RECORD IMPOUNDED
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-5798-11T1
R.S.,
Petitioner-Appellant, APPROVED FOR PUBLICATION
v. January 23, 2014
APPELLATE DIVISION DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES AND UNION COUNTY BOARD OF SOCIAL SERVICES,
Respondents-Respondents. ———————————————————————————————————————
Argued October 2, 2013 – Decided January 23, 2014
Before Judges Sapp-Peterson,1 Lihotz and Hoffman.
On appeal from the Department of Human Services, Division of Medical Assistance and Health Services, and Union County Board of Social Services.
Eugene S. Rosner argued the cause for appellant (Fink, Rosner, Ershow-Levenberg, LLC, attorneys; Mr. Rosner, on the brief).
Kay R. Ehrenkrantz, Deputy Attorney General, argued the cause for respondent Division of Medical Assistance and Health Services (John J. Hoffman, Acting Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Ms. Ehrenkrantz, on the brief).
1 Judge Sapp-Peterson did not participate in oral argument. She joins the opinion with the consent of counsel. R. 2:13-2(b). Respondent Union County Board of Social Services has not filed a brief.
The opinion of the court was delivered by
HOFFMAN, J.A.D.
In this appeal, we are asked once again to address "the
continuing tension between the State's effort to conserve
Medicaid resources for the truly needy and the legal ability of
institutionalized Medicaid recipients to shelter income for the
benefit of their non-institutionalized spouses." H.K. v. Div.
of Med. Assistance & Health Servs., 379 N.J. Super. 321, 323
(App. Div. 2005). Petitioner R.S. appeals from a final agency
decision of the Division of Medical Assistance and Health
Services (Division) finding that the community spouse monthly
income allowance (CSMIA) for his wife, D.S., should be
calculated in accordance with 42 U.S.C.A. § 1396r-5(e)(2)(B) and
N.J.A.C. 10:71-5.7(e), rather than pursuant to a separate
maintenance order entered by the Family Part. Following our
review, we conclude the Division, when determining the
institutionalized spouse's obligation for his nursing home care,
is not bound to abide by the terms of a Family Part non-
dissolution separate maintenance order, entered in a non-
contested proceeding, without notice to the Division, because
the Order was designed to circumvent the regulations governing
2 A-5798-11T1 the CSMIA. We affirm, concluding the Order "transgressed the
permissible limits of Medicaid planning[.]" H.K., supra 379
N.J. Super. at 323.
I.
R.S. and D.S. were married on September 9, 1978. As a
result of physical and mental ailments, R.S. began residing at
the Kessler Rehabilitation Center on November 1, 2010.
Thereafter, R.S. moved to the Cornell Hall Nursing and
Rehabilitation Center for further rehabilitation and long-term
custodial care, which he will require for the rest of his life.
Since November 1, 2010, R.S. and D.S. have been living
separately, with D.S continuing to reside in the marital home.
On November 4, 2010, D.S. filed a complaint for separate
maintenance wherein she requested a judgment compelling R.S. to
pay her support equaling the amount of R.S.'s Social Security
income, asserting R.S.'s income is necessary for D.S. "to meet
her basic expenses to remain in the marital home . . . [and]
maintain a reasonable approximation of the marital standard of
living enjoyed prior to the separation of the parties." In the
complaint, D.S. claimed R.S. had "separated himself from [D.S.]
and ha[d] refused and neglected to support [D.S.] within the
meaning of N.J.S.A. 2A:34-24." D.S. attached to her complaint a
Family Part case information statement (CIS) detailing her
3 A-5798-11T1 income, expenses, assets and liabilities, in which she disclosed
she was employed and earning an annual salary of $22,679.
On November 24, 2010, R.S.'s attorney accepted service of
the complaint. Neither the Union County Board of Social
Services (Board) nor the Division received notice of the Family
Part proceedings, even though D.S.'s complaint stated she was
"about to file a[n] application for . . . Medicaid benefits
pursuant N.J.S.A. 30:4D et seq. and N.J.A.C. 10:71 et seq." on
R.S.'s behalf, and further alleged that R.S. "meets the
financial and medical criteria for eligibility."
R.S. did not oppose his wife's action nor is there evidence
a hearing was held. An order issued by the court on December
10, 2010 required R.S. to pay D.S. "an amount equal to [R.S.'s]
net Social Security benefit; that is, after the deduction of the
Medicare premium, supplemental insurance premium and the
Medicaid 'Personal Needs Allowance,' for her support." The
order was retroactive to November 2010. Because D.S.
inadvertently omitted income R.S. received from a worker's
compensation award, on March 30, 2011, the judge issued an
amended order (the Order) including this additional income as
part of R.S.'s support obligation. Therefore, the Order
required R.S. to pay D.S. $3460.20 per month in spousal support,
consisting of his monthly social security and worker's
4 A-5798-11T1 compensation income benefits, less the designated offsets for
R.S.'s personal allowance and health insurance premiums.
On May 12, 2011, the Board received a Medicaid application
for R.S.2 On September 20, 2011, the Board determined R.S.
eligible for Medicaid as a "medically needy" recipient,
effective April 1, 2011. The Board did not recognize the Order
in its "Statement of Available Income for Medicaid Payment."
Rather, the Board decided, D.S. was entitled to a CSMIA3 of
$1514.93 per month, allowing her to meet her minimum monthly
maintenance needs amount (MMMNA), as calculated pursuant to
N.J.A.C. 10:71-5.7(c).
R.S. appealed the Board's determination at a hearing before
the Office of Administrative Law (OAL), claiming that N.J.A.C.
10:71-5.7(f) required the allocation of R.S.'s income consistent
with the Order rather than in accordance with the CSMIA
calculated by the Board. R.S. further sought an award of
2 Appellant's brief indicates that D.S. made the application on R.S.'s behalf; however, the application bears the signature of Irene Quesada, designated as R.S.'s "authorized representative." According to respondent's brief, Ms. Quesada is a legal assistant employed by Fink, Rosner, Ershow-Levenberg, LLC, who represented D.S. in the initial family court matter and R.S. on this appeal. 3 42 U.S.C.A. § 1396r(D)(2) uses the term "community spouse monthly income allowance," while N.J.A.C. 10-71:5.7(c) refers to this amount as "community spouse's maintenance deduction." For purposes of clarity and consistency, we use the former (CSMIA).
5 A-5798-11T1 attorney's fees and costs under 42 U.S.C.A. §§ 1983 and 1988,
alleging the Board's findings, as adopted by the Division,
denied his rights under federal and state law.
Administrative Law Judge Caridad Rigo (ALJ) rejected R.S.'s
contentions in an initial decision issued on April 5, 2012. The
ALJ noted the Board was not provided notice of the Family Part
proceedings nor did it have an opportunity to be heard; further,
"the issue in Superior Court was not the community spousal
support in relation to Medicaid[,] but rather spousal support in
relation to the Family Law statutes and regulations." Relying
on H.K., Judge Rigo found the appeal represented an attempt to
use a support order "to circumvent the Medicaid regulations
concerning . . . spousal allowance[,]" and concluded "this case
does not exhibit the requisite medical and financial duress or
any exceptional circumstances where an increase of spousal
maintenance allowance is required [or] justified."
On July 2, 2012, the Division adopted the ALJ's decision
agreeing D.S.'s "ordinary and regular expenses" did not meet the
"exceptional circumstances threshold" required for an increase
in the CSMIA, pursuant to 42 U.S.C.A. § 1396r-5(e)(2)(B). In
declining to give effect to the amended support order, the
Division noted:
A review of the record indicates that the wife's action in family court was not
6 A-5798-11T1 adversarial and was chosen to avoid following the Medicaid spousal impoverishment rules so as to "protect" income for her monthly expenses such as: $150 for hair care or $1,800 yearly; . . . $50 for unspecified contributions or $600 a year; $100 for life insurance or $1,200 a year.
After reviewing the legislative history of 42 U.S.C.A. § 1396r-
5(d)(5), the Division emphasized that R.S.'s wife "has not
claimed any 'special circumstances' in this matter or before the
family court" that would warrant enforcement of the amended
support order. Appellant appeals from this final agency
decision.
II.
Established by Title XIX of the Social Security Act, the
Medicaid program is a joint federal-state program in which the
federal government provides "financial assistance to states that
choose to reimburse certain costs of medical treatment for needy
persons." Harris v. McRae, 448 U.S. 297, 301, 100 S. Ct. 2671,
2680, 65 L. Ed. 2d 784, 794 (1980); see also 42 U.S.C.A. § 1396.
Simply put, Medicaid "provide[s] medical assistance to the poor
at the expense of the public." Mistrick v. Div. of Med.
Assistance & Health Servs., 154 N.J. 158, 165 (1998). Although
participation is optional, states that do participate must
adhere to the requirements of Title XIX. Harris, supra, 448
U.S. at 301, 100 S Ct. at 2680, 65 L. Ed. 2d at 794.
7 A-5798-11T1 Participating states must develop a plan including "'reasonable
standards . . . for determining eligibility for and the extent
of medical assistance . . . [that is] consistent with the
objectives' of the Medicaid program." L.M. v. Div. of Med.
Assistance & Health Servs., 140 N.J. 480, 484 (1995) (alteration
in original) (quoting 42 U.S.C.A. § 1396a(a)(17)(A)).
New Jersey elected to participate in the Medicaid Program
by adopting the New Jersey Medical Assistance and Health
Services Act (the Act). N.J.S.A. 30:4D-1 to -19.5. The
Division is the "'single [s]tate agency' responsible for
administering New Jersey's Medicaid program." In re A.N., 430
N.J. Super 235, 243 (App. Div. 2013); see also N.J.S.A. 30:4D-7
(authorizing commissioner to issue through the Division "all
necessary rules and regulations and administrative
orders . . . to secure for the State of New Jersey the maximum
federal participation that is available with respect to a
program of medical assistance”). In administering New Jersey's
Medicaid program, the Division has promulgated comprehensive
regulations delineating the program's scope and procedures.
See, e.g., N.J.A.C. 10:71-2.1 to -2.16 (establishing application
process); N.J.A.C. 10:71-3.1 to -3.16 (establishing eligibility
factors). County welfare agencies, such as the Board, "assist
[the Division] in processing applications for Medicaid and
8 A-5798-11T1 determining whether applicants have met the income and resource
eligibility standards." Cleary v. Waldman, 959 F. Supp. 222,
229 (D.N.J. 1997), aff’d, 167 F.3d 801 (3d Cir.), cert. denied,
528 U.S. 870 (1999).
Among the objectives of Medicaid is to "provide[] medical
assistance to needy persons who are institutionalized in nursing
homes as a result of illness or other incapacity." M.E.F. v.
A.B.F., 393 N.J. Super. 543, 545 (App. Div. 2007), certif.
denied, 192 N.J. 479 (2007). Before 1988, couples would "spend
down" their assets so an institutionalized spouse could qualify
for Medicaid assistance to defray the cost of his or her care.
Ibid. This practice often rendered the spouses who remained in
the community impoverished. Ibid.
In response to this trend, Congress incorporated "spousal
impoverishment provisions" in the Medicare Catastrophic Coverage
Act of 1988 (MCCA). 42 U.S.C.A. § 1396r-5(a) to (h).
Generally, Medicaid-eligible individuals pay part of the cost of
their care and "the remainder is paid by the State and Federal
governments through Medicaid." H.K., supra, 379 N.J. Super. at
324 n.2 (quoting H.R. Rep. No. 100-105(II), at 66 (1987),
reprinted in 1988 U.S.C.C.A.N. 857, 899 (1987)). Furthermore,
these provisions provide that certain allowances must be made
from the institutional spouse's income before determining how
9 A-5798-11T1 much of the monthly income is applied to the cost of care in the
institution. 42 U.S.C.A. § 1396r-5(d). One such allowance is
made for the CSMIA. 42 U.S.C.A. § 1396r-5(d)(1)(B).4
The CSMIA is "the amount by which the community spouse's
needs in the form of a minimum monthly maintenance needs
allowance (MMMNA), established by each state in compliance with
federal standards, exceeds the community's spouse's income."
M.E.F., supra, 393 N.J. Super. at 546 (citing 42 U.S.C.A. §
1396r-5(d)(2)-(3)). "The provision for this allowance ensures
that income transferred from the institutionalized spouse to the
community spouse to meet the latter's basic needs is not also
considered available for the former's care." Wis. Dep't of
Health & Family Servs. v. Blumer, 534 U.S. 473, 482, 122 S. Ct.
962, 968, 151 L. Ed. 2d 935, 945 (2002). Consequently, Medicaid
pays a greater share of the institutionalized spouse's costs of
care than it would without the CSMIA provisions. Ibid.
The MCCA also revises the minimum monthly maintenance needs
allowance by providing:
If either such spouse establishes that the community spouse needs income, above the level otherwise provided by the minimum monthly maintenance needs allowance, due to
4 Congress repealed the MCCA through the Medicare Catastrophic Coverage Repeal Act of 1989, but the spousal impoverishment prevention provisions remain in effect. Pub.L. No. 101-234, 103 Stat. 1979; Mistrick, supra, 154 N.J. at 171 n. 1.
10 A-5798-11T1 exceptional circumstances resulting in significant financial duress, there shall be substituted, for the minimum monthly maintenance needs allowance in subsection (d)(2)(A) of this section, an amount adequate to provide such additional income as is necessary.
[42 U.S.C.A. § 1396r-5(e)(2)(B).]
Pursuant to its grant of authority in the Act, the Division
issued parallel regulations. The State's CSMIA regulation
reads:
There shall be deducted from the institutionalized individual's income an amount for the maintenance of the community spouse. Except as specifically provided below, the deduction for the maintenance of the community spouse shall not exceed $1,821.25 per month . . . . In arriving at the amount that may be deducted for the maintenance of the community spouse, the deductions authorized by this section shall be reduced by the gross income of the community spouse. The community spouse deduction is authorized only to the extent that the income deducted is actually made available to (or for the benefit of) the community spouse.
[N.J.A.C. 10:71-5.7(c).]
Similar to the federal statute, the New Jersey regulations
provide for a fair hearing to contest a determination of the
deduction. N.J.A.C. 10:71-5.7(e).
Both the MCCA and the New Jersey regulations allow for
recognition of court orders for spousal support in determining
the CSMIA. Further, the MCAA provides "[i]f a court has entered
11 A-5798-11T1 an order against an institutionalized spouse for monthly income
for the support of the community spouse, the community spouse
monthly income allowance for the spouse shall be not less than
the amount of the monthly income so ordered." 42 U.S.C.A. §
1396r-5(d)(5). The analogous New Jersey regulation states:
If a court has entered an order against an institutionalized spouse for monthly income for the support of a community spouse and the amount of the order is greater than the amount of the community spouse deduction, the amount so ordered shall be used in place of the community spouse deduction.
[N.J.A.C. 10:71-5.7(f).]
Guided by the applicable legislation, we note our review of
administrative agency decisions is limited. Karins v. City of
Atl. City, 152 N.J. 532, 540 (1998). 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." Russo v. Bd. of Trs., Police and
Firemen's Ret. Sys., 206 N.J. 14, 25 (2011) (quoting In re
Herrmann, 192 N.J. 19, 27-28 (2007)). The judicial role focuses
on three inquiries:
(1) whether the agency action violates the enabling act's express or implied legislative policies; (2) whether there is substantial evidence in the record to support the findings upon which the agency based application of legislative policies; and (3) whether, in applying the legislative policies to the facts, the agency clearly
12 A-5798-11T1 erred by reaching a conclusion that could not reasonably have been made upon a showing of the relevant factors.
[H.K., supra, 379 N.J. Super. at 327 (quoting Pub. Serv. Elec. v. N.J. Dep't of Envtl. Prot., 101 N.J. 95, 103 (1985)).]
"Deference to an agency decision is particularly
appropriate where interpretation of the Agency's own regulation
is in issue." 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); see also Estate of F.K. v. Div. of Med. Assistance &
Health Servs., 374 N.J. Super. 126, 138 (App. Div.) (indicating
that we give "considerable weight" to the interpretation and
application of regulations by agency personnel within the
specialized concern of the agency), certif. denied, 184 N.J. 209
(2005). On the other hand, an appellate court is "in no way
bound by the agency's interpretation of a statute or its
determination of a strictly legal issue." Mayflower Sec. Co. v.
Bureau of Sec. in Div. of Consumer Affairs of Dep't of Law &
Pub. Safety, 64 N.J. 85, 93 (1973).
III.
R.S. argues that the final agency decision, declining to
enforce the Order, violates the plain language of the Medicaid
law and regulations. Specifically, R.S. contends the Division
ignored the clear and unambiguous language of N.J.A.C. 10:71-
13 A-5798-11T1 5.7(f) and 42 U.S.C.A. § 1396r-5(d)(5), by refusing to give
effect to the Order in determining the CSMIA for D.S. We reject
this argument. Not only does R.S.'s rigid construction ignore
the context of the Medicaid Program provisions he seeks to
apply, but also abrogates the well-defined policies of the
program and would lead to an absurd result. We conclude the
Division's determination declining to follow the Order was
neither arbitrary nor capricious.
A.
The first issue is one of statutory construction. R.S.
argues for a strict application of the canons of statutory
interpretation, contending the Board and the Division
disregarded the mandatory language of 42 U.S.C.A. § 1396r-
5(d)(5) and N.J.A.C. 10:71-5.7(f). R.S. contends the
regulations' plain language directs the Order to control the
Board's review. Such a crabbed construction cannot stand as it
abrogates the clear intent and purpose of the statute and
obviates the Division's role in safeguarding limited Medicaid
resources.
Our Court has emphasized repeatedly "when interpreting an
enabling statute or any other law, a court's obligation is to
determine and give effect to the Legislature's intent." N.J.
Ass'n of School Adm'rs v. Schundler, 211 N.J. 535, 549 (2012).
14 A-5798-11T1 "The primary task for the Court is to effectuate the legislative
intent in light of the language used and the objects sought to
be achieved." Mun. Council v. James, 183 N.J. 361, 370 (2005)
(internal citations omitted) (quoting Merin v. Maglaki, 126 N.J.
430, 435 (1992)). Our Legislature expressly articulated the
Medicaid program's goal of providing assistance to the medically
needy, declaring:
the intent of the Legislature . . . to provide medical assistance, insofar as practicable, on behalf of persons whose resources are determined to be inadequate to enable them to secure quality medical care at their own expense, and to enable the State, within the limits of funds available . . . to obtain all benefits for medical assistance provided by the Federal Social Security Act[.]
[N.J.S.A. 30:4D-2.]
Another provision authorizes the Commissioner of the
Division to issue "all necessary rules and regulations and
administrative orders . . . to secure for the State of New
Jersey the maximum federal participation that is available with
respect to a program of medical assistance, consistent with
fiscal responsibility and within the limits of funds available
for any fiscal year[.]" N.J.S.A. 30:4D-7. The Legislature's
intention is to align New Jersey's rules and regulations with
federal objectives and assure effective use of limited
resources. See ibid.; N.J.S.A. 30:4D-2; see also M.E.F., supra,
15 A-5798-11T1 393 N.J. Super. at 547 (quoting A.K., supra, 350 N.J. Super. at
180) ("[W]hen discussing Medicaid regulations concerning
resource allocation . . . the New Jersey regulations
'essentially track the federal statute.'"). Also, in deciding
whether a particular agency action is authorized, a reviewing
court "may look beyond the specific terms of the enabling act to
the statutory policy sought to be achieved by examining the
entire statute in light of its surroundings and objectives."
N.J. Ass'n of School Adm'rs, supra, 211 N.J. at 549.
The legislative history of the MCCA reflects Congress'
concern for proper allocation of financial resources. The New
Jersey Supreme Court reviewed the legislative history of the
"spousal impoverishment" provisions of the MCCA and explained:
Those provisions were intended to end the pauperization of the community spouse by allowing that spouse to protect a sufficient, but not excessive, amount of income and resources to meet his or her own needs while the institutionalized spouse was in a nursing home at Medicaid expense. Congress also recognized that because the allocation of resources depended wholly on whether a resource was in the name of one spouse or the other, couples could shelter their resources in the name of the community spouse while the institutionalized spouse would receive Medicaid coverage. MCCA closed this loophole by considering a couple's resources in their entirety, regardless of the name in which the resources were held.
16 A-5798-11T1 [Mistrick, supra, 154 N.J. at 170 (internal citations omitted).]
Congress enacted the MCCA to "assure that the community
spouse . . . has income and resources sufficient to live with
independence and dignity." M.E.F., supra, 393 N.J. Super. at
552-53 (quoting H.R. Rep. No. 100-105(II) (1988), reprinted in
1988 U.S.C.C.A.N. 857, 892).
Legislative history concerning 42 U.S.C.A. § 1396r-5(d)(5)
also supports a finding that Congress sought to strike a balance
between the maintenance of the community spouse and the
preservation of limited resources:
[I]ndividuals now can have their unique financial circumstances reviewed on a case by case basis in state court to determine the institutionalized spouse's financial responsibility to the community spouse. In this way, special circumstances can be accounted for that might otherwise not be foreseen by federal regulations. Under [the] proposed legislation, state Medicaid agencies would be required to recognize such support orders.
[M.E.F., supra, 393 N.J. Super. at 556 n.8 (quoting 132 Cong. Rec. H 11437 (October 17, 1986) (statement of Rep. Mikulski)).]
Those provisions protecting community spouses "place strict
limits on the amount of a Medicaid recipient's income that can
be used for the community spouse allowance." H.K., supra, 379
N.J. Super. at 324 (citing Blumer, supra, 534 U.S. at 481-82,
122 S. Ct. at 967-69, 151 L. Ed. 2d at 945-46). Finally, this
17 A-5798-11T1 concern for community spouses is reflected in 42 U.S.C.A. §
1396r-5(e)(2)(B), which allows for an adjustment of the MMMNA
"due to exceptional circumstances resulting in significant
financial distress[.]"
We conclude the Division's decision comports with the
legislative policies. The decision is consistent with the broad
federal and state goals of preventing the impoverishment of
community spouses, while ensuring limited Medicaid resources are
allocated prudently among those most in need.
In H.K., supra, 379 N.J. Super. at 323-26, we affirmed a
Division decision refusing to give effect to a support order
obtained in a divorce from a "bed and board" proceeding, entered
after the institutionalized spouse applied for Medicaid. This
court concluded the agency's decision was "consistent with the
language and purpose of the Medicaid statute," id. at 327, and
noted holding otherwise would invite collusive agreements to
divert an institutionalized spouse's income to the community
spouse in a manner contrary to the intent underlying Medicaid.
Ibid. (citing Estate of G.E. v. Div. of Med. Assistance & Health
Servs., 271 N.J. Super. 229, 239 (App. Div. 1994)) ("We have
previously disapproved such potentially unlimited transfers of
income from an institutionalized spouse to the community
spouse.").
18 A-5798-11T1 Thus, R.S.'s invocation of the canons of statutory
interpretation fails to adequately account for the complexity of
the Medicaid statutes and regulations, the policies underlying
Medicaid, the legislative history regarding 42 U.S.C.A. § 1396r-
5(d)(5), and the significant deference accorded agency decisions
in the Medicaid context. As the Federal District Court for the
District of New Jersey observed:
The Medicaid Act contains complex, interrelated provisions, and it would be foolhardy to impute a plain meaning to any of its provisions in isolation. A statute must be read as a whole; words depend upon context; they have only a communal existence; and not only does the meaning of such interpenetrate the other, but all in their aggregate take their purport from the setting in which they are used.
[Cleary, supra, 959 F. Supp. at 228-29 (internal quotation marks omitted).]
B.
R.S. next contends the agency's decision was unsupported
and must be set aside. In considering whether a reviewing
"court owes substantial deference to the agency's expertise and
superior knowledge of a particular field[,]" a key inquiry is
"whether the record contains substantial evidence to support the
findings on which the agency based its action." Herrmann,
supra, 192 N.J. at 28 (citation omitted). As demonstrated by
our review of the statutory context and legislative history, the
19 A-5798-11T1 claimed "plain language" reading suggested by R.S. is unfounded.
N.J. Dep't of Envtl. Prot. v. Exxon Mobil Corp., 420 N.J. Super.
395, 404 (App. Div. 2011) (quoting DiProsopero v. Penn, 183 N.J.
477, 493 (2005)) ("A reviewing court 'may also resort to
extrinsic evidence if a plain reading of the statute leads to an
absurd result or if the overall statutory scheme is at odds with
the plain language.'"). As noted in H.K., an interpretation of
N.J.A.C. 10:71-5.7(f) "permit[ting] a community spouse to obtain
an unlimited increase in the spousal allowance by obtaining a
court order for support . . . would nullify the statutory and
regulatory limitations on the community spouse allowance."
H.K., supra, 379 N.J. Super. at 328.
The Division's findings are supported by calculations of
R.S. and D.S.'s income and expenses, and its decision is further
supported by R.S.'s failure to allege any special circumstances
necessitating enforcement of the Order. Moreover, strict
enforcement of the amended support order would produce the
absurd result of providing D.S. with a monthly spousal allowance
$1945.27 greater than her MMMNA, while depleting the limited
resources available to provide for other individuals in need.
We conclude the record supports the Division's adoption of the
Board's sound methodology, which is consistent with the policies
of New Jersey's Medicaid program, specifically, N.J.A.C. 10:71-
20 A-5798-11T1 5.7(c) (providing for calculation of CSMIA) and N.J.A.C. 10:71-
5.7(e) (providing for an increase in CSMIA upon demonstration of
exceptional circumstances resulting in financial distress).
Using D.S.'s actual shelter costs, including a mortgage of $2320
per month, and other preset standards, the Board determined
D.S.'s MMMNA (labeled "total community deduction standard" on
the community spouse deduction worksheet) to be $3972.19. The
Board then subtracted $2457.26, D.S.'s monthly total gross
income, to calculate her CSMIA as $1514.93.
Pursuant to N.J.A.C. 10:71-5.7(c) and U.S.C.A. § 1396r-
5(d)(3), the Board determined that this "total community
deduction" (the CSMIA) would be deducted from R.S.'s total
monthly income of $3597.27. After accounting for minor
deductions including the personal needs allowance ($35.00) and
health insurance premiums ($102.07), R.S.'s remaining monthly
income, totaling $1945.27, would be paid toward the costs of his
care. If the March 2011 award were given effect, that $1945.27
would have been paid to D.S., making her net monthly income
$5917.46 (comprised of all of her earned income and almost all
of R.S.'s unearned income). To give effect to the amended
support order would cause the CSMIA for D.S. to more than
double, despite the absence of exceptional circumstances
resulting in financial duress. Such a result demonstrates the
21 A-5798-11T1 arbitrariness of isolating the language of N.J.A.C. 10:71-
5.7(f), as R.S. contends. Indeed, the obvious intent of the
Order was to maintain D.S.'s lifestyle prior to R.S's
institutionalization at the expense of the Medicaid program.
C.
R.S. asserts that we should defer to the Order citing the
Appellate Division's deference to the special expertise of the
Family Part in dealing with family matters. However, this
argument is inappropriately broad. Rather, in our review of a
trial court's order, we grant substantial deference to the trial
court's findings of facts following a hearing in which the court
is able to assess the evidence. Cesare v. Cesare, 154 N.J. 394,
411-413 (1998). This deference is specifically appropriate when
the trial court "hears the case, sees and observes the
witnesses, [and] hears them testify," because "it has a better
perspective than a reviewing court in evaluating the veracity of
witnesses." Id. at 412 (alteration in original) (internal
quotation marks omitted) (quoting Pascale v. Pascale, 113 N.J.
20, 33 (1988)). Further, the Court has held that "an
appellate court should not disturb the 'factual findings and
legal conclusions of the trial judge unless [it is] convinced
that they are so manifestly unsupported by or inconsistent with
the competent, relevant and reasonably credible evidence as to
22 A-5798-11T1 offend the interests of justice.'" Ibid. (alteration in
original) (quoting Rova Farms Resort, Inc. v. Investors Ins.
Co., 65 N.J. 474, 484 (1974)).
In this case, the Family Part Judge did not hold a fact-
finding hearing to which we owe deference. The Order was not
supported by "adequate, substantial, credible evidence[;]"
rather, the evidence presented does not support the Order and
thus, we need not defer to the Order. Moreover, the incongruity
between the regulatory CSMIA calculations and those factors
considered by the Family Part in awarding support orders further
demonstrates the potential for an absurd result in applying the
plain language of N.J.A.C. 10:71-5.7(f). While the MCCA
provisions on the whole focus on preventing the pauperization of
community spouses, the family courts have latitude to
contemplate factors that are irrelevant in calculation of CSMIA,
such as "[t]he standard of living established in the marriage or
civil union and the likelihood that each party can maintain a
reasonably comparable standard of living." N.J.S.A. 2A:34-23.
Here, the record clearly indicates the Order was entered to
allow for the payment of all of D.S.'s living expenses,
including monthly expenses of $150 for hair care, $100 for life
insurance, and $50 for unspecified contributions. Diverting
income toward payment of these expenses reflects a paradigm of
23 A-5798-11T1 maintaining a spouse's lifestyle, rather than the more modest
goal of ensuring personal needs. As noted by the Division, the
difference would be at the taxpayer's expense.
The record also contains substantial evidence to support
the Board's treatment of R.S.'s income. R.S. attempts to limit
relevant evidence to the proceedings in the Family Part,
including D.S.'s complaint and CIS, and the two support orders.
Because agency discretion must accord with express and implied
legislative policies, the Division was not required to divert
all income to a community spouse without considering whether
there are "exceptional circumstances" warranting the payment.
Additionally, R.S.'s own application for medical assistance, the
Board's eligibility decision, and the community spouse deduction
worksheet are all relevant in determining the post-eligibility
treatment of his income; without these forms, R.S would not be
deemed eligible for Medicaid in the first instance.
We also address R.S.'s argument the ALJ and the Division
improperly undertook an "exceptional circumstances" analysis.
However, R.S. sought relief in a letter dated September 21,
2011, specifically requesting a "Fair Hearing" pursuant to
N.J.A.C. 10:71-5.7(e), which allows for a fair hearing to
determine whether an increase is warranted due to "exceptional
circumstances." Therefore, the appropriate standard was applied
24 A-5798-11T1 according to R.S.'s requested relief. However, we will still
address this issue.
Our review asks "whether, in applying the legislative
policies to the facts, the agency clearly erred by reaching a
conclusion that could not reasonably have been made upon a
showing of the relevant factors." H.K., supra, 379 N.J. Super.
at 327 (quoting Pub. Serv. Elec., supra, 101 N.J. at 103). The
Division relied on the factual findings of the ALJ which
appropriately considered R.S.'s financial information submitted
to calculate the CSMIA in accordance with N.J.A.C. 10:71-5.7(c)
and U.S.C.A. § 1396r-5(d)(3).
The record clearly supports the Board's calculation of
D.S.'s CSMIA and accordingly, the primary question at the fair
hearing, and in the Division's subsequent review of the hearing,
was whether or not D.S. was entitled to a revision of her CSMIA
based upon "exceptional circumstances resulting in financial
duress[.]" N.J.A.C. 10:71-5.7(e). Relying on the contents of
the record, the ALJ found that R.S. had averred no such
circumstances:
D.S. does not qualify for an increase in the community spouse monthly maintenance allowance based on exceptional circumstances. D.S. does not claim any medical/physical impairments of her own. She is gainfully employed. There is no showing that the community spouse needs specialized medical care or attention. The
25 A-5798-11T1 instant case does not involve the type of long-term health and financial problems as contemplated in the term "exceptional circumstances." In sum, D.S. has not demonstrated the requisite level of significant financial duress to justify an increase above the $1,514.93 she has already received from the respondent.
After reviewing all documents in the record, including those
submitted to the Family Part, the Division similarly found that
D.S.'s CSMIA should not be increased to cover her "ordinary and
regular expenses." The Director further found "interesting[]
[that] even without her husband in the household, her monthly
expenses remain nearly the same ($5,827 vs. $5,651)."5 This
meager $176 decrease in monthly expenses upon
institutionalization of R.S. reasonably led to the skepticism of
the Division in considering D.S.'s calculations concerning her
expenses. In reviewing the record for any possible "exceptional
circumstances," the Division recognized the credit card debt of
R.S. may warrant an increase in income for D.S. "depending on
the circumstances such as when and how the charges were incurred
and if the expenses were charged for the couple's sole use."
Considering the foregoing in light of the implied and
express legislative policies and legislative history discussed
above, the Director's decision was well-reasoned and made in
5 D.S. made this representation in her CIS.
26 A-5798-11T1 reliance on relevant guiding principles and a sufficient factual
record. To conclude, the Division's decision was not arbitrary,
capricious or unreasonable, having passed muster under the
three-pronged test.
D.
R.S. makes additional arguments, also rejected by the
Division, which we find lack sufficient merit to warrant
extensive discussion. R.S. asserts that the Division engaged in
improper rule-making by imposing an "exceptional circumstances"
criterion for post-eligibility treatment of a recipient's income
and by imposing a requirement that R.S. give "notice" to
Medicaid on the support action. This argument lacks merit. In
Metromedia, Inc. v. Dir., Div. of Taxation, 97 N.J. 313, 330-31
(1984), the Supreme Court held, for due process reasons, that an
administrative agency must conduct formal rulemaking before
imposing new standards upon those it regulates. Six factors
guide our analysis of when such formal rulemaking is necessary:
(1) [the decision] is intended to have wide coverage encompassing a large segment of the regulated or general public, rather than an individual or a narrow select group; (2) is intended to be applied generally and uniformly to all similarly situated persons; (3) is designed to operate only in future cases, that is, prospectively; (4) prescribes a legal standard or directive that is not otherwise expressly provided by or clearly and obviously inferable from the enabling statutory authorization; (5)
27 A-5798-11T1 reflects an administrative policy that (i) was not previously expressed in any official and explicit agency determination, adjudication or rule, or (ii) constitutes a material and significant change from a clear, past agency position on the identical subject matter; and (6) reflects a decision on administrative regulatory policy in the nature of the interpretation of law or general policy.
[Id. at 331.]
These factors, "either singly or in combination," determine
whether agency action amounts to the promulgation of an
administrative rule. Id. at 332. Having considered each of the
six enumerated Metromedia factors, we are satisfied that the
decision to apply an "exceptional circumstances" criterion for
post-eligibility treatment of a recipient's income was an
unassailable exercise of the agency's pre-existing authority.
R.S.'s argument is based on a misreading of the
administrative decisions of the ALJ adopted by the Division. In
her decision, Judge Rigo referred to the language of 42 U.S.C.A.
§ 1396r-5(e)(2)(B), which expressly allows for revision of the
MMMNA "in exceptional circumstances resulting in significant
financial distress," and N.J.A.C. 10:71-5(e), which allows for
revision if the community spouse or recipient establishes at a
fair hearing that "exceptional circumstances resulting in
financial duress" exist. Relying on the record and the express
language of the Medicaid law and regulations, Judge Rigo
28 A-5798-11T1 concluded an increase in the MMMNA was not warranted. This was
not rule-making, but the application of the criterion already
established in 42 U.S.C.A. § 1396r-5(e)(2)(B) and N.J.A.C.
10:71-5.7(e).
Next, regarding the alleged creation of a "notice"
requirement, when Judge Rigo considered the Order, she noted
that the Board had not been provided notice or an opportunity to
be heard. Judge Rigo did not, however, adopt a rule; rather,
she analogized the facts of this case to those of H.K.,
ultimately concluding, based on the record, that R.S.'s
"obtaining the court order was an attempt to circumvent the
Medicaid regulations concerning the levels of spousal
allowance." Similarly, in its final agency decision, the
Division adopts this finding, noting "[n]either [R.S.] nor his
wife appears to have informed the court of the true
ramifications of the support order on Medicaid[.]" Although
this was a circumstance relevant to the Division in deciding not
to give effect to the amended support order, it did not amount
to formulating a rule.
Furthermore, R.S. further contends that the outcome of this
appeal is controlled by our decision in M.E.F., supra, 393 N.J.
Super. 54. In M.E.F., the community spouse who "received $576
per month from Social Security as her sole source of independent
29 A-5798-11T1 income," was allocated a community spouse allowance of
approximately $445 upon a determination of her institutionalized
spouse's Medicaid eligibility. Id. at 548. Dissatisfied with
this amount, the community spouse sought relief from the Family
Part in the form of separate maintenance, pursuant to N.J.S.A.
2A:34-24. Id. at 548-49.
At issue was whether the administrative hearing and the
Family Part constitute alternative avenues to seek relief from
the determination of an allegedly inadequate CSMIA, as well as
what standard applied in such a review. Id. at 545, 549-51. We
reached our decision on procedural grounds, reasoning that
"M.E.F.'s effort to obtain [a support] order, perfected only
after her MMMNA had been reconsidered and increased, albeit not
to her satisfaction, constituted parallel litigation and a form
of forum shopping of a sort that we are unwilling to recognize
as valid." Id. at 557. We added that the "present appeal does
not require [a] decisive construction of the effect of the court
ordered support provision[.]" Ibid. We explained:
An award of support entered against an institutionalized spouse prior to Medicaid eligibility would clearly be governed by the standards articulated in N.J.S.A. 2A:34-23. We see no principled reason why those standards would change simply because the spouse was found to be eligible for Medicaid and subject to the spousal income protection provisions of the Act. We do note, however, that the standards for calculating support,
30 A-5798-11T1 set forth in N.J.S.A. 2A:34-23, permit consideration of spousal "actual need," ability to pay, and "[a]ny other factors which the court may deem relevant." N.J.S.A. 2A:34-23b(1) and (13). The dual purposes of the MCCA — to ensure that the community spouse has sufficient, but not excessive, income and to ensure that individuals not be permitted to avoid payment of their own fair share for long- term care — are certainly relevant considerations in this regard.
[Id. at 557-58.]
Thus, we were concerned with preserving the standards of
the family proceedings and ensuring that such proceedings
consider the goals of the Medicaid program when relief is sought
by a community spouse. Ibid. While this quote regards the
standard to be applied in Family Court proceedings, it envisions
a flexibility that should be extended to the Division to allow
for deviations from the statutorily calculated MMMNA where the
circumstances warrant special consideration. Ibid.
R.S. next asserts the "forum shopping" found in M.E.F.,
supra, 393 N.J. Super. at 557, is absent here, since D.S.
obtained her support order prior to R.S.'s Medicaid application;
however, M.E.F. is otherwise distinguishable. There, the
community spouse's sole source of independent income was monthly
payments of $545 from Social Security. Id. at 548. In
contrast, D.S. earns $2457.26 in monthly income. Importantly,
there was a hearing held by the Family Part in M.E.F., as
31 A-5798-11T1 opposed to the record here, which indicates an uncontested
application decided on the papers.
We find H.K., supra, 379 N.J. Super. 321, more on point.
There, an institutionalized spouse qualified for Medicaid "even
though he had Social Security and pension income of
approximately $4,500 per month and his wife worked full-time and
earned over $2,000 per month." Id. at 324. Because the
community spouse's monthly income was too high to entitle her to
an allowance, the couple "attempted to invoke the 'court order'
exception of N.J.A.C. 10:71-5.7(f), by obtaining a divorce from
'bed and board' with a property settlement agreement providing
for support to be paid to [the community spouse] from the
[institutionalized spouse's] pension." Id. at 325-26. The
Division adopted the decision of the ALJ not to give effect to
the court-ordered spousal support obligation, reasoning that
"giving effect to the divorce judgment would be contrary to the
purpose and intent of the [MCCA]." Id. at 326 (internal
quotation marks omitted).
We agreed, reasoning that, "given the facts of [the] case,
the agency's decision is consistent with the language and
purpose of the Medicaid statute." Id. at 327. Additionally,
accepting the petitioner's position in that case "would nullify
the statutory and regulatory limitations on the community spouse
32 A-5798-11T1 allowance[,]" thereby yielding an "absurd result." Id. at 328.
We further stated that
[t]his is not a situation where a court has held an evidentiary proceeding and determined independently that the community spouse is in need of support or that she has "special circumstances." Nor was the court that entered the order even notified that [the institutionalized spouse] was receiving Medicaid benefits. This is also not a case where there was an existing support obligation that pre-dated the Medicaid application and was entered at a time when such application was not anticipated. Rather, the property settlement agreement in this case was an undisguised attempt to circumvent the Medicaid regulations concerning the appropriate level of spousal allowance.
[Id. at 329.]
Supporting this conclusion was our observation that the
proceeding in the Family Part in H.K. was not "genuinely
adversarial" because the State Medicaid program had not been
provided notice; further, "no factual record was made to support
the alimony award, and the court that entered the order did not
determine whether the award was justified in light of the
countervailing interests of the State[.]" Id. at 329-30.
The record here similarly lacks any evidence that R.S.
contested D.S.'s allegations or computations of financial needs
asserted in her complaint. Because R.S. did not file any
opposition to D.S.'s application, the entire record in the
33 A-5798-11T1 Family Part proceeding consisted of D.S.'s verified complaint
and CIS, the acknowledgment of service, and two orders. In sum,
as the Division noted, "[a] review of the record indicates that
the wife's action in family court was not adversarial and was
chosen to avoid following the Medicaid spousal impoverishment
rules[.]" "Generally, an appellate court does not substitute
its judgment of the facts for that of an administrative agency."
Campbell v. N.J. Racing Comm'n, 169 N.J. 579, 587 (2001).
These circumstances raise the concern noted in H.K. and
echoed in the final agency decision that spouses may collude and
use support orders "to circumvent the Medicaid regulations
concerning the appropriate level of the spousal allowance."
H.K., supra, 379 N.J. Super. at 329. As the Division noted:
The instant matter shows how one couple could obtain legal counsel to seek judicial fiat to circumvent the spousal impoverishment rules. . . . [y]et another couple, without income or wherewithal to hire counsel, would have to abide by the statutory calculation and the statutory remedy to have additional income set aside for the community spouse.
In light of the substantial deference afforded agency decisions,
the express and implied legislative policies underlying
Medicaid, and the circumstances of this case, we affirm the
Division's approval of D.S.'s CSMIA determined in accordance
with N.J.A.C. 10:71-5.7(c) and 42 U.S.C.A. § 1396r-5(d).
34 A-5798-11T1 R.S. finally claims entitlement to attorney's fees pursuant
to 42 U.S.C.A. §§ 1983, 1988, alleging the Division's refusal to
enforce the amended support order amounted to an arbitrary and
capricious violation of established law and his civil rights.
Because R.S. failed to prevail on any issue in the litigation,
his claim for attorney's fees clearly lacks merit. See Singer
v. State, 95 N.J. 487, 494, cert. denied, 469 U.S. 832, 105 S.
Ct. 121, 83 L. Ed. 2d 64 (1984).
Affirmed but without prejudice as to any reconsideration by
the Division of a potential adjustment to the MMMNA concerning
the extensive credit card balances of R.S.
35 A-5798-11T1