In the Matter of A.N., a Minor, A-5657-10T3; Appellate Division; opinion by Lisa, J.A.D., retired and temporarily assigned on recall; decided and approved for publication April 16, 2013. Before Judges Ashrafi, Hayden and Lisa. On appeal from the Chancery Division, Hudson County, No. 300260. DDS No. 22-2-9608 [18 pp.]
This appeal requires a determination of where the jurisdiction of the Chancery Division ends, in its oversight of trust expenditures under Title 3B, and where the jurisdiction of the Division of Medical Assistance and Health Services begins in making Medicaid eligibility determinations.
The division appeals from certain provisions in a Chancery Division order approving acquisition by a special-needs trust of residential real property for the benefit of the beneficiary. The 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."
DMAHS promptly notified the court and counsel for all parties and 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. DMAHS stated that if the beneficiary should ever apply for Medicaid benefits, it did not waive any right to review all transactions and resources, and only it could make a Medicaid eligibility determination.
On appeal, the division argues that the language in the 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.
Held: A Chancery Division order approving certain expenditures and authorizing similar future expenditures by a special-needs trust, which also adjudicated that the expenditures "shall not" act to deprive the beneficiary of any Medicaid benefits should a Medicaid application be made, exceeded the court’s subject-matter jurisdiction. The Division of Medical Assistance and Health Services, as the single state agency responsible for administering New Jersey’s Medicaid program, is vested with the sole authority for determining Medicaid eligibility, and it retains the right to review the subject expenditures and the totality of the beneficiary’s financial circumstances during a five-year look-back period.
The court based its subject-matter jurisdiction primarily on N.J.S.A. 3B:2-2, which provides trial courts with full authority to resolve controversies arising out of the administration of trust estates and also contains a catchall provision granting "authority over all other matters and things as are submitted to its determination under this title." The court found further support for jurisdiction in other sections in Title 3B. Finally, the court found "instructive" In re Keri, which approved the practice of Medicaid planning by a fiduciary. The court concluded that it has jurisdiction to direct the disbursements of funds from a special-needs trust for the sole benefit of a minor and make the determination that those disbursements shall not act to deprive the minor of Medicaid benefits.
No party, including DMAHS, objected to the relief sought by BOA, namely, to authorize the purchase of the home, ratify and approve past expenses incurred for saving the home from foreclosure and providing extraordinary care for A.N., and approving future expenditures for the extraordinary care. The "controversy" before the court could best be characterized as whether those approvals would be most advantageous to and in the best interests of A.N. and the trust estate. That determination required analysis of matters bearing on preservation of the trust’s status as a special-needs trust, including the potential impact on Medicaid eligibility. The court properly conducted that analysis.
However, the court went too far in purporting to render a binding and final Medicaid eligibility determination. None of the cited Title 3B sections authorize such a determination. The catchall provision in N.J.S.A. 3B:2-2 does not embrace such a determination because Medicaid determinations are governed by Title 30, not Title 3B. Nor does Keri authorize the court to make a Medicaid eligibility determination where the Keri court merely sanctioned the practice of Medicaid planning for fiduciaries under appropriate circumstances. Likewise, authority was not conferred on the Chancery Division for making the disputed determination by Rule 4:95-2 or N.J.S.A. 2A:16-55; which authorize instructions, advice and determinations pertaining to the administration of an estate. That administration does not extend to future Medicaid eligibility determinations.
DMAHS is the "single State agency" responsible for administering New Jersey’s Medicaid program. As required by federal and state law, only the designated Medicaid agency is authorized to determine Medicaid eligibility — through a detailed analysis, to be conducted through the expertise of the agency charged with administration of the complex statutory and regulatory Medicaid provisions. That review involves analysis of resources and expenditures within a five-year look-back period.
The appellate panel concludes that all references in the order as to prospective Medicaid determinations exceeded the court’s jurisdiction and must be deleted. In their place, the court may include qualified language to the effect that, based on the information presented to the court at the time of the proceeding before it, the transaction in question is not likely to have an adverse impact on A.N.’s entitlement to benefits, including Medicaid.
The appellate panel reverses and remands for entry of an amended order.
For appellant Division of Medical Assistance and Health Services — Jennifer Simons, Deputy Attorney General (Jeffrey S. Chiesa, Attorney General; Melissa H. Raksa, Assistant Attorney General, of counsel; Simons and Dianna Rosenheim, Deputy Attorneys General, on the briefs); For respondents: A.N. — Sharon Rivenson Mark; S.N. — Richard N. Campisano; E.N. — Valerie A. Powers Smith (Slovak Baron Empey Murphy & Pinkney); Bank of America — Thomas J. Monroe (Meyner & Landis).