by Jose D. Roman | Feb 4, 2025 | Legal Bulletin, Medicaid
In an interesting case from last year, J.R. v. Horizon NJ Health, A-2028-21 (February 5, 2024), the American Civil Liberties Union (ACLU) of New Jersey, supported by advocacy groups like Disability Rights New Jersey and the National Health Law Program, took on a widespread issue affecting Medicaid recipients. The case centered on J.R., a child with medically complex needs whose Private Duty Nursing (PDN) hours were significantly reduced by Horizon NJ Health, her Medicaid provider. Despite some clever legal arguments, the Superior Court of New Jersey, Appellate Division, ruled in favor of the Horizon’s decision to scale back J.R.’s care hours.
Background
Born prematurely in February 2019, J.R. faces serious medical conditions, including bronchopulmonary dysplasia, hypertension, and laryngomalacia. Initially, Horizon provided her with round-the-clock PDN care to meet her intensive medical needs. However, in 2020, Horizon reassessed her condition using a form called the PDN Acuity Tool—developed by Milliman Care Guidelines—and decided to cut her nursing hours from 24 per day down to just 8. This drastic reduction, which unfortunately is a common practice, was challenged. Specifically, at issue was the fairness and reliability of the process when using an automated assessment method such as the PDN Acuity Tool.
Legal Arguments: A Fight for Fairness
The ACLU of New Jersey, advocating for J.R., presented novel arguments against Horizon NJ Health’s decision, emphasizing the following concerns:
- Inadequate Notice: J.R.’s legal team argued that Horizon NJ Health failed to provide a clear, detailed explanation for reducing her PDN hours, leaving insufficient regulatory grounding for the decision.
- Questionable Standards and the PDN Acuity Tool: Critics contend that the reliance on the PDN Acuity Tool constitutes an overly opaque method for determining medical necessity. While automated tools can standardize assessments, such systems risk oversimplifying the complexities inherent with severe disabilities. The proprietary nature of the tool—and the lack of transparency regarding its underlying algorithms—can conceal potential biases and errors that adversely affect vulnerable populations.
- Ignoring Medical Expertise: Despite J.R.’s treating physician’s strong recommendation for 24/7 care, the decision-making process largely depended on the tool’s point score, which may not fully incorporate individualized clinical judgments.
The PDN Acuity Tool and Automated Decision-Making
This case is an important attempt at taking a critical look at the implications of using automated decision-making systems in the delivery of healthcare:
- Balancing Standardization and Individual Needs: The PDN Acuity Tool was designed to convert complex clinical data into a quantifiable score. However, this case highlights the fact that while such tools promote consistency, they may fall short when addressing the multifaceted nature of a patient care. In J.R.’s case, the tool’s reduction from 24 to 8 hours was based on a standardized scoring system that her attorneys argued failed to fully capture the child’s nuanced clinical needs, and was contrary to the recommendation of her physician.
- Transparency and Accountability Concerns: Critics argue that using algorithmic forms such as the PDN Acuity Tool lack transparency because there is no clear disclosure of how individual variables are weighted. The forms simply have pre-determined point values without disclosing how the point value was determined. As a result, consumers are left with little means to challenge potentially arbitrary reductions in care. This analysis underscores the necessity for state agencies to ensure that automated assessments are accompanied by detailed, accessible explanations that uphold due process rights. It also highlights a roadmap for future legal challenges.
- Impact on Individuals with Unique Needs: While automated decision-making systems may be efficient, they may inadvertently disadvantage those with complex or atypical care needs. The legal discourse around J.R.’s case illustrates how reliance on proprietary tools can obscure critical nuances and lead to decisions that appear “reasonable” on paper but are ethically problematic when applied to individual patients.
The Court’s Decision: A Disappointing Outcome
The Appellate Division ultimately upheld the decision to reduce J.R.’s care hours, concluding that Horizon NJ Health had acted within Medicaid regulations. The ruling was based on several key points:
- Sufficient Notice: The court found that, despite lacking explicit regulatory citations, the notice provided adequate information about the reasons for the reduction.
- Legitimacy of the PDN Acuity Tool: No evidence was presented showing improper use of the tool. The court accepted its results as a “reasonable and objective” method to determine medical necessity, even as critics warned that such assessments might not fully address individual clinical complexities.
- Consideration of Medical Evidence: The review included extensive clinical records and expert testimony, which the court deemed sufficient to support the decision.
What This Means for Medicaid Recipients
J.R.’s case brings to light the ongoing tension between cost containment measures and the rights of Medicaid beneficiaries to receive personalized, medically appropriate care. While automated tools like the PDN Acuity Tool offer efficiency, they also underscore the need for transparency, individualized assessment, and robust safeguards against the potential biases inherent in algorithm-driven decisions.
Looking Ahead
Although the ruling was not favorable, it highlights an important conversation regarding the use of automated decision-making systems. The Appellate Division seemed to indicate that it was looking for more evidence from J.R.’s side that could be a roadmap for future litigation. Specifically, the court noted that at the hearing stage “J.R. had the right to discovery, to subpoena witnesses, and to call her own witnesses, including experts.” Perhaps depositions of Horizon representatives and experts, as well as testimony from experts who are critical of the PDN tool could change the outcome in a future case. In the meantime, advocacy organizations will continue to call for clearer guidelines, enhanced transparency, and more comprehensive evaluations that integrate both standardized assessments and individualized clinical judgments. This case serves as a powerful reminder of the critical role legal advocacy plays in ensuring that technological advancements in healthcare do not come at the expense of patient rights and quality care.
by Jose D. Roman | Feb 3, 2025 | Estate Administration, Estate Planning, Legal Bulletin, NJ Supreme Court, Probate
On January 27, 2025, in In the Matter of the Estate of Michael D. Jones, Deceased (A-28-23) (088877) the Supreme Court of New Jersey addressed whether an ex-spouse’s right as the pay-on-death (POD) beneficiary of U.S. savings bonds was modified by the couple’s divorce agreement. The case, which involved the interplay between federal bond regulations and New Jersey’s estate and family law, ultimately affirmed that the ex-wife retained her right to the bonds despite the divorce.
Case Background
The husband purchased Series EE U.S. savings bonds during his marriage to his ex-spouse, designating her as the POD beneficiary. The couple later divorced and executed a divorce settlement agreement, which provided for certain asset distributions but did not explicitly mention the savings bonds. The settlement agreement also required him to pay $200,000 in installments. At the time of his death, the ex-wife had received approximately $110,000 of this sum. After his passing, she redeemed the savings bonds, which were valued at approximately $77,800. The estate, administered by his daughter from a prior relationship, argued that the bond redemption should count toward the outstanding settlement agreement payments, effectively satisfying his financial obligation. The trial court agreed, but the Appellate Division reversed the decision, holding that federal regulations governing savings bonds preempted state law, thereby affirming the ex-spouse’s entitlement to the bonds. The NJ Supreme Court affirmed the Appellate Division’s decision, though it disagreed regarding the issue of preemption.
Key Legal Issues
- Federal Preemption and State Law
- The Appellate Division held that N.J.S.A. 3B:3-14, which revokes certain property transfers upon divorce, was preempted by federal law regulating savings bonds.
- However, the New Jersey Supreme Court disagreed, stating that preemption was not at issue because the state statute explicitly defers to governing instruments, which in this case were the federal regulations governing savings bonds.
- Effect of the Divorce Settlement Agreement
- The court found that the settlement agreement was silent on the savings bonds and did not revoke the ex-spouse’s beneficiary status.
- A catchall provision in the settlement agreement stating that “any marital asset not listed belongs to the party who has it in their possession” was interpreted as reinforcing the ex-spouse’s claim to the bonds, because they were the husband’s before his death and immediately passed to the ex-spouse upon death.
- Right of Survivorship Under Federal Law
- Federal regulations establish that upon the death of a bondholder, the designated POD beneficiary becomes the sole owner.
- The court ruled that the trial court’s assumption that Michael intended to revoke Jeanine’s status was speculative and contrary to federal protections of survivorship rights.
Court’s Decision
The Supreme Court of New Jersey ultimately ruled that:
- Jeanine rightfully retained ownership of the savings bonds as the designated POD beneficiary under federal regulations.
- The bonds were separate from the $200,000 owed to Jeanine under the settlement agreement, meaning she was still entitled to the remaining balance of the settlement.
- The trial court’s ruling impaired the ex-spouse’s federal survivorship rights, a result not permitted under the governing regulations.
Implications and Takeaways
This case serves as an important reminder for estate and family law practitioners, particularly concerning the treatment of federal savings bonds in divorce settlements. Key takeaways include:
- Explicit Clarity in Divorce Agreements: Individuals going through a divorce should ensure that all assets, including savings bonds, are explicitly addressed in settlement agreements to avoid future litigation.
- Deference to Federal Regulations: State courts must recognize and uphold federal regulations governing financial instruments like U.S. savings bonds.
- Automatic Revocation Limitations: N.J.S.A. 3B:3-14 does not automatically revoke all beneficiary designations upon divorce when federal law dictates otherwise.
- Importance of an Estate Plan: The case highlights the importance of seeking estate planning guidance and understanding beneficiary designations, as well as probate versus non-probate assets.
By affirming the ex-spouse’s rights to the bonds, the court reinforced the importance of adhering to federal estate regulations while also ensuring fair application of state divorce laws. This ruling will likely guide future disputes involving federal financial instruments and marital property division.
by Jose D. Roman | Jan 28, 2025 | Irrevocable Family Trusts, Legal Bulletin, Medicaid, Medicaid Planning, Trusts
In a recent Superior Court of New Jersey, Appellate Division decision, W.F. v. Morris County Department of Family Services, the court reversed the imposition of a Medicaid transfer penalty for funds placed in trust to meet future child support obligations.
Background of the Case
The case involved W.F., an incapacitated individual living in a Care One nursing home due to a long-term alcoholism-related disease. Years before his incapacitation, W.F. entered into a property settlement agreement (PSA) during his divorce, agreeing to pay $23,400 annually in child support and cover half of his children’s future college expenses.
As W.F.’s financial situation deteriorated, his assets became insufficient to cover both his nursing home debts and child support obligations. To ensure his children received the necessary support, an irrevocable Family Trust was established with the approval of the court. This led to a dispute with the Morris County Department of Family Services regarding the classification of these trust funds in the context of Medicaid eligibility. When considering his eligibility for long-term Medicaid (MLTSS), the County argued that the transfer of funds to the trust was improper and imposed a 190 day transfer penalty.
Legal Arguments and Court’s Analysis
The County considered the funds in the Family Trust to be W.F.’s available assets or money he could have used to pay for his care. The County further found the transfer to the Trust for his children to be an improper gift for the purpose of qualifying him for Medicaid. As a result the improper transfer/give resulted in a period of ineligibility for Medicaid benefits, that is, a transfer penalty. However, W.F.’s guardian challenged the imposition of a penalty, arguing that the child support payments were legitimate, court-ordered debts and should not be treated as voluntary transfers.
The Appellate Division examined several key points:
- Definition of Available Resources: Under N.J.A.C. 10:71-4.1(b), resources include any property that can be converted to cash for support and maintenance. Only resources that are “available,” meaning the individual has the right or power to liquidate them, are counted towards Medicaid eligibility. N.J.A.C. 10:71-4.1(c).
- Transfer Penalty Rules: N.J.A.C. 10:71-4.10(a) imposes a penalty if assets are transferred below fair market value during a look-back period (the 60-month period before the Medicaid application is filed). The presumption is that such transfers are made to qualify for Medicaid, unless proven otherwise by the applicant.
- Court-Ordered Transfers: The regulations specify that transfers ordered by a court, not acting at the individual’s behest, may indicate that the transfer was for purposes other than establishing Medicaid eligibility. N.J.A.C. 10:71-4.10(k).
Court’s Decision
The Appellate Division reversed the Division of Medical Assistance and Health Services’ (DMAHS) decision, which upheld the County’s imposition of the transfer penalty. The court found several faults in the DMAHS’s approach:
- Misinterpretation of Gifts: The court held that the transfer of assets to the Family Trust was not a gift by W.F. but a court-ordered reallocation to fulfill pre-existing child support obligations. This distinction is crucial because gifts imply voluntary transfer of assets, whereas court-ordered payments are mandatory and binding.
- Lack of Control Over Assets: W.F. had no control over the funds once they were placed in the irrevocable trust. The trial court, recognizing the children’s entitlement to support, ordered the division of W.F.’s assets accordingly.
- Erroneous Legal Standards: The Appellate Division found that DMAHS misapplied the legal standards of eligibility, and that its actions were unreasonable, arbitrary and capricious. The court emphasized that the allocation of assets to meet pre-existing child support obligations, as mandated by a divorce judgment, was clearly not a gift under the circumstances of this case.
Final Thoughts
By reversing the transfer penalty, the court has once again shown that it favors upholding court-ordered support obligations versus strict interpretation of Medicaid regulations. This case will provide further guidance to Medicaid planning professional dealing with the issue of allocating competing debts and support obligations. It reinforces the principle that mandated child support payments are not gifts but essential support mechanisms protected by law.
by Jose D. Roman | Jan 27, 2025 | Legal Bulletin, Medicaid, Medicaid Planning, Medicaid Updates
The New Jersey Department of Human Services, Division of Medical Assistance and Health Services issued Medicaid Communication No. 25-01 on December 24, 2024. The document includes updates to certain eligibility and post-eligibility calculations, and reflects a 2.5% federal cost-of-living adjustment (COLA) for SSI eligibility standards.
Notable changes effective January 1, 2025, include:
- Assisted Living Residence (ALR) and Comprehensive Personal Care Home (CPCH): Monthly room and board rates set at $973.40, with a maintenance needs allowance of $143.65.
- Adult Family Care (AFC): Monthly room and board rates set at $854.60, with a maintenance needs allowance of $143.65.
- Community Spouse Resource Allowance: Minimum increased to $31,584; maximum raised to $157,920.
- MLTSS Income Cap/Living at Home Monthly Standard: Increased to $2,901.
- In-kind Support Income Amounts: Updated to $342.33 for individuals and $503.33 for couples.
For full details on eligibility calculations, refer to the updated administrative manual sections (N.J.A.C. 10:71-4.8, 5.4-6, and 5.9). Practitioners should be mindful of these changes and update staff to ensure clients receive the most up to date advice. Read the full document here.
by Jose D. Roman | Jan 26, 2025 | Estate Administration, Estate Planning, Last Will and Testament, Probate
When it comes to estate planning, creating a Will is one of the most important steps you can take to ensure your assets are distributed according to your wishes. However, many people are unsure about whether they need to register their Will in New Jersey. Here’s what you need to know.
Is Registration Required in New Jersey?
In New Jersey, you are not required to register your Will during your lifetime. Unlike some legal documents, a Will does not need to be filed or recorded with a government office until after the testator’s death (the testator is the person who created the Will). Until that time, your will is a private document that you can store wherever you choose.
What Happens After Death?
After the testator passes away, the original Will must be submitted to the Surrogate’s Court in the county where the deceased person resided. This is why it is important to let your loved ones know how to find your Will. This process is called probate. During probate, the court validates the Will and grants the Executor (the person named in the Will to carry out its instructions) the authority to manage the estate.
New Jersey’s Voluntary Will Registry
New Jersey law, specifically N.J.S.A. §3B:3-2.1, requires the Secretary of State to maintain a Will Registry. The registry is a voluntary service where individuals can record the location of their Will and the contact information of the person who holds it. It is important to note that the registry does not store the actual Will—only information about where it can be found. This service can help Executors and family members locate the Will after the testator’s death, avoiding delays and complications. To register a Will, you must complete a registration form and pay a small fee. The registration information is confidential and accessible only to authorized individuals after the testator’s death.
Benefits of Storing Your Will Safely
Although registering your will is not mandatory, it’s crucial to ensure the document is safely stored and easily accessible to your Executor. Some popular options for storing your Will include:
- Home Safes: A fireproof and waterproof safe at home can protect your Will from damage. Make sure someone you trust knows the combination or where to find the key.
- Attorney’s Office: Many estate planning attorneys will hold onto the original copy of your Will for safekeeping.
Final Thoughts
If your Will is lost or destroyed and no one can produce the original, the court may presume it was intentionally revoked. This can complicate matters for your heirs and lead to disputes. To avoid this, let your Executor or a trusted loved one know where your original Will is stored and consider utilizing the voluntary Will Registry.
Estate planning can feel overwhelming, but taking steps to protect your Will provides peace of mind for you and your loved ones. If you have questions about drafting or storing your Will, consult an experienced estate planning attorney who can guide you through the process.