Opinion
May 27, 1988
Appeal from the Supreme Court, Onondaga County, Murphy, J.
Present — Dillon, P.J., Denman, Green, Pine and Balio, JJ.
Judgment unanimously reversed on the law with costs and matter remitted to Supreme Court, Onondaga County, for further proceedings in accordance with the following memorandum: Petitioner appeals from a judgment which dismissed his CPLR article 78 petition challenging respondents' denial of his application for medical assistance benefits on behalf of his mother, whom petitioner was seeking to place in a nursing home. Respondents denied the application based on petitioner's failure to submit a letter from a physician stating whether the patient was expected to return home. Respondents required such information to determine whether the patient's house was an exempt resource (it would be exempt if she were expected to return home) and, hence, whether she was financially eligible to receive benefits. At the time of the initial denial of benefits, the county agency had a letter from petitioner's lawyer stating that it was expected that the patient would return home. The agency had no medical evidence to the contrary. Following the initial denial and prior to the fair hearing requested by petitioner, petitioner produced the requested statement from the physician but the agency refused to consider it. Petitioner subsequently attempted to place the physician's statement in evidence at the fair hearing but, on respondents' objection, it was not admitted. At the hearings respondents did not produce medical evidence that the patient would not be able to return home. Nevertheless, the Hearing Officer found that denial of benefits was proper because petitioner had failed to provide respondents with the necessary information. Supreme Court confirmed that determination, but we now reverse.
Initially, we note that the court erred in deciding the substantial evidence question instead of transferring the petition to this court (CPLR 7804 [g]). Nevertheless, we may treat the matter as though it had been properly transferred (Matter of King v McMickens, 120 A.D.2d 351, affd 69 N.Y.2d 840). The denial of benefits was arbitrary and capricious because it was inconsistent with respondents' own regulations. 18 NYCRR 360.6 (b) (1) provides that an applicant's home is exempt if he or she is temporarily absent therefrom. Hospitalization or placement in a nursing home constitutes temporary absence if "the client intends to return home when the purpose of the visit is completed" unless "it is established by medical evidence that the person will not be able to return to the home" (18 NYCRR 360.6 [b] [1]). The agency may deny exemption only if the agency has medical verification that the client will be unable to return to such homestead (see, 18 NYCRR 360.6 [b] [2] [ii]). Since the agency had no "medical verification" that the patient would not be able to return home, it erred in denying exempt status to her home (see, Matter of Palmer v New York State Dept. of Social Servs., 125 A.D.2d 977, 978; Matter of Dauer v Perales, 116 A.D.2d 573, 574).
Moreover, the agency acted arbitrarily and capriciously in refusing to consider the physician's letter which it had requested when such letter was produced prior to the fair hearing. Similarly, the Hearing Officer erred in refusing to receive the letter into evidence at the fair hearing based on respondents' objection that it was irrelevant.
Finally, the Commissioner erred in adhering to the initial determination following the fair hearing. It was the agency's burden to establish by substantial evidence that its denial of benefits was justified (Matter of Palmer v New York State Dept. of Social Servs., supra). That the agency failed to do since it produced no "medical verification" that the patient would be unable to return home (see, Matter of Palmer v New York State Dept. of Social Servs., supra; Matter of Dauer v Perales, supra, at 575). The petition must be granted, the determination annulled, and the matter remitted to the county agency to determine the correct amount of medical assistance (Matter of Dauer v Perales, supra, at 574). In addition, petitioner is entitled to recover attorney's fees and the matter must be remitted to Supreme Court for determination of the reasonable amount of attorney's fees to be awarded (Matter of Palmer v New York State Dept. of Social Servs., supra).