According to Laura, she and her mother did their "banking together [because] it gave [Elaine] comfort." Laura considered the funds to be her own even though Elaine had unrestricted access to the funds and the ability to draw on these funds.
Laura also testified about a series of checks drawn against the accounts totaling $62,732.27. Laura stated that she used the money to pay for her daughters' day care expenses, "for a car loan that was paid off," and to "basically . . . pay [her]self back" for taking care of Elaine and her disabled sibling. According to Laura, the checks were not written for the purpose of obtaining Medicaid eligibility for Elaine. Laura testified that the accounts were also used to pay for Elaine's in-home nursing care before she was placed in a full-time nursing home.
In addition to testifying about the bank accounts, Laura explained the circumstances surrounding the sale of the home she owned that was subject to Elaine's life estate. According to Laura, she sold the home on July 22, 2013, to a third party for $416,000.00. After costs and fees associated with closing, Laura received the sale proceeds totaling $391,292.00 and Elaine received no consideration for the extinguishment of her life estate.
Based on Laura's testimony, the ALJ recommended that no transfer penalty should be imposed. The ALJ found that Laura testified credibly that, although both Laura and Elaine had "unrestricted access to the funds," all funds came from Walter's estate, which was left to her and "due to [Elaine's] age and institutionalization" she could not access the funds. Further, he found that the family home was conveyed to Laura in 2006, before the look-back period. In addition, the ALJ found that the life estate had been sold for fair market value and that the joint accounts were inaccessible to Elaine, "except through her [attorney in fact, Laura]," and therefore no transfer occurred under the law. Finally, the ALJ found that the purchases made using the accounts' funds were for Elaine's and Laura's benefit, and, therefore "could not have been made for purposes of qualifying for Medicaid."
The Board filed exceptions to the ALJ's determination, and Elaine responded. After considering the ALJ's initial recommendation and the parties' submissions, the director of the DMAHS (Director) issued the agency's final decision, rejecting the ALJ's recommendation and imposing a transfer penalty of $207,502.48. Relying on our decision in E.S. v. Div. of Med. Assistance & Health Servs., 412 N.J. Super. 340, 363 (App. Div. 2010) and N.J.A.C. 10:71-4.10(i), the Director found that Elaine failed to rebut the presumption that the transfer of her life estate in July 2013 and the transfer of funds from the bank accounts were "exclusively (that is, solely) for some other purpose" than qualifying for Medicaid benefits. The Director found that a penalty was warranted because the sale of Elaine's life estate was a transfer of an available resource for which Elaine did not receive any value, let alone fair market value. According to the Director, normally "[a] life estate has a value based on the tenant's age at the time of the sale to a third party and results in a transfer if the life tenant is not compensated from the proceeds." As such, when Laura sold her home and extinguished Elaine's life estate, Elaine should have received fair market value for her interest. The Director found that the penalty assessed should have been $144,770.21.
As to the bank accounts, the Director found that "[o]ver the course of the look-back period, [Laura] used checks and cash withdrawals [from the joint accounts] totaling $62,732.27 to purchase items such as a car for herself and expenses for her children[.]" Additionally, checks were drawn against the accounts to pay for Elaine's living expenses, home health care, and nursing home care. Although Laura claimed that the accounts "were funded with assets she received from her father's estate," the agency found that "the record . . . contains no evidence that the funds inherited [from Walter] in 2003 were the same funds in December 2010 when the savings account" was opened. The evidence also fails to show when the checking account was opened or how it was funded.
The Director also observed that Elaine's name was listed first on both accounts. She quoted from Internal Revenue Service Publication 17 as to how that demonstrated the funds in the account belonged to Elaine and stated:
If the funds in a joint account belong to one person, list that person's name first on the account and give that person's SSN to the payer. . . . If the joint account contains combined funds, give the SSN of the person whose name is listed first on the account.
These rules apply both to joint ownership by a married couple and to joint ownership by other individuals. For example, if you open a joint savings account with your child
using funds belonging to the child, list the child's name first on the account and give the child's SSN.As such, the Director concluded that "[i]f the funds in these two accounts belonged to [Laura], [her] name should appear first and would be the reporting Social Security number for tax purposes." Because Elaine's name appeared first on both accounts, and there was no documentation demonstrating the true source of the funding in the account, Elaine could not demonstrate that the money withdrawn by Laura was Laura's sole property. Relying on the "residuum rule," N.J.A.C. 1:1-15.5(b), the Director found that Laura's testimony alone was insufficient to establish that the funds deposited into the two accounts were hers alone as there was no other "legally competent evidence . . . sufficient to provide assurances of reliability [of her testimony] and to avoid the fact or appearance of arbitrariness."
[(citation omitted).]
The regulation, which permits the admission of hearsay in an administrative hearing, states "[n]otwithstanding the admissibility of hearsay evidence, some legally competent evidence must exist to support each ultimate finding of fact to an extent sufficient to provide assurances of reliability and to avoid the fact or appearance of arbitrariness." N.J.A.C. 1:1-15.5(b).
The Director concluded the agency's decision by imposing a transfer penalty. This appeal followed.
The amount of the penalty is not in dispute.
Our review of an agency decision is limited. R.S. v. Div. of Med. Assistance & Health Servs., 434 N.J. Super. 250, 260 (App. Div. 2014). "An administrative agency's decision will be upheld 'unless there is a clear showing that it is arbitrary, capricious, or unreasonable, or that it lacks fair support in the record.'" Id. at 261 (quoting Russo v. Bd. of Trs., Police & Firemen's Ret. Sys., 206 N.J. 14, 25 (2011)). "The agency decision must be supported by substantial credible evidence in the record as a whole[,] . . . must not offend either the state or federal constitution and must be in accord with the agency's legislative mandate." E.S., supra, 412 N.J. Super. at 348-49 (citations and internal quotation marks omitted). "The burden of demonstrating that the agency's action was arbitrary, capricious or unreasonable rests upon the [party] challenging the administrative action." Id. at 349 (quoting In re Arenas, 385 N.J. Super. 440, 443-44 (App. Div.), certif. denied, 188 N.J. 219 (2006)).
"Deference to an agency decision is particularly appropriate where the interpretation of the [a]gency's own regulation is in issue." I.L. v. N.J. Dep't of Human Servs., Div. of Med. Assistance & Health Servs., 389 N.J. Super. 354, 364 (App. Div. 2006). "Nevertheless, 'we are not bound by the agency's legal opinions.'" A.B. v. Div. of Med. Assistance & Health Servs., 407 N.J. Super. 330, 340 (App. Div.) (quoting Levine v. State, Dep't of Transp., Div. of Motor Vehicles, 338 N.J. Super. 28, 32 (App. Div. 2001)), certif. denied, 200 N.J. 210 (2009). "Statutory and regulatory construction is a purely legal issue subject to de novo review." Ibid. (citing Mayflower Sec. Co. v. Bureau of Sec., 64 N.J. 85, 93 (1973)).
We begin our review with an explanation of the laws and regulations applicable to applications for Medicaid benefits. The determination of the nature and purposes of transfers made by an individual before applying for benefits is necessary to protect the funds available to help people in need. See H.K. v. State, 184 N.J. 367, 378-80 (2005); M.E.F. v. A.B.F., 393 N.J. Super. 543, 558 (App. Div.), certif. denied, 192 N.J. 479 (2007). Medicaid is a federally established, state-administered program, Estate of F.K. v. Div. of Med. Assistance & Health Servs., 374 N.J. Super. 126, 134 (App. Div.), certif. denied, 184 N.J. 209 (2005), "designed to provide medical assistance," at public expense, "to individuals 'whose income and resources are insufficient to meet the cost of necessary medical services.'" N.M. v. Div. of Med. Assistance & Health Servs., 405 N.J. Super. 353, 359 (App. Div.) (quoting 42 U.S.C.A. § 1396), certif. denied, 199 N.J. 517 (2009).
States are not required to participate in the program but those that do must comply with Title XIX of the Social Security Act and the regulations adopted by the Secretary of Health and Human Services. Mistrick v. Div. of Med. Assistance & Health Servs., 154 N.J. 158, 165-66 (1998). See Harris v. McRae, 448 U.S. 297, 301, 100 S. Ct. 2671, 2680, 65 L. Ed. 2d 784, 794 (1980); United Hosps. Med. Ctr. v. State, 349 N.J. Super. 1, 4 (App. Div. 2002); see also 42 U.S.C.A. § 1396a(a), (b). New Jersey participates in the program pursuant to the New Jersey Medical Assistance and Health Services Act, N.J.S.A. 30:4D-1 to -19.5, and the DMAHS is charged with administering the program. N.J.S.A. 30:4D-7; N.J.A.C. 10:49-1.1.
Medicaid provides "medical assistance to needy persons who are institutionalized in nursing homes as a result of illness or other incapacity." M.E.F., supra, 393 N.J. Super. at 545. That assistance is intended to be a resource of last resort, N.J.S.A. 30:4D-2, and reserved only for those applicants who have a financial as well as medical need for assistance — that is, those whose income and assets fall below a certain threshold, N.E. v. Div. of Med. Assistance & Health Servs., 399 N.J. Super. 566, 572 (App. Div. 2008).
In implementing a Medicaid program, a state must adopt "'reasonable standards . . . for determining eligibility for and the extent of medical assistance . . . [that are] consistent with the objectives' of the Medicaid program," Mistrick, supra, 154 N.J. at 166 (first and second alterations in original) (quoting L.M. v. Div. of Med. Assistance & Health Servs., 140 N.J. 480, 484 (1995)), and "provide for taking into account only such income and resources as are . . . available to the applicant." N.M., supra, 405 N.J. Super. at 359 (internal quotation marks omitted); see also 42 U.S.C.A. § 1396a(a)(17)(A)-(B). Eligibility for Medicaid in New Jersey is governed by regulations adopted in accordance with the authority granted by N.J.S.A. 30:4D-7 to the Commissioner of the Department of Human Services (DHS). Our Legislature has expressly stated its intent "to provide medical assistance, insofar as practicable, on behalf of persons whose resources are determined to be inadequate to enable them to secure quality medical care at their own expense[.]" N.J.S.A. 30:4D-2. According to the Legislature, such assistance "shall be the last resource benefit[]" to those in need. Ibid.
DMAHS is the agency within the DHS that administers the Medicaid program. N.J.S.A. 30:4D-5, -7. Accordingly, DMAHS is responsible for protecting the interests of the New Jersey Medicaid Program and its beneficiaries.
DMAHS provides benefits to nursing home residents pursuant to the Medicaid Only program. N.J.A.C. 10:71-1.1 to -9.5. Among other eligibility requirements, an individual seeking such benefits must have financial eligibility as determined by controlling regulations. See N.J.A.C. 10:71-1.2(a). The local county welfare agencies — e.g., the Board — evaluate eligibility. N.J.A.C. 10:71-1.5; N.J.A.C. 10:71-2.2(c). Through those county agencies, DMAHS serves as a "gatekeeper to prevent individuals from using Medicaid to avoid payment of their fair share for long-term care." W.T. v. Div. of Med. Assistance & Health Servs., 391 N.J. Super. 25, 37 (App. Div. 2007) (citing N.J.S.A. 30:4D-1 to -19.1).
Medicaid eligibility is limited to individuals with resources valued at $2000 or less. N.J.A.C. 10:71-4.5(c). "A resource or asset is defined as 'any real or personal property which is owned by the applicant . . . and which could be converted to cash to be used for his/her support and maintenance.'" E.S., supra, 412 N.J. Super. at 353 (quoting H.K., 184 N.J. at 380 n.3); see also N.J.A.C. 10:71-4.4(b); N.J.A.C. 10:71-4.5(c). An applicant's "liquid and nonliquid resources" are "considered in the determination of eligibility, unless such resources are specifically excluded under the provisions of N.J.A.C. 10:71-4.4(b)." N.J.A.C. 10:71-4.1(b). Excluded resources include those "which are not accessible to an individual through no fault of his or her own . . . [including] irrevocable trust funds, property in probate, and real property which cannot be sold because of the refusal of a co-owner to liquidate." N.J.A.C. 10:71-4.4(b)(6).
Only "available" resources are considered when calculating Medicaid eligibility. N.J.A.C. 10:71-4.1(c). "A resource shall be considered available when . . . [t]he person [applying for Medicaid] has the right, authority or power to liquidate real or personal property or his or her share of it[.]" N.J.A.C. 10:71-4.1(c)(1).
If the applicant "has disposed of assets at less than fair market value at any time during the 60-month period immediately before . . . the date the individual applies for Medicaid as an institutionalized individual," (the look-back period), N.J.A.C. 10:71-4.10(a)(2); see also N.J.A.C. 10:71-4.10(b)(9)(ii), "'a conveyance [of a resource or asset] made during the look-back period raises a rebuttable presumption that the resource was transferred for the purpose of establishing Medicaid eligibility,' thereby triggering a transfer penalty." E.S., supra, 412 N.J. Super. at 353 (quoting H.K., supra, 184 N.J. at 380 n.3); see also 42 U.S.C.A § 1396p(c)(1).
The burden of rebutting the presumption rests on the applicant, who must present "convincing evidence that the assets were transferred exclusively (that is, solely) for some other purpose," as well as credible documentary evidence of the fair market value of the transferred assets. N.J.A.C. 10:71-4.10(j). The presumption "shall be considered successfully rebutted only if the applicant demonstrates that the asset was transferred exclusively for some other purpose." N.J.A.C. 10:71-4.10(l)(1). "If the applicant had some other purpose for transferring the asset, but establishing Medicaid eligibility appears to have been a factor in his or her decision to transfer, the presumption shall not be considered successfully rebutted." N.J.A.C. 10:71-4.10(1)(2).
"The Administrative Code defines fair market value as 'an estimate of the value of an asset, based on generally available market information, if sold at the prevailing price at the time it was actually transferred.'" E.S., supra, 412 N.J. Super. at 353 (quoting N.J.A.C. 10:71-4.10(b)(6)). "In other words, '[t]he value of a resource shall be defined as the price that the resource can reasonably be expected to sell for on the open market in the particular geographic area minus any encumbrances.'" Id. at 353-54 (quoting N.J.A.C. 10:71-4.1(d)). If the applicant transferred assets during the look-back period, the fair market value of the asset shall be ascertained and fully documented. N.J.A.C. 10:71-4.10(c).
If it is determined that the applicant transferred an asset for less than fair market value during the look-back period, to become eligible for Medicaid institutional services, the applicant will be subject to a period of Medicaid ineligibility to be imposed once he or she is otherwise eligible for Medicaid benefits. N.J.S.A. 30:4D-3(i)(15)(b); N.J.A.C. 10:71-4.10(c)(4). The period of ineligibility, determined in accordance with 42 U.S.C.A. § 1396p(c)(1)(E), "shall be the number of months equal to the total, cumulative uncompensated value of all assets transferred by the individual, on or after the look-back date, divided by the average monthly cost of nursing home services in the State of New Jersey." N.J.A.C. 10:71-4.10(m)(1).
The period of ineligibility begins on the later of the first day of the month during or after which the individual transferred the assets for less than fair market value or the date on which he or she is eligible for medical assistance and would be receiving institutional level services but for the penalty period. 42 U.S.C.A. § 1396p(c)(1)(D)(ii). An institutionalized individual who is ineligible for payment for long-term care services because an asset transfer precluded her from eligibility "shall be entitled to ancillary services if otherwise eligible." N.J.A.C. 10:71-4.10(m).
Applying these guiding principles, we turn first to Elaine's claims regarding the transfer of her life estate for which she received no compensation. Her arguments focus on the fact that the transfer to Laura was made in 2006, beyond the look-back period, rather than the date of the property being sold, and on her continuing to reside in the home after she conveyed her fee interest to Laura. Neither of these arguments have merit.
A life estate is an ownership interest in real property. "Generally, the conveyance of a life estate provides the grantee with the right to possess the property until death[.]" B.D. v. Div. of Med. Assistance & Health Servs., 397 N.J. Super. 384, 392 (App. Div. 2007). The Center for Medicaid and Medicare Services (CMS), an organization charged by Congress with defining Medicaid eligibility requirements to which we defer to its expertise, see N.M., supra, 405 N.J. Super. at 364, describes the creation of "a typical life estate, [as being where] an individual transfers ownership of his or her own home or other property to another person; for example a son or daughter, but retains a right to live in the home for the remainder of the individual's life." Important Facts for State Policymakers Deficit Reduction Act, Center for Medicare and Medicaid Services 2 (Jan. 8, 2008), https://www.cms.gov/regulations-and-guidance/legislation/deficitreductionact/downloads/toabackgrounder.pdf.
Like any other interest in real estate, a life estate is created by deed, N.J.S.A. 46:3-13; see also H.K., supra, 184 N.J. at 382-83, can be freely alienated, N.J.S.A. 46:3-5, is taxable, and has value. See In re Estate of Romnes, 79 N.J. 139, 150 n.4 (1979) ("Life estates are taxable under N.J.S.A. 54:34-1 and the method of valuation is set forth in N.J.S.A. 54:36-2."). For that reason, the uncompensated transfer of a life estate warrants a transfer penalty under the law. See In re Peterson v. Daines, 77 A.D.3d 1391, 1392 (N.Y. App. Div. 4th Dep't 2010).
For Medicaid purposes, a life estate's value is calculated, pursuant to N.J.A.C. 10:71-4.10(b)(6)(iii), by determining its fair market value. "Fair market value" is determined using "generally available market information, if [the home is] sold at the prevailing price at the time it was actually transferred." N.J.A.C. 10:71-4.10(b)(6).
Additionally, calculation of a penalty period relating to the sale of a life estate during the lookback period tracks 42 U.S.C.A. § 1396p(c)(1)(E) and is calculated by determining a fraction where the "cumulative uncompensated value of all assets transferred" on or after the lookback date is "divided by the average monthly cost of nursing home services" in New Jersey. N.J.A.C. 10:714.10(m)(1). "Uncompensated value" is defined as "the difference between the fair market value at the time of the transfer (less any outstanding loans, mortgages or other encumbrances on the asset) and the amount of consideration received for the asset." N.J.A.C. 10:714.10(b)(7). "If the asset was jointly owned" at the time of transfer, the uncompensated value "shall be only the individual's share of that value[.]" Ibid.
It is undisputed that Elaine did not receive any compensation when Laura sold the family home in 2013. Accordingly, the DMAHS correctly determined that her assets were conveyed for no consideration during the look-back period. Elaine's focus on the transfer of her fee interest to Laura prior to the look-back period and the fact that she lived in the home before the sale was irrelevant to the determination of a penalty as compared to if the agency had been considering Elaine's purchase of a life estate for more than fair market value with an intent to live in the premises. See 42 U.S.C.A. § 1396p(c)(1)(J). By selling Elaine's assets without her receiving any consideration, Laura triggered the requirement for imposition of a penalty. See E.S., supra, 412 N.J. Super. at 353.
As the CMS explains, the provision addresses the situation where:
[S]ome individuals have used this planning mechanism to purchase a life estate in another person's home, but without intending to ever reside in that home. This type of life estate transaction is really just an attempt to transfer assets for less than fair market value to someone else. To prevent this, the [Deficit Reduction Act of 2005] requires that the purchase of a life estate interest in another person's home be treated as a transfer of assets for less than [fair market value] unless the purchaser actually lives in the home for at least one year after the date of purchase. Additionally, even if the individual lives in the home for at least one year, if the purchase amount of the life estate is greater than the computed value of the life estate's interest, the difference is considered a transfer for less than fair market value that may be subject to penalty.
[Important Facts for State Policymakers Deficit Reduction Act, supra, at 2 (emphasis added).]
We turn next to Elaine's arguments regarding the bank accounts. Elaine argues that the evidence she presented at the hearing "as well as evidence presented herein . . . provide sufficient evidence establishing the source" of the funds transferred out of Laura and Elaine's joint account to be Laura's. (emphasis added). Specifically, the large checks, as well as the payments to day care centers, was money that Walter had left to Laura, which she later deposited into her jointly shared account.
Elaine also argues that "[s]ubstantial evidence was provided by Petitioner and evidence/testimony presented at the Hearing . . . to demonstrate that the transfers, . . . were made for purposes other than to qualify for Medicaid" and, therefore, a penalty should not have been assessed. N.J.A.C. 10:71-4.10(1)(3); N.J.A.C. 10:71-4.10(e)(6)(ii). This issue was not raised before the ALJ or DMAHS, and is therefore not subject to our review. See Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 245 (1973).
According to Elaine, some of this evidence was only made available recently, which she argues should be admitted into the record. However, she has not filed a motion seeking to supplement the record, see R. 2:5-5(b); Rudbart v Bd. of Review, 339 N.J. Super. 118, 123 (2001), and, therefore, we chose not to consider such evidence.
Elaine's reliance on Laura's use of the funds in their joint account for Laura's children or for her own or Elaine's personal expenses does not alter the effect of transferring funds out of an account in which Elaine held an unfettered interest. See N.J.A.C. 10:71-4.1(d)(2). As such, an asset "shall be considered to be transferred by the individual when any action is taken, either by the individual or any other person, that reduces or eliminates the individual's ownership or control of the asset." N.J.A.C. 10:71-4.10(o). However, "[i]f the individual can satisfactorily establish that the withdrawn funds were . . . the sole property of, and were contributed to the account by the other owner, . . . the withdrawal of those funds shall not result in the imposition of an asset transfer penalty." N.J.A.C. 10:71-4.10(o)(3).
The regulation states in pertinent part:
When a savings or checking account is held by the eligible individual with other parties, all funds in the account are resources to the individual, so long as he or she has unrestricted access to the funds (that is, an "or" account) regardless of their source [unless] it can be demonstrated that the funds are totally inaccessible to the client, [which] should be verified through the financial institution holding the account.--------
[N. J.A.C. 10:71-4.1(d)(2).]
Elaine argues that she established the funds were Laura's sole property through Laura's credible testimony that the sole source of the withdrawn funds was Walter's estate, and the new evidence that was not available at the time of the hearing confirming Laura's testimony. However, as the DMAHS found, Elaine offered no evidence at the hearing other than Laura's testimony. That testimony alone was found to be insufficient to establish Laura's sole interest in the accounts, and Elaine's argument, to the contrary, does not make "a clear showing that it [was] arbitrary, capricious, or unreasonable," R.S., supra, 434 N.J. Super. at 261, for the DMAHS to conclude that more than Laura's testimony was required.
In summary, we discern no reason to disturb the DMAHS' decision that Elaine's life estate and the funds taken from the joint accounts constituted transfers that triggered the penalties the agency assessed against Elaine's eligibility determination.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION