A.F. VS. DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES (DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES)

• Court: New Jersey Superior Court Appellate Division
• Decided: July 23, 2018
• Docket: A-2163-16T1
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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-2163-16T1

A.F.,

Petitioner-Appellant,

v.

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

Respondents-Respondents. _____________________________________

Argued April 11, 2018 – Decided July 23, 2018

Before Judges Fuentes and Manahan.

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

Lawrence S. Berger argued the cause for appellant (Berger & Bornstein, LLC, attorneys; Lawrence S. Berger, on the brief).

Caroline Gargione, Deputy Attorney General, argued the cause for respondent Division of Medical Assistance and Health Services (Gurbir S. Grewal, Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Caroline Gargione, on the brief).

Johnson & Johnson, attorneys for respondent Morris County Board of Social Services, join in the brief of respondent Division of Medical Assistance and Health Services.

PER CURIAM

A.F. suffered an accident twenty years ago that caused severe

injuries to her cervical spine. As a result of this accident, she

is quadriplegic. It is undisputed that A.F. is totally disabled

and needs personal assistance to perform the personal, social, and

biological functions of daily living. She depends upon Medicaid

benefits to provide her with the assistance she needs. On December

9, 2016, the Director of the State Department of Human Services,

Division of Medical Assistance and Health Services, issued an

order upholding the termination of A.F.'s Medicaid benefits. A.F.

now appeals from this order arguing that the Director's decision

was arbitrary, capricious, and unreasonable, and violated the

procedures established in our State's administrative code for

redetermining a Medicaid recipient's eligibility to continue to

receive benefits.

The Director argues the Morris County Board of Social Services

(Board) properly terminated A.F.'s Medicaid benefits because she

failed to provide the Board with necessary information to verify

her continued eligibility to receive benefits. The Director also

argues that A.F.'s argument based on the Board's failure to follow

2 A-2163-16T1 established regulatory procedures before terminating her benefits

is "outside the scope of this appeal."

After reviewing the record developed by the parties and

mindful of prevailing legal standards, we reverse. The Board's

failure to follow the procedures codified in N.J.A.C. 10:71-8.1

are not outside the scope of the issues before this court. These

irregularities contributed to the misinformation undermining the

Board's decision to deny A.F.'s redetermination application and

ultimately formed the basis for the wrongful termination of A.F.'s

Medicaid benefits. The Director's decision was thereafter

materially tainted by the Board's threshold error. Finally, the

Director failed to give due deference to the Administrative Law

Judge's (ALJ) findings. Consequently, the Director's decision and

order terminating A.F.'s Medicaid benefits must be vacated as

arbitrary, capricious, and unreasonable.

I

The Board is required to redetermine a recipient's

eligibility to receive Medicaid benefits "at least once every 12

months." N.J.A.C. 10:71-8.1(a). On January 12, 2016, the Board's

"Human Service Specialist" sent A.F. a form-letter that stated:

"In order to determine eligibility for the MEDICAID Program(s),

we require the following verification[.]" The Form contained a

number of categories of information with boxes next to them. Three

3 A-2163-16T1 categories were checked with an "X," requiring A.F. to provide the

following: (1) Verification of Address – Utility Bill; (2) a

completed PA-1G-NJR2 forms for September 2014, and September 2015

redetermination; and (3) copies of September 2014, and September

2015 bank statements.

The form-letter directed A.F. to return "the necessary

information IMMEDIATELY" by regular mail or email to Ms. Garcia,

and provided Garcia's email address and fax number. The form-

letter concluded with the following admonition:

If you do not respond [by] 01/22/2016 we will have to assume that you are no longer in need of assistance and you will not receive benefits. If you have any questions, or cannot provide necessary information, please contact your caseworker at the number listed above. We will be happy to help you in any way that we can.

The record shows that A.F. responded and provided the information

requested on February 10, 2016.

In a second identically formatted letter dated March 11,

2016, the Board placed an "X" next to the boxes requesting the

following information: (1) completed PA-1G-NJR2 forms for

September 2014 redetermination; and (2) "Life Insurances: Banner

Acct. # _______ and Transamerica Acc.# _______."1 The Board did

1 We have not included the actual account numbers to protect appellant's privacy.

4 A-2163-16T1 not provide any additional information concerning these two

insurance policies or explain how they related to A.F.'s

redetermination for Medicaid eligibility. The March 11, 2016

form-letter gave A.F. until March 22, 2016 to respond and concluded

with the same admonition. According to A.F., she did not receive

the Board's letter until March 15, 2016.

For reasons not disclosed in this record, A.F. did not respond

to the Board's request nor make any effort to contact the

caseworker by phone, mail, or email to solicit more information

on the nature of the requested information or request an extension

of the deadline to provide the relevant documents. In a letter

dated April 28, 2016, the Board terminated A.F.'s Medicaid

assistance. The form-letter stated: "This action was taken for

the following reason: CLIENT DID NOT SUPPLY LIFE INSURANCE

INFORMATION." The form-letter apprised A.F. that she had twenty

days to request a fair hearing and again included the telephone

number of caseworker Garcia.

In a letter also dated April 28, 2016, A.F.'s attorney advised

caseworker Garcia that he was "not clear as to what information

is being requested." Counsel asserted that A.F. did not have

insurance policies on her life. However, counsel disclosed that

he had obtained two life insurance policies with Transamerica and

Banner on his life, naming A.F. as beneficiary on both policies.

5 A-2163-16T1 Counsel also noted that the policy or account numbers listed in

the Board's March 11, 2016 letter "did not match up with any

policies that we are aware of." The Board did not respond to

counsel's request for clarification.

Unable to reach a suitable resolution, A.F. requested a fair

hearing. The matter was thereafter assigned to the Office of

Administrative Law for a hearing before an ALJ. A.F.'s Medicaid

benefits continued pending the outcome of the hearing. After

conducting two hearings, the ALJ issued his Initial Decision on

October 4, 2016. In his factual findings, the ALJ noted:

The agency conceded at the first day of the hearing that the Banner Life Insurance policy is no longer in issue. The issue was solely whether the term insurance policy issued by Transamerica was in full force and effect and if it had any surrender or cash value.

. . . .

I permitted [A.F.'s] counsel an opportunity to produce confirmation of the expired term life insurance police previously issued by Transamerica. When we reconvened on September 27, 2016, counsel presented a letter from Transamerica dated May 13, 2009, setting forth that the subject policy had lapsed.

After reviewing the relevant regulatory criteria for continued

Medicaid eligibility, the ALF concluded:

Here, the agency made one attempt to obtain information on a term insurance policy that was no longer in effect. The petitioner sought clarification but that request crossed

6 A-2163-16T1 in the mail with the adverse action notice. Even though it is now clear that the insurance policy at issue was a term policy with no cash or surrender value and had lapsed many years ago, the agency refuses to waive a few weeks delay on a redetermination application for a handicapped individual. I have seen this same agency [take] years of back and forth communications with an applicant or client attempting to verify information before taking positive or adverse action. Its actions here can only be characterized as ungenerous.

The ALJ recommended that the Director uphold A.F.'s appeal

and reverse the Board's April 28, 2016 denial of redetermination.

The Director rejected the ALJ's Initial Decision. In a Final

Agency Action dated December 9, 2016, the Director made the

following findings:

This is not a situation in which there was an ongoing exchange of information between Petitioner and [the Board]. Petitioner was asked to provide verifications with regard to two very specific requests. If Petitioner was still unsure about what was needed, she could have contacted [the Board] for clarification and an extension of time to provide the documentation. Instead, Petitioner received [the Board's] notice and then waited over a month to contact the County. The credible evidence in the record demonstrates that Petitioner failed to provide the needed information prior to the April 28, 2016 denial of benefits. Without this information, [the Board] was unable to complete its eligibility determination and the denial was appropriate.

[(Emphasis added).]

7 A-2163-16T1 II

On appeal from a final State agency determination, we can

intervene only if the decision is arbitrary, capricious,

unreasonable, Brady v. Bd. of Rev., 152 N.J. 197, 210 (1997), or

not supported by substantial credible evidence in the record. N.J.

Soc'y for the Prev. of Cruelty to Animals v. N.J. Dep't of Agric.,

196 N.J. 366, 384-85 (2008). We have articulated this standard

of review as follows:

Under the arbitrary, capricious, or unreasonable standard, our scope of review is guided by three major inquiries: (l) whether the agency's decision conforms with relevant law; (2) whether the decision is supported by substantial credible evidence in the record; and (3) whether, in applying the law to the facts, the administrative agency clearly erred in reaching its conclusion.

[Twp. Pharmacy v. Div. of Med. Assistance & Health Servs., 432 N.J. Super. 273, 283-84 (App. Div. 2013).]

The Medicaid redetermination process is carefully regulated.

For purposes of redetermination, resources are defined "as any

real or personal property which is owned by the applicant (or by

those persons whose resources are deemed available to him or her,

as described in N.J.A.C. 10:71-4.6) . . . ." N.J.A.C. 10:71-

4.1(b). Moreover, "[b]oth liquid and nonliquid resources shall

be considered in the determination of eligibility, unless such

resources are specifically excluded under the provisions of

8 A-2163-16T1 N.J.A.C. 10:71-4.4(b)." Ibid. Here, it is undisputable that the

insurance policies which prompted the cryptic March 11, 2016

request did not have any bearing on A.F.'s continued eligibility

for Medicaid benefits.

Under these undisputed facts, denying redetermination based

on A.F.'s failure to provide information which the agency conceded

would not have affected its determination of her eligibility to

receive benefits is facially an arbitrary and capricious decision.

The Director's unexplained statement concerning "the credibility

of the evidence" also failed to give proper deference to the ALJ.

As our colleague Judge King wrote sixteen years ago: "An agency

head reviewing an ALJ's credibility findings relating to a lay

witness may not reject or modify these findings unless the agency

head explains why the ALJ's findings are arbitrary or not supported

by the record." S.D. v. Div. of Med. Assistance & Health Servs.,

349 N.J. Super. 480, 485 (App. Div. 2002).

The record shows A.F. was eligible to continue to receive

Medicaid benefits at all times relevant to the Board's March 11,

2016 inquiry. The Board conceded before the ALJ that the

information it requested, even if timely received, would not have

provided a valid basis to deny A.F. Medicaid benefits. Distilled

to its essence, the Director's decision to deny Medicaid benefits

to a severely disabled person based only on her failure to timely

9 A-2163-16T1 provide irrelevant information does not promote the Medicaid

program salutary policy. Under these circumstances, the

Director's decision was arbitrary and capricious.

Reversed and remanded for the Board to reinstate A.F.'s

Medicaid benefits. We do not retain jurisdiction.

10 A-2163-16T1