In re A.N.

• Decision Date: 16 April 2013
• Citation: 63 A.3d 764,430 N.J.Super. 235
• Parties: In The Matter of A.N., a minor.
• Court: New Jersey Superior Court

430 N.J.Super. 235

63 A.3d 764

In The Matter of A.N., a minor.

Superior Court of New Jersey,

Appellate Division.

Argued Jan. 9, 2013.

Decided April 16, 2013.

Jennifer Simons, Deputy Attorney General, argued the cause for appellant Division of Medical Assistance and Health Services (Jeffrey S. Chiesa, Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Dianna Rosenheim, Deputy Attorney General, and Ms. Simons, on the briefs).

Sharon Rivenson Mark argued the cause for respondent A.N. (Law Office of Sharon Rivenson Mark, P.C., New Jersey, attorneys; Ms. Mark, on the brief).

Richard N. Campisano argued the cause for respondent S.N.

Valerie A. Powers Smith argued the cause for respondent E.N. (Slovak Baron Empey Murphy & Pinkney, LLP, attorneys; Ms. Smith, on the brief).

Thomas J. Monroe argued the cause for respondent Bank of America, N.A. (Meyner and Landis, Newark, LLP, attorneys; Mr. Monroe, on the brief).

Before Judges ASHRAFI, HAYDEN and LISA.

The opinion of the court was delivered by

LISA, J.A.D. (retired and temporarily assigned on recall).

This appeal requires determination of where the jurisdiction of the Chancery Court ends, in its oversight of trust expenditures under Title 3B, and where the jurisdiction of the Division of Medical Assistance and Health Services (DMAHS or Division) begins in making Medicaid eligibility determinations.

The Division appeals from certain provisions in the January 18, 2011 Chancery Division order approving acquisition by a special needs trust of residential real property for the benefit of the beneficiary, and related matters, and the June 7, 2011 order denying the Division's motion for reconsideration. The substantive order was issued pursuant to the request of the co-trustee, Bank of America (BOA), for instructions regarding its proposed acquisition of the property and incurring expenses connected with maintenance of the property and expenses for the care of the beneficiary. The court approved acquisition of the property, ratified certain past expenditures, and approved similar anticipated future expenditures. The court determined that the acquisition and expenditures were for the “sole benefit” of the beneficiary and that they “shall not act to deprive [the beneficiary] of any government funds or benefits, including, but not limited to, Medicaid.”

No application for Medicaid benefits had ever been made by or on behalf of the beneficiary. DMAHS was served with the pleadings as an interested party. It promptly notified the court and counsel for all parties that it took no position regarding the relief requested, i.e. authorization for acquisition of the property and making the requested expenditures. However, it expressed its position that, although the court could provide guidance on the effect of these transactions on the beneficiary's possible future Medicaid eligibility, the court lacked jurisdiction to address the qualification of an asset for purposes of Medicaid eligibility. Therefore, DMAHS stated that if the beneficiary should ever apply for Medicaid benefits, it did not waive any right to review at that time all transactions and resources, and only it could make a Medicaid eligibility determination.

On appeal, the Division argues that the language in the January 18, 2011 order making prospective Medicaid determinations must be stricken because the Chancery Division lacks subject matter jurisdiction to make such determinations, which, by law, can only be made by the Division. We agree. Accordingly, we reverse and remand for entry of an amended order.

The beneficiary of the trust, A.N., is presently seventeen years old. She suffers from quadriplegic cerebral palsy and is fully dependent on others. Her father is E.N., and her mother is S.N. No application has ever been made on behalf of A.N. for Social Security or Medicaid benefits. Her medical expenses have been paid by her father's private medical insurance and by funds in the trust.

The trust was created in 2000 pursuant to a Law Division order in Hudson County in litigation in which the beneficiary was plaintiff and received a monetary award, which, in turn, funded the trust. Her parents created the special needs trust pursuant to 42 U.S.C.A. § 1396p(d)(4)(A) and 42 U.S.C.A. § 1382b(e)(5). Her parents are co-trustees, along with BOA, the corporate co-trustee.

E.N. and S.N. separated in 2006. S.N. remains in the family home in Elmwood Park with her daughter, A.N., as well as A.N.'s maternal grandmother, who assists her in caring for A.N. The home has been renovated to accommodate A.N.'s special needs.

Because of family financial difficulties, the home was threatened with foreclosure, as a result of which, in November 2008, the trust began assuming the mortgage payments and carrying costs. E.N. and S.N. wanted the trust to purchase the home for their daughter's benefit. They also sought to receive compensation from the trust for the care they provided their daughter.

Article THIRD of the trust contains these relevant provisions:

H. It is intended that this trust will supplement [A.N.]'s needs but only in ways that preserve eligibility for current and future programs of significant value to which she may be entitled and all questions pertaining to the trust shall be resolved accordingly. No payment shall be made (for any purpose, including food, shelter and clothing) on behalf of [A.N.] which will render her ineligible for any such program (or reduce the benefits available), however, if eligibility can be maintained by making a payment on her behalf instead of making the payment directly to her or to her guardian, such payment may be made subject to the limitations of this article....

I. Subject to the limitations imposed by this Article, the trustee may purchase real estate that would make suitable housing for [A.N.]. The trustee shall pay all expenses and taxes associated with the maintenance of this property, but [A.N.] shall be charged rent on a monthly basis in a reasonable amount to be determined by the trustee in his discretion, and other persons residing in such property shall pay a proportional share of expenses associated with the maintenance of the property.

J. The trustee may pay one or more family members of [A.N.] a fee to enable such person or persons to provide [A.N.] with care over and above that which a family member would normally provide a non-disabled child of [A.N.]'s age, if such care is necessary because of [A.N.]'s disability, if the trustee determines that it would be more economical to do so rather than to purchase such care from a professional caregiver, and if the cost of such care does not exceed fair market value.

Article FOURTEENTH contains these relevant provisions:

A. This agreement and any trust created hereunder is intended to meet the requirements for a Special Needs Trust under 42 U.S.C.A. § 1396p(d)(4)(A) and 42 U.S.C.A. § 1382b(e)(5) and all provisions of this agreement shall be construed so as to achieve this result. The agreement may be conformed, if necessary, with the approval of the Court which authorized the establishment of this trust, for the sole purpose of achieving technical compliance with the aforementioned statutes.

B. Any and all disbursements shall be for the sole benefit of [A.N.].

In January 2010, in accordance with the wishes of A.N.'s parents, BOA filed a verified complaint in the Chancery Division, Probate Part, seeking instructions pertaining to the trust's proposed purchase of the home and approval of prior and future payments related to the maintenance of the home and for A.N.'s care. The complaint also sought instructions regarding rent by occupants of the property and as to the scope of parental support provided to A.N. by her parents. As to each of these items, the complaint also sought instructions regarding the “impact on the Trust beneficiary's Medicaid eligibility.”

An order to show cause was issued. The court appointed a guardian ad litem, who filed a report with the court. As we stated, DMAHS responded to the complaint with a letter, dated March 16, 2010. The Division noted that A.N. was not receiving Medicaid benefits and it took no position on the relief requested by BOA. However, it expressed its position that, although the court could provide guidance to the trustee on A.N.'s possible future Medicaid eligibility as a result of the proposed transactions, the court lacked jurisdiction to “make administrative determinationswith regard to a person's future Medicaid eligibility or make determinations about the evaluation of transactions under Medicaid rules.” The Division concluded that it possesses the sole authority for making such determinations, and it did not waive the right to review all income, resources, trusts for A.N.'s benefit, trust accountings and transfers by or on A.N.'s behalf “as they may affect her eligibility should she apply for Medicaid benefits.”

On the return date of the order to show cause, the court conducted a plenary hearing, receiving the testimony of A.N.'s parents. Various documents were placed in evidence. No representative from DMAHS attended the hearing. After reserving decision, the court issued a comprehensive oral decision on January 12, 2011. In the course of rendering its decision, the court acknowledged the Division's position, referencing its March 16, 2010 letter.

Based upon the evidence received at the hearing, the court found that A.N.'s parents were providing extraordinary care for her beyond routine care, and they could be compensated from the trust for the extraordinary care. Likewise, the court found that the grandmother was providing necessary care, for which she could be compensated from the trust. The court found the purchase of the home to be in A.N.'s best interest and authorized the trust to purchase it. The court also approved the prior mortgage payments by the trust because they were made to preserve the residence for A.N.'s benefit.

The...