Administrative Appeal Of Undue Hardship in Medicaid Transfer Of Asset Cases
Our office represented the family of a now-deceased nursing home resident for over a year. The Department of Human Services (DHS) denied eligibility for a period of around seven months based on nearly $60,000.00 of wedding gifts and payment of college expenses during the so-called “penalty period”. In this case DHS denied client’s Medicaid application, saying that there was a seven-month penalty period that had to elapse before Medicaid coverage could begin.
The family asked our office to appeal this final administrative decision, and we agreed to do so. The reason for appeal was “hardship”, i.e., that the client would face involuntary transfer from her nursing home based on the $40,000.00 or so that was unpaid (covering this seven month time period). We also said that the family had been to see an elder law attorney, who had said in writing that transfers for the purpose set forth would in all likelihood qualify client for Medicaid eligibility. Lastly, we said that these gifts could not now be given back because the funds had been used for their intended purpose.
The appeal hearing officer heard from the daughter and son in law on client’s behalf, and the appeals co ordinator on DHS’ behalf. Ultimately, a written decision was issued, saying virtually nothing about the hardship issue, but simply stating DHS policy regarding unauthorized transfers during the penalty period. The family then appealed to the Circuit Court of Cook County under the Administrative Procedure Act, saying that the hearing officer’s decision was arbitrary and capricious. Both sides briefed the issues before the court, and the case was sent back to the DHS Office of Hearings and Appeals by the trial court to develop a more extensive record on the undue hardship issue.
At the remand hearing, a new hearing officer took evidence from the daughter and son in law again, this time focusing on the questionable legal advice by the former attorney detrimental reliance, and inability to return the gifts. Also, more stress was placed on the lack of regulations issued by DPA to tell an applicant whether (s)he does or doesn’t have a sufficient hardship case.
A new briefing schedule was set, and eventually a ruling by the trial court agreed with the Hearing Officers updated decision denying Medicaid benefits during the 7-month penalty period. The Attorney General’s Welfare Litigation Bureau is voicing the position of DPA that transfers within the penalty period where the applicant is already in a nursing home will virtually never be approved. No indication was given by DHS council as to when there might be exceptional circumstances.
Partly, this case failed because the family failed to contact an elder law attorney in the beginning. Also, it underscored the unwillingness of the Department to go along with and undue hardship argument, and the extreme difficulty of getting the trial court to reverse a decision by a Medicaid fair hearing officer where the decision was regarded by the court as being based on evidence that was presented at the hearing and evaluated there by the hearing officer.