E.T. v. DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES
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APPROVAL OF THE APPELLATE DIVISION
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0403-16T4
E.T.,
Petitioner-Appellant,
v.
DIVISION OF MEDICAL ASSISTANCE
AND HEALTH SERVICES,
Respondent-Respondent,
and
HUDSON COUNTY BOARD OF SOCIAL
SERVICES,
Respondent.
___________________________
Submitted October 4, 2017 – Decided November 20, 2017
Before Judges Koblitz and Manahan.
On appeal from the Division of Medical
Assistance and Health Services, Department of
Human Services.
SB2, Inc., attorneys for appellant (John
Pendergast, on the briefs).
Christopher S. Porrino, Attorney General,
attorney for respondent (Melissa H. Raksa,
Assistant Attorney General, of counsel;
Stephen Slocum, Deputy Attorney General, on
the brief).
PER CURIAM
Petitioner E.T. appeals the August 12, 2016 final agency
decision of the Director of the Division of Medical Assistance and
Health Services (Director), denying Medicaid benefits for failure
to provide necessary verifications. We affirm.
We briefly recite the underlying facts and procedural history
relevant to our decision. E.T. became a nursing facility resident
in 2012. Shortly thereafter, Sam Stern was appointed as E.T.'s
authorized representative and attorney–in-fact.1
On August 6, 2015, Future Care Consultants (Future Care), on
behalf of E.T., first filed application for Medicaid benefits to
the county welfare agency (CWA), Hudson County Board of Social
Services (HCBSS). On August 18, 2015, Future Care received
correspondence from HCBSS requesting additional necessary
verifications excluded from E.T.'s application, giving a deadline
of September 29. The requested verifications included E.T.'s bank
records and a billing and payment history from the nursing
facility.
1
Sam Stern is owner of Future Care Consultants, the financial
agent for multiple nursing facilities in New Jersey, including
E.T.'s facility.
2 A-0403-16T4
Upon further review of the application, HCBSS discovered two
additional bank accounts that required verification. By notice
dated September 3, 2015, HCBSS requested the additional
verifications from Future Care, however, the due date specified
on the notice was incorrectly deemed September 14, rather than
September 29. On multiple occasions thereafter, HCBSS notified
Future Care by telephone regarding the due date error on the
September 3 notice, and to confirm the verifications were due by
September 29. Future Care did not remark about their non-receipt
of the September 3 notice, nor awareness of the due date error
reflected on the notice. Subsequently, by facsimile, Future Care
provided the missing verifications requested within the August 18
notice, but neglected to include the additionally requested
verifications from the September 3 notice.
On September 17, Future Care submitted another application
for Medicaid benefits on behalf of E.T. assuming incorrectly that
the first application had been denied. Since HCBSS did not
consider the original application as denied, it processed the
September 17 submission as part of the August 6 application.2
2
In the ALJ's decision, the judge found the September 17
submission by HCBSS to be a "second application." The Director
concluded that this finding was erroneous and that this submission
was part of the first application of August 6.
3 A-0403-16T4
The following day, Stern emailed HCBSS stating, "We were told
about but never [rec]eived a second pending letter with an earlier
due date than the first letter." In response, HCBSS confirmed
that the September 3 notice was sent and an explanation of the
incorrect due date was given to a Future Care representative.
Notwithstanding, the required verifications regarding the
additional bank accounts requested by HCBSS were not provided.
On October 13, 2015, two weeks after the September 29 due
date, HCBSS denied E.T.'s first Medicaid application for failing
to provide the necessary verifications requested in the September
3 notice. Future Care appealed, and the matter was scheduled for
an administrative hearing before an administrative law judge
(ALJ).3
The appeal hearing was held on May 4, 2016. Testimony was
presented by both parties. On June 27, 2016, the ALJ issued an
initial decision reversing the HCBSS's denial and granting E.T.
Medicaid benefits effective September 17, 2015. In reaching the
decision, the ALJ concluded, "[E.T.] failed to provide
verification of resources in a timely manner for the first
application [August 6], but timely provided documentation for the
3
While the hearing was pending, Future Care filed another separate
application for Medicaid benefits on E.T.'s behalf, which was
approved.
4 A-0403-16T4
second application of September 17, 2015." The ALJ further
concluded that, "Future Care provided the required verification
documentations in a timely manner for the September 17, 2015
application and should be granted eligibility effective that
date."
On August 12, 2016, the Director issued a final agency
decision, which adopted the ALJ's finding that E.T. did not timely
provide the requested verifications with regard to the August 6
application, and the application for Medicaid was properly denied
for failure to provide necessary verification. However, the
Director reversed the ALJ's findings and conclusions regarding the
September 17 application, finding a lack of support in the record
that an application was submitted on that date or that any notice
was transmitted to the OAL.4 This appeal followed.
I.
As a threshold matter, an appellate court will not reverse
the decision of an administrative agency unless it is "arbitrary,
capricious or unreasonable or it is not supported by substantial
credible evidence in the record as a whole." Henry v. Rahway
4
Additionally, according to the Director's final decision,
consistent with the petitioner's brief, the second Medicaid
application was filed in November 2015. As such, the Director
held that "any findings or conclusions regarding the timeliness
of petitioner's submissions in connection with subsequent Medicaid
applications are not currently before the court."
5 A-0403-16T4
State Prison,
81 N.J. 571, 579-80 (1980) (citing Campbell v. Dep't
of Civil Serv.,
39 N.J. 556, 562 (1963)). In cases where an agency
head reviews the fact-findings of an ALJ, a reviewing court must
uphold the agency head's findings even if they are contrary to
those of the ALJ, if supported by substantial evidence. In re
Suspension of License of Silberman,
169 N.J. Super. 243, 255-56
(App. Div. 1979), aff’d,
84 N.J. 303, 418 (1980); S.D. v. Div. of
Med. Assistance and Health Servs.,
349 N.J. Super. 480, 483-84
(App. Div. 2002).
New Jersey participates in the federal Medicaid program
pursuant to the New Jersey Medical Assistance and Health Services
Act,
N.J.S.A. 30:4D-1 to -19.5. Eligibility for Medicaid in New
Jersey is governed by regulations adopted in accordance with the
authority granted by
N.J.S.A. 30:4D-7 to the Commissioner of the
Department of Human Services. The Division of Medical Assistance
and Health Services (DMAHS) is the agency with the Department of
Human Services that administers the Medicaid program.
N.J.S.A.
30:4D-5, -7; N.J.A.C. 10:49-1.1. Accordingly, DMAHS is charged
with the responsibility for safeguarding the interests of the New
Jersey Medicaid program and its beneficiaries. N.J.A.C. 10:49-
11.1(b). DMAHS is required to manage the state's Medicaid program
in a fiscally responsible manner. See Dougherty v. Dep't of Human
Servs., Div. of Med. Assistance & Health Servs.,
91 N.J. 1, 4-5
6 A-0403-16T4
(1982); Estate of DeMartino v. Div. of Med. Assistance & Health
Servs.,
373 N.J. Super. 210, 217-19 (App. Div. 2004).
The local CWA evaluates Medicaid eligibility.
N.J.S.A.
30:4D-7a; N.J.A.C. 10:71-2.2(a); N.J.A.C. 10:71-3.15. Eligibility
must be established based on the legal requirements of the program.
N.J.A.C. 10:71-3.15. The CWA must verify the equity value of
resources through appropriate and credible sources. If the
applicant's resource statements are questionable or the
identification of resources is incomplete, "the CWA shall verify
the applicant's resource statements through one or more third
parties." N.J.A.C. 10:71-4.1(d)(3).
"The process of establishing eligibility involves review of
the application for completeness, consistency, and
reasonableness." N.J.A.C. 10:71-2.9. Applicants must provide the
CWA with verifications, which are identified for the applicant.
The applicant must "[a]ssist the CWA in securing evidence that
corroborates his or her statements." N.J.A.C. 10:71-2.2(e)(2).
The applicant’s statements in the application are evidence and
must substantiate the application with corroborative information
from pertinent sources. N.J.A.C. 10:71-3.1(b).
The CWA must timely process the application. See 42 U.S.C.A.
§ 1396(a)(3); 42 C.F.R. § 435.911; N.J.A.C. 10:71-2.3. It must
send each applicant written notice of the agency's decision on his
7 A-0403-16T4
or her application and if eligibility is denied, the reasons for
the denial and right to request a fair hearing. See 42 C.F.R. §
435.913; N.J.A.C. 10:71-8.3. The CWA should deny applications
when the applicant fails to timely provide verifications. See
N.J.A.C. 10:71-2.2(e), -2.9, -3.1(b).
Here, E.T. argues the Director's final decision is plainly
unreasonable due to its failure to recognize the September 17
application as separate from the August 6 application. We
disagree. Stern acknowledged during the hearing before the ALJ
that HCBSS accepted the September 17 application as part of the
August 6 application. Furthermore, although the ALJ found the
September 17 application to be separate, it was stipulated by the
parties that only the August 6 application was before the ALJ.
Given the deference we accord the Director's findings and
having determined that they are supported by sufficient credible
evidence in the record, we conclude the decision was neither
arbitrary nor unreasonable. As such, we discern no basis to
disturb the decision.
II.
E.T. further contends that HCBSS violated Medicaid
Communication No. 10-09. Medicaid Communication No. 10-09 states:
If additional verifications are needed
and the applicant or their representative does
not respond to the worker's request after a
8 A-0403-16T4
time period, as specified by the Agency, an
additional request for information must be
sent informing the applicant of what
documentation is still needed in order to
determine their eligibility. This letter will
also inform the applicant or their
representative that if the information is not
received within the specified time period form
the receipt of the request, the case will be
denied.
. . . .
If the applicant or their representative
continues to fail to provide the requested
information, or fails to act within the spirit
of cooperation, a denial letter with
applicable New Jersey Administrative Code
citations must be sent to the applicant.
After the denial letter is sent, no further
documentation will be accepted by the Agency.
The applicant or their representative will be
informed that a new application must be
submitted; however, verifications from the
previous application shall be utilized in the
new application where applicable. Every
application must have a disposition regarding
eligibility within these new timeframes,
except when documented exceptional
circumstances arise.
Although Stern claimed that Future Care did not receive the
September 3 notice, he did not dispute that HCBSS sent the notice
to the correct address. A properly addressed letter which is not
returned is deemed received. See First Resolution Inv. Corp. v.
Seker,
171 N.J. 502, 506 (2002) (citing Morristown Mem'l Hosp. v.
Caldwell,
340 N.J. Super. 562, 564 (App. Div. 2001)).
9 A-0403-16T4
The record supports that multiple attempts were made by HCBSS
to notify Future Care regarding the missing verifications.
Saliently, Stern testified that he was aware of the September 3
notice when he corresponded with HCBSS.
Although the ALJ found as fact that E.T. did not receive the
notice, the Director is not bound by the ALJ's fact-finding and
may adopt, modify, or reject the ALJ's decision. N.J.A.C. 1:1-
18.3. Here, the Director modified the ALJ's decision because
sufficient credible evidence found within the record demonstrated
that the September 3 notice was sent to E.T. It was not arbitrary,
capricious, or unreasonable for the Director to reject the ALJ's
finding that the September 3 notice was sent to Future Care.
Again, we discern no basis to disturb the decision on this score.
III.
Finally, E.T. argues that the court should award Medicaid
benefits due to the failure of HCBSS to comply with the duty to
assist with E.T.'s Medicaid application. Contrary to E.T.'s
argument, controlling regulations do not require the state
Medicaid agency to obtain all application information on its own.
See 42 C.F.R. § 435.948(a). The regulation directs the state
Medicaid agency to obtain limited information only "to the extent
the agency determines such information is useful to verifying the
financial eligibility of an individual." Ibid.
10 A-0403-16T4
There is no regulation that requires agencies to obtain
information about a Medicaid applicant's bank records from an
electronic service. See 42 C.F.R. § 435.952(c). Furthermore,
there is no regulation that precludes the state Medicaid agency
from obtaining such information directly from the Medicaid
applicant. Ibid. In New Jersey, the law requires the Medicaid
applicant to provide such information and verifications to the
relevant agency. N.J.A.C. 10:71-2.2(e); N.J.A.C. 10:71-3.1(b).
As a participant in the application process, an applicant shall
assist the county welfare agency in securing evidence that
corroborates his or her statements. N.J.A.C. 10:71-2.2(e)(2).
Here, HCBSS requested specific verifications from E.T. on
September 3. Future Care was aware of the notice and the
information requested by HCBSS before the September 29 deadline.
However, the requested verifications were not provided, and there
was no request for additional time in order to comply. Since E.T.
both failed to provide the requested verification and failed to
satisfy the requirements imposed on Medicaid applicants by
N.J.A.C. 10:71-2.2(e) and N.J.A.C. 10:71-3.1(b), the denial of
E.T.'s August 6 Medicaid application was grounded in the applicable
regulations and was not arbitrary, capricious, or unreasonable.
Finally, E.T. argues that the decision approving his November
Medicaid application should have been retroactive to August 6.
11 A-0403-16T4
This argument is without merit as in contravention of applicable
law. Although E.T.'s November application was granted, it was
after the requirements imposed by the Administrative Code for
determining eligibility were satisfied. As the Director held, and
we agree, E.T. did not satisfy those requirements in his August 6
application and his eligibility for the benefits as of that date
was not established.
We conclude E.T.'s remaining arguments, not specifically
addressed herein, lack sufficient merit to warrant discussion in
a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
12 A-0403-16T4
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