Kinda annoying to reach the bottom after responding to certain sections only to find out that this transfer hasn't even taken place. :) I didn't change the answers (respond as I read) in light of this development.
It's not clear why you're anticipating this cascade either, since it's not a terribly complicated process to prove that a child was a primary caregiver for a couple of years before the person needed to enter a nursing home.
Your questions basically ask whether certain actions are possible, and the only possible answers to both are "yes". Sure, they're possible, but if the transfer was bona fide and the situation met the proper requirements, I should think a competent local real estate attorney could deal with the fall-out as it relates to any lien on the property.
Also, if the NJDHAHS deems the real estate transfer to be ineligible for the exception transfer, can you explain wha the effect will be in terms of the eligibility period for Medicaid.
"Can the NJDMAHS pursue an estate recovery action for the cost of the nursing home that was paid by Medicaid against the estate of the decedent/former nursing home resident?"
Again, only possible answer is "yes". But if the person met the asset requirements for Medicaid except for the house and the house was properly transferred to a child, then it's not clear what the agency would hope to get. How could someone qualify for Medicaid assistance with assets beyond a couple grand outside of the house (you talk about bank accounts, stocks, mutual funds, etc.)? A surviving spouse is presumed not to exist.