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Opinions – Office of Administrative Hearings: 7/5/11


Medical Assistance — Long-term care penalty period

Appellant v. Baltimore County Department of Social Services

OAH No.: DHMH-BCNY-10A-11-04129

Decision by: ALJ Nicole Pastore Klein

Decision Issued: April 18, 2011

RecordFax No. 11-0419-50, 11 pages.

On September 30, 2010, the Appellant applied for Medical Assistance–Long Term Care (MA-LTC). On January 10, 2011, the Baltimore County Department of Social Services (local department) notified the Appellant that the local department approved MA-LTC benefits as of September 1, 2010, but imposed a penalty period from September 1, 2010 through November 28, 2010, as a result of transfers of the Appellant’s assets for less than fair market value. On January 24, 2011, the Appellant’s representative, her nephew, Mr. R*, requested a hearing on the imposition of a penalty period. The administrative law judge (ALJ) held a hearing on the matter on March 9, 2011.

The Appellant is 99 years old. Sometime in 2003, Mr. R* noticed that his aunt was deteriorating both physically and mentally, to the point that he needed to go to her home on a regular basis to care for her. In 2005, Mr. R*’s wife was diagnosed with cancer and, as a result, he needed to be home more to care for her as well as be available to take her to doctor appointments and cancer treatments. In 2008, Mr. R* found it too difficult to care for both his wife and the Appellant in two separate homes, and moved his aunt into his home. The Appellant wanted to keep her independence and her home, in hopes that she could return there.

While the Appellant lived with her nephew, he provided for all of her daily living needs and she wrote him checks to cover those expenses. When Mr. R* traveled out of town for work or when he took his wife for medical care (sometimes four days a week), he hired a caregiver for the Appellant which cost him approximately $100.00 per day. The Appellant wrote checks for this care and also wrote checks for the four medications she took. The Appellant’s care, medications, rent and utilities averaged $2,100.00 per month. The Appellant wrote one check to Mr. R* a month for all her living expenses. To indulge his aunt, Mr. R* had her indicate on the check that it was for “rent.” After caring for his aunt for years, he realized that she required more round-the-clock care and on April 12, 2010. he moved her to a nursing home. The Appellant was billed via private pay until she no longer had the funds to pay for her care.

On September 30, 2010, Mr. R* submitted an MA-LTC application on his aunt’s behalf. On November 30, 2010, the local department sent Mr. R* a Request for Verifications noting that it needed written verification for a number of checks written to him, establishing that the checks were for the Appellant’s daily care and medications. Soon after receiving the request, Mr. R* prepared and sent a written explanation as to the purpose of the monetary amounts in question. On January 10, 2011, the local department notified the Appellant that she was approved for MA-LTC benefits as of September 1, 2010, but imposed a two month and 28 day penalty period, as a result of $19,900.00 in transfers of the Appellant’s assets for less than fair market value.

Medical Assistance regulations provide that for an institutionalized person, a penalty period will be established during which the person is ineligible for nursing facility services if the person disposed of an asset for less than fair market value during a specified time period. Code of Maryland Regulations (COMAR) COMAR provides that the local department “shall require an accounting and reasonable documentation, consisting of convincing testimony or other evidence, of the disposal of previously held resources.” The ALJ held that the Appellant did not transfer any assets for less than fair market value, and did not write any check to Mr. R* or to anyone else for the purpose of achieving MA-LTC eligibility. In fact, the ALJ found that the checks for her care were written to keep the Appellant out of a nursing home.

At the hearing, Mr. R* came well-prepared to discuss the checks in question, but without the requested written documentation. The local department did not contest his explanation. The ALJ pointed out that the local department simply relied upon COMAR and MA Manual Release No. MR-140, Chapter 8, pp. 800-89-800-92, contending that when issuing a penalty period, the interpretation of the regulation does not permit the local department to consider the purpose of the $19,900.00 in withdrawals unless it’s proven through documentation. The local department conceded that ALJs have the ability to consider testamentary evidence that its case workers are prohibited from considering according to the MA Manual Release No. MR-140’s interpretation of COMAR The ALJ quoted from COMAR and (f) that the regulations further state that an individual is permitted to furnish “convincing evidence, consisting of testimony and other corroborative evidence, that the individual intended to dispose of the assets at fair market value or for other valuable consideration” and/or “that the asset was transferred exclusively for a purpose other than to qualify for Medical Assistance.”

Mr. R* testified convincingly that the $19,900.00 in payments made to him was part of the Appellant’s daily care, medication expenses, rent and utilities. He explained in detail regarding the deterioration of his aunt’s physical and mental capacities, the lengths he personally went to provide for her care in an attempt to obviate the need for a nursing home. The checks in question were written at a time when Mr. R* genuinely believed that he would be able to care for his aunt until she passed away, and he did not seek financial assistance through the MA-LTC program until the Appellant’s funds were exhausted. Thus, the ALJ could not find that the $19,900.00 in checks were made for less than fair market value and/or solely for the purpose of qualifying for MA.

The ALJ concluded that the Appellant did not transfer assets for less than fair market value or for the purpose of obtaining MA-LTC eligibility and; therefore, the local department improperly imposed a penalty period. Therefore, the ALJ ordered that the MA-LTC benefits period of September 1, 2010 through November 28, 2010 be reversed, and ordered the local department to remove the penalty imposed on the Appellant.


Commissioner of Financial Regulation — Denial of application for mortgage originator license

Applicant v. Commissioner of Financial Regulation

OAH No.: DLR-CFR-76A-10-35761

Decision by: ALJ Michael Wallace

Proposed Decision Issued: December 13, 2010

Decision Affirmed: March 11, 2011

RecordFax No. 11-0311-50, 8 pages.

On August 17, 2010, the Maryland Commissioner of Financial Regulation (CFR), Department of Labor, Licensing and Regulation (Department), denied the Applicant’s application for a mortgage originator’s license (License). On September 10, 2010, the Applicant filed an appeal and the CFR referred the matter to the Office of Administrative Hearings (OAH) with the authority to issue proposed finding of fact and conclusions of law with a recommended order.

On his application for the license, dated January 28, 2010, the Applicant indicated that he did not have any unsatisfied judgments or liens against him. The Applicant’s U. S. Credit Profile Report (Credit Report), dated March 24, 2010, showed that the Hanover Office Park had an open judgment against him in the amount of $3,705.00, which was filed in the District Court of Maryland for Montgomery County on April 22, 2009. The Applicant’s Credit Report showed a credit score of 501 on a scale of 501-990 with 501 being the lowest or most unfavorable score. The Applicant’s Credit Report also showed thirteen delinquent accounts totaling over $196,000.00.

On or about June 19, 2010, the CFR notified the Applicant that certain items were missing from his application. It requested a Maryland Background Check, Sponsorship information, Education information, Affidavit of Maryland Originator Activity, Employer statement, and Explanation for negative credit history and any supporting documentation. On June 24, 2010, the Applicant responded to the request for an explanation regarding his negative credit report but did not address the outstanding judgment. As a result, on August 17, 2010, the CFR notified the Applicant that his application for the License was denied because of his failure to satisfy the Commissioner that he met the requirements for a license. The Commissioner had concluded that his seriously negative financial history raised sufficient questions about financial responsibility and the ability to command the confidence of the public to warrant denial of the License. The CFR based its decision on the Applicant’s poor credit history, the existence of significant debt and his failure to openly disclose the outstanding judgment against him.

The Applicant did not dispute the existence of his debt, but contended that it was due solely to the fact that his business failed in 2007, and he had been out of work since then and could not pay his bills. He stated that he had been in the mortgage industry since 1996 and wanted to stay in that business. He argued that he applied for the License so that he could work in a field with which he has familiarity and experience. He argued that once he finds employment, he will begin to pay off his debts.

The Administrative Law Judge (ALJ) held that, while the Applicant suggested that the CFR based its decisions solely on a poor credit report, the evidence clearly established that the CFR considered the poor credit report, his substantial ongoing debt from a failure to pay off any portion of the amounts honestly, fairly, and efficiently. As a result, the ALJ recommended that the Commissioner Regulation deny the Applicant’s application for renewal of his mortgage originator’s license. The DLR affirmed the ALJ’s recommended decision on March 11, 2011.


Special Education — Motion to dismiss complaint for insufficiency

Student v. Frederick County Public Schools

OAH No.: MSDE-FRED-OT-11-15331

Decision by: ALJ Deborah Buie

Decision Issued: April 29, 2011

RecordFax No. 11-0429-50, 2 pages.

On April 19, 2011, the Student’s Parents (the Parents) filed a Due Process Complaint (Complaint) with the Office of Administrative Hearings against Frederick County Public Schools (FCPS), on behalf of their daughter (the Student), under the Individuals with Disabilities Act (IDEA). On April 27, 2011, FCPS filed a Motion to Dismiss for Insufficiency, pursuant to Code of Maryland Regulations (COMAR), asserting that the Complaint did not meet the sufficiency requirements of the law. 20 U.S.C. § 1415(b)(7)(A).

Federal regulations provide that a due process complaint must provide, among other information, a description of the student’s problem, relating to a proposed or change in educational placement, including facts relating to the problem, and a proposed resolution of the problem. The Administrative Law Judge (ALJ) is required to decide whether the Complaint is sufficient, based solely on the information contained within it. 20 USC § 1415(c)(2)(D).

In this case, the Parents’ “description of the problem and relevant facts” states in pertinent part, “We request to graduate at [the FCPS high school] (High School # 1), where she last physically attended school. [High School #1] is instead promoting that the Student graduate at a school where she never attended and does not know anyone [High School # 2]. The Parent’s proposed resolution to the problem states, “[Student] should be permitted to participate in all graduation related activities and ceremonies, included in the yearbook, and recognized for the honors level of academic work she has achieved.”

FCPS asserted that the Complaint was insufficient primarily because the Parents failed to allege any violations related to the identification, evaluation, or educational placement of a child with a disability, or the provision of a free, appropriate, public education (FAPE), pursuant to the IDEA.

After reviewing the Complaint, the ALJ held that it was not a special education matter. Moreover, the Parent’s resolution request sought, i.e., participation in graduation at [High School #1], was not available to FCPS because the Student was at present residing and attending college in Northern Virginia. Therefore, the ALJ ordered that the FCPS’ challenge to Legal Sufficiency be granted and the Parent’s Due Process Complaint was ordered Dismissed.


Automobile Policy Termination

Complainant v. Geico General Insurance Company

OAH No.: MIA-NRC-31-10-22967

Decision by: ALJ Harriet Helfand

Decision Issued: January 31, 2010

RecordFax No. 11-0131-50, 10 pages.

This case arose upon the Complainant’s protest of GEICO Insurance Company’s (Licensee) proposed action to terminate his private passenger motor vehicle liability insurance policy (Policy). The Maryland Insurance Administration (MIA), after investigation, affirmed the Licensee’s proposed action, and the Complainant requested a hearing. The hearing was held on January 19, 2011 and the issue before the Administrative Law Judge (ALJ) was whether the Licensee’s proposed action complied with Maryland insurance law.

The Licensee based its termination of the Policy on its claim that the Complainant had no “insurable interest” in his vehicle, a 2004 Scion (Scion), because it was owned by Schaefer Nevada, Inc. (SN). SN is a corporation. The Complainant was a corporate officer of SN, specifically its Secretary/Treasurer. SN leases the Scion to the Complainant. The Complainant pays SN $100.00 per month for the use of the Scion. As lessee, the Complainant is responsible for all operating costs, auto insurance, repairs, fines and proper annual registration for the Scion. The lease for the Scion between SN and the Complainant was executed by the Complainant in his capacity as Secretary/ Treasurer for SN. The lease between SN and the Complainant is for a period of one year and provides that it will automatically renew from year to year unless the lessee affirmatively cancels.

The Licensee had the burden of proof by a preponderance of the evidence to establish that its proposed action was within its rating plan, its underwriting standards, or the lawful terms or conditions of the policy related to cancellation, nonrenewal, or reduction in coverage, and may only rely on the conditions set forth in the notice to the insured why the proposed action is being taken. If the proposed action is in accordance with the insurer’s filed rating plan, its underwriting standards, and the lawful terms and conditions of the policy, cancellation or non-renewal is permissible. Md. Code Ann., Ins. § 27-613(h) (Supp. 2010). The Licensee had to establish that its nonrenewal decision was not arbitrary or capricious. Code of Maryland Regulations (COMAR) (1)(b). An action is arbitrary and capricious when it is not based on or supported by sufficient facts or proper factual inferences, or when there is no probative evidence to support the action. Turner v. Hammond, 270 Md. 41, 55-56 (1973).

With regard to a private passenger motor vehicle insurance policy, “an insurer or insurance producer may not cancel or refuse to underwrite or renew a particular insurance risk or class of risk except by the application of standards that are reasonably related to the insurer’s economic and business purposes.” Md. Code Ann., Ins. § 27-501(a)(2) (Supp. 2010).

In this matter, however, the Administrative Law Judge (ALJ) found that the Licensee failed to meet its burden. The Licensee neither offered statistical validation nor a cogent explanation as to why it could not continue to insure a vehicle leased by the Complainant from a corporation for which he is a corporate officer. The Licensee could not point to any specific provision in the Policy to substantiate its action. In fact, the Licensee’s guidelines, submitted in its policy log as part of the MIA’s exhibits, specifically provide that “[v]ehicles leased for 6 months or longer are considered the same as those owned by the insured.” However, the Licensee simply kept repeating that the Complainant had “no insurable interest” in the vehicle, yet could not explain what it meant by that designation. During the course of the hearing, the Licensee did not appear to understand the concepts of corporate ownership and the authority of corporate officers, in general, and the role of the Complainant as both the corporate officer authorized to execute the lease and the lessee, in particular.

At one point, the Licensee cited the alleged inadequacy of the Complainant’s lease; however, the Licensee refused to state what it would require in a lease to render it acceptable. The Licensee presented no evidence whatsoever to suggest that the Complainant’s lease arrangements with SN involved misrepresentation or any other impediment to its business purposes.

The ALJ concluded that the Licensee presented insufficient evidence that its rating plan did not contemplate coverage for the additional exposure presented by SN’s ownership and the Complainant’s lease of the Scion. Accordingly, the ALJ found that the Licensee may not terminate the Policy for that reason. Based upon the foregoing discussion, the ALJ concluded as a matter of law that the Licensee’s proposed termination did not comply with the requirements of Maryland insurance law. Md. Code Ann., Ins. §§ 27-501 and 27-613 (Supp. 2010) and COMAR 31.15.10. The ALJ ordered that the Licensee was not permitted to put its proposed action into effect.


Grievance — Employee Termination

Grievant v. State Highway Administration

OAH No.: THRS-SHA-03-10-38992

Decision by: ALJ Henry R. Abrams

Decision Issued: May 23, 2011

RecordFax No. 11-0523-50, 20 pages.

This decision concerned an action remanded to the Office of Administrative Hearings (OAH) by the Circuit Court for Anne Arundel County (Court) on October 6, 2010. The Grievant was at all times employed as an Administrative Assistant for the State Highway Administration (SHA). On March 19, 2009, the Grievant filed a complaint (Grievance) with the SHA alleging that two supervisors and two co-employees had harassed and abused her. The Grievant claimed that this conduct was motivated, in part, by the co-employees’ and one supervisor’s displeasure with her for prior reports she filed concerning their alleged misconduct. The Grievant asserted that the alleged abuse and harassment violated the SHA’s Workplace Violence policy, and requested that the policy be enforced, and that the SHA pay her damages and attorney’s fees.

The SHA investigated the Grievant’s allegations, and, on July 2, 2009, notified her that it had not found evidence to support them. After exhausting prior appeals, the Grievant appealed the SHA’s decision to the OAH on August 4, 2009. On August 14, 2009, the Grievant notified the OAH that the SHA had retaliated against her for appealing to the OAH by transferring her to one of its maintenance shops, subjecting her to unfavorable working conditions. A hearing was held on November 20, 2009, and the Presiding ALJ Reeves ruled against the Grievant. The Grievant appealed the decision to the Circuit Court. On October 6, 2010, the Court issued its decision, remanding the matter to the OAH “for further consideration on the issue of retaliation which was properly before the OAH….”

A grievance hearing was held at the OAH on April 11, 2011. In a grievance hearing the grievant has the burden of proof by a preponderance of the evidence. The Administrative Law Judge (ALJ) found that the Grievant failed to prove that the filing of the Grievance Appeal caused her transfer to the SHA maintenance shop. The ALJ did find that the Grievant satisfied many of the elements of her retaliation claim. She was a State employee covered by the prohibitions against reprisal contained in the Transportation Code, COMAR, and Transportation Service Policy; and the action of which she complained occurred during one stage of the grievance process, and concerned State employment. However, the ALJ found that the Grievant failed to prove the critical element of causation — that the transfer was solely or intentionally in retaliation for the filing of her Grievance Appeal. The ALJ recognized that the Grievant’s transfer close in time following her appeal to the OAH was circumstantial evidence of causation. Nevertheless, there was substantial, credible evidence that the transfer was motivated by benign reasons, designed to benefit the Grievant.

The ALJ also found, relying on Title VII cases, that the Grievant failed to prove that her transfer subjected her to adverse working conditions. First, there was no change in position, salary or benefits. Second, the Grievant did not identify any significant change in job responsibilities. Third, the Grievant was transferred to an office on the second floor of the maintenance shop — not on the shop floor, where the people she complained about were stationed. Fourth, her commute was precisely the same as it had been before the transfer. Fifth, she was even given the privilege to ignore essential duty days when they interfered with her school calendar. The ALJ further found that the Grievant failed to address any remedy for the alleged retaliation. The Grievant had ample notice of what was required for the hearing, and ample time to formulate and gather appropriate proof of damages or other remedy sought. The Grievant failed to do so, and offered no explanation for that failure.

The ALJ ordered that the Grievant’s grievance be dismissed because she failed to meet her burden of proof.