IN RE: HILDEGARDE CVETKOVIC (2026)

MEMORANDUM AND ORDER

It is hereby ORDERED that the determination is unanimously confirmed without costs and the petition is dismissed.

Memorandum: Petitioners commenced this CPLR article 78 proceeding seeking to annul a determination of respondent, which affirmed after a fair hearing the decision of the Oneida County Department of Social Services (DSS) that the undue hardship waiver of a transfer penalty period imposed on the Medicaid application of Hildegarde Cvetkovic (petitioner) submitted May 4, 2022 due to the subsequent discovery of an uncompensated transfer during the look-back period (see Social Services Law § 366 [5] [a], [e] [1] [vi]) would be effective October 1, 2022, i.e., three months prior to the month in which petitioner's application for an undue hardship waiver was made. We now confirm the determination.

“[G]enerally, [w]hen reviewing a Medicaid eligibility determination made after a fair hearing, we must determine whether the agency's decision is supported by substantial evidence and [is] not affected by an error of law, bearing in mind that the petitioner bears the burden of demonstrating eligibility” (Matter of Waterfront Operations Assoc. LLC v New York State Dept. of Health, 243 AD3d 1320, 1320-1321 [4th Dept 2025], appeal dismissed 45 NY3d 943 [2026] [internal quotation marks omitted]).

Petitioners contend that DSS erred in imposing the transfer penalty period without first evaluating on its own initiative, even in the absence of a request, whether petitioner was entitled to an undue hardship waiver. We reject that contention. The governing statute and the implementing rules contemplate a process under which an individual may obtain an undue hardship waiver by filing an application for that relief (see Social Services Law § 366 [5] [e] [4] [iv]; NY St Dept of Health Admin Directive 06 OMM/ADM-5 at 20-21; see generally Matter of Washington Ctr. for Rehabilitation & Nursing Home v New York State Dept. of Health, 218 AD3d 1280, 1281 [4th Dept 2023]). Moreover, petitioners’ position that an agency must sua sponte consider undue hardship without any request by the applicant cannot be squared with the statutory and regulatory scheme under which the applicant must offer proof demonstrating that they meet the criteria for an undue hardship waiver (see § 366 [5] [e] [4] [iv]; 18 NYCRR 360-4.4 [c] [1] [ii] [d] [2]; Matter of Weiss v Suffolk County Dept. of Social Servs., 121 AD3d 703, 705 [2d Dept 2014]; see also Matter of Burke, 145 AD3d 1588, 1590 [4th Dept 2016]).

As respondent correctly points out, an applicant for Medicaid coverage of nursing home care may simultaneously apply for an undue hardship waiver (see NY St Dept of Health Admin Directive 06 OMM/ADM-5 at 20). If an applicant requests an undue hardship waiver alongside an application for Medicaid coverage, the agency must send the applicant notice of its decision on the requested waiver along with the notice of its decision regarding Medicaid eligibility (see id. at 20-21). Here, however, petitioner's son—acting as power of attorney—did not request an undue hardship waiver when submitting petitioner's application for Medicaid coverage and instead affirmatively represented on the application that petitioner had not made any transfers during the look-back period that could result in her temporary ineligibility for nursing facility services coverage. Inasmuch as petitioner did not request an undue hardship waiver upon applying for Medicaid coverage and DSS was not obligated to sua sponte consider undue hardship, we agree with respondent that DSS did not err in failing to assess undue hardship at the time it decided petitioner's initial application for nursing home care coverage.

Next, contrary to petitioners’ contention, we conclude that respondent's determination upholding the effective date of the undue hardship waiver set by DSS as three months prior to the month in which petitioner applied for the waiver is supported by substantial evidence and is not affected by an error of law (see generally Matter of Anand v New York State Dept. of Health, 196 AD3d 563, 564-565 [2d Dept 2021]). Notwithstanding DSS's June 17, 2022 notice granting petitioner's application for Medicaid with limited coverage due to the transfer penalty and informing petitioner that she could request a waiver of the transfer penalty based on undue hardship, petitioner did not apply for that wavier until January 25, 2023. Thus, contrary to petitioners’ assertion, DSS properly evaluated petitioner's request for an undue hardship waiver as one made by a recipient of limited coverage during a transfer penalty period (see NY St Dept of Health Admin Directive 06 OMM/ADM-5 at 21). Under those circumstances, DSS properly concluded that, pursuant to New York State Department of Health Administrative Directive 06 OMM/ADM-5, “the undue hardship waiver period could extend no more than three months prior to the month in which the application for an undue hardship waiver was made,” i.e., October 1, 2022 (Washington Ctr. for Rehabilitation & Nursing Home, 218 AD3d at 1281; see NY St Dept of Health Admin Directive 06 OMM/ADM-5 at 21; see also Anand, 196 AD3d at 564-565).

Petitioners also contend that DSS violated petitioner's right to due process by determining her eligibility for Medicaid benefits before sending her an agency-required notice of the right to present evidence to rebut the presumption that the uncompensated transfer was made in order to qualify for Medicaid coverage of nursing facility services. We agree with respondent that any failure by DSS to provide the requisite notice does not warrant annulment of the determination under the circumstances of this case. Although the subject notice was not sent to petitioner prior to DSS's determination (cf. NY St Dept of Health Medicaid Reference Guide at 445; NY St Dept of Health Admin Directive 96 ADM-8 at 22), the record nonetheless establishes that DSS advised petitioner in its June 17, 2022 notice that any prohibited transfer of assets during the look-back period was presumed to be made for the purpose of qualifying for Medicaid, but that petitioner could present evidence to rebut that presumption (see Matter of Cooperstown Ctr. for Rehabilitation & Nursing v New York State Dept. of Health, 225 AD3d 1045, 1046 [3d Dept 2024]). Petitioner did not submit any such evidence, and petitioners have not argued here that she could have submitted evidence to rebut the statutory presumption. Inasmuch as petitioners “failed to demonstrate that they suffered any prejudice as a result of DSS's failure to send the required notice ․, and further because the notice that was sent to them allowed them to submit opposition and fully prepare for the fair hearing,” we conclude that it “cannot [be said] that DSS's omission deprived petitioners of any substantial rights” (id. at 1047).

Contrary to petitioners’ related contention, we likewise agree with respondent that petitioners failed to establish that they suffered prejudice by any failure by DSS to provide notice with the original Medicaid application of petitioner's right to apply for an undue hardship waiver in the event that a transfer of assets resulted in a penalty (see NY St Dept of Health Admin Directive 06 OMM/ADM-5 at 21). The record establishes that petitioner received notice of her right to request an undue hardship waiver in June 2022 and that, had petitioner promptly submitted a request for a waiver in the two months following that notice, the entire period of the nursing home facility care would have been covered by the three-month retroactivity window (cf. Washington Ctr. for Rehabilitation & Nursing Home, 218 AD3d at 1281). Petitioner's failure to qualify for an undue hardship waiver reaching back to the beginning of her stay in the nursing home was due to her unexplained delay in submitting a waiver request even after receiving notice. Thus, petitioners failed to demonstrate that they suffered any prejudice by not receiving earlier notice of the undue hardship waiver process (see generally Cooperstown Ctr. for Rehabilitation & Nursing, 225 AD3d at 1047).

Entered: October 9, 2026

Ann Dillon Flynn

Clerk of the Court