A v. Kennedy v. DHS, A v. Kennedy v. DHS

Background

Alvin V. Kennedy applied for Medical Assistance (MA) and long-term care (LTC) benefits after a 2013 hip fracture; his wife, Genevieve Kennedy, applied for Home and Community Based Services (HCBS).
During the MA look-back period, Jefferson County CAO found Mr. and Mrs. Kennedy transferred $350,664.06 to their children for less than fair market value and allocated half ($175,332.03) to each spouse, producing a 608-day penalty each (later reduced to 571 days after partial undue-hardship waivers).
Mrs. Kennedy entered a personal care home and her HCBS waiver case was closed effective May 1, 2015; she had 203 penalty days remaining.
CAO notified Mr. Kennedy that Mrs. Kennedy’s remaining 203 penalty days must be added to his existing penalty period, extending his ineligibility to May 28, 2016; Mr. Kennedy appealed.
An ALJ and then BHA affirmed the allocation; Kennedy sought reconsideration from the Secretary more than 15 days after the final administrative order. The Secretary denied reconsideration as untimely and on the merits rationale of BHA; this appeal challenges that denial.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Secretary abused discretion by denying reconsideration as untimely	Kennedy: He was misled by CAO into filing for undue-hardship waiver rather than appealing initial penalty, so reconsideration should be allowed	DHS: Request was filed after the 15-day reconsideration period and there is no evidence of fraud, bad faith, caprice, or abuse of power	Denied — Secretary did not abuse discretion; request untimely and Kennedy showed no misconduct by DHS
Whether CAO erred by adding Mrs. Kennedy’s remaining 203 penalty days to Mr. Kennedy’s penalty period	Kennedy: Underlying transfers were gifts, not attempts to qualify for MA; merits were never decided	DHS: Regulations permit apportionment of spouse’s ineligibility period to the other spouse when spouse becomes eligible; CAO applied law and policy correctly	Affirmed — CAO properly allocated the 203 days to Mr. Kennedy (ALJ/BHA rationale adopted)
Whether prior penalty and waiver determinations remain open for review	Kennedy: Seeks review of original penalty determinations and waiver handling	DHS: Those determinations were adjudicated previously and no timely appeals were taken to this Court	Court: Those prior determinations are not before the Court in this appeal
Whether there was evidence of fraud, bad faith, caprice, or abuse of power warranting reversal	Kennedy: Allegations of CAO guidance and unfair handling imply misconduct	DHS: No such evidence was presented in the reconsideration request or appeal	Court: No evidence of misconduct; required threshold to reverse discretionary denial unmet

Key Cases Cited

Keith v. Department of Public Welfare, 551 A.2d 333 (Pa. Cmwlth. 1988) (reconsideration is discretionary and will be reversed only for abuse of discretion)
J.B. Steven, Inc. v. Department of Transportation, 627 A.2d 278 (Pa. Cmwlth. 1993) (abuse of discretion requires evidence of fraud, bad faith, capricious action, or abuse of power)