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In re: DCIS No. Redacted Redacted
Redacted, daughter and Power of Attorney for Redacted
Redacted, daughter of Redacted
Stephanie Suing, Sr. Social Worker/Case Manager, Division of Social Services
Tammy McCabe, Social Worker Supervisor, Division of Social Services
Redacted (Claimant), by and through his daughter and Power of Attorney, Redacted Redacted, opposes a decision by the Division of Social Services (DSS) to deny his application for Long Term Care Medicaid benefits based upon a transfer of real property. She contends that the transfer was not made for the purpose of qualifying for Medicaid.
The Division of Social Services (DSS) contends that Claimant transferred his home to his daughter, Redacted, which constituted a transfer of assets in order to qualify for Medicaid, and therefore he is not eligible for Medicaid benefits for a period of 11 months.
On July 27, 2004, Redacted applied for the Long Term Care Program on behalf of her father, Redacted. At the time of the financial interview, DSS was informed that the residence of Redacted had been transferred to his daughter, Redacted.
On October 7, 2004, DSS sent a Notice to Deny Your Medical Assistance (Notice) to Redacted on behalf of Redacted. The denial was based upon the transfer of the house on July 9, 2004, noting that the only reason for the transfer was eligibility for Medicaid. (Exhibit 3).
The Claimant's representative filed a timely request for a fair hearing. (Exhibit 2).
The Claimant was sent a certified letter dated October 28, 2004, that a fair hearing would be held on December 7, 2004 in Dover, DE. The hearing was supposed to have been scheduled for New Castle, DE. Thereafter, the Claimant was sent another certified letter dated November 9, 2004, indicating that the hearing was scheduled for November 22, 2004, in New Castle, DE. The hearing was conducted on that date in Conference Room 258, Lewis Building, Herman Halloway Campus, 1901 N. DuPont Highway, New Castle, Delaware. This is the decision resulting from that hearing.
(The hearing decision was delayed because the file was inadvertently lost. Since no new documents were submitted at the hearing, the case file was retrieved from the records clerk and is used, along with the taped hearing, to render this determination)
On July 27, 2004, Redacted (the Claimant's daughter) applied for Medicaid on behalf of her father, Redacted. At the time of the application, the Claimant resided at Milford Care - Genesis Elder Care. Based upon information provided at the interview, DSS requested additional information regarding the status of the residence that had been owned by Mr. Redacted. (On September 14, 2004, DSS denied Mr. Redacted application for LTC Medicaid because they had requested information pertaining to the Hollyville House. There is no indication that Mr. Redacted re-applied, but his application was again denied on October 7, 2004 (Exhibits 3 & 4)). DSS ultimately determined that the home at Redacted, Millsboro, Delaware (Hollyville Home) was transferred to Redacted daughter, Redacted, on July 9, 2004 for $1.00, and that the fair market value of the home was determined to be $56,000. (While the deed was dated April 9, 2004, it was not recorded until July 9, 2004.)
On October 7, 2004, DSS sent to Redacted, a Notice to Deny Your Medical Assistance for Redacted, based on the transfer of a residence, stating in pertinent part that, "The only reason Redacted did this was to be able to get Medicaid." (Exhibit 4). Interestingly, DSS never made any inquiry regarding liens or other encumbrances on the property prior to determining a value to use for a transfer of asset penalty.
On October 15, 2004, the Claimant, through his power of attorney, filed a timely request for a fair hearing. (Exhibit 2).
Credible testimony and evidence was presented at the hearing to establish that the transfer of the residence was made in July 2004, for reasons other than Medicaid eligibility and not for the purpose of qualifying for Medicaid. Particularly, the testimony provided indicated that the transfer was made because the house was transferred with the purpose of demolishing the existing structure and building a new structure to accommodate Mr. Redacted. That construction required a mortgage, which had to be signed for by someone with title to the property and who could afford the mortgage. Mr. Redacted along with his daughters, and in the presence of their attorney, determined that Redacted, the daughter that was caring for him and whom would care for him upon his return to the house, was to get the Redacted Home.
In addition, the transfer of the home was contemplated in April 2004 as this is when the deed was prepared, even though the transfer did not occur until July 9, 2004. Moreover, Redacted had been caring for her father since July 2003, at a home that she was renting because it was big enough to accommodate her family and her father as well. When she moved from that home, the only place that she had to go to live was a mobile home that was located near the back of the Hollyville Home property. That mobile home could not accommodate her entire family, and her father, who was status post stroke. Mr. Redacted was placed in a nursing facility with the understanding that as soon as the house that was being built on the Hollyville Home property was complete, he would move back there with his daughter Redacted. In the summer of 2004, while Mr. Redacted was residing at Milford Care, he suffered a medical emergency requiring emergency surgery. Sometime in late July 2004, Milford Care actually suggested to Mr. Redacted family that they apply for Long Term Care Medicaid due to his illness and increased length of stay at the facility. The family applied for benefits on July 27, 2004.
It is not disputed that a transfer of Mr. Redacted residence took place. The crux of the dispute herein lies with the procedural deficiencies of the process by which DSS determined that Mr. Redacted case should be denied, and how and why a determination was made that resulted in a statement by DSS that, "The only reason Redacted Redacted did this was to be able to get Medicaid."
First, the testimony adduced at the hearing indicated that the reason for denial was financially based and the issue of medical qualification was not raised. The sole reason for the denial of Medicaid based upon the Notice received by the Claimant was the transfer of the residence at Redacted Road. (Exhibit 4). In this case, however, there is simply no evidence to support DSS's contention that the transfer was made for the purposes of becoming eligible for Medicaid. In addition, DSS did not comply with its own rules in determining the amount of penalty that they believed should apply.
Prior to the denial letter being sent, DSS determined the Fair Market Value (FMV) of the property to be $56,000. They also determined that Mr. Redacted only received $1.00 for the transfer of the home. This was consistent with the process of the Transfer of Assets required by DSSM 20350.12. However, DSS only followed part of the required procedure. In addition to ascertaining the above information, DSS was required to determine the uncompensated value of the property, if any. Uncompensated value is defined as the difference between the FMV at the time of the transfer (less any outstanding loans, mortgages or other encumbrances on the asset), and the compensation received for the asset. (DSSM 20350.1.9) This number is important because it would ultimately determine what penalty would be appropriate under DSSM 20350.3, if it was determined that the asset was determined to have been transferred for the purpose of establishing Medicaid eligibility. According to the testimony, DSS did not take into account the fact that Mr. Redacted retained a life estate in the property, and therefore, they failed to calculate the value of that life estate when assessing a penalty. (See, DSSM 203184.108.40.206) (This is not an issue in the hearing because I have determined that while the home was transferred for less than fair market value, it was transferred exclusively for a purpose other than to qualify for Medicaid)
While DSS correctly determined that the asset was transferred for less than FMV that does not end their obligation to further investigate. Pursuant to DSSM 20350.12 DSS is required to presume that any assets sold or given away at less than FMV, were done so for the purpose of establishing Medicaid, unless the individual can demonstrate either that they intended to dispose of the asset for FMV or they can show that the transfer was exclusively for a purpose other than to qualify for Medicaid. (emphasis added) Therefore, the presumption that the transfer was made to become eligible is a rebuttable presumption.
Here, DSS correctly applied the presumption set forth in DSSM 20350.12. However, they did not give Ms. Redacted an opportunity to rebut this presumption until after the decision to deny coverage was issued. This was improper. DSSM 20350.13 requires that DSS provide the applicant with written notice that an asset was transferred for less than FMV and must be counted towards eligibility, unless the applicant wishes to rebut the presumption. The opportunity to rebut the presumption must be offered to the applicant prior to the application being approved or denied. In this case, DSS never sent out this required letter, which would have advised Ms. Redacted that she had 15 days to rebut their determination. DSS simply denied the application for benefits on October 7, 2004. (Exhibit 4) Because the burden of proof rests with the applicant to rebut the presumption, it is imperative that the applicant be given proper notice and the actual chance to rebut the presumption. In this case, Ms. Redacted did not receive proper notice and was never allowed to rebut this presumption. DSS simply denied the application for Medicaid without allowing Ms. Redacted to rebut the presumption.
Since the validity of the Claimant's rebuttal must be determined on a case-by-case basis, based on the Claimant's specific circumstances as required by DSSM 20350.13, the Claimant must have the opportunity to rebut the presumption, if they so choose. DSS never provided the opportunity to rebut this presumption.
Based upon the information in the record, had DSS actually requested and reviewed the rebuttal information that was provided at the hearing, prior to issuing a denial Notice, they would never have had to issue a denial. The uncontested information provided by Ms. Redacted clearly indicates that at the time of the transfer of the residence Medicaid was not an issue. At no time did DSS dispute this testimony and it is sufficient to rebut DSS presumption that the transfer was made for the purpose of qualifying for Medicaid. There is simply no evidence to support DSS's determination that Medicaid was a factor in the transfer of the house.
Therefore, the decision to deny Claimant's Medicaid benefits cannot be sustained on the record.
For these reasons, the decision of the Division of Social Services to deny Claimant's benefits is REVERSED. Medicaid LTC Benefits should be provided to Redacted in accordance with DSS policy based upon an application date of July 27, 2004.
Date: January 24, 2005
MICHAEL L. STEINBERG
THE FOREGOING IS THE FINAL DECISION OF THE DIVISION OF SOCIAL SERVICES
Stephanie Suing, DSS
Tammy McCabe, DSS
EXHIBITS FILED IN OR FOR THE PROCEEDING