Commonwealth of MassachusettsCounty of Essex
The Superior Court
RE: Cuddemi Executor Estate of Albert Cuddemi v Dehner Director of the Office ofMedical
TO: Ronald H Surabian, EsquireOne Essex StreetSaugus, MA 01906
You are hereby notified that on 01/20/2010 the following entry was made on the abovereferenced docket:
FINDINGS, RULINGS AND ORDER FOR ENTRY OF JUDGMENT ORDER Basedupon the foregoing, the agency's decision in this matter shall be vacated andjudgment is ordered entered for the plaintiff upon determination that the transfer inquestion represented a loan from spouse/mother to son and further that anydetermination that the promissory note had no market value is not in accord withapplicable law. Further, finding is made that the promissory note is a countablemarital asset, includable in the female spouse's community spouse resourceallowance thereby making the deceased applicant eligible for long term carecoverage from June 3, 2007 until his death some one month later on July 2,2007.(Robert A. Cornetta, Justice)Dated at Lawrence, Massachusetts this 20th day of January,2010.
Thomas H. Driscoll Jr.,Clerk of the Courts
BY: Kevin JonesAssistant Clerk
COMMONWEALTH OF MASSACHUSETTSTHE TRIAL COURT
SUPERIOR COURT DEPT.CIVIL ACTION NO. 2007-02177-C
)PAUL CUDDEMI, EXECUTOR )ESTATE OF ALBERT CUDDEMI)
Plaintiff, ))
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THOMAS DEHNERDIRECTOR OF MEDICAID,Defendant
FINDINGS, RULINGS AND ORDERFOR ENTRY OF JUDGMENT:
brief that the defendant's hearing office had applied the wrong standard to the facts of the case, and
remanded the matter for further hearing. Following a remand hearing which resulted in another denIal
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On July 5, 2006, while both spouses, both 93 years old, were living at home, Mrs. Cuddemi
loaned their eldest son $20,000, as a business loan. The son executed a promissory note which was
payable within two years and provided for no installment payments and no interest payment. Mrs.
Cuddemi did not sign the note, as the lender customarily does not execute such a document.
Over seven months later, Mr. Cuddemi was hospitalized, and on February 21,2007, he was
admitted to a nursing horne. On June 1,2007, an application for long term care benefits was filed. The
application requested a start date of June 3, 2007, at which time it is undisputed that Cuddemi and his
spouse had assets, including the promissory note, which fell below the standard for eligibility for such
benefits ($101,640.00). Cuddemi died on July 2,2007. At issue is the eligibility for benefits from
June 3 through July 3,2007.
By notice dated July 24,2007, the application was denied on grounds that the loan of funds
made to the plaintiff s son was an impermissible transfer. The amount transferred was held to trigger a
period of ineligibility of 78 days ($20,000 divided by $256- the daily nursing cost standard applied by
the Agency). The worker determined that, based on the couple's assets, Cuddemi, but for the
transaction involving the promissory note, would have been eligible for coverage on April 1, 2007. The
period of ineligibility ran from June 3, 2007 through August 20, 2007. A timely appeal was filed and a
fair hearing was conducted on August 22, 2007. The determination to denJ coverage was upheld, and a
timely appeal was filed. Whereas the defendant acknowledged that the hearing officer had applied the
wrong standard, the case was remanded for further hearing, and the denial was again upheld by the
hearing officer. The case is before the court on a renewed motion for judgment on the pleadings.
DISCUSSION
A court may set aside an administrative agency's final decision only where the court determines
petitioner's substantial rights have been prejudiced because the decision was based upon error oflaw,
was unsupported by substantial evidence or was arbitrary or capricious or an abuse of discretion. G.L.
c. 30A 14; Connolly v. Suffolk County Sheriff's Department, 62 Mass. App. Ct. 187, 192-93 (2004).
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The court must defer to the factual findings ofthe administrative body where there is ~ubstantial
evidence to support its findings and there is no error of law. The court may not substitute its fact-
finding judgment for that of the agency. Wheelock Coll. V Massachusetts Comm 'n Against
Discrimination, 371 Mass. 130; 133 (1976). Petitioner bears the burden of demonstrating the
invalidity of the agency decision. Bagley v. Contributory Ret. Appeal Bd., 397 Mass. 255,258 (1986);
Merisme v. Bd. of Appeal on Motor Vehicle Liab. Policies and Bonds, 27 Mass. App. Ct. 470,474
(1989). The reviewing court gives "due weight" to the experience, technical competence, and
specialized knowledge of the agency, as well as the discretionary authority conferred upon it.
Connolly, supra at 192; G.L. c. 30A 14(7).
In order to qualify for MassHealth long-term care benefits, an individual's total assets may not
exceed $2,000, and, in the case of a married person in the relevant time frame, the couple's total assets
may not have exceeded $103,640.00. 130 Code Mass. Reg. 520.003(A)(I) and 520.026. In order
to prevent individuals who can pay for their own health care from using resources earmarked for the
less fortunate, the regulations authorize the Agency to scrutinize all transfers of assets by the applicant
or his or her spouse during a 36-month period ("the look-back period") prior to the submission of his
application. Id, at 520.0 19(B). If any transfer made during the look-back period was not made for fair
market value, or with the intent to qualify for MassHealth coverage, or was not a "permissible transfer"
under 130 Code Mass. Regs. 520.019(D), then, depending on the size of the transfer, the applicant's
. date of eligibility for benefits will be pushed back to a specified date. This requirement may be avoided
if the applicant can show that the transfer was (1) "exclusively for a purpose other than to qualify for
MassHealth", or (2) that the applicant intended to dispose of a resource at either fair market value or
for other valuable consideration." Id at 520.019(F)
In affirming the Agency's decision, the hearing officer rejected the plaintiffs argument that the
promissory note was an asset of the applicant and his wife. The agency had determined that the
plaintiff was otherwise eligible for benefits on April 1,2007, in view of the countable marital assets
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having a value of $60, 125.13, well below the applicable standard. Thus, counting the $20,000 note as
an asset would not have resulted in theplaintiffs being found ineligible. The agency hearing officer
acknowledged this fact. Treating the note as an asset would have resulted in the approval of the
application. It is illogical to assert that an applicant would transfer an asset which would not be
disqualifying in order to qualify for MassHealth~ Moreover, there is clear authority to treat the
promissory note, by its terms a "sealed instrument", as an asset. It has commonly been said that
consideration consists in a detriment to the promisor or a benefit to the promisee. Peck v. Requa, 13
Gray 407; Torrey v. Adams, 254 Mass. 22, 149 N.E.618. The promise to repay the loan iri a sealed
instrument establishes "a conclusive presumption of consideration". G.L. c. 4 9A. There is no
reasonable basis for considering the note to be worthless. The evidence is substantial, then, that the'
plaintiff intended to receive fair market value for the transaction, and the note and Mrs. Cuddemi's
testimony make clear that there was no intent to make a gift. There is no evidence that Mrs. Cuddemi
relied on the advice of counsel in the context of long term care planning, since in July 2006, both
spouses were relatively healthy and they had not consulted with counsel when Mrs. Cuddemi required
her son to execute the promissory note.
Moreover, if valid, the penalty period imposed, determined by dividing the "transferred" funds
($20,000.00) by the daily cost of nursing home care ($256), which should have resulted in a peridd of
ineligibility of 78 days, from June 3, 2007 to August 20, 2007. Since the plaintiff died on July 2,2007,
he had no coverage from June 3 until death. As a result, the plaintiff s spouse was obliged to pay from
her assets- protected by the Agency's regulations relative to the community spouse's resource
allowance at 130 CMR 520.016(B). The Agency's decision focused narrowly on its regulation defining
promissory notes, and faulted the plaintiffs note for failing to comport with 130 Code Mass. Reg.
520.007(J)(3) in that it failed to provide for equal payments during the life of the loan, with no
deferral and no balloon payments and did not prohibit cancellation of the balance upon the death of the
lender. The Agency also challenged the note on grounds that the lender did not sign the note and that
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there was no evidence that the lender, Mrs. Cuddemi had the capacity to enter into the transaction. The
testimony of Mrs. Cuddemi dispels any notion of incapacity and there is no significance to the fact that
she, as the lender, did not sign the note. Moreover, her testimony reflected her intent to make a loan
and not a gift. While the note contains none of the regulatory provisions, it does not follow that it is
legally defective or non-binding and has no fair market value. The MassHealth promissory note
regulation clearly was designed to