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                                       SUPERIOR COURT OF NEW JERSEY
                                       APPELLATE DIVISION
                                       DOCKET NO. A-2815-16T4






              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
              Health Services.

              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 &

                                      2                                  A-2815-16T4
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.

                                  3                           A-2815-16T
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

regulations recognize:

                                     4                             A-2815-16T4
          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;

          [N.J.A.C. 10:71-2.3(c).]

     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

                                  5                          A-2815-16T4
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

                                 6                          A-2815-16T4
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-

                                 7                           A-2815-16T4
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
           essential information.

     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, 
337 N.J.

Super. 52, 56 (App. Div. 2001)).           "Deference to an agency decision

                                       8                               A-2815-16T4
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 &

Health Servs., 
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).


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