R.P. v. DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES

NOT FOR PUBLICATION WITHOUT THE
                      APPROVAL OF THE APPELLATE DIVISION
     This opinion shall not "constitute precedent or be binding upon any court."
      Although it is posted on the internet, this opinion is binding only on the
        parties in the case and its use in other cases is limited. R. 1:36-3.




                                       SUPERIOR COURT OF NEW JERSEY
                                       APPELLATE DIVISION
                                       DOCKET NO. A-3041-16T1

R.P.,

        Petitioner-Appellant,

v.

DIVISION OF MEDICAL ASSISTANCE
AND HEALTH SERVICES and CAMDEN
COUNTY BOARD OF SOCIAL SERVICES,

     Respondents-Respondents.
_________________________________

              Argued April 30, 2018 – Decided May 25, 2018

              Before Judges Accurso and Vernoia.

              On appeal from the Division of Medical
              Assistance and Health Services, Department of
              Human Services.

              John P. Pendergast argued the cause for
              appellant   (SB2   Inc.,    attorneys; John
              Pendergast, on the briefs).

              Jacqueline R. D'Alessandro, Deputy Attorney
              General, argued the cause for respondents
              (Gurbir S. Grewal, Attorney General, attorney;
              Melissa H. Raksa, Assistant Attorney General,
              of counsel; T. Nicole Williams-Parks, on the
              brief).

PER CURIAM
      R.P. appeals from a final decision of the Director of the

Division of Medical Assistance and Health Services (DMAHS) finding

her ineligible for Medicaid benefits because she failed to timely

provide requested verifications permitting the Camden County Board

of Social Services (CCBSS) to make an eligibility determination.

We vacate the decision and remand for further proceedings.

                                        I.

      In a letter dated May 2, 2016, CCBSS denied R.P.'s application

for   Medicaid      benefits    because       she   failed     to   timely    provide

verifications CCBSS asserts it requested. R.P. appealed the denial

to DMAHS, which referred the matter to the Office of Administrative

Law   for   a    hearing.      The   evidence       at   the   hearing     before    an

Administrative Law Judge (ALJ) showed the following.

      On January 7, 2016, R.P.'s step-daughter V.S. met with CCBSS

representative       Cynthia     L.    Repsher,          completed     a     Medicaid

application on R.P.'s behalf, and delivered the application to

Repsher.1       The application showed R.P. owned a residence, and had


1
    R.P. was hospitalized when V.S. submitted the Medicaid
application.    On appeal, R.P.'s counsel argues R.P. was
incapacitated and suffering from dementia at that time.      We
observe, however, that the day following submission of the
application, R.P. executed a power of attorney designating V.S.
as her representative to make all decisions concerning R.P.'s
medical care in the event R.P. "become[s] incapable of making
decisions for [her]self." The two witnesses attesting to R.P.'s
execution of the power of attorney did not perceive R.P. as


                                          2                                   A-3041-16T1
a bank account with a balance of $5641.49 as of December 7, 2015,

and a pending claim for proceeds from a life insurance policy for

her late husband.      The application, which V.S. signed as R.P.'s

authorized agent, expressly advised that "an individual is only

permitted    to   retain   $2,000    or   $4,000   in   applicable    program

resources in order to be eligible" for Medicaid benefits.

      When V.S. submitted the application, Repsher asked V.S. to

supply additional information.            V.S. testified she was advised

R.P. was "over resourced" and may have assets whose value exceeded

the $2,000 limit for Medicaid eligibility.          V.S. acknowledged she

was told to spend R.P.'s bank account down to less than $2,000,2

and was requested to provide CCBSS with R.P.'s birth certificate,

the   deed   to   R.P.'s   home,    and   information    concerning    R.P.'s

husband's life insurance policy and proceeds.               V.S. testified

Repsher did not give her a letter requesting information or

verifications CCBSS needed to determine R.P.'s eligibility.

      At the hearing, DMAHS presented the testimony of William

Gensel, the Supervisor of CCBSS's Medical Outpatient Unit.             Gensel

testified the Unit takes Medicaid applications from patients in


incapacitated or suffering from dementia; they witnessed R.P.'s
signature and represented that R.P. "appear[ed] to be of sound
mind."
2
    V.S. provided a bank statement showing the balance in the
account. V.S. held the account jointly with R.P.

                                      3                               A-3041-16T1
health care facilities. Gensel did not have any direct involvement

in his Unit's receipt or processing of R.P.'s application, but

testified concerning the documents in the Unit's file and explained

the Unit's practices in accepting Medicaid applications.

      Gensel testified the Unit's practice was to review a Medicaid

application upon receipt, and provide the applicant with a "pending

notice" listing any additional information required to complete

an eligibility determination.          According to Gensel, CCBSS's file

showed a pending notice was prepared by Repsher on January 7,

2016, the day V.S. submitted R.P.'s application.          Gensel explained

that because the pending notice was addressed to V.S. but did not

include an address, he expected the notice was given directly to

V.S. when she submitted the application.

      The January 7, 2016 pending notice requested verification of

R.P.'s   Medicare     Card,   proof   of   health   insurance,   information

concerning her husband's life insurance policy and the use of any

life insurance proceeds, the fair market value of R.P.'s home, and

the January and February 2016 statements from R.P.'s bank accounts.

The pending notice stated that if the requested verifications were

not   provided   by   February   21,    2016,   the   Medicaid   application

"[would] be denied on" February 21, 2016.           V.S. never supplied the

verifications requested in the pending notice.



                                       4                             A-3041-16T1
     Gensel further testified CCBSS's file showed a February 22,

2016 pending notice addressed to V.S.   The notice sought the same

information requested in the January 7, 2016 notice, and stated

the decision on R.P.'s eligibility would remain pending until

March 7, 2016.   Gensel explained the letter's inclusion of V.S.'s

home address indicated that, in accordance with CCBSS's practice,

it was mailed to her.     He acknowledged the letter included an

incorrect zip code for V.S.'s address, but noted the CCBSS file

did not show the letter had been returned.      V.S. testified she

never received the February 22, 2016 notice, and the verifications

requested in the notice were not provided prior to the March 7,

2016 deadline.

     On May 2, 2016, CCBSS denied R.P.'s Medicaid application

based on her failure to timely provide the requested verifications.

In a letter addressed to V.S., CCBSS explained the verifications

were required to determine R.P.'s eligibility, and V.S. failed to

assist by not providing requested necessary documentation.       See

N.J.A.C. 10:71-2.2(e)(2).    The denial letter included the same

incorrect zip code that was on the February 22, 2016 pending

notice, but V.S. testified she received the denial letter at her

home.

     The ALJ who conducted the hearing, at which only Gensel and

V.S. testified, issued a written decision.   The ALJ noted Gensel's

                                 5                          A-3041-16T1
testimony that the initial January 7, 2016 pending notice "would

have been handed to" the applicant when the application was

submitted.3       Although V.S. denied receiving the January 7, 2016

pending notice, the ALJ found V.S. "acknowledged" receipt of the

"the initial request for verification."            The ALJ found as a matter

of fact that the February 22, 2016 pending notice was sent with

the wrong zip code due to "an error [of] the agency," and that

V.S. "did not receive" the notice.

     The ALJ concluded CCBSS "requested a clear and succinct

verification of [R.P.'s] resources" from V.S., and it "was never

provided."        The only factual finding supporting the conclusion,

however,     is     the   ALJ's    erroneous      determination,        which    is

contradicted by the evidence, that V.S. acknowledged receipt of

the original January 7, 2016 request for verification.                   Based on

that finding, the ALJ determined R.P. "failed to comply with

N.J.A.C.   10:71-2.2(d)(2)        by    not   verifying    or   explaining      the

resource     information     for       the    [January    7,    2016]    Medicaid




3
   The ALJ incorrectly stated that Gensel testified the notice
"would have been handed to R.P." There was no testimony R.P. was
involved in the submission of the application, and it is undisputed
V.S. submitted the application on R.P.'s behalf.



                                         6                                A-3041-16T1
application . . . ," and recommended affirmance of CCBSS's    denial

of Medicaid benefits.4

       In DMAHS's final agency decision, the Director adopted the

ALJ's findings and determined "[t]here is no dispute that [R.P.,

through her step-daughter V.S.] received CCBSS'[s] first request"

for verification on January 7, 2016, when CCBSS "handed" it to

V.S.   The Director ignored that, contrary to the ALJ's finding and

his own, V.S. denied receipt of the notice and, therefore, whether

CCBSS delivered the notice to V.S. was a disputed factual issue.

       The Director further found the February 22, 2016 notice was

sent to the wrong zip code, did not make any findings as to whether

V.S. received it, and did not reject the ALJ's finding that V.S.

never received the notice.   The Director concluded R.P. failed to

provide the requested verifications prior to the May 2, 2016 denial




4
   It is difficult to discern the ALJ's findings concerning V.S.'s
credibility. The ALJ's finding V.S. "testified in a manner that
lent to her credibility" suggests he found V.S.'s testimony
credible.   The ALJ begins the following sentence with the word
"[h]owever," suggesting that although V.S. "testified in a manner
that lent to her credibility," the ALJ rejected V.S.'s testimony,
or at least some part of it, as not credible. The incongruity of
the ALJ's findings is further demonstrated by the fact that if he
found V.S. a credible witness, he would have accepted her testimony
she was never given the January 7, 2016 pending notice. Instead,
he found she acknowledged receipt of that notice, which the record
shows is not the case. In sum, the ALJ's credibility and factual
findings cannot be logically reconciled and in certain instances
are unsupported, and unsupportable, by the evidentiary record.

                                 7                           A-3041-16T1
of benefits, adopted the ALJ's findings and recommendation, and

affirmed CCBSS's denial of R.P.'s Medicaid application.

     R.P. appealed, and presents the following arguments for our

consideration:

          POINT I

          R.P. was incapacitated during the Medicaid
          application process, thus her resources were
          required to be excluded pursuant to N.J.A.C.
          10:71-4.4 [].

          POINT II

          V.S. did not receive the pending notices
          Camden County was required to send prior to
          denying   R.P.'s  Medicaid   application   in
          violation of Medicaid Communication No. 10-09
          [].

          POINT III

          Respondent should have reviewed       all the
          information    regarding   R.P.'s     Medicaid
          application on its merits [].

                               II.

     Our role in reviewing the decision of an administrative agency

is limited. In re Stallworth, 
208 N.J. 182, 194 (2011). We accord

a strong presumption of reasonableness to an agency's exercise of

its statutorily delegated responsibility, City of Newark v. Nat.

Res. Council, 
82 N.J. 530, 539 (1980), and defer to its fact

finding, Utley v. Bd. of Review, 
194 N.J. 534, 551 (2008).         We

will not upset the determination of an administrative agency absent


                                8                           A-3041-16T1
a showing "that it was arbitrary, capricious or unreasonable, that

it lacked fair support in the evidence, or that it violated

legislative policies."         Parascandolo v. Dep't of Labor, Bd. of

Review, 
435 N.J. Super. 617, 631 (App. Div. 2014) (quoting Campbell

v. Dep't of Civil Serv., 
39 N.J. 556, 562 (1963)).

     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.          In New Jersey, eligibility for

Medicaid is determined by the Commissioner of the Department of

Human Services.     See 
N.J.S.A. 30:4D-7.        DMAHS is the agency within

the Department of Human Services that administers the Medicaid

program,    
N.J.S.A.     30:4D-5;    N.J.A.C.      10:49-1.1(a),      and     is

responsible for safeguarding the interests of the New Jersey

Medicaid program and its beneficiaries, N.J.A.C. 10:49-11.1(b).

     A County Welfare Agency, such as CCBSS, 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.            A County

Welfare Agency is required to verify the equity value of resources

through    appropriate   and    credible    sources.    If   an   applicant's

resource statements are questionable or the identification of

resources is incomplete, "the [County Welfare Agency] shall verify



                                     9                                 A-3041-16T1
the applicant's resource statements through one or more third

parties." N.J.A.C. 10:71-4.1(d)(3).

       County Welfare Agencies review Medicaid applications "for

completeness, consistency, and reasonableness." N.J.A.C. 10:71-

2.9.    Applicants must provide verifications that are identified,

and "[a]ssist the [County Welfare Agency] in securing evidence

that    corroborates    his    or   her     statements."       N.J.A.C.    10:71-

2.2(e)(2).

       Here, the Director's decision affirming CCBSS's denial of

R.P.'s application is based on a finding that it was undisputed

V.S. received CCBSS's January 7, 2016 pending notice.                  As noted,

however, the record shows otherwise.               V.S. denied receiving the

notice, and Gensel testified only that he expected the notice had

been given to V.S.       Thus, whether V.S. received the January 7,

2016 pending notice is a disputed factual issue that neither the

ALJ nor the Director decided due to their erroneous and unsupported

finding that V.S.'s receipt of the notice was undisputed.                 Because

the final agency decision is based on a factual determination that

finds no support in the record, we are constrained to vacate the

decision and remand for further proceedings.               The Director shall

decide whether V.S. received the initial pending notice on January

7,   2016,   consider   that   fact   and    all    of   the   other   evidence,



                                      10                                  A-3041-16T1
determine whether CCBSS correctly denied R.P.'s application5 and

make the findings required by 
N.J.S.A. 52:14B-10(c).             See In re

Stallworth,   
208 N.J.   at   194   (finding   an   agency's   action    is

arbitrary, capricious or unreasonable when the record does not

contain substantial evidence supporting a finding upon which the

agency's decision is based).

     We also consider the ALJ's factual finding that V.S. did not

receive the February 22, 2016 pending notice due to DMAHS's error

in addressing the notice to an incorrect zip code.6          The Director

adopted the ALJ's factual findings, but did not address the effect,

if any, of DMAHS's failure to deliver the February 22, 2016 notice

to V.S.


5
   We leave in the Director's discretion whether a remand to the
ALJ is necessary for the development of an additional evidentiary
record or further findings of fact.
6
  The ALJ found as a matter of fact that V.S. did not receive the
February 22, 2017 notice. The finding is supported by the evidence
showing the incorrect zip code on the notice and V.S.'s testimony
she did not receive the second notice. "In rejecting or modifying
any findings of fact, the agency head shall state with
particularity the reasons for rejecting the findings and shall
make new or modified findings supported by sufficient, competent,
and credible evidence in the record." A.M.S. ex rel. A.D.S. v.
Bd. of Educ. of City of Margate, 
409 N.J. Super. 149, 159 (App.
Div. 2009) (emphasis added); see also 
N.J.S.A. 52:14B-10(c). The
Director did not state with particularity that he rejected the
ALJ's finding V.S. did not receive the February 22, 2016 notice,
and otherwise stated he adopted the ALJ's findings. We therefore
infer the Director also concluded V.S. did not receive the second
notice.


                                      11                            A-3041-16T1
     DMAHS's Medicaid Communication No. 10-09 (Nov. 24, 2010)

requires that during the initial face-to-face meeting between

County Welfare Agency representatives and Medicaid applicants, the

agency   representative     must        provide       the   applicant    with     a

"checklist/missing information letter to the applicant or their

representative     highlighting          verifications        and      supporting

documentation    which    are     required       to    process   the     Medicaid

application."    Medicaid Communication No. 10-09.

     Where the requested information is not supplied within the

timeframe provided in the initial notice, the County Welfare Agency

"must" send the applicant or their representative "an additional

request for information" detailing "what documentation is still

needed in order to determine eligibility."                  Ibid.   The second

request must advise "that if the information is not received within

the specified time period from the receipt of the request, the

case will be denied."           Ibid.        On remand, the Director shall

consider the requirements of Medicaid Communication No. 10-09, and

decide what effect, if any, CCBSS's failure to deliver the second

notice to V.S. has on the validity of CCBSS's denial of R.P.'s

Medicaid application.

     We reject R.P.'s claim that CCBSS was obligated to obtain the

requested verifications on its own.             The controlling regulations

do not require that either CCBSS or DMAHS obtain all application

                                        12                                A-3041-16T1
information on their own.           See 42 C.F.R. § 435.948(a).          The

regulation requires that the state Medicaid agency obtain limited

information   only    "to    the   extent   the   agency   determines   such

information is useful to verifying the financial eligibility of

an individual."      Ibid.

     There is no regulation precluding a state Medicaid agency

from obtaining information directly from the applicant.             See 42

C.F.R. § 435.952(c). In New Jersey, the law requires the 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 process, R.P. was required to assist CCBSS in

securing evidence that corroborated the information submitted in

support of her application.        N.J.A.C. 10:71-2.2(e)(2).     We reject

R.P.'s contentions to the contrary.

     We are also not persuaded by R.P.'s contention that the ALJ

and the Director erred by failing to consider evidence which she

produced for the first time following the May 2, 2016 denial of

benefits, and which she contends showed she was eligible for

benefits.     CCBSS is permitted to 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).        CCBSS denied the application because

R.P. did not timely supply the verifications as required by the

pending notices.      The issue before the ALJ and the Director was

                                     13                             A-3041-16T1
whether R.P. timely provided the requested information, and not

whether   R.P.   was   otherwise   entitled   to   benefits.     Thus,

verifications submitted following CCBSS's denial were irrelevant

to the issue before the ALJ and the Director.

    R.P.'s remaining arguments are without merit sufficient to

warrant discussion in a written opinion.      R. 2:11-3(e)(1)(E).

    Vacated and remanded for further proceedings consistent with

this opinion.    We do not retain jurisdiction.




                                   14                          A-3041-16T1