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Court Holds MPDAA Controls over Tenancy Act in Joint Account Ownership Case Banner Image

Court Holds MPDAA Controls over Tenancy Act in Joint Account Ownership Case

Month: December 2023

Court Holds MPDAA Controls over Tenancy Act in Joint Account Ownership Case

Posted on by Christie Bowness

Introduction

The New Jersey Appellate Division recently decided a case involving levies on a bank account wherein it held the New Jersey’s Multiple-Party Deposit Account Act, N.J.S.A. 17:16I-4 et seq. controls over the New Jersey’s Tenancy Act, N.J.S.A. 46:3-17 et seq., in deciding ownership of the account. See Discover Bank v. Mullen, No. A-2579-22, 2023 N.J. Super. Unpub. LEXIS 2278 (Super. Ct. App. Div. Dec. 13, 2023).

The Trial Court Decision

Defendant Steven Mullen (“Mullen”) and Erica Kaps married in 2013. The couple had joint primary and secondary PNC Bank accounts. On June 9, 2022, a judgment for $8,432.26 was entered against Mullen in favor of Discover Bank (the “Bank”), and after a writ of execution was effectuated to satisfy the judgment, a total of $9,282,03 was levied from the joint accounts. The Bank then filed a turnover motion for these funds.

Mullen opposed the motion, “arguing that the funds in the joint accounts were exempt from levy” under the Tenancy by Entirety Act, N.J.S.A. 46:3-17 et seq. (“Tenancy Act”).  Mullen also submitted bank statements with his and his wife’s names, showing that he and his wife were joint owners of the two bank accounts. He did not submit additional documents detailing ownership of the two accounts or contributions thereto. After the Court held an argument over the motion, the Court entered an oral decision granting the Plaintiff’s motion.

The Trial Court distinguished the facts of this case from those in Jimenez v. Jimenez, 454 N.J. Super. 432, 437-39 (App. Div. 2018). There, the Court “precluded partition of real property owned by a married couple as a tenancy by the entirety to collect a judgment entered against only one spouse.” Here, the issue at hand centered on joint account ownership and not real property, and thus Jimenez was not on point, and N.J.S.A 17:16I-4, NJ Multiple-Party Deposit Account Act (“MPDAA”) was controlling.

Finally, because Mullen did not produce evidence on the proportionality of the contributions in the account, the Trial Court found that the accounts were owned in equal shares between Defendant and his wife. Thus, Plaintiff was entitled to the entire balance in each of the PNC Bank joint accounts.

The Appeal

On appeal, Mullen argued that the Trial Court erred in applying the MPDAA instead of the Tenancy Act in finding that the joint accounts did not constitute property. Mullen argued that the creditor of one spouse could not execute on marital property owned as a tenancy by the entirety to satisfy a judgment. In addition to opposing that argument, the Bank contended that Mullen also withheld information concerning the source and amount of the funds in the joint accounts, that it was impossible for the Court to determine the proper amount of the funds that should be levied, and that the MPDAA is controlling.

The Appellate Division first decided whether the accounts were owned by Mullen and Kaps as tenants by the entirety under the Tenancy Act, which provides that.

“A tenancy by entirety shall be created when:

a. A husband and wife together take title to an

interest in real property or personal property under a

written instrument designating both of their names as

husband and wife; or

. . . .

Language which states "...... and ......, his wife"

or ".......... and .........., her husband" shall be deemed to

create a tenancy by the entirety.

[N.J.S.A. 46:3-17.2.]”

The Court found no evidence showing that the accounts were owned by husband and wife or any other information showing that Mullen and his wife intended to create a tenancy by the entirety. The Court rejected the “defendant's argument that the statutory language supports a presumption that a tenancy by the entirety was created. Thus, the Court concluded based upon the evidence before it that Mullen and Kaps owned the accounts jointly, rather than as tenants by the entirety under the Tenancy Act.” Because of this finding, it held it did not need to reach the question of whether the MPDAA superseded the Tenancy Act in determining ownership of joint accounts.  No matter how it was viewed, the MPDAA controlled.

The Court set forth that the MPDAA Act details,

“Unless a contrary intent is manifested by the

terms of the contract, or the deposit agreement, or there

is other clear and convincing evidence of a different

intent at the time the account is created:

a. A joint account belongs, during the

lifetime of all parties, to the parties in proportion to the

net contributions by each to the sums on deposit. In the

absence of proof of net contributions, the account

belongs in equal shares to all parties having present

right of withdrawal. [N.J.S.A. 17:16I-4.]”

The Court held that the plain language of the MPDAA reads, “[i]n the absence of proof of net contributions, the account belongs in equal shares to all parties having present right of withdrawal.” That meant to the Court that the language of the MPDAA necessitates that only one-half of the joint accounts’ funds can be levied over absent proof that one account holder contributed more funds.

In so doing, the Court pointed out, “We have previously held it is the plaintiff's burden to establish the balance in the account is ‘the individual property of the judgment debtor, and therefore applicable to the satisfaction of the judgment.’ Banc of Am. Leasing & Cap.,

LLC v. Fletcher-Thompson Inc., 453 N.J. Super. 50, 53 (App. Div. 2018).”  It found the Bank had not met that burden. As such, the Court affirmed in part and vacated in part.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Thomas Persico at tpersico@riker.com, Kevin Hakansson at khakansson@riker.com, or Kori Pruett at kpruett@riker.com.

Home Health Agency Final Rule for 2024

Posted on by Christie Bowness

Home Health Agency Final Rule for 2024

The United States Centers for Medicare & Medicaid Services (“CMS”) recently issued its final rule (88 FR 77676) updating Medicare payment policies and rates for Home Health Agencies (“HHAs”) in calendar year (“CY”) 2024.

Home health providers will receive an aggregate 0.8%, or a $140 million increase in Medicare reimbursements from CY 2023. Notably, the increase reflects the effects of a behavioral adjustment decrease that will cut payments by an estimated 2.6%. CMS split the permanent adjustment in half due to concerns over how such a large decrease would affect providers. CMS stated it will account for the remaining permanent adjustment in future rulemaking.

CMS is also finalizing a permanent prospective negative adjustment to the CY 2024 home health 30-day period payment rate to account for increases in aggregate expenditures in future years.

Additionally, the final rule includes a 3.1% market basket increase in national hospice payments and a 36-month rule for HHAs and hospice providers. The rule forbids any change in majority ownership of an HHA or hospice provider by sale for the 36 months following initial Medicare enrollment or the most recent change in majority ownership. The rule also includes a number of provisions to better identify poor-performing hospices.

Finally, CMS will adopt a 2021-based home health market basket with proposed changes to the cost weights and price proxies.

A fact sheet for the CMS final rule may be accessed here.

End-Stage Renal Disease Final Rule

CMS issued the final rule (88 FR 76344) increasing payments to end-stage renal disease (“ESRD”) facilities for calendar year (“CY”) 2024. The ESRD prospective payment system (“PPS”) final rule also updates other payment adjustments and includes new reporting requirements and other policies for renal dialysis services for Medicare beneficiaries.

The final rule increases the ESRD PPS base payment rate of $265.57 by $5.45 to $271.02, increasing overall Medicare payments to ESRD facilities by 2.1%. The dialysis payment for patients with acute kidney injury will also increase to $271.02.

CMS is finalizing a payment adjustment to increase rates for new renal dialysis drugs and biological products after the Transitional Drug Add-on Payment Adjustment (“TDAPA”) period ends. During the two-year TDAPA period, Medicare adjusts payments for certain drugs and biologicals to offset costs and promote competition between other products in the ESRD PPS. This new add-on payment adjustment will last for three years after the TDAPA period ends and will support Medicare ESRD beneficiaries’ continued access to new renal dialysis treatments.

Beginning in 2025, the final rule will require ESRD facilities to report “time on machine” data, or the number of minutes a patient spends receiving in-center hemodialysis treatment, to measure patient-level resource usage.

CMS is also finalizing a transitional pediatric ESRD add-on payment adjustment of 30% per treatment amount to address concerns over equal access for pediatric beneficiaries. This payment will begin in 2024 and extend throughout 2025 and 2026.

A fact sheet for the CMS final rule may be accessed here.

Two Executive Orders Revoke Temporary COVID-19 Waivers

Posted on by Christie Bowness

In November 2023, the Commissioner of the Department of Health (“Commissioner”) published two notices of revocation (“NOR”) of temporary rule waiver/modifications pursuant to Executive Orders ("EO") Nos. 103, 281, and 292. These NORs revoked partial waivers of flexibilities that had existed during the COVID-19 pandemic.

Revocation of Flexibilities for Opioid Treatment Programs

The Commissioner, through 55 N.J.R. 2229(a), revoked waivers regarding take-home medication dosage schedules, extended take-home medication, and take-home dosing and delivery guidelines in response to COVID-19. The provisions at N.J.A.C. 10:161B-11.12(a)vii and N.J.A.C. 10:161B-11.13(a)5 allowing Opioid Treatment Programs (“OTPs”) to follow take-home dosing and delivery guidelines at N.J.A.C. 10:161B, Appendix C are no longer in effect. Thus, OTPs no longer have the flexibility with regard to take-home medication procedures.

The Commissioner reasoned that after due consideration, the Department of Health determined that the temporary rule waivers/modifications should be revoked because they are no longer consistent with federal guidance governing the provision of services by OTPs because the Substance Abuse and Mental Health Services Administration (SAMHSA) issued superseding, temporary guidance in April 2023, "Methadone Take-Home Flexibilities Extension Guidance."

The full text of the Notice of EO rule may be accessed here.

Revocation of Flexibilities for Long-Term Care Facilities, Assisted Living, Dementia Care Homes, Home Health Agencies, Hospice Care, Residential Health Care Facilities, and Ambulatory Care Mobile Vans

The Commissioner published 55 N.J.R. 2229(b), which revokes the waivers/modifications to regulations that were effective through EO Nos. 103, 281, and 292. The revocations are effective February 4, 2024. These waivers involved telemedicine. The provisions at N.J.A.C. 8:39, 8:36, 8:37, 8:42, 8:42C, 8:43, 8:43A-23.3, allowing flexibilities related to telemedicine for long-term care facilities, assisted living facilities, dementia care homes, home health agencies, hospice care, residential health care facilities, and ambulatory care mobile vans, will no longer be in effect as of February 4, 2024.

The Commissioner reasoned that after due consideration, the Department of Health determined that the temporary rule waivers/modifications should be revoked as they are no longer necessary, and enforcement of the rules in their original form would no longer be detrimental to the public.

The full text of the Notice of EO rule may be accessed here.

Court Grants Motion to Dismiss Coverage Suit, Questioning What Plaintiff Knew and When She Knew it

Posted on by Christie Bowness

Introduction

In this case, the United States District Court for the Central District in California considered how the interplay between notice of a claim made under a title policy and subsequent coverage investigation impacts statute of limitations defenses. At the heart of the decision was that the statute of limitations is equitably tolled during the insurer’s coverage investigation.  In the end, the Court granted the Defendant's motion to dismiss, but with leave to replead the second amended complaint one last time. Gennaro v. N. Am. Title Ins. Co., No. CV 23-3991-MWF (AGRx), 2023 U.S. Dist. LEXIS 212820 (C.D. Cal. Oct. 23, 2023)

Background

In 2011, Myrian Gennaro (“Gennaro”) purchased a title insurance Policy from North American Title Insurance Company (“North American”) for property located at 8848 Farralone Ave., in Canoga Park, California (the “Property”). The Policy provided coverage for damage and losses due to recorded violations of municipal code affecting the Property as of the date of the Policy.[i]

In April 2017, the City of Los Angeles began an investigation into the Property. In September 2017, Gennaro notified North American that the City of Los Angeles was seeking to enforce land use violations on the Property. Shortly thereafter, the City of Los Angeles recorded a Notice of Abatement in October 2017 against the Property in the public record because the Property did not have permits or certificates for occupancy required under the Los Angeles Municipal Code.

On March 26, 2021, North American denied the claim as the municipal code violation occurred after the date of the Policy. And on March 12, 2023, Gennaro sued North American for breach of contract and breach of covenant of good faith dealing.

In addition to moving on its defense under the Policy that land use violations occurring after the date of the Policy were not covered, North American moved to dismiss pursuant to Rule 12(b)(6) based on Gennaro’s claims being time-barred under the California Code 339(1), which provides for a two-year statute of limitations to bring a claim under a title policy and that failed to sufficiently allege equitable tolling, which was granted. Gennaro filed her second amended complaint, which North American again moved to dismiss, stating that the policy's plain language shows that the policy does not cover Plaintiff’s damages and that the statute of limitations has run.

The Decision

The Court first limited its decision to the statute of limitations argument, as it found that if the action was time-barred, it need not reach the merits of North American’s seemingly sound argument that coverage was only provided for recorded violations of land use regulations as of the date of the Policy. Addressing the limitations arguments of the parties, the Court addressed a host of contradictory facts and statements in the pleadings. Again, Gennaro argued that the statute of limitations had not run and only began to accrue on March 26, 2023, when the Defendant first sent her a letter denying coverage. Defendant argued that time began accruing when the City of Los Angeles began investigating the property in April 2017.

The Court quickly denied Gennaro’s claim, stating that “a cause of action under title insurance policy accrues upon discovery of the adverse claim.” That said, it also dismissed North American’s claim that the investigation alone gave notice of a claim. Instead, based on her second amended complaint, Gennaro only indisputably had knowledge of the facts underlying the insurance claim (September 2017) when she advised North American of the same. In any event, as Gennaro did not file this action until March 14, 2022, her claims are thus time-barred unless equitable tolling was at issue.

The Court found equitable tolling was at issue, but there was confusion about the timeline and what occurred, principally due to the inadequacies of Gennaro’s pleadings. That is, Gennaro alleged in the second amended complaint that the limitations period was tolled while North American investigated Plaintiff’s claims between September 2017 and March 12, 2021. But even taking this at face value, the action was filed on March 26, 2023. In that vein, Gennaro omitted crucial information: the date she first learned the facts underlying the insurance claim. This was a deficiency that the Court could not ignore and one the Court used to grant the Defendant’s 12(b)(6) motion to dismiss, but gave leave to replead to show that she had notice of the title claim “at least 12 days prior to filing her insurance claim.” The Court concludes that it is granting Plaintiff time to amend her complaint while granting Defendant’s motion to dismiss. However, in so doing,  the Court noted that there may be a third amended complaint, but not a fourth.

The Court also addresses Section 2695.7 of the California Code, which requires insurers to “provide written notice of any statute of limitation or other time period requirement upon which the insurer may rely to deny a claim.” (Cal. Code. Regs. Tit. 10, Section 2695.7(f)). The Court dismissed the notification argument handily, saying that this statute applies when related to possible denial of a claim, “not statutes of limitations that an insurer may raise to defeat a subsequent…lawsuit arising out of the denial of a claim.”

Takeaway

This case is an excellent primer of what constitutes knowledge of a title claim and how equitable tolling plays into coverage investigations.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Thomas Persico at tpersico@riker.com, Kevin Hakansson at khakansson@riker.com, or Kori Pruett at kpruett@riker.com.

[i] Covered Risk 14 of the Policy provided coverage “[t]he violation or enforcement of those portions of any law or government regulation concerning: a. building; b. zoning; c. land use; d. improvements on the land; e. land division; or f. environmental protection, if there is a notice recorded in the Public Records, describing any part of the Land, claiming a violation exists or declaring the intention to enforce the law or regulation.” Gennaro v. N. Am. Title Ins. Co., No. CV 23-3991-MWF (AGRx), 2023 U.S. Dist. LEXIS 140799 (C.D. Cal. Aug. 10, 2023)

CMS Issues Four Final Payment Rules

Posted on by Christie Bowness

The United States Centers for Medicare & Medicaid Services (“CMS”) recently issued four final payment rules for 2024. Below are the highlights from each update.

Physician Fee Schedule Final Rule

CMS released the calendar year (“CY”) 2024 Medicare Physician Fee Schedule (“PFS”) final rule (88 FR 78818) which finalizes policies for Medicare payments under the PFS and other Medicare Part B issues, and will take effect on January 1, 2024.

Notably, the PFS conversion factor for 2024 is $32.74, a $1.15 or 3.4% decrease from the 2023 conversion factor of $33.89, which reduces overall physician pay. Beyond the reduction, CMS finalized policies relating to telehealth services, updates to the Medicare Shared Savings Program ("MSSP"), programs to promote coverage and payment for additional services, and changes to develop physician quality initiatives.

The final rule also implements a new add-on code G2211 for Medicare billing split (or shared) visits to better recognize the costs associated with a patient’s serious or complex condition and the need for evaluation or management visits for primary or longitudinal care.

Relating to telehealth, CMS created a differential payment based on place of service for Medicare telehealth services and extended the COVID-19 public health emergency telehealth policies through December 31, 2024.

CMS also finalized its proposal for Medicare to pay for caregiver training services as part of patients with certain conditions, such as dementia, treatment or therapy plan of care.

A fact sheet for the CMS final rule may be accessed here.

OPPS and ASC Payment Systems Final Rule

CMS released the CY 2024 Hospital Outpatient Prospective Payment System (“OPPS”) and Ambulatory Surgical Center (“ASC”) Payment Systems Final Rule (88 FR 81540) which finalizes payment rates and policy changes affecting Medicare services furnished in hospital outpatient and ASC settings and will take effect on January 1, 2024.

CMS updated OPPS and ASC payment rates by 3.1% for hospitals that meet the applicable quality reporting requirements, a slight increase from the 2.8% payment update initially proposed. This adjustment reflects the projected hospital market basket percentage increase of 3.3% with a .2% reduction for productivity. These payment policies will affect about 3,500 hospitals and 6,000 ASCs.

Other key takeaways from the final rule include:

  • Continuing to use the adjusted productivity hospital market basket update to increase ASC payment systems rates for 2024 and 2025
  • Finalizing changes to CMS’s hospital price transparency requirements which will require hospitals using a template to submit charge information and affirm the accuracy of that information
  • Establishing payment for intensive outpatient program services to close the coverage gap for behavioral health
  • Continuing to pay the statutory default rate for 340B acquired drugs and biologicals, which is generally the average sale price plus 6%
  • Adding 26 dental and 11 surgical procedure codes to the ASC-covered procedures list that are widely performed in outpatient settings, including total ankle and total shoulder replacement surgery
  • Adding 9 services to the inpatient-only list
  • Maintaining the current list of service categories subject to prior authorization
  • Modifying the requirements for community mental health centers conditions of participation

A fact sheet for the CMS final rule may be accessed here.

340B-Acquired Drug Payment Final Rule

CMS issued a final rule (88 FR 77150) to remedy the underpayments from the invalidated 340B-acquired drug payment policy for calendar years 2018 to 2022 following the Supreme Court’s decision in American Hospital Association v. Becerra, 142 S. Ct. 1896 (2022) and the District Court for the District of Columbia’s remand to the agency. The final rule goes into effect on January 8, 2024.

CMS will provide a lump sum payment to each hospital that was unlawfully underpaid from 2018 to 2022 for applicable 340B-acquired drugs. CMS estimates approximately $9 billion is owed across the 1,700 affected 340B covered entity hospitals. These payments are also intended to cover beneficiary cost-sharing that the affected entities did not earn due to the payment policy.

CMS estimates that hospitals were paid $7.8 billion more for non-drug items and services from CY 2018-2022 and to comply with the rule’s budget-neutrality requirement, CMS will offset that cost by adjusting the OPPS conversion factor for non-drug items and services by -0.5% starting in CY 2026. CMS estimates it will take 16 years to recoup the $7.8 billion. Providers who enrolled in Medicare after January 1, 2018 are excluded from the rate reduction.

The final rule updates the Addendum AAA to account for all payment activity since the proposed rule was issued. CMS will likely begin to make payments at the beginning of CY 2024.

A fact sheet for the CMS final rule may be accessed here.

Medicare Shared Savings Program Rule

CMS’s PFS final rule (88 FR 78818) discussed above includes changes to the Medicare Shared Savings Program (“MSSP”) focused on value-based care.

The changes to the MSSP continue to move accountable care organizations (“ACOs”) toward “digital measurement of quality” by establishing a new Clinical Quality Measure (“CQM”) collection type for ACOs. The Medicare CQMs will aid ACOs in patient matching and will require ACOs to report on only those beneficiaries who meet the ACO assignment criteria.

CMS delayed implementation of the Merit-Based Incentive Payment System (“MIPS”) Promoting Interoperability performance category one year, until January 1, 2025, to give ACOs time to work with participants and meet the new requirements.

These changes to the MSSP include financial benchmarking methodology for ACOs and beneficiary assignment methodologies to better recognize the role of nurse practitioners, physician assistants, and clinical nurse specialists in delivering primary care services.

CMS expects these changes to increase participation in the MSSP by 10% to 20%.

A fact sheet for the CMS final rule may be accessed here.

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