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Supreme Court, Appellate Division, Third Department, New York.

IN RE: Stewart G. KESSMAN, as Administrator of the Estate of Ruth L. Kessman, Deceased, Petitioner, v. ULSTER COUNTY DEPARTMENT OF SOCIAL SERVICES et al., Respondents.

Decided: February 25, 1999

Before:  MERCURE, J.P., CREW III, PETERS, SPAIN and CARPINELLO, JJ. Klein & Klein (Louis M. Klein of counsel), Kingston, for petitioner. Eliot Spitzer, Attorney-General (Julia Ryan Christ of counsel), Albany, for New York State Department of Health, respondent.

Proceeding pursuant to CPLR article 78 (transferred to this court by order of the Supreme Court, entered in Ulster County) to review a determination of respondents which, inter alia, denied the application of petitioner's decedent for medical assistance.

In October 1994, petitioner's decedent (then age 81), became a resident of a nursing home in Ulster County, where she remained until her death in November 1997.   Decedent's spouse, Herbert Kessman (hereinafter Kessman), applied for medical assistance (see, Social Services Law § 366[1][a][5] ) on decedent's behalf in September 1996.   The application was denied by respondent Ulster County Department of Social Services, following a hearing, on the ground that the combined household resources of Kessman and decedent were so high as to render decedent ineligible for medical assistance.   That determination was, in turn, confirmed by respondent State Department of Health.

Petitioner, who is the son of decedent and Kessman and also the administrator of decedent's estate, thereafter commenced this proceeding challenging the denial of medical assistance to decedent.   It is his contention that respondents erred by factoring into the calculation of decedent's combined household resources the sum of $122,169.50, i.e., the equity value of Kessman's 25% interest in the assets of a family-owned corporation known as Kessman Golf Properties Inc. (hereinafter Kessman Golf), a company which operates a driving range.

To determine eligibility for medical assistance under Social Services Law § 366(1)(a)(5), the applicant/recipient's available financial resources must be calculated to determine if they exceed his or her medical expenses.   If they do, the applicant/recipient will be deemed ineligible, at least until such expenses equal or exceed the “excess resource standards” (18 NYCRR 360-4.1).   Some resources owned by individuals 65 years of age and older may be disregarded in determining eligibility.   One of these exemptions is the equity value of business property that is “income-producing” (18 NYCRR 360-4.4[d] [2] [i] ).   Our review of the record supports the determination that Kessman's 25nterest in Kessman Golf is not “income-producing” business property as described in 18 NYCRR 360-4.4(d)(2)(i).

Our review is limited to whether the challenged determination is based on substantial evidence (see, 300 Gramatan Ave. Assocs. v. State Div. of Human Rights, 45 N.Y.2d 176, 181-182, 408 N.Y.S.2d 54, 379 N.E.2d 1183).   Substantial evidence will be found to exist if, upon a review of the record as a whole, we determine that there is a rational basis therein for the findings of fact supporting the agency's determination (see, id.).   The court is precluded from weighing the evidence or substituting its own view of the evidence, as that would usurp respondents' function as the fact finder, where conflicting inferences may be drawn from the evidence, as here (see, Berenhaus v. Ward, 70 N.Y.2d 436, 443-444, 522 N.Y.S.2d 478, 517 N.E.2d 193).

At a fair hearing before an Administrative Law Judge, Kessman testified that he did not receive income from Kessman Golf although he did receive payment of certain contractual obligations owed to him by this family corporation arising out of the sale of a business entity known as the “Kessman Family Partnership”.   Furthermore, Kessman Golf's accountant affirmed that the fair market value of Kessman's interest in the corporation was $122,169.50 but that, as a minority interest in a closely held corporation, the interest was worthless.   The accountant also reported that Kessman Golf operates at a loss, a fact which was also reported by Kessman during his testimony.

In our view, despite a statement in the original application for medical assistance that Kessman received a monthly income of $825 from Kessman Golf and the accountant's assertion that the value of the corporation's stock owned by Kessman is not actually worth the figure he submitted as the fair market value, Kessman's testimony and the accountant's report provided sufficient record evidence to support respondents' determination that Kessman Golf was not “income-producing business property”.   Thus, it was rational for respondents to determine that the exemption for income-producing property was inapplicable and decedent was therefore ineligible for medical assistance based upon her excess available resources.

ADJUDGED that the determination is confirmed, without costs, and petition dismissed.



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