IN THE MATTER OF THE ESTATE OF ARTHUR E. BROWN, DECEASED.
DOCKET NO. A-1086-14T4
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION
January 26, 2017
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
APPROVED FOR PUBLICATION January 26, 2017 APPELLATE DIVISION
Argued September 28, 2016 - Decided January 26, 2017
Before Judges Fuentes, Simonelli and Gooden Brown.
Jennifer L. Cavin, Deputy Attorney General, argued the cause for respondent New Jersey Department of Human Services (Christopher S. Porrino, Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Ms. Cavin, on the brief).
The opinion of the court was delivered by
SIMONELLI, J.A.D.
This appeal involves a priority lien that the Division of Medical Assistance and Health Services (DMAHS) filed against the Estate of Arthur E. Brown (Estate) pursuant to
Thomas M. Brown (Thomas) filed a complaint as next-of-kin, seeking a judgment discharging the lien pursuant to
Thomas appeals from the July 29, 2014 Chancery Division final judgment, which denied entry of judgment discharging the lien, and from the September 26, 2014 order, which denied his motion for reconsideration. Thomas also appeals from the May 22, 2015 order, which established the amount of Arthur‘s one-third elective share of Mary‘s augmented estate. We affirm the judgment and orders.
I.
We begin our analysis with a review of the federal and state Medicaid statutes and regulations and factual background relevant to this appeal. Medicaid is a federally-created, state-implemented program that provides “medical assistance to the poor at the expense of the public.” Estate of DeMartino v. Div. of Med. Assistance & Health Servs., 373 N.J. Super. 210, 217 (App. Div. 2004) (quoting Mistrick v. Div. of Med. Assistance & Health Servs., 154 N.J. 158, 165 (1998)), certif. denied, 182 N.J. 425 (2005); see also
New Jersey participates in the federal Medicaid program pursuant to the New Jersey Medical Assistance and Health Services Act,
DMAHS provides institutional level Medicaid benefits to individuals residing in nursing homes pursuant to the Medicaid Only program,
In the eligibility determination, the CWA considers
all income and resources of the individual . . . and resources which the individual . . . is entitled to but does not receive because of action or inaction by the individual or . . . by any person, including a court or administrative body with the legal authority to act in place of or on behalf of the individual[.]
[
N.J.A.C. 10:71-4.10(b)(3) (emphasis added).]
A “resource” is defined as
any real or personal property which is owned by the applicant (or by those persons whose resources are deemed available to him or her as described in
N.J.A.C. 10:71-4.6 ) and which could be converted to cash to be used for his or her support and maintenance. Both liquid and non-liquid resources shall be considered in the determination of eligibility unless . . . [they] are specifically excluded under . . .N.J.A.C. 10:71-4.4(b) .[
N.J.A.C. 10:71-4.1(b) (emphasis added).]
See also
Further, to satisfy the federal estate recovery requirements, states must define a decedent‘s estate to include at least “all real and personal property and other assets included within the individual‘s estate, as defined for purposes of State probate law[.]”
any other real and personal property and other assets in which the individual had any legal title or interest at the time of death (to the extent of such interest), including such assets conveyed to a survivor, heir, or assign of the deceased individual through joint tenancy, tenancy in common, survivorship, life estate, living trust, or other arrangement.
[
42 U.S.C.A. § 1396p(b)(4)(B) (emphasis added).]
New Jersey has enacted statutes to comply with the federal estate recovery requirements.
all real and personal property and other assets included in the recipient‘s estate as defined in [
N.J.S.A.] 3B:1-1 , as well as any other real and personal property and other assets in which the recipient had any legal title or interest at the time of death, to the extent of that interest, including assets conveyed to a survivor, heir or assign of the recipient through joint tenancy, tenancy in common, survivorship, life estate, living trust or other arrangement.[
N.J.S.A. 30:4D-7.2(a)(3) (emphasis added).]
(1) For purposes of this section, the term “estate” with respect to a deceased Medicaid beneficiary shall include:
- All real and personal property and other assets included within the individual‘s estate, as defined in
N.J.S.A. 3B:1-1 ; and - For individuals who died on or after April 1, 1995, the term “estate” shall also include any other real and personal property and other assets in which the Medicaid beneficiary had any legal title or interest at the time of death, to the extent of that interest, including assets conveyed to a survivor, heir or assign of the beneficiary through joint tenancy, tenancy in common, survivorship, life estate, living trust or other arrangement, as well as any proceeds from the sale of any such property which remain in the estate of the survivor, heir or assign of the beneficiary, to the extent of the beneficiary‘s interest[.]
[(Emphasis added).]
Our role “is to interpret a federal statute in light of the purposes that Congress sought to achieve through its enactment.” Estate of DeMartino, supra, 373 N.J. Super. at 219. Thus, we must “look not only at the particular statutory language but also to the design of the statute as a whole.” Ibid. We should interpret the statute “in accordance with its ordinary meaning and in a common sense manner so as to accomplish the purpose and intent of Congress.” Ibid. Congress requires that participating states adopt estate recovery provisions and authorized states to adopt a more expansive definition of “estate” “to address the increased demand for Medicaid benefits from the nation‘s aging population.” Ibid. “Allowing states to recover from the estates of persons who previously received assistance furthers the broad purpose of providing for the medical care of the needy; the greater amount recovered by the state allows the state to have more funds to provide future services.” Ibid. (quoting Belshe v. Hope, 38 Cal. Rptr. 2d 917, 925 (Cal. Ct. App. 1995)).
In this case, Arthur and Mary lived together in their jointly-owned condominium before he began living in an assisted living facility in April 2007, when he was seventy-eight years old. On July 18, 2007, Mary executed a Last Will and Testament, naming Thomas and his two siblings as her residual beneficiaries. Mary excluded Arthur as a beneficiary under her Will.
On February 6, 2008, Arthur and Mary executed a deed transferring Arthur‘s interest in the condominium to Mary. On April 7, 2008, Arthur was admitted into a nursing home, suffering from Alzheimer‘s disease, and soon thereafter applied for institutional level Medicaid benefits under the Medically Needy Program. The CWA conducted a resource assessment of Arthur and Mary as a married couple and determined that they had $141,732.24 in total countable resources, and Mary had $70,866.12 in protected community spouse assets. The condominium and an automobile were deemed exempt resources for purposes of establishing Arthur‘s Medicaid eligibility.2 After spending down his
Mary became ill in November 2009, and died testate on September 9, 2010.3 The assets in her estate included the proceeds from the sale of the condominium, bank accounts, and stock that was transferred to her after Arthur submitted his first Medicaid application.
In November 2010, Thomas notified the CWA of Mary‘s death and the discovery of two life insurance policies with a combined cash surrender value of approximately $1250, which were unknown to Mary at the time of Arthur‘s first Medicaid application. In December 2010, the CWA inquired as to whether Arthur would elect a spousal share against Mary‘s estate. Thomas responded that the elective share statute did not apply to Arthur.4
Consequently, on January 12, 2011, the CWA notified Arthur and Thomas that Arthur‘s Medicaid benefits would terminate, effective June 30, 2011. The CWA also notified them that Arthur had twenty days to request a fair hearing, his Medicaid benefits may continue until a final decision was rendered, and Arthur may be required to repay any Medicaid benefits to which he was not entitled.5
The CWA claimed that Arthur‘s waiving of the spousal elective share amounted to a transfer of an available asset that subjected him to a penalty period of ineligibility. The CWA relied on
(a) An individual shall be ineligible for institutional level services through the Medicaid program if he or she (or his or her spouse) has disposed of assets at less than fair market value at any time during or after the [sixty]-month period immediately before[.]
. . . .
(b) The following definitions shall apply to the transfer of assets:
. . . .
3. Assets shall include all income and resources of the individual and of the individual‘s spouse. Assets shall also include income and resources which the individual or the individual‘s spouse is entitled to but does not receive because of action or inaction by the individual or the individual‘s spouse; or by any person, including a court or administrative body with the legal authority to act in place of or on behalf of the individual or the individual‘s spouse; or any person, including a court or administrative body, acting at the direction of or upon the request of the individual or the individual‘s spouse. Examples of actions that would cause income or resources not to be received shall include, but shall not be limited to:
. . . .
ii. Waiving the right to receive an inheritance, including spousal elective share pursuant to
N.J.S.A. 3B:8-10 [.][
N.J.A.C. 10:71-4.10(a) ,(b)(3)(ii) (emphasis added).]
The Assistant Commissioner of DHS denied Arthur‘s request for interlocutory review, and Arthur did not pursue an interlocutory appeal to this court. The OAL scheduled the matter for a final hearing, but Arthur died before then. The Estate did not pursue the matter, and the request for a hearing was withdrawn a year later.
Arthur had received a total of $166,981.25 in Medicaid benefits from July 1, 2008, until his death on April 14, 2013. On July 28, 2013, DMAHS filed a priority lien claim against the Estate pursuant to
Thomas, as next-of-kin, filed a complaint in the Chancery Division, Probate Part, for judgment discharging the lien. He contended that Arthur had no right to an elective share of Mary‘s estate under
a right of election to take an elective share of one-third of the augmented estate under the limitations and conditions hereinafter stated, provided that at the time of death the decedent and the surviving spouse . . . had not been living separate and apart in different habitations or had not ceased to cohabit as man and wife, either as the result of judgment of divorce from bed and board or under circumstances which would have given rise to a cause of action for divorce or nullity of marriage to a decedent prior to his death under the laws of this State.
[
N.J.S.A. 3B:8-1 .]
Thomas argued that the statute did not apply because the right to an elective share was personal to Arthur and could only be exercised during Arthur‘s lifetime as per
Thomas also argued the statute did not apply because Arthur and Mary had been living separate and apart at the time of Mary‘s death, or ceased to cohabit as man and wife under circumstances that gave Mary a cause of action for divorce under
In the alternative, Thomas contended that Arthur‘s elective share was zero because the proceeds from the sale of the condominium were excluded from Mary‘s augmented estate under
Thomas also contended that Arthur‘s elective share was zero because the value of all property he owned in his own right at the time of Mary‘s death is deducted from his elective share pursuant to
The amount of the surviving spouse‘s . . . elective share shall be satisfied by applying:
a. The value of all property, estate or interest therein, owned by the surviving spouse . . . in his own right at the time of the decedent‘s death from whatever source acquired, or succeeded to by the surviving spouse . . . as a result of decedent‘s death notwithstanding that the property, estate or interest or part thereof, succeeded to by the surviving spouse . . . as the result of decedent‘s death has been renounced by the surviving spouse[.]
In a July 29, 2014 oral opinion, the trial judge reviewed the legislative history of
The judge also rejected Thomas‘s argument that Arthur had no right to an elective share because he and Mary ceased to cohabit as man and wife, thus giving Mary a cause of action for divorce under
The judge declined to hold that every couple would qualify for divorce when one spouse suffers from Alzheimer‘s disease, because depriving that spouse of the spousal share “would leave vulnerable adults with an inability to access assets that might be necessary for their care. This was not the intent of the [L]egislature.” Citing I.G. v. Dep‘t of Human Servs., 386 N.J. Super. 282, 291 (App. Div. 2006), the judge also determined that “where there are limited assets . . . without access to the elective share, the practical effect is for . . . the cost of care to be shifted upon the taxpayers. . . . There is no indication this was the intent of the [L]egislature either.”
The judge emphasized there was no evidence of marital discord; rather, through Medicaid
The judge also found that despite Arthur having never exercised the elective share during his lifetime, it was available to him and his ability to exercise that right while alive was not excepted from
Lastly, the judge found that the transfer of Arthur‘s interest in the condominium to Mary was not a transfer within the ambit of
Thomas filed a motion for reconsideration, arguing that the judge: (1) failed to calculate Arthur‘s elective share under
Thomas appealed. Following a Civil Appeals Settlement Program conference, we remanded the matter for the limited purpose of calculating Arthur‘s elective share. On remand, Thomas calculated Mary‘s estate at $17,507.41, comprised of $15,988.12 from two bank accounts and $1,519.29 from miscellaneous other property. He excluded the proceeds from the sale of the condominium, the value of the stocks that were transferred to Mary, and the value of her joint bank account with Arthur.
In the alternative, Thomas calculated Mary‘s estate at $244,347.55, which included the previously excluded assets and
other property. Thomas then deducted $70,430.32 for expenses incurred by Mary‘s estate, and calculated her net augmented estate at $173,917.23. Thomas then averred that Arthur‘s elective share of Mary‘s augmented estate was $25,870.85, at the most, and that the following assets Arthur owned at the time of Mary‘s death must be deducted from that amount pursuant to
| | Checking Account | $3,563.21 |
| 2. | Personal Needs Account | 221.12 |
| 3. | New Jersey Group Life Ins. Policy | 6,726.87 |
| 4. | Pre-paid Funeral Trust | 9,626.01 |
| 5. | Pre-paid Mausoleum6 | 5,610.00 |
| 6. | New Jersey Death Benefit | 2,073.07 |
| 7. | Prudential Ins. Policy | 4,281.28 |
| Total | $32,101.56 | |
Thomas concluded that Arthur‘s elective share was zero after deducting these assets.
In a May 22, 2015 written opinion, the judge calculated Mary‘s augmented estate at $184,861.58, comprised of $261,848.40 in total estate assets minus $76,986.82 in estate expenses. The judge noted she had previously ruled that the proceeds from the sale of the condominium were included in Mary‘s augmented estate, and found that Thomas had excluded assets that were included under
The judge then calculated Arthur‘s elective share at $48,379.92, comprised of one-third of Mary‘s augmented estate ($61,620.53) minus the assets Arthur owned at the time of Mary‘s death, which the judge calculated at $13,240.61. The judge declined to deduct the New Jersey Group Life Insurance Policy, pre-paid funeral trust, and New Jersey Death Benefit from Arthur‘s elective share, finding that
Thomas appeals from the July 29, 2014 final judgment, and from the orders entered on September 26, 2014, and May 22, 2015. On appeal, he reiterates the arguments made to the trial judge.
Because this appeal involves the judge‘s interpretation of the Medicaid and elective share statutes, our review is de novo. Potomac Ins. Co. of Ill. ex rel. OneBeacon Ins. Co. v. Pa. Mfrs.’ Ass‘n Ins. Co., 215 N.J. 409, 421 (2013). However, the trial court‘s factual findings “are binding on appeal when supported by adequate, substantial, credible evidence.” Ibid. (quoting Cesare v. Cesare, 154 N.J. 394, 411-12 (1998)).
As for the denial of a motion for reconsideration, we have held that
[r]econsideration itself is a matter within the sound discretion of the [c]ourt, to be exercised in the interest of justice[.] It is not appropriate merely because a litigant is dissatisfied with a decision of the court or wishes to reargue a motion, but should be utilized only for those cases which fall into that narrow corridor in which either 1) the
[c]ourt has expressed its decision based upon a palpably incorrect or irrational basis, or 2) it is obvious that the [c]ourt either did not consider, or failed to appreciate the significance of probative, competent evidence. [Palombi v. Palombi, 414 N.J. Super. 274, 288 (App. Div. 2010) (citations omitted).]
We will not disturb a trial court‘s reconsideration decision absent a clear abuse of discretion. Pitney Bowes Bank, Inc. v. ABC Caging Fulfillment, 440 N.J. Super. 378, 383 (App. Div. 2015) (citation omitted). An abuse of discretion “arises when a decision is made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis.” Flagg v. Essex Cnty. Prosecutor, 171 N.J. 561, 571 (2002) (citation omitted). Applying the above standards, we discern no reason to disturb any of the judge‘s rulings.
II.
A.
Thomas argues that the Estate had no right to an elective share of Mary‘s augmented estate under
A surviving spouse is entitled to an elective share of one-third of the deceased spouse‘s augmented estate provided that at the time of the decedent‘s death the couple “had not been living separate and apart in different habitations or had not ceased to cohabit as man and wife, either as the result of judgment of divorce from bed and board or under circumstances which would have given rise to a cause of action for divorce[.]”
In Estate of Hersh, the couple separated by mutual consent, were separated for over thirty years, the surviving spouse had obtained a judgment of separation from bed and board in New York where the parties were married, and the deceased spouse had remarried. Id. at 76. We determined that the surviving spouse had no right to an elective share of the decedent‘s estate under
In Carr, the couple separated thirteen months prior to the wife having filed a complaint for divorce. 120 N.J. 336, 340 (1990). The wife was subsequently awarded pendente lite support, among other things. Ibid. The husband died before the divorce action concluded, and left his entire estate to his children. Ibid. The Court held that because the parties had separated and the wife had embarked on a divorce action with good cause prior to the husband‘s death, the wife was not entitled to an elective share of the husband‘s estate under
Here, although living separate and apart for approximately three years at the time of Mary‘s death, the couple‘s relationship was not sufficiently removed from the normally thought of state of matrimony that would preclude Arthur from claiming an elective share of Mary‘s estate. Estate of Hersh, 195 N.J. Super. at 77. There was no evidence whatsoever of marital problems or discord, or that the couple was estranged, no longer considered themselves husband and wife, had no intention of continuing their marriage, and considered their marriage “dead.” See Altbrandt v. Altbrandt, 129 N.J. Super. 235, 237-38 (Ch. Div. 1974) (holding that the purpose of divorce on the ground of separation is to “terminate dead marriages” where the relationship “has so far deteriorated” that one party seeks a divorce).
Arthur and Mary were married for approximately fifty-nine years and there was nothing suggesting that Mary was seeking or even considering a divorce because she and Arthur were separated. Rather, the only reason for the couple‘s physical separation was the unfortunate circumstances of Arthur‘s Alzheimer‘s disease. We conclude that this is not the type of situation giving rise to a cause of action for divorce under
Nor is this the type of situation that would constitute grounds for divorce under
Thomas next argues that the Estate had no right to an elective share of Mary‘s augmented estate because that right was personal to Arthur and could only be exercised during his lifetime as per
Contrary to Thomas‘s position, this is not a matter involving a creditor seeking to recover against a surviving spouse‘s elective share, see Aragon v. Estate of Snyder, 314 N.J. Super. 635, 640 (Ch. Div. 1998), nor is it a probate or estate matter. See In re Estate of Wilma Bilse, 329 N.J. Super. 158 (Ch. Div. 1999), aff‘d o.b., 329 N.J. Super. 118 (App. Div. 2000). This matter involves a Medicaid recipient and is governed by broad federal and state Medicaid estate recovery provisions. Federal Medicaid law requires participating states to recover benefits paid for nursing facility services from a deceased Medicaid recipient‘s estate.
Arthur‘s elective share of Mary‘s augmented estate was an asset in which he had legal title or interest at the time of his death, and it was an asset that was available to him during his lifetime. Accordingly, we conclude the trial judge correctly found that the elective share was part of Arthur‘s estate and subject to a Medicaid lien.
III.
A.
In the alternative, Thomas first argues that Arthur‘s elective share was zero because the proceeds from the sale of the condominium were excluded from Mary‘s augmented estate under
The augmented estate under
means the estate reduced by funeral and administration expenses, and enforceable claims, to which is added the value of property transferred by the decedent at any time during the marriage . . . to or for the benefit of any person other than the surviving spouse . . . to the extent that the decedent did not receive adequate and full consideration[.]
[
N.J.S.A. 3B:8-3 (emphasis added).]
However, any transfer of property by the decedent pursuant to
The decedent, Mary, did not transfer her one-half interest in the condominium to Arthur. She merely signed the deed transferring his one-half interest to herself, and she at all times maintained her ownership of the property. Arthur‘s transfer of his interest in the condominium “was not a transfer within the ambit of
B.
Lastly, Thomas argues that the $6,726.87 New Jersey Group Life Insurance Policy, the $9,626.01 irrevocable pre-paid funeral trust, and the $2,073.07 New Jersey Death Benefit should be deducted from Arthur‘s elective share pursuant to
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION