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APPROVAL OF THE APPELLATE DIVISION
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SUPERIOR COURT OF NEW JERSEY
DOCKET NO. A-2815-16T4
DIVISION OF MEDICAL ASSISTANCE
AND HEALTH SERVICES and
ATLANTIC COUNTY BOARD OF
Submitted February 28, 2018 – Decided March 20, 2018
Before Judges Manahan and Suter.
On appeal from the Department of Human
Services, Division of Medical Assistance and
Cowart Dizzia, LLP, attorneys for appellant
(Lycette Nelson, on the briefs).
Gurbir S. Grewal, Attorney General, attorney
for respondent Division of Medical Assistance
and Health Services (Melissa H. Raksa,
Assistant Attorney General, of counsel; Angela
Juneau Bezer, Deputy Attorney General, on the
W.S. appeals from the January 17, 2017 final decision of the
New Jersey Department of Human Services, Division of Medical
Assistance and Health Services (DMAHS). A fair hearing was held
before the Administrative Law Judge (ALJ), who, in his initial
decision, reversed the Atlantic County Board of Social Services'
(ACBSS) denial of W.S.'s Medicaid application. ACBSS filed
exceptions to the ALJ's decision. The Director of the DMAHS,
reversed the ALJ's decision and entered a final agency decision
upholding the denial of W.S.'s Medicaid application. In essence,
the Director held that despite given the opportunity to provide
financial documents necessary for a determination of eligibility
for Medicaid benefits, the documents were not provided.
W.S. argues that ACBSS should have allowed more time to
provide the information and should have provided assistance in
obtaining the information. We conclude that controlling law
compels us to affirm.
We review an agency's decision for the limited purpose of
determining whether its action was arbitrary, capricious or
unreasonable. "An administrative agency's decision will be upheld
'unless there is a clear showing that it is arbitrary, capricious,
or unreasonable, or that it lacks fair support in the record.'"
R.S. v. Div. of Med. Assistance and Health Servs.,
434 N.J. Super.
250, 261 (App. Div. 2014) (quoting Russo v. Bd. of Trs., Police &
Firemen's Ret. Sys.,
206 N.J. 14, 27 (2011)). "The burden of
demonstrating the agency's action was arbitrary, capricious or
unreasonable rests upon the [party] challenging the administrative
action." E.S. v. Div. of Med. Assistance & Health Servs.,
412 N.J. Super. 340, 349 (App. Div. 2010) (alteration in original)
(quoting In re Arenas,
385 N.J. Super. 440, 443-44 (App. Div.
"Medicaid is a federally-created, state-implemented program
that provides 'medical assistance to the poor at the expense of
the public.'" Matter of Estate of Brown,
448 N.J. Super. 252,
256, (App. Div.) (quoting Estate of DeMartino v. Div. of Med.
Assistance & Health Servs.,
373 N.J. Super. 210, 217 (App. Div.
2004)), certif. denied, In re Estate of Brown,
230 N.J. 393 (2017);
see also 42 U.S.C. § 1396-1. To receive federal funding, the
State must comply with all federal statutes and regulations.
Harris v. McRae,
448 U.S. 297, 301 (1980).
In New Jersey, the Medicaid program is administered by DMAHS
pursuant to the New Jersey Medical Assistance and Health Services
N.J.S.A. 30:4D-1 to -19.5. The county welfare boards, such
as ACBSS, evaluate eligibility.
One of the objectives of Medicaid is to provide "medical
assistance to needy persons who are institutionalized in nursing
homes as a result of illness or other incapacity." R.S., 434 N.J.
4 Super. at 258 (quoting M.E.F. v. A.B.F.,
393 N.J. Super. 543, 545
(App. Div. 2007)). "DMAHS provides institutional level Medicaid
benefits to individuals residing in nursing homes pursuant to the
Medicaid Only program, N.J.A.C. 10:71-1.1 to -9.5." Brown,
448 N.J. Super. at 257. "[A]n applicant seeking such benefits must
have financial eligibility as determined by the regulations and
procedures." Ibid.; see also N.J.A.C. 10:71-1.2(a). "[T]o be
financially eligible, the applicant must meet both income and
resource standards." Ibid.; N.J.A.C. 10:71-3.15.
Through its regulations, DMAHS establishes "policy and
procedures for the application process." N.J.A.C. 10:71-2.2(b).
The county welfare boards exercise "direct responsibility in the
application process to . . . [r]eceive applications." N.J.A.C.
10:71-2.2(c)(2). The regulations establish timeframes to process
an application, with the "date of effective disposition" being the
"effective date of the application" where the application has been
approved. N.J.A.C. 10:71-2.3(b)(1).
"The process of establishing eligibility involves a review
of the application for completeness, consistency, and
reasonableness." N.J.A.C. 10:71-2.9. "The maximum period of time
normally essential to process an application for the aged is
[forty-five] days." N.J.A.C. 10:71-2.3(a). New Jersey
there will be exceptional cases where the
proper processing of an application cannot be
completed within the [45-day] period. Where
substantially reliable evidence of
eligibility is still lacking at the end of the
designated period, the application may be
continued in pending status. In each such
case, the CWA [(county welfare agency)] shall
be prepared to demonstrate that the delay
resulted from one of the following:
. . . .
(2) A determination to afford the applicant,
whose proof of eligibility has been
inconclusive, a further opportunity to develop
additional evidence of eligibility before
final action on his or her application;
This was the fourth application by W.S. for Medicaid. The
applications were filed by Hammonton Center as his "Authorized
Representative" (AR) of W.S. Prior applications were submitted
in February, May and November, 2015. The instant application was
received on February 1, 2016 and was denied for failure to provide
information needed to make a determination on June 21, 2016. At
the time of the denial, bank statements from an ING Direct account
remained outstanding. Statements from this account were requested
by ACBSS commencing with the first application.
On April 27, 2016, an ACBSS caseworker acknowledged receipt
of a fax from the AR's attorney, which informed the ACBSS that it
had not obtained the requested documents. The caseworker advised
the AR that the documentation was necessary to make an eligibility
determination and suggested searching for the documents with the
financial institution by using the wife's account number.
On June 2, 2016, the caseworker sent the AR a letter stating
that the application would be denied on June 20, 2016, if the
account statements were not provided by that date. On June 20,
2016, the attorney for the AR sent an email to the caseworker
requesting an extension because they still had not obtained the
records. The request was denied and the application was denied
on June 21, 2016.
ACBSS had the discretion, pursuant to N.J.A.C. 10:71-2.3(c),
to extend the deadline even further and could have placed W.S.'s
application in pending status. ACBSS, however, did not use the
forty-five day standard set out in N.J.A.C. 10:71-2.3(a) as a
basis for denying eligibility. See 42 C.F.R. § 435.912(g)(2)
(2013). Instead, ACBSS gave the AR one-hundred-eighty days to
procure the requested verification documents. ACBSS has the
obligation to address Medicaid applications timely. See N.J.A.C.
During a Medicaid application process, the CWA, ACBSS here,
is responsible for assisting an applicant "in exploring their
eligibility for assistance," N.J.A.C. 10:71-2.2(c)(3), and making
known to the applicant "the appropriate resources and services
both within the agency and the community, and, if necessary, assist
in their use." N.J.A.C. 10:71-2.2(c)(4). The applicant must
"[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), and "[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 is "the primary source of information," but the CWA
is responsible for making "the determination of eligibility and
to use secondary sources when necessary, with the applicant's
knowledge and consent." N.J.A.C. 10:71-1.6(a)(2).
"The CWA shall verify the equity value of resources1 through
appropriate and credible sources. . . . If the applicant's
resource statements are questionable, or there is reason to believe
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 applicant is responsible
for cooperating fully with the verification process if the CWA has
to contact the third party in reference to verifying resources.
N.J.A.C. 10:71-4.1(d)(3)(i). "If necessary, the applicant shall
A resource is "any real or personal property which is owned by
the applicant . . . and which could be converted to cash to be
used for his or her support and maintenance." N.J.A.C. 10:71-
provide written authorization allowing the CWA to secure the
appropriate information." Ibid.
N.J.A.C. 10:71-2.10 discusses collateral investigation:
(a) "Collateral investigation" shall refer
to contacts with individuals other than
members of applicant's immediate household,
made with the knowledge and consent of the
(b) The primary purpose of collateral
contacts is to verify, supplement or clarify
Here, ACBSS did not attempt to procure the missing
documentation. However, nothing in N.J.A.C. 10:71-4.1(d)(3)
places a burden on ACBSS to acquire the required documents, but
rather states only that if an applicant's identification of
resources is incomplete, ACBSS must verify the resource statements
through a third party. Although ACBSS is responsible for assisting
an applicant, the regulations did not create an affirmative duty
upon ACBSS to procure all documents necessary to complete the
application, especially when W.S. had a representative.
"An administrative agency's interpretation of statutes and
regulations within its implementing and enforcing responsibility
is ordinarily entitled to our deference." N.J. Div. of Child
Prot. & Permanency v. V.E.,
448 N.J. Super. 374, 390 (App. Div.
2017) (quoting Wnuck v. N.J. Div. of Motor Vehicles,
Super. 52, 56 (App. Div. 2001)). "Deference to an agency decision
is particularly appropriate where interpretation of the Agency's
own regulation is in issue." R.S.,
434 N.J. Super. at 261 (quoting
I.L. v. N.J. Dep't of Human Servs., Div. of Med. Assistance &
389 N.J. Super. 354, 364 (App. Div. 2006)).
Here, the DMAHS rendered its final decision after
interpreting its own regulations. We may reverse only upon a
showing that the DMAHS acted arbitrarily, capriciously, or
unreasonably. Denying an application that did not have the
information necessary to verify eligibility after giving several
adjournments is not arbitrary, capricious or unreasonable because
Medicaid applications must be processed promptly and Medicaid is
intended to be a resource of last resort, reserved for those who
have a proven financial or medical need for assistance. See N.E.
v. N.J. Div. of Med. Assistance & Health Servs.,
399 N.J. Super.
566, 572 (App. Div. 2008).