M.P. 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-5024-16T2
M.P.,
Petitioner-Appellant,
v.
DIVISION OF MEDICAL
ASSISTANCE AND HEALTH
SERVICES, and CAMDEN COUNTY
BOARD OF SOCIAL SERVICES,
Respondents-Respondents.
_________________________________
Argued November 14, 2018 – Decided December 17, 2018
Before Judges Fisher and Suter.
On appeal from New Jersey Department of Human
Services, Division of Medical Assistance and Health
Services.
Donald B. Mark argued the cause for appellant.
Jacqueline R. D'Alessandro, Deputy Attorney General,
argued the cause for respondent (Gurbir S. Grewal,
Attorney General, attorney; Melissa H. Raksa,
Assistant Attorney General, of counsel; Jacqueline R.
D'Alessandro, on the brief).
PER CURIAM
Petitioner M.P. appeals the final agency decision of the New Jersey
Division of Medical Assistance and Health Services (DMAHS) that denied his
application for Medicaid benefits under the Medically Needy Program. We
affirm the decision that M.P. was not eligible because he stipulated his resources
were in excess of the program's requirements.
M.P. and his wife resided at the Elmwood Hills Healthcare Center in
2014. 1 On October 14, 2014, M.P. made application to the Camden County
Board of Social Services (CCBSS) for Medicaid benefits under the Medically
Needy Program. N.J.A.C. 10:70-1.1 to -7.3. The Medically Needy Program
extends limited Medicaid program benefits "to certain groups of medically
needy persons whose income and/or resources exceeds the standards for the
Medicaid program but are within the standards for the Medically Needy
Program, or whose income exceeds the standards for the Medically Needy
Program but is insufficient to meet their medical expenses." N.J.A.C. 10:70-
1.1(a).
1
M.P. passed away in July 2015. His wife passed away in 2014 and is not an
appellant.
A-5024-16T2
2
M.P. applied for benefits under the Medically Needy Program because in
2014, his combined gross monthly income from Social Security and a pension
was $2637.72. This exceeded the Medicaid Only income cap of $2163. In 2015,
his combined gross monthly income was $2660.72, also in excess of the cap.
Thus, he could not qualify for the Medicaid Only program, and made application
to the Medically Needy Program. The Medically Needy Program also had a
resources cap of $4000. N.J.A.C. 10:70-5.1(a).
When M.P. applied for the Medically Needy Program in October 2014, it
covered nursing facility services. See N.J.A.C. 10:71-4.11(h). Effective on
December 1, 2014, New Jersey amended its Medicaid State Plan to remove
nursing facility benefits from the Medically Needy Program, replacing it with
Qualified Income Trusts (QIT), which allowed individuals to avoid counting
certain income when determining financial eligibility for Medicaid. See 42
U.S.C. §1396p(d)(4)(B); N.J.A.C. 10:71-4.11(h). DMAHS advised of the
change stating:
[t]he State of New Jersey is adopting the use of
Qualified Income Trusts (QITs) to qualify for the
Medicaid Only program effective December 1, 2014.
Beginning December 1, 2014, the Medically Needy
program will no longer be accepting new applications
to cover nursing facility services. Individuals who
were receiving nursing facility benefits through the
Medically Needy program prior to December 1, 2014
A-5024-16T2
3
will be permitted to maintain their coverage as long as
they remain otherwise eligible and remain in the
nursing facility.
[Medicaid Communication No. 14-15.]
M.P.'s application for Medicaid under the Medically Needy Program
remained pending in 2015 and his attorney prepared a QIT for him. The CCBSS
requested financial statements regarding identified bank accounts and copies of
checks that exceeded $500.
On January 27, 2016, CCBSS denied M.P.'s application for Medicaid
benefits because his available resources exceeded the $4000 resource cap for the
Medically Needy Program. CCBSS stated "his resources were $2744.18 in a
checking account and $23,682.52 in a trust account totaling $26,426.70 as of
[August 31, 2014]."
The trust account related to an order to show cause and verified complaint
filed in the Superior Court by M.P.'s daughter, Diana, seeking a fee of $15,500
as compensation for her services to her parents as attorney-in-fact. The court
granted her request in September 2014. Pursuant to a contract titled an
"irrevocable deposit," an agreement was reached by Diana, in her individual
capacity, Diana as attorney-in-fact for M.P. and his wife, and M.P.'s attorney, to
deposit $15,500 in the attorney's trust account. The funds were to be distributed
A-5024-16T2
4
to the law office to pay "outstanding legal fees and costs incurred for the legal
services rendered by the [l]aw [o]ffice for [M.P. and his wife]"; to pay Diana
fees awarded from the order to show cause and, if funds remained, to pay
Elmwood Center as "reimbursement for the Medicaid benefits that have been
paid" for M.P. and his wife. With the exception of the law firm, the contract
provided that Diana, M.P. and his wife could not be paid without the consent of
Medicaid.
M.P.'s attorney requested a fair hearing to challenge the denial of
Medicaid eligibility, contending CCBSS erred by including the $15,500 in his
firms' trust account as an available resource and arguing these monies
represented fees awarded to Diana as attorney-in-fact by the Superior Court. He
also alleged CCBSS's delay in processing the application violated Medicaid
regulations.
Following conferences with the Administrative Law Judge (ALJ), the
parties agreed to a "stipulation of facts" prior to filing cross-motions for
summary disposition. In the stipulation, M.P. agreed his assets from November
1, 2014, to March 1, 2015, exceeded $4000. 2 By April 1, 2015, however, his
2
The stipulation of facts provided M.P. owned the following assets:
A-5024-16T2
5
assets were $3937.31 and they continued to decline through July 1, 2015. The
parties stipulated the legal issue in dispute was limited to "[d]oes the DMAHS
Medicaid Communication No. 14-15, issued on December 19, 2014, apply to
M.P.'s Medically Needy application filed on October 14, 2014?"
The ALJ's Initial Decision denied M.P.'s request for Medicaid eligibility,
finding that although M.P. was clinically eligible for the program and his income
did not deprive him of eligibility in the Medically Needy Program, M.P.'s
"resources were not successfully spent down until April 2015." After December
1, 2014, the State adopted the use of QIT's to qualify for Medicaid, but M.P.
never "properly funded" the QIT. The ALJ affirmed the denial of M.P.'s
Medicaid eligibility "because he did not meet the financial requirements for the
Medicaid [n]ursing [h]ome [p]rogram as of August 31, 2014."
Date Amount
11/01/2014 $13,155.18
12/01/2014 $12,003.75
01/01/2015 $8,382.18
02/01/2015 $6,575.89
03/01/2015 $5,693.96
04/01/2015 $3,937.31
05/01/2015 $2,845.31
06/01/2015 $2,407.94
07/01/2015 $1,699.82
A-5024-16T2
6
The Final Agency Decision adopted the ALJ's Initial Decision, finding
that M.P. failed to meet the resources standard of the Medically Needy Program
until April 2015, "by which time [that program] no longer covered nursing home
services." The Director noted the State "received federal authority to cease
covering nursing home services" under the Medically Needy Program but
allowed persons who had income above eligibility standards "to place the excess
income in a QIT . . . and obtain Medicaid benefits." This did not apply to persons
who were receiving nursing home services under the Medically Needy Program
before December 1, 2014. M.P. was not part of that program prior to December
1 and his resources exceeded the $4000 resource cap. After December 1, the
Medically Needy Program no longer covered nursing home services and thus,
M.P. was not eligible under that program. The Director found CCBSS correctly
reviewed M.P.'s Medicaid application to determine if he was eligible for any
other Medicaid programs, but found he was not eligible under the Medicaid Only
program, which was "the only other program that covered nursing home
services."
On appeal, M.P. contends that although DMAHS terminated the
Medically Needy Program for nursing home services for new applications filed
on or after December 1, 2014, this change did not apply to M.P. whose
A-5024-16T2
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application for Medicaid was filed in October 2014, before the change. He also
argues that CCBSS's failure to timely process M.P.'s Medicaid application
should be taken into account because he might have been able to take steps to
remediate his eligibility problem had he known and then transferred the excess
funds into an irrevocable funeral trust under N.J.A.C. 10:71-4.4. There is no
merit in these arguments.
We review an agency's decision for the limited purpose of determining
whether its action was arbitrary, capricious or unreasonable. K.K. v. Div. of
Med. Assistance & Health Servs., 453 N.J. Super. 157, 160 (App. Div. 2018).
"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 & 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, 25 (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) (quoting In re Arenas,
385 N.J. Super. 440, 443-44 (App. Div. 2006)). We "defer to the specialized or
technical expertise of the agency charged with administration of a regulatory
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8
system." K.K., 453 N.J. Super. at 160 (quoting In re Virtua-W. Jersey Hosp.
Voorhees for Certificate of Need, 194 N.J. 413, 422 (2008)). However, we are
not bound by the "agency's interpretation of a statute or its determination of a
strictly legal issue." In re Virtua-W., 194 N.J. at 422 (quoting Mayflower Sec.
Co. v. Bureau of Sec., 64 N.J. 85, 93 (1973)).
"Medicaid is a federally-created, state-implemented program that
provides 'medical assistance to the poor at the expense of the public.'" In re
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, 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 Act,
N.J.S.A. 30:4D-1 to -19.5. Through its regulations, DMAHS establishes "policy
and procedures for the application process." N.J.A.C. 10:71-2.2(b). "[T]o be
financially eligible, the applicant must meet both income and resource
standards." Brown, 448 N.J. Super. at 257; see N.J.A.C. 10:71-3.15; N.J.A.C.
A-5024-16T2
9
10:71-1.2(a). The local county welfare agencies (CWA) evaluate Medicaid
eligibility. N.J.S.A. 30:4D-7a; N.J.A.C. 10:71-1.5, 2.2(c).
The Medically Needy Program extended Medicaid benefits to persons
whose income and or resources exceeded the standards for the Medicaid Only
program but whose income was not sufficient to meet their medical expenses.
N.J.A.C. 10:70-1.1(a). No one disputed that M.P. was clinically eligible for the
program. N.J.A.C. 10:70-3.4. However, to qualify, the applicant's resources
must be less than the $4000 resource eligibility limit for an individual in
N.J.A.C. 10:70-5.1(a). M.P. stipulated that his resources exceeded this amount
until April 1, 2015. The record supports that he simply did not qualify for the
program when he applied because his resources exceeded the eligibility cap.
M.P.'s resources dipped below the eligibility resource level on April 1,
2015, but by that time, the Medically Needy Program no longer was available
for nursing home services. M.P. contends that his application was not a "new"
application filed after December 1, 2014, and therefore he argues it should have
been grandfathered into the program once his resources were under $4000.
M.P. cites no authority for this. The State amended its Medicaid plan
effective on December 1, 2014, to remove nursing facility benefits from the
Medically Needy Program, but provided that the medically needy could apply
A-5024-16T2
10
for, and establish, Medicaid eligibility through the use of a QIT. DMAHS's
Communication No. 14-15 made clear that unless a person was receiving
Medicaid under the Medically Needy Program by December 1, 2014,
reimbursement for nursing home expenses would no longer be available under
the plan. The State must conform with its State plan to receive available federal
financial participation. Harris, 448 U.S. at 301. DMAHS was not arbitrary,
unreasonable or capricious in denying eligibility to M.P. after December 1,
2014, because he was not receiving Medicaid benefits at that time and the
program was no longer available for these type of expenses.
M.P. stipulated to his income and resources. DMAHS was not acting in
an arbitrary, capricious or unreasonable manner by relying on the stipulations
made by the parties. 3 "Agencies are well within their authority to adopt
stipulations as fact-finding tools, as long as they evaluate the stipulations and
the parties have had an opportunity to argue against." In re Pub. Serv. Elec. &
Gas Co.'s Rate Unbundling, 330 N.J. Super. 65, 111 (App. Div. 2000). M.P.'s
counsel signed the stipulation which appears to have been prepared by his office.
3
In light of the stipulation, we have no need to determine whether the $15,500
in the attorney trust account was a countable resource. Counsel for M.P. argues
these funds were not available for M.P. because of the irrevocable deposit, but
all of these funds were paid to that law firm for legal fees that were incurred by
M.P. and his wife for this case.
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CCBSS's evaluation of M.P.'s application for benefits exceeded the
processing time set forth in DMAHS's regulations. See N.J.A.C. 10:70-2.1(d)(1)
(providing with exceptions, that disposition is to be in thirty days). M.P.'s
attorney claims he would have established an irrevocable funeral trust under
N.J.A.C. 10:71-4.4 had he known that CCBSS would deny his application based
on excess available resources. There was nothing, however, that prevented this
during the time the application was pending with CCBSS. There also was no
evidence that CCBSS's delay was based on anything other than the need for
additional financial information.
CCBSS reviewed M.P.'s eligibility for other programs, including the
Medicaid Only program that covered nursing home services, but his income
exceeded the eligibility amount. The ALJ found that M.P.'s QIT, prepared in
2015, "was never properly funded." Counsel did not argue otherwise. We do
not know if M.P. would qualify were the QIT properly funded.
After carefully reviewing the record and the applicable legal principles,
we conclude that M.P.'s further arguments are without sufficient merit to warrant
discussion in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
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