P.B. v. DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-5405-15T2
P.B.,
Petitioner-Appellant,
v.
DIVISION OF MEDICAL ASSISTANCE
AND HEALTH SERVICES and ATLANTIC
COUNTY BOARD OF SOCIAL SERVICES,
Respondents-Respondents.
________________________________
Argued November 28, 2017 – Decided December 8, 2017
Before Judges Fasciale and Sumners.
On appeal from the Division of Medical
Assistance and Health Services.
Carl Ahrens Price argued the cause for
appellant (Price & Price, LLC, attorneys; Carl
Ahrens Price, of counsel and on the briefs).
Jacqueline R. D'Alessandro, Deputy Attorney
General, argued the cause for respondent
Division of Medical Assistance and Health
Services (Christopher S. Porrino, Attorney
General, attorney; Melissa H. Raksa, Assistant
Attorney General, of counsel; Stephen Slocum,
Deputy Attorney General, on the brief).
PER CURIAM
P.B., who is now deceased,1 appeals from a July 14, 2016 final
agency decision by the Department of Human Services Division of
Medical Assistance and Health Services (DMAHS) concluding that
P.B. failed to provide financial verifications after receiving
multiple requests from the county welfare agency (CWA). The
verifications were required so that DMAHS could determine whether
P.B. was eligible for Medicaid.
In September 2014, P.B.'s daughter (the daughter) filed an
application for Medicaid on behalf of her mother. Although P.B.
lived in Ocean County, the daughter filed the application in
Atlantic County. As a courtesy to the daughter, the Atlantic
County welfare agency forwarded the application to Ocean County
Board of Social Services for processing. Thereafter, the daughter
did not attend a scheduled appointment in Ocean County.
In November 2014, the daughter submitted a second application
in Atlantic County. The CWA advised the daughter that she needed
to provide missing verifications for the application to be
processed. It requested information about P.B.'s life insurance
policy, statements and check images for bank accounts, and
1
P.B. passed away in May 2015. We question whether P.B. has
standing to bring this appeal because since her passing, the estate
did not name an administrator or otherwise designate an individual
to proceed on behalf of the estate. Nevertheless, we adjudicate
the appeal concluding that P.B.'s contentions lack merit.
2 A-5405-15T2
verification of P.B.'s lease or rental agreement. The daughter
acknowledged that failure to provide bank statements and financial
accounts would result in denial of the application.
The CWA made numerous written and oral follow-up requests for
the required information. The caseworker corresponded with P.B.'s
life insurance company and bank, however, without success. The
caseworker also notified the daughter in numerous writings that
the agency would deny the application unless she produced the
missing verifications. In September 2015, the CWA denied the
application.
The daughter appealed, and an Administrative Law Judge (ALJ)
conducted a hearing. In April 2016, the ALJ rendered a lengthy
written opinion and reversed the CWA's denial of the Medicaid
application. The ALJ then remanded the matter to the CWA and
directed the parties to "work on acquiring the necessary
document[ation]." The ALJ stated that the application must be
decided on the merits "unless [the daughter] fails to cooperate,
without good cause."
In April 2016, the CWA appealed to the DMAHS. It argued that
the record contradicted most of the ALJ's findings and departed
from controlling law. The CWA contended that the daughter failed
to produce documentation including "lookback statements, deposit
verifications, check images, and the cash value of life insurance
3 A-5405-15T2
. . . despite numerous requests." It maintained that without this
information it would be unable to ascertain Medicaid eligibility.
In July 2016, the DMAHS issued its final written decision.
The DMAHS rejected the ALJ's sua sponte reliance on equitable
doctrines and foreign law. The DMAHS upheld the CWA's denial of
the November 2014 application for failure to provide the missing
verifications. It concluded the requested information remained
missing, and the record contained no credible evidence explaining
the failure to produce the documents. In rejecting the ALJ's
analysis, the DMAHS stated:
While there was delay in Atlantic County's
handling of the case, [the daughter] did not
provide the information necessary to establish
Medicaid eligibility. Atlantic County could
not process the application[,] as there were
still assets and accounts unaccounted for and
transactions that needed explanation. [The
daughter] had a [power of attorney (POA)], had
access to documents that pre-dated Hurricane
Sandy and was able to retrieve some
information quickly. The records requested
in August 2015 are essentially the same as
those requested in November 2014 when she
applied. Without these records, there is no
evidence that [P.B.] was eligible for benefits
or that she was not subject to a transfer
penalty.
On appeal, P.B. argues the CWA mismanaged the initial
application; the CWA failed to provide the daughter with timely
assistance; the CWA's failure to assist prejudiced P.B.; and the
4 A-5405-15T2
CWA did not account for the daughter's diligence and absence of
control throughout the application process.
We begin by addressing our standard of review and general
governing legal principles. This court's review of DMAHS's
determination is limited. Barone v. Dep't of Human Servs., Div.
of Med. Assistance & Health Servs.,
210 N.J. Super. 276, 285 (App.
Div. 1986), aff'd,
107 N.J. 355 (1987) (explaining that "we must
give due deference to the views and regulations of an
administrative agency charged with the responsibility of
implementing legislative determinations"); see also Wnuck v. N.J.
Div. of Motor Vehicles,
337 N.J. Super. 52, 56 (App. Div. 2001)
(indicating that "[i]t is settled that [a]n administrative
agency's interpretation of statutes and regulations within its
implementing and enforcing responsibility is ordinarily entitled
. . . deference") (second alteration in original) (citations
omitted).
We have previously stated that "[w]here [an] action of an
administrative agency is challenged, a presumption of
reasonableness attaches to the action of an administrative
agency[,] and the party who challenges the validity of that action
has the burden of showing that it was arbitrary, unreasonable or
capricious." Barone, supra,
210 N.J. Super. at 285 (citations
omitted). "Delegation of authority to an administrative agency
5 A-5405-15T2
is construed liberally when the agency is concerned with the
protection of the health and welfare of the public." Ibid. Thus,
this court's task is limited to deciding
(1) whether the agency's decision offends the
State or Federal Constitution; (2) whether the
agency's action violates express or implied
legislative policies; (3) whether the record
contains substantial evidence to support the
findings on which the agency based its action;
and (4) whether in applying the legislative
policies to the facts, the agency clearly
erred in reaching a conclusion that could not
reasonably have been made on a showing of the
relevant factors.
[A.B. v. Div. of Med. Assistance & Health
Servs.,
407 N.J. Super. 330, 339 (App. Div.)
(citation omitted), certif. denied,
200 N.J.
210 (2009).]
The Medicaid program was created when Congress added Title
XIX to the Social Security Act, 42 U.S.C.A. §§ 1396 to 1396w-5,
"for the purpose of providing federal financial assistance to
States that choose to reimburse certain costs of medical treatment
for needy persons." Harris v. McRae,
448 U.S. 297, 301,
100 S. Ct. 2671, 2680,
65 L. Ed. 2d 784, 794 (1980). Participation in
the Medicaid program is optional for states; however, "once a
State elects to participate, it must comply with the requirements
of Title XIX." Ibid. The New Jersey Medical Assistance and Health
Services Act,
N.J.S.A. 30:4D-1 to -19.5, authorizes New Jersey's
participation in the Medicaid program.
6 A-5405-15T2
The Commissioner of the New Jersey Department of Human
Services has the power to issue regulations dealing with
eligibility for medical assistance.
N.J.S.A. 30:4D-7. DMAHS is
a division of the Department of Human Services that operates the
Medicaid program in New Jersey.
N.J.S.A. 30:4D-4. Applications
for Medicaid benefits are either granted or denied by the CWA.
N.J.A.C. 10:71-3.15. Pursuant to this regulation, a CWA must
determine "income and resource eligibility." N.J.A.C. 10:71-
3.15(a). N.J.A.C. 10:71-4.1(b) defines resource to include
any real or personal property which is owned
by the applicant (or by those persons whose
resources are deemed available to him or her,
as described in N.J.A.C. 10:71-4.6) and which
could be converted to cash to be used for his
or her support and maintenance. Both liquid
and non[-]liquid resources shall be considered
in the determination of eligibility, unless
such resources are specifically excluded under
the provisions of N.J.A.C. 10:71-4.4(b).
The regulation explains that a resource must be "available"
to be considered in determining eligibility. N.J.A.C. 10:71-
4.1(c). A resource is "available" when: "1. [t]he person has the
right, authority or power to liquidate real or personal property
or his or her share of it; 2. [r]esources have been deemed
available to the applicant ([pursuant to N.J.A.C. 10:71-4.6]); or
3. [r]esources arising from a third-party claim or action" under
certain circumstances. Ibid. The value of the resource is
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"defined as the price that the resource can reasonably be expected
to sell for on the open market in the particular geographic area
minus any encumbrances (that is, its equity value)." N.J.A.C.
10:71-4.1(d). The regulation explains that "[t]he CWA shall verify
the equity value of resources through appropriate and credible
sources." N.J.A.C. 10:71-4.1(d)(3). "Resource eligibility is
determined as of the first moment of the first day of each month."
N.J.A.C. 10:71-4.1(e).
In delineating the responsibilities in the application
process, the regulation states that the applicant is required to
"[c]omplete, with assistance from the CWA if needed, any forms
required by the CWA as a part of the application process."
N.J.A.C. 10:71-2.2(e)(1). Moreover, the applicant is expected to
"[a]ssist the CWA in securing evidence that corroborates his or
her statements." N.J.A.C. 10:71-2.2(e)(2). "The process of
establishing eligibility involves a review of the application for
completeness, consistency, and reasonableness." N.J.A.C. 10:71-
2.9. Retroactive eligibility for Medicaid is governed by the
regulation and allows "outstanding unpaid medical bills incurred
within the three month period prior to the month of application"
to be compensated upon approval by the agency. N.J.A.C. 10:71-
2.16(a).
8 A-5405-15T2
Finally, and important to this appeal, the regulation notes
that "[e]ligibility must be established in relation to each legal
requirement to provide a valid basis for granting or denying
medical assistance" and that an applicant's statements regarding
eligibility are "evidence." N.J.A.C. 10:71-3.1(a), (b).
"Incomplete or questionable statements shall be supplemented and
substantiated by corroborative evidence from other pertinent
sources, either documentary or non[-]documentary." N.J.A.C.
10:71-3.1(b). Thus, these regulations establish that an applicant
must provide sufficient documentation to the agency to allow it
to determine eligibility and corroborate the claims of the
applicant.
Here, the Director of the DMAHS authored an extensive final
decision on behalf of the agency. The Director acknowledged that
the CWA and an applicant have responsibilities as to the
application process. Applicants have the responsibility to
complete forms, secure evidence, and report changes. The CWA must
inform applicants about the process, eligibility requirements, and
their right to a fair hearing. It must also assist applicants in
exploring their eligibility. In addition to these
responsibilities, the Director offered other examples in the final
decision.
9 A-5405-15T2
The Director noted that the daughter produced some financial
information showing deposits and withdrawals of thousands of
dollars from a number of accounts. Atlantic County welfare agency
required additional information regarding these transactions. The
Director explained that the CWA needed verification "to ascertain
if eligibility could be established and if there were any transfers
of assets."
The Director noted that the ALJ relied on New York cases and
sua sponte employed equitable doctrines to remand the matter to
the CWA with directions for the production of the missing
information. The Director properly concluded that the cases were
inapplicable. The New York cases, from 1982 and 1998, pre-dated
the more stringent requirements, which restrict the ability to
shelter or transfer assets.
The Director found the daughter was able to obtain information
as to P.B.'s assets. The Director noted that a POA was available
to act on behalf of P.B., before she passed away, and that an
estate administrator may have been available thereafter.
Moreover, the Director stated that P.B. had another daughter, who
was P.B.'s POA and someone who had been actively involved in P.B.'s
medical treatment. The Director noted that the other daughter did
not appear at the ALJ hearing, or otherwise assist in producing
the verifications. The Director mentioned the other daughter
10 A-5405-15T2
because the record reflected that P.B.'s "accounts had online
transfers [in] October and November 2014, indicating [that]
someone had the ability and authority to manage [P.B.'s] accounts."
The Director identified mistakes made by the ALJ. For
example, P.B.'s husband passed away in January 2014, not May 2015
as found by the ALJ. This is important because the accounts the
daughter provided showed that while he was alive, there were large
deposits to and withdrawals from those accounts. On May 26, 2011,
there was a deposit of more than $20,000, followed by a check made
out to P.B. for $9600 the next day.
Furthermore, the Director pointed out that the ALJ's reliance
on the doctrine of substantial compliance is misplaced. P.B. and
the daughter had failed to show a series of steps to comply with
the statutes and regulations, and offered no reasonable
explanation as to why there was no strict compliance. The Director
explained that there is no credible evidence in the record to show
the daughter was unable to produce the verifications due to
Hurricane Sandy.
Importantly, the Director stated further that the CWA did not
deny Medicaid access to P.B. due to her disability. Rather, the
CWA denied the application because it had not received the required
documentation. As the Director stated, "[t]o process the
application without this information would contravene Medicaid
11 A-5405-15T2
rules requiring verification of all finances and all statements
made on a Medicaid applications."
Applying the governing standards of review and legal
principles, we conclude there exists substantial credible evidence
in the record to support the Director's findings, and that the
final agency decision was not arbitrary, capricious, or
unreasonable.
Affirmed.
12 A-5405-15T2
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