RECORD IMPOUNDED
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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-3411-17T4
J.D., o/b/o K.D.,
Petitioner-Appellant,
v.
DEPARTMENT OF CHILDREN AND FAMILIES, DIVISION OF CHILDREN'S SYSTEM OF CARE,
Respondent-Respondent. _____________________________
Submitted January 28, 2020 – Decided August 19, 2020
Before Judges Accurso and Gilson.
On appeal from the New Jersey Department of Children and Families, Division of Children's System of Care, AHU No. 17-0056.
Disability Rights New Jersey, attorneys for appellant (Mary A. Ciccone and Susan Saidel, on the briefs).
Gurbir S. Grewal, Attorney General, attorney for respondent (Melissa H. Raksa, Assistant Attorney General, of counsel; Mark D. McNally, Deputy Attorney General, on the brief). PER CURIAM
Petitioner J.D. appeals from a final agency decision upholding the plan
of the Department of Children and Families, Division of Children's System of
Care to reduce the behavioral services it provides to her minor son, K.D., to
address his severe autism. She argues that she was inappropriately assigned
the burden of proof in the hearing before the Office of Administrative Law as
to the reasonableness of the plan and that, in any event, the Division's decision
was contrary to federal Medicaid law and the Americans with Disabilities Act
under Olmstead v. L.C. ex rel. Zimring, 527 U.S. 581, 587, 597 (1999).
The Division counters that J.D. was appropriately assigned the burden of
proof on the case she brought at the OAL, a challenge to the Division's
decision regarding her son's eligibility for services, see N.J.A.C. 3A:40-5.1(b),
and that we should not consider the other issues J.D. raises regarding Medicaid
law and Olmstead because J.D. never addressed those issues during the
hearing, raising them only in her written summation to the Administrative Law
Judge. The Division asserts it was thus deprived the opportunity to create a
record on those issues, contrary to N.J.S.A. 52:14B-9(c), and, indeed, that it is
not even clear the OAL has jurisdiction to address ADA claims, see Hirsch v.
N.J. State Bd. of Med. Exam'rs, 128 N.J. 160, 161-62 (1992).
A-3411-17T4 2 J.D. does not dispute that she did not raise the principal issues she
addresses on appeal — that the Division's "hard cap" of seventeen hours of in-
home behavioral services per week fails to comply with federal Medicaid
requirements and also violates the ADA and Olmstead because it exposes her
son to the risk of unnecessary institutionalization — until written summations,
weeks after both parties had rested their cases. She contends, however, that, as
to the Medicaid issue, her delay was caused by the State's failure to mention
that the Division's services to her son are funded through Medicaid. She does
not explain her delay in raising her claims under the ADA and Olmstead.
We have considered whether we can or should address the issues J.D.
raises as to the Division's compliance with federal Medicaid requirements and
the ADA under Olmstead. Appellate review, as the Supreme Court has again
recently reminded, is "not unbounded." S.C. v. Dep't of Children & Families,
___ N.J. ___, ___ (May 27, 2020) slip op. at 59 n.10. We ordinarily will not
consider an issue never explicitly advanced as a claim until after the OAL
hearing concluded. In re Stream Encroachment Permit, Permit No. 0200-04-
0002.1 FHA, 402 N.J. Super. 587, 602 (App. Div. 2008).
Critically, J.D.'s failure to raise the principal issues she asserts on appeal
until after the parties' had put on their proofs has left the record insufficient
A-3411-17T4 3 even to determine the plan's precise connection to Medicaid in the first
instance, let alone whether it complied with federal law in challenged respects.
We, nevertheless, deem the issues of significant public interest to warrant
review. See Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973).
Accordingly, we remand the matter to the Division for the development of an
appropriate record sufficient to permit review of the issues raised on appeal.
Given our disposition, we limit our discussion of the facts and the issue s.
By way of brief background, petitioner and her husband became resource
parents for their son K.D. when he was a year old. He suffered from fetal
alcohol syndrome and had related minor developmental delays and some
hyperactivity for which he received early intervention services. With those
caveats, he seemed to be developing normally enough until four months after
his third birthday, when, in the space of a week, he lost all language and
communication skills, all self-help skills and the ability to interact or play.
Doctors diagnosed him with Childhood Disintegrative Disorder, a condition
falling at the most severe end of the autism spectrum.
K.D.'s dangerous behavior in the time that followed, including running
away, self-injury, physical aggression, and pica — the ingestion of inedible
matter — resulted in his hospitalization for six months. On his discharge in
A-3411-17T4 4 February 2011, the Division of Developmental Disabilities (DDD) of the
Department of Human Services afforded him access to in-home support
services with a board-certified behavioral analyst as part of its Children's
Placement Enhancement Pilot (CPEP) program. The Division maintains CPEP
was a small program in DDD meant to fund services necessary to maintain
stability in the home while a child awaited out-of-home placement. Since
2011, when K.D. was six years old, DDD began providing K.D. fifty-two
hours a week of in-home behavior support services during those weeks the boy
was in school and up to eighty-seven and one-half hours a week during school
breaks and summer vacation.
The CPEP program ended in 2013 when the State moved all DDD
services for children under twenty-one to the Division of Children and
Families. The thirty-two children receiving services under the program were
transferred to the Division's Children's System of Care (CSOC) in DCF. Over
the next three years, the Division developed its own network of providers and
programs, as well as a treatment model meant to be more clinically sound,
efficient, and "sustainable" than that under CPEP, but in the interim
maintained services for all children from the program, including K.D., at thei r
existing levels.
A-3411-17T4 5 For children on the autism spectrum, the Division developed its program
using applied behavioral analysis methods for intervention, assigning higher
need children such as K.D. to between fifteen and seventeen hours per week of
in-home applied behavioral services and three hours per week with a board-
certified behavior analyst. The Division presented testimony at the hearing
that the support services it provided were limited and meant only to
supplement those already supplied by a child's school district. Moreover, the
Division maintained it was tasked with allocating finite resources among
thousands of children with developmental disabilities in a fair and sustainable
manner. Although it endeavored to provide a level of support responsive to
each child's needs, it could not offer more than what its treatment program
permitted. Nonetheless, the Division contended that families of children
whose needs exceeded availability could still work with their care management
organizations, private insurance, or Medicaid to obtain additional support
services.
The Division advised the care management organizations responsible for
administering the children's support services in spring 2015 that they would
eventually need to "titrate" — that is, reduce — the children's support services
to fit within the Division's program. In spring 2016, the care management
A-3411-17T4 6 organizations were instructed to begin discussions with the children's families
to negotiate titration plans to that end. The Division, however, imposed no
specific deadlines or timeframes in order to allow the families flexibility . A
representative of K.D.'s care management organization attempted to work out a
gradual reduction in services in May or June 2016, but the family would not
negotiate any change. In September 2016, the Division implemented a
titration plan reducing K.D.'s services from fifty-two to thirty-seven hours per
week.
The behavior analyst who had worked with K.D. since his release from
the hospital in 2011, testified he benefited from the level of services
previously afforded through DDD and required continuation of services at that
level to effectively manage his behavior. Among his problematic behaviors
she addressed during that time, with varying frequency, were self-injury,
including hitting himself in the head with a closed fist; physical aggression
toward others, including hitting, kicking, and biting; pica; breaking and
throwing items; running away; climbing on furniture, windows, or railings;
crying and throwing tantrums; and touching or attempting to climb into the
oven.
A-3411-17T4 7 The analyst acknowledged that K.D. continued to engage in those
behaviors in the family home and that, given his diagnosis of Childhood
Disintegrative Disorder, his prognosis was poor. She maintained, however,
that the services helped him manage those behaviors, and, that under CPEP,
K.D. had slowly reacquired some skills, including learning to nod his head,
engage in communication by "pecking symbols," and sometimes use the toilet.
Based on data collected by the analyst and K.D.'s parents, however, K.D. had
seen a significant increase in problematic behaviors since the Division
imposed the titration plan with month-over-month increases of as much as 385
percent. The analyst testified that increasing K.D.'s services back to CPEP
levels would allow him to continue to live safely at home with his family. She
acknowledged, however, that, as K.D. got older — and stronger — his needs
could become so great as to render home placement unfeasible.
J.D. filed an administrative appeal in 2016, challenging the reduced
services reflected by the titration plan as insufficient to meet her son's needs.
The matter was transferred to the OAL, which conducted a fair hearing over
two days in 2017. Assignment of the burden of proof was a matter of dispute
from the outset, but the parties agreed the Division would present its evidence
A-3411-17T4 8 first, with the expectation the ALJ would ultimately assign the appropriate
burden.
The parties submitted their written summations more than two months
after the last hearing date, with J.D. raising for the first time the notion that
K.D.'s treatment plan failed to comply with the Medicaid program and the
ADA, 42 U.S.C.A. §§ 12101-12213 and Olmstead. The ALJ made no formal
assignment of the burden of proof in his recommended decision, but generally
accorded J.D.'s evidence greater attention and scrutiny and ultimately found,
with little elaboration, that K.D.'s condition was extraordinarily severe to the
point of perhaps not being amenable to adequate treatment with the resources
respondent could make available. He concluded that K.D. should comply with
respondent's titration program and explicitly contemplated, if titration proved
unfeasible, that K.D. might not qualify for further benefits and may need to be
considered for out-of-home placement. The ALJ did not address J.D.'s
arguments as to Medicaid or the ADA, even to reject them as untimely raised.
J.D. timely filed exceptions, again raising an issue as to the appropriate
assignment of the burden of proof and arguing the initial decision was contrary
both to the record and to Medicaid requirements and the ADA. The
Commissioner Designate of DCF issued a final agency decision in February
A-3411-17T4 9 2018, adopting the ALJ's initial decision and affirming the Division's
implementation of the titration plan, without any explicit acknowledgement of
J.D.'s arguments as to the burden of proof, Medicaid, or the ADA.
On appeal, J.D. argues, in addition to maintaining the decision was not
supported by the record, that the agency's decision was unreasonable because
the titration plan violated federal Medicaid requirements because it imposed a
hard limit on behavioral services, rather than tailoring the plan to his
individual needs, and that the plan violated the ADA by exposing her son to
the risk of unnecessary institutionalization. As already noted, the record is
inadequate to permit us to resolve either claim.
Medicaid is a federally established but state-run program, Estate of F.K.
v. Div. of Med. Assistance & Health Servs., 374 N.J. Super. 126, 134 (App.
Div. 2005), that "provide[s] medical assistance" at public expense "to
individuals 'whose income and resources are insufficient to meet the cost of
necessary medical services,'" N.M. v. Div. of Med. Assistance & Health
Servs., 405 N.J. Super. 353, 359 (App. Div. 2009) (quoting 42 U.S.C.A.
§ 1396). Participation is voluntary, but each participating state must comply
with all federal statutory and regulatory requirements, Mistrick v. Div. of Med.
Assistance & Health Servs., 154 N.J. 158, 166 (1998), and must adopt and
A-3411-17T4 10 adhere to a plan establishing the scope of its program and setting forth
reasonable standards for administration, Wilder v. Va. Hosp. Ass'n, 496 U.S.
498, 502 (1990). Federal approval of such a plan permits the state to receive
matching federal funds for applicable medical services reimbursed through the
program. 42 U.S.C.A. § 1396b.
As pertinent here, each participating state must provide "early and
periodic screening, diagnostic, and treatment services" (EPSDT) for all eligible
minors under the age of twenty-one, 42 U.S.C.A. § 1396d(a)(4)(B), along with
"[s]uch other . . . health care, diagnostic services, treatment, and other
measures" that are "necessary . . . to correct or ameliorate defects and physical
and mental illnesses and conditions discovered by the screening services,
whether or not such services are covered under the State" plan for adults,
§ 1396d(r)(5). Each covered service "must be sufficient in amount, duration,
and scope to reasonably achieve its purpose," although the state agency
responsible for the Medicaid program "may place appropriate limits on a
service based on such criteria as medical necessity or on utilization control
procedures." 42 C.F.R. § 440.230.
In that connection, federal guidance explains that EPSDT services must
be provided only if "medically necessary," elaborating:
A-3411-17T4 11 The determination of whether a service is medically necessary for an individual child must be made on a case-by-case basis, taking into account the particular needs of the child. The state (or the managed care entity as delegated by the state) should consider the child’s long-term needs, not just what is required to address the immediate situation. The state should also consider all aspects of a child’s needs, including nutritional, social development, and mental health and substance use disorders. . . .
[U.S. Dep't of Health & Human Servs., EPSDT – A Guide for States, at 23 (June 2014) (emphasis added), https://www.medicaid.gov/sites/default/files/2019- 12/epsdt_coverage_guide.pdf.]
However, to the extent such services qualify as medically necessary for a
particular child, they must be covered irrespective of budgetary constraints:
Because medical necessity decisions are individualized, flat limits or hard limits based on a monetary cap or budgetary constraints are not consistent with EPSDT requirements. States may adopt a definition of medical necessity that places tentative limits on services pending an individualized determination by the state, or that limits a treating provider's discretion, as a utilization control, but additional services must be provided if determined to be medically necessary for an individual child. For example, while a state may place in its State Plan a limit of a certain number of physical therapy visits per year for individuals age 21 and older, such a "hard" limit could not be applied to children. A state could impose a "soft" limit of a certain number of physical therapy visits annually for children, but if it were to be determined in an individual child's case, upon review, that additional physical therapy services were
A-3411-17T4 12 medically necessary to correct or ameliorate a diagnosed condition, those services would have to be covered.
[Id. at 23-24.]
J.D.'s position is that the behavioral services the Division affords to K.D.
qualify as mandatory EPSDT services, which the State is "or should be"
funding through Medicaid under the terms of New Jersey's Medicaid waiver
plan (emphasis added). The Division, she argues, must therefore adhere to
federal requirements prohibiting imposition of any hard limits on those
services. It would thus follow that the reduction of care in K.D.'s titration plan
was improper, because it was made pursuant to a hard limit of fifteen to
seventeen hours per week, rather an individualized determination of his
medical needs.
The problem is that J.D. cannot assert with confidence that the State
funds the services it provides her son through Medicaid. The Division's
regulations contemplate its funding may come from Medicaid, but not
necessarily so:
An applicant who is deemed eligible to receive functional services from the CSOC shall, as a condition of continuing eligibility, apply for all benefits, including, but not limited to, Medicaid, NJ Family Care and any other State or Federal benefits for which he or she may be eligible and comply with
A-3411-17T4 13 the requirements for continuing eligibility if found eligible. The CSOC does not provide services that are available through other sources.
1. Notwithstanding the requirement to apply for benefits as set forth in this subsection, denial of an application for benefits does not constitute grounds for finding an individual ineligible for functional services from the CSOC.
[N.J.A.C. 3A:40-2.1(b).]
Further, although J.D. is correct that the behavioral services the Division
makes available to children with "serious emotional disturbance" such as K.D.
are listed in New Jersey's Medicaid waiver, the federal Centers for Medicare &
Medicaid Services, as the Division points out, have approved that waiver
through June 2022 with the Division's existing program limits, the implication
being that those limits are not inherently problematic. NJ FamilyCare (NJFC)
Comprehensive Demonstration before Ctrs. for Medicare & Medicaid Servs.,
Special Terms and Conditions at 1, 30-31 (Aug. 2017) (amended July 25,
2019), https://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-
Topics/Waivers/1115/downloads/nj/nj-1115-request-ca.pdf. Indeed, the very
statute establishing the agency and its implementing regulations explicitly
contemplates a limitation of services based on availability:
Notwithstanding any law, rule, or regulation to the contrary, . . . the Division of Children's System of
A-3411-17T4 14 Care in the Department of Children and Families shall determine eligibility and provide support and services, deemed clinically and functionally appropriate by the Department of Children and Families, as limited by service availability and appropriations and other monies available, and to become available, for persons with developmental disabilities . . . under 21 years of age. . . .
[N.J.S.A. 30:4C-4.4(a); see also N.J.A.C. 3A:40- 1.1(b) (providing that "[t]he availability of services shall be limited to the CSOC's funding in a given fiscal year").]
Moreover, even assuming the sort of services K.D. receives nonetheless
qualify as EPSDT services, it does not follow that they also qualify as
"medically necessary" for K.D. Pursuant to the above legal framework and our
Department of Human Services' regulations, determinations of medical
necessity are fact-specific to each individual and, particularly in the case of a
minor, are sensitive to the individual's long-term needs and functional
capacity:
"Medically necessary services" means services . . . necessary to prevent, diagnose, correct, prevent the worsening of, alleviate, ameliorate, or cure a physical or mental illness or condition; . . . to promote the development or maintenance of maximal functioning capacity in performing daily activities, taking into account both the functional capacity of the individual and those functional capacities that are appropriate to individuals of the same age; to prevent or treat a condition that threatens to cause or aggravate a
A-3411-17T4 15 handicap or cause physical deformity or malfunction, and there is no other equally effective, more conservative or substantially less costly course of treatment available or suitable for the enrollee. The services provided, as well as the treatment, the type of provider and the setting, are reflective of the level of services that can be safely provided, are consistent with the diagnosis of the condition and appropriate to the specific medical needs of the enrollee and not solely for the convenience of the enrollee or provider of service and in accordance with standards of good medical practice and generally recognized by the medical scientific community as effective.
In the case of pediatric enrollees, this definition applies, with the additional criteria that the services, including those found to be needed by a child as a result of a comprehensive screening visit or an inter- periodic encounter, whether or not they are ordinarily covered services for all other Medicaid/NJ FamilyCare enrollees, are appropriate for the age and health status of the individual and that the service will aid the overall physical and mental growth and development of the individual and the service will assist in achieving or maintaining functional capacity.
[N.J.A.C. 10:74-1.4.]
Because it is not clear on this record whether the services provided to K.D. by
the Division are funded by Medicaid, whether they are implicated by the
State's most recent Comprehensive Medicaid Waiver, and, if subject to federal
Medicaid requirements, whether they are "medically necessary," in light of his
A-3411-17T4 16 long-term needs and functional capacity, we cannot resolve the issue of
whether the Division's titration plan complies with law.
We are similarly unable to resolve J.D.'s claim that the Division's
decision was unreasonable on the ground that its titration plan failed to comply
with the ADA, specifically by exposing her son to the risk of unnecessary
institutionalization. As with her Medicaid argument, J.D. undisputedly failed
to raise any issue as to the ADA in a timely manner. She offers no excuse for
the delay.
J.D. relies for her position that respondent's plan conflicts with the ADA
on Olmstead, 527 U.S. at 587, 597, where the Court concluded that placement
of a person with mental disabilities in institutional care could constitute illegal
"discrimination based on disability," if community placement was feasible and
appropriate. Yet the Court concomitantly recognized "the States' need to
maintain a range of facilities for the care and treatment of persons with diverse
mental disabilities" and their "obligation to administer services with an even
hand." Id. at 597. In light of those obligations, it held that community-based
treatment would be required only "when the State's treatment professionals
determine that such placement is appropriate, the affected persons do not
oppose such treatment, and the placement can be reasonably accommodated,
A-3411-17T4 17 taking into account the resources available to the State and the needs of others
with mental disabilities." Id. at 607 (emphasis added).
J.D. argues on appeal that implementation of the Division's titration plan
put K.D. at serious risk of institutionalization, pointing to the ALJ's conclusion
that, if the plan proved unsuccessful, alternative services such as out-of-home
placement might be required. She maintains the only evidence in the record as
to the adequacy of K.D.'s treatment showed that the level of services
previously afforded to him through DDD were sufficient to manage his
behavior. J.D. acknowledges the "integration mandate under Olmstead [wa]s
not absolute," but faults the Division for failing to present any evidence at the
hearing to show that this limitation of benefits did not run afoul of that
mandate.
The problem, of course, is that J.D. never raised the issue in time to put
the Division on notice it would have to present any such evidence. As such,
the record is inadequate to permit review of her claim under the ADA.
Because we have determined a remand is necessary for the development
of the record, we do not address J.D.'s remaining arguments as to the
allocation of the burden of proof or the sufficiency of the evidence to support
the Commissioner's decision. We note this case was not argued. The hearing
A-3411-17T4 18 before the ALJ took place three years ago. K.D. is now fifteen years old. His
situation may well be different than what is was then. We do not presume the
issues or arguments the parties will address at a new hearing.
Because the record developed before the ALJ is inadequate to determine
whether the Division's plan is even subject to federal Medicaid law, and, if so,
whether the services the Division provides K.D. are "medically necessary," in
light of his long-term needs and functional capacity, as well as whether the
Division's titration plan put K.D. at serious risk of institutionalization, in
violation of the ADA, and whether that claim is even cognizable in the OAL,
and because we think the issues of sufficient public interest, we remand the
matter to the Division for the development of an appropriate record sufficient
to permit resolution of the issues raised on appeal. We do not retain
jurisdiction.
Vacated and remanded.
A-3411-17T4 19