J.F. 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NOT FOR PUBLICATION WITHOUT THE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-0807-17T4

J.F.,

          Petitioner-Appellant,

v.

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

     Respondents-Respondents.
____________________________

                    Submitted December 13, 2018 – Decided April 4, 2019

                    Before Judges Simonelli and DeAlmeida.

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

                    SB2, Inc., attorneys for appellant (Laurie M. Higgins,
                    of counsel; John P. Pendergast, on the brief).

                    Gurbir S. Grewal, Attorney General, attorney for
                    respondent Division of Medical Assistance and Health
                    Services (Melissa H. Raksa, Assistant Attorney
            General, of counsel; Jacqueline R. D'Alessandro,
            Deputy Attorney General, on the brief).

PER CURIAM

      Petitioner J.F. appeals from an August 29, 2017 final decision of the

Director, Division of Medical Assistance and Health Services (DMAHS),

adopting the initial decision of an Administrative Law Judge (ALJ) finding him

ineligible for Medicaid benefits because he failed to submit documents

necessary to verify his eligibility. We affirm.

                                        I.

      On April 6, 2015, J.F., through his daughter and power of attorney, M.P.,

submitted an application for Medicaid benefits to the county welfare agency

(CWA) for Camden County. The CWA requested J.F. submit five years of bank

statements from his checking account, along with other information, to verify

his eligibility for benefits. On April 8, 2015, the CWA informed J.F. that the

application would be denied if the requested information was not provided by

April 23, 2015.

      On April 22, 2015, M.P. requested an extension of time to provide the

requested documents. In her request, M.P. stated that the checking account was

closed and its statements had been archived by the bank. According to M.P.,

she submitted a request to the bank to retrieve the archived records and was told

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that the account statements would be produced "ASAP." On April 28, 2015, the

CWA granted an extension to May 13, 2015.

      On May 14, 2015, one day after the expiration of the extended deadline,

M.P. submitted a January 8, 2015 bank receipt for the checking account showing

a closed account with a final balance of $19.16. A handwritten note on the

receipt stated: "This is checking acct. which has been closed. I did[ not] handle

my dad's accounts until January 2010, therefore I do not have copies of

statements for this account. Thank you." M.P. provided the other materials

requested by the CWA by the May 13, 2015 deadline. She did not seek a further

extension to produce the checking account records. On July 10, 2015, the CWA,

citing N.J.A.C. 10:71-2.2(e)(2), denied J.F.'s application because he did not

provide the requested information.

      J.F. requested a fair hearing. The matter was transferred to the Office of

Administrative Law, where a fair hearing was held before ALJ Mary Ann Bogan.

Two issues were addressed at the hearing: (1) whether the CWA was required

by federal and state law to assist J.F. in obtaining the financial information

necessary to verify his application; and (2) whether verification was required,

given the information M.P. provided showing that the checking account was

closed in 2015 with a final balance of $19.16. At the hearing, the ALJ asked a


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representative of DMAHS whether the agency should have assisted J.F. through

use of the Asset Verification System (AVS), a computer system that facilitates

access to financial information.      The representative stated that AVS was

instituted as a pilot program after J.F.'s application was processed.

      On June 27, 2017, ALJ Bogan issued an initial decision recommending

that the denial of benefits be affirmed. The ALJ examined the responsibilities

assigned to the CWA and the applicant in N.J.A.C. 10:71-2.2 and determined

that nothing in the regulation required the CWA to assume the applicant's

obligation to submit the information necessary to complete his application and

verify his eligibility for benefits. In addition, ALJ Bogan concluded that the

information provided by M.P. was insufficient to establish eligibility for benefits

because the agency is entitled to examine transfers of assets during a sixty-

month look-back period. See N.J.A.C. 10:71-4.10(a).1

      On August 29, 2017, the Director issued a final decision adopting the

ALJ's recommendation. The Director agreed with ALJ Bogan's determination

that J.F. failed to provide the information necessary to verify eligibility for

benefits. In addition, the Director agreed that "there is nothing in the state or


1
   ALJ Bogan noted that J.F. subsequently obtained the checking account
information and reapplied for benefits. The CWA approved J.F.'s reapplication
with an effective eligibility date of November 1, 2015.
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federal law that . . . excuses Petitioner from [his] obligation to obtain documents

needed to verify [his] eligibility[.]"

      This appeal followed. J.F. argues that the final determination should be

reversed because: (1) the information submitted with respect to his checking

account was sufficient for the CWA to verify his eligibility for benefits; and (2)

the CWA violated both state and federal law by failing to assist him in

completing his Medicaid application.

                                         II.

      "Judicial review of agency determinations is limited." Allstars Auto Grp.,

Inc. v. N.J. Motor Vehicle Comm'n,  234 N.J. 150, 157 (2018).                   "An

administrative agency's final quasi-judicial decision will be sustained unless

there is a clear showing that it is arbitrary, capricious, or unreasonable, or that

it lacks fair support in the record." Ibid. (quoting Russo v. Bd. of Trs., Police

& Firemen's Ret. Sys.,  206 N.J. 14, 27 (2011)). In reviewing the agency's

decision, we consider:

             (1) whether the agency's action violates express or
             implied legislative policies, that is, did the agency
             follow the law;

             (2) whether the record contains substantial evidence to
             support the findings on which the agency based its
             action; and


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             (3) 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.

             [Ibid. (quoting In re Stallworth,  208 N.J. 182, 194
             (2011)).]

      "A reviewing court 'must be mindful of, and deferential to, the agency's

expertise and superior knowledge of a particular field.'" Id. at 158 (quoting

Circus Liquors, Inc. v. Governing Body of Middletown Twp.,  199 N.J. 1, 10

(2009)). "A reviewing court 'may not substitute its own judgment for the

agency's, even though the court might have reached a different result. '"

Stallworth,  208 N.J. at 194 (quoting In re Carter,  191 N.J. 474, 483 (2007)).

"Deference to an agency decision is particularly appropriate where

interpretation of the [a]gency's own regulation is in issue." R.S. v. Div. of Med.

Assistance & Health Servs.,  434 N.J. Super. 250, 261 (App. Div. 2014) (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)). "However, a reviewing court is 'in

no way bound by [an] agency's interpretation of a statute or its determinati on of

a strictly legal issue.'" Allstars Auto Grp.,  234 N.J. at 158 (alteration in original)

(quoting Dep't of Children & Families, Div. of Youth & Family Servs. v. T.B.,

 207 N.J. 294, 302 (2011)).


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      "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. 2017) (quoting Estate of

DeMartino v. Div. of Med. Assistance & Health Servs.,  373 N.J. Super. 210,

217 (App. Div. 2004)); 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).

      Pursuant to the New Jersey Medical Assistance and Health Services Act,

 N.J.S.A. 30:4D-1 to -19.5, DMAHS is responsible for administering Medicaid

in our State.  N.J.S.A. 30:4D-4. 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." Estate of Brown,  448 N.J. Super. at 257; see also N.J.A.C. 10:71-

3.15; N.J.A.C. 10:71-1.2(a).

      In New Jersey, the Medicaid applicant is "the primary source of

information.   However, it is the responsibility of the agency to make 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

must "[a]ssist the applicant[] in exploring their eligibility for assistance[,]" and


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"[m]ake 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)(3) to (4). However, the applicant must: "1. [c]omplete,

with assistance from the CWA if needed, any forms required by the CWA as a

part of the application process; 2. [a]ssist the CWA in securing evidence that

corroborates his or her statements; and 3. [r]eport promptly any change affecting

his or her circumstances." N.J.A.C. 10:71-2.2.

            The CWA shall verify the equity value of resources
            through      appropriate     and     credible    sources.
            Additionally, the CWA shall evaluate the applicant's
            past circumstances and present living standards in order
            to ascertain the existence of resources that may not have
            been reported. 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 bears a duty to cooperate fully with the CWA in its verification

efforts, providing authorization to the CWA to obtain information when

appropriate. N.J.A.C. 10:71-4.1(d)(3)(i).

            If verification is required in accordance with the
            provisions of N.J.A.C. 10:71-4.1(d)[(3)], the CWA
            shall . . . . verify the existence or nonexistence of any
            cash, savings or checking accounts, time or demand
            deposits, stocks, bonds, notes receivable or any other

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             financial instrument or interest. Verification shall be
             accomplished through contact with financial
             institutions, such as banks, credit unions, brokerage
             firms and savings and loan associations. Minimally,
             the CWA shall contact those financial institutions in
             close proximity to the residence of the applicant or the
             applicant's relatives and those institutions which
             currently provide or previously provided services to the
             applicant.

             [N.J.A.C. 10:71-4.2(b)(3).]

      The CWA may perform a "[c]ollateral investigation" wherein the agency

contacts "individuals other than members of applicant's immediate household,

made with the knowledge and consent of the applicant[.]" N.J.A.C. 10:71-

2.10(a). "The primary purpose of collateral contacts is to verify, supplement or

clarify essential information." N.J.A.C. 10:71-2.10(b). Neither N.J.A.C. 10:71-

4.1(d)(3) nor N.J.A.C. 10:71-2.10 require a CWA to undertake an independent

investigation of an applicant. The agency instead is charged with verifying

information provided by an applicant. For example, while N.J.A.C. 10:71-

4.2(b)(3) requires the CWA to contact an applicant's financial institutions to

verify an account's existence, it does not require the agency to obtain records

directly from a financial institution.

      Having carefully reviewed the record and applicable legal principles, we

conclude DMAHS's decision is not arbitrary, capricious, or unreasonable and


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comports with controlling law. The CWA's role is to assist the applicant in

completing an application and to verify financial information when necessary.

The CWA twice extended the deadline for submission of J.F.'s bank statements.

He did not submit those documents in a timely manner. The CWA acted

reasonably in upholding the denial of benefits.

      We also disagree with J.F.'s argument that the CWA violated federal law

by not adequately assisting him in completing his application. DMAHS, as our

State Medicaid "agency[,] must request and use information relevant to

verifying an individual's eligibility for Medicaid in accordance with § 435.948

through § 435.956 of this subpart."        Income and Eligibility Verification

Requirements, 42 C.F.R. § 435.945(b) (2017).          To fulfill this obligation

DMAHS must request:

            (1) Information related to wages, net earnings from
            self-employment, unearned income and resources from
            the State Wage Information Collection Agency
            (SWICA), the Internal Revenue Service (IRS), the
            Social Security Administration (SSA), the agencies
            administering the State unemployment compensation
            laws, the State-administered supplementary payment
            programs under section 1616(a) of the Act, and any
            State program administered under a plan approved
            under Titles I, X, XIV, or XVI of the Act; and

            (2) Information related to eligibility or enrollment from
            the Supplemental Nutrition Assistance Program, the


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            State program funded under part A of title IV of the
            Act, and other insurance affordability programs.

            [42 C.F.R. § 435.948(a)(1) to (2) (2013).]

In addition, DMAHS may request "information relating to financial eligibility

from other agencies in the State and other States and Federal programs to the

extent the agency determines such information is useful to verifying the

financial eligibility of an individual[.]" 42 C.F.R. § 435.948(a)(2013). Bank

records do not fall within the scope of 42 C.F.R. § 435.948(a)(1).

      Additionally, while the CWA cannot mandate applicants submit financial

information for eligibility verification when that information is available

electronically under 42 C.F.R. § 435.952(c) (2016), New Jersey's AVS, a system

for gathering financial information electronically, was not yet operational at the

time J.F.'s application was considered.

      Finally, we reject J.F.'s argument that his application was improperly

denied because the CWA had sufficient information with respect to his account.

J.F. relies on the bank receipt showing that the checking account was closed in

2015 with a final balance of $19.16. To determine eligibility, however, DMAHS

must examine an applicant's transfer of resources during a sixty-month look-

back period. N.J.A.C. 10:71-4.10(a). The fact that J.F.'s account had a small



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amount of funds at the time it was closed in 2015 does not shed light on transfers

from that account during the sixty-month look-back period.

      Affirmed.




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