G.M. VS. DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES (DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES) ( 2021 )

NOT FOR PUBLICATION WITHOUT THE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-0433-19
G.M.,
Petitioner-Appellant,
v.
DIVISION OF MEDICAL
ASSISTANCE AND HEALTH
SERVICES and CAMDEN
COUNTY BOARD OF
SOCIAL SERVICES,
Respondents-Respondents.
____________________________
Argued May 26, 2021 – Decided June 16, 2021
Before Judges Whipple and Firko.
On appeal from the New Jersey Department of Human
Services, Division of Medical Assistance and Health
Services.
Michael Heinemann argued the cause for appellant.
Mark D. McNally, 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; Mark D.
McNally, on the brief).
PER CURIAM
Petitioner G.M. 1 appeals from the final agency decision of respondent
New Jersey Department of Human Services, Division of Medical Assistance and
Health Services (Division) denying her Medicaid application. We affirm.
The record in this case reveals petitioner was eighty-three years old at the
relevant time, suffered from dementia, and was permanently institutionalized at
a long-term skilled nursing facility. Petitioner's nephew, B.J., held petitioner's
power-of-attorney (POA). On January 20, 2018, the Camden County Board of
Social Services (CWA) received petitioner's application for Medicaid benefits.
The application included a form designating Senior Planning Services (SPS) as
petitioner's designated authorized representative (DAR) for Medicaid purpo ses.
Naomi Steinmetz of SPS was named as petitioner's DAR.
On October 9, 2018, the CWA sent a letter to Steinmetz requesting
verification of financial information regarding ten specific items. The CWA
advised in its letter that petitioner's application would remain in pending status
1
We learned during oral argument that regrettably, petitioner passed away on
December 19, 2019. On May 28, 2021, we granted counsel for G.M.'s motion
to substitute her estate as appellant nunc pro tunc to May 26, 2021.
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until October 24, 2018, to allow time for the documentation to be provided. Item
number five requested verification of the source and purpose of recurring
transactions appearing on petitioner's 2013 bank statements labelled, "ACH
DEPOSIT UNITEDCAPITALCRE UNITED CAP" (UCC), in the amount of
$300. The transactions included debits and credits to and from petitioner's
account.
On October 25 and November 26, 2018, petitioner's DAR provided
additional information for nine out of the ten items listed in the CWA's October
9, 2018 letter. However, item number five—the UCC transactions—remained
unresolved. Item number four was a request for information verifying a set of
recurring transactions "ACH DEBIT MILTONBOUHOUTSOS" in the amount
of $180. The DAR forwarded a letter from Milton Bouhoutsos, an attorney-at-
law, outlining the background of the transactions and explaining the debits
against petitioner's account were applied to satisfy previously incurred debts.
Steinmetz's November 26, 2018 letter noted petitioner's family believed
the UCC transactions were part of a scam that she was a victim of. In addition,
Steinmetz provided unauthenticated screenshots indicating UCC was no longer
in business, and therefore, she was unable to provide formal documentation
detailing petitioner's UCC transactions.
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On November 28, 2018, Deena Teichman, Director of Operations at SPS,
sent an email to the CWA claiming SPS hit a "dead end" in obtaining documents
regarding the UCC transactions and queried as to "what else [SPS] should/could
do"? On November 30, 2018, petitioner was notified by the CWA that her
application for Medicaid benefits was denied because she failed to provide
sufficient verification of the UCC transactions.
Steinmetz requested a fair hearing, and the matter was transferred to the
Office of Administrative Law (OAL) as a contested case. At the May 13, 2019
fair hearing, Michelle Acevedo appeared on behalf of the CWA and Abe
Jankelovits of SPS appeared on behalf of petitioner. Acevedo admitted the
CWA took longer than the proscribed time to review petitioner's application due
to understaffing and an overwhelming caseload. And, candidly, Acevedo
acknowledged that the UCC was a defunct collection agency. The CWA took
the position that this matter constitutes a "gray area," but it needed "something
more specific, an agreement, a billing summary, anything that could really show
what those payments were for."
Steinmetz did not testify at the hearing. B.J. testified petitioner was
disorganized and that he did not become her POA until 2017; therefore, he had
no information about the UCC transactions or her finances prior to 2017.
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Following the hearing, the SPS representative provided a May 16, 2019 letter
from Bouhoutsos advising he had no record of any transactions involving
petitioner and the UCC transactions. The parties submitted written summations.
On July 12, 2019, the ALJ issued an initial decision affirming the denial
of petitioner's Medicaid eligibility, finding that petitioner "failed to
demonstrate, by a preponderance of the evidence, that appropriate verifications
were submitted in a timely fashion to the [CWA], regarding the UCC
transactions." The ALJ further commented that there was a lack of testimony
from petitioner's POA as to any steps or efforts undertaken to determine the
nature of the UCC transactions.
In addition, the ALJ noted "[n]othing was presented as to additional
efforts made by the DAR to obtain further information about [the] UCC
[transactions], except for a subsequent letter from an attorney, which was dated
after testimony was taken in this matter." The ALJ also found that although the
CWA "admittedly did not process [petitioner's] Medicaid application in a timely
fashion, apparently due to understaffing," the CWA "did extend additional time
to [Steinmetz] to provide supplemental verifications regarding multiple issues."
On August 16, 2019, the Division issued its final administrative decision
adopting the ALJ's initial decision. The Assistant Commissioner emphasized
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the information provided regarding the UCC transactions was "circumstantial at
best" and highlighted discrepancies in the screenshots and documentation
provided by the DAR attempting to substantiate petitioner's argument that UCC
was no longer doing business. In conclusion, the Assistant Commissioner found
petitioner failed to corroborate the nature of the transactions or their source.
This appeal followed.
Petitioner argues that: (1) the subject verifications were not required under
Medicaid regulations for a determination of Medicaid eligibility; (2) the CWA's
ten-month delay in receiving G.M.'s application was an egregious violation of
Medicaid regulations and prejudiced her ability to obtain the verifications; and
(3) the Division's denial of Medicaid benefits was arbitrary and capricious since
the verifications were impossible to obtain, and the CWA refused to provide
guidance or assistance as required by Medicaid regulations. We disagree.
Appellate review of the Division's final agency action is limited. K.K. v.
Div. of Med. Assistance & Health Servs., 453 N.J. Super. 157, 160 (App. Div.
2018). We "defer to the specialized or technical expertise of the agency charged
with administration of a regulatory system." In re Virtua-West Jersey Hosp.
Voorhees for a Certificate of Need, 194 N.J. 413, 422 (2008). "[A]n appellate
court ordinarily should not disturb an administrative agency's determinations or
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findings unless there is a clear showing that (1) the agency did not follow the
law; (2) the decision was arbitrary, capricious, or unreasonable; or (3) the
decision was not supported by substantial evidence." Ibid.A presumption of validity attaches to the agency's decision. See Brady v.
Bd. of Rev., 152 N.J. 197, 210 (1997). The party challenging the validity of an
agency's decision has the burden of showing that it was arbitrary, caprici ous, or
unreasonable. J.B. v. N.J. State Parole Bd., 444 N.J. Super. 115, 149 (App. Div.
2016) (quoting In re Hermann, 192 N.J. 19, 27-28 (2007)). "Deference to an
agency decision is particularly appropriate where interpretation of the Agency's
own regulation is in issue." I.L. v. Div. of Med. Assistance & Health Servs.,
389 N.J. Super. 354, 364 (App. Div. 2006). However, "an appellate court is 'in
no way bound by the agency's interpretation of a statute or its determination of
a strictly legal issue.'" R.S. v. Div. of Med. Assistance & Health Servs., 434
N.J. Super. 250, 261 (App. Div. 2014) (quoting 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)).
Medicaid is a federally-created, state-implemented program that provides
"medical assistance to the poor at the expense of the public." Estate of
DeMartino v. Div. of Med. Assistance & Health Servs., 373 N.J. Super. 210,
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217 (App. Div. 2004) (quoting Mistrick v. Div. of Med. Assistance & Health
Servs., 154 N.J. 158, 165 (1998)); see also 42 U.S.C. § 1396-1. Although a state
is not required to participate, once it has been accepted into the Medicaid
program it must comply with the Medicaid statutes and federal regulations. See
Harris v. McRae, 448 U.S. 297, 301 (1980); United Hosps. Med. Ctr. v. State,
349 N.J. Super. 1, 4 (App. Div. 2002); see also 42 U.S.C. § 1396a(a) and (b).
The State must adopt "'reasonable standards . . . for determining eligibility
for . . . medical assistance . . . [that are] consistent with the objectives' of the
Medicaid program[,]" Mistrick, 154 N.J. at 166 (first alteration in original)
(quoting L.M. v. Div. of Med. Assistance & Health Servs., 140 N.J. 480, 484
(1995)), and "provide for taking into account only such income and resources as
are . . . available to the applicant." N.M. v. Div. of Med. Assistance & Health
Servs., 405 N.J. Super. 353, 359 (App. Div. 2009) (quoting Wis. Dep't of Health
& Family Servs. v. Blumer, 534 U.S. 473, 479 (2002)); see also 42 U.S.C. §
1396a(a)(17)(A)-(B).
New Jersey participates in the federal Medicaid program pursuant to the
New Jersey Medical Assistance and Health Services Act, N.J.S.A. 30:4D-1 to -
19.5. Eligibility for Medicaid in New Jersey is governed by regulations adopted
in accordance with the authority granted by N.J.S.A. 30:4D-7 to the
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Commissioner of the Department of Human Services (DHS). The Division is
the agency within the DHS that administers the Medicaid program. N.J.S.A.
30:4D-5, -7; N.J.A.C. 10:49-1.1. Accordingly, the Division is responsible for
protecting the interests of the New Jersey Medicaid Program and its
beneficiaries. N.J.A.C. 10:49-11.1(b).
In this State, in order to qualify for Medicaid benefits, an applicant's
resources cannot exceed $2000. N.J.A.C. 10:71-4.5(c). 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) and which could be converted to
cash to be used for his or her support and maintenance.
Both liquid and non[-]liquid resources shall be
considered in the determination of eligibility, unless
such resources are specifically excluded under the
provisions of N.J.A.C. 10:71-4.4(b).
[N.J.A.C. 10:71-4.1(b).]
The regulations explain that a resource must be "available" to be
considered by the CWA in determining an applicant's eligibility. N.J.A.C.
10:71-4.1(c). A resource is deemed "available" when: "1. [t]he person has the
right, authority or power to liquidate real or personal property or his or her share
of it; 2. [r]esources have been deemed available to the applicant ([pursuant to
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N.J.A.C. 10:71-4.6]); or 3. [r]esources arising from a third-party claim or action"
under certain circumstances. Ibid.
The value of the resource is "defined as the price that the resource can
reasonably be expected to sell for on the open market in the particular
geographic area minus any encumbrances (that is, its equity value)." N.J.A.C.
10:71-4.1(d). Importantly, the regulation explains that "[t]he CWA shall verify
the equity value of resources through appropriate and credible sources."
N.J.A.C. 10:71-4.1(d)(3) (emphasis added). A determination regarding resource
eligibility is made "as of the first moment of the first day of each month."
N.J.A.C. 10:71-4.1(e). The CWA may deny eligibility for Medicaid if the
applicant fails to timely provide verifying information or "verifications."
N.J.A.C. 10:71-2.2(e); N.J.A.C. 10:71-3.1.
In order to discourage an applicant from disposing of assets for the sole
purpose of becoming eligible for Medicaid nursing home facility services,
regulations impose a period of ineligibility to an applicant receiving an
institutional level of benefits who transfers resources for less than fair market
value during a sixty-month look-back period. N.J.A.C. 10:71-4.10(a)(2).
Transfers made within the look-back period "are presumed to be improperly
motivated to obtain Medicaid eligibility." W.T. v. Div. of Med. Assistance and
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Health Servs., 391 N.J. Super. 25, 36 (App. Div. 2007). However, an applicant
retains the right to rebut the presumption. N.J.A.C. 10:71-4.10(j). If the
presumption is not rebutted, the State imposes a transfer penalty, calculating the
period of ineligibility following a transfer of an available resource. N.J.A.C.
10:71-4.10(b)(4) and 10:71-4.10(c).2 Where an applicant’s resource statements
are questionable, or there is reason to believe the identification of resources is
incomplete, the CWA can request verification of the applicant’s resource
statements through one or more third parties. N.J.A.C. 10:71-4.1(d)(3).
Applicants must provide the CWA with the information necessary to
enable it to determine if the applicant is eligible for benefits. Further, applicants
must "[a]ssist the CWA in securing evidence that corroborates his or her
statements," N.J.A.C. 10:71-2.2(e)(2), and the applicant must do so from
pertinent sources. See N.J.A.C. 10:71-3.1(b). The CWA is permitted to deny
an application if the applicant fails to timely provide verifying information or
"verifications." See N.J.A.C. 10:71-2.2(e); -2.12; -3.1(b).
We address the documents and information the CWA requested the
petitioner provide. The CWA requested petitioner provide source and purpose
2
"The transfer penalty is calculated by dividing the uncompensated portion of
the transferred resource by the monthly average cost of nursing home care in
this State." W.T., 391 N.J. Super. at 37.
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verification for the recurring debit and deposit transactions from UCC appearing
on her bank statements from April 2, 2013, through December 2, 2013.
Steinmetz merely submitted webpage screen shots ostensibly taken from a
Facebook page, the Better Business Bureau, internet search results, and a copy
of UCC's former website. Petitioner's former attorney could not provide
answers to the CWA's inquiry. As the ALJ noted in her decision, the CWA
"cannot read between the lines and hypothesize what was the purpose of the
[UCC] debit and deposit transactions." Because the CWA is tasked with
ensuring that applicants have below $2000 in resource levels, and petitioner's
proof of eligibility was inconclusive, the Division's decision to deny petitioner's
application was not arbitrary, capricious, or unreasonable.
Moreover, we reject petitioner's argument that the UCC verifications were
unnecessary under the Medicaid regulations for a determination of eligibility.
"The CWA shall verify the equity value of resources through appropriate and
credible sources. . . . 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). This condition is not waivable and was not
satisfied here by petitioner.
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Petitioner claims she complied with N.J.A.C. 10:71-2.2(d)(2) by assisting
the CWA in trying to verify the account. She argues the CWA did not assist her
as required by N.J.A.C. 10:71-2.2(c). However, although the CWA is
responsible for assisting an applicant, the regulations did not create an
affirmative duty upon the CWA to procure all documents necessary to complete
the application, especially when petitioner had Steinmetz as her representative.
The regulations establish timeframes to process a Medicaid application,
with the "[d]ate of effective disposition" being the "effective date of the
application" where the application has been approved. N.J.A.C. 10:71-
2.3(b)(1). "The maximum period of time normally essential to process an
application for the aged is [forty-five] days." N.J.A.C. 10:71-2.3(a). New
Jersey regulations recognize:
there will be exceptional cases where the proper
processing of an application cannot be completed
within the [forty-five day] period. Where substantially
reliable evidence of eligibility is still lacking at the end
of the designated period, the application may be
continued in pending status. In each such case, the
[CWA] shall be prepared to demonstrate that the delay
resulted from one of the following:
....
(2) A determination to afford the applicant, whose
proof of eligibility has been inconclusive, a further
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opportunity to develop additional evidence of
eligibility before final action on his or her application.
(3) An administrative or other emergency that could not
reasonably have been avoided; or
(4) Circumstances wholly outside the control of both
the applicant and the CWA.
[N.J.A.C. 10:71-2.3(c).]
Petitioner's application was made in January 2018 and was still pending
in November 2018. The record shows petitioner's DAR was granted extensions
of time to submit sufficient verification of the UCC transactions in dispute. The
ALJ found the CWA was understaffed and was processing an "overwhelming"
number of applications that led to the delay in reviewing petitioner's application.
Given the deference we accord the ALJ's findings, and having determined that
they are supported by sufficient credible evidence in the record, we conclude the
decision was neither arbitrary nor unreasonable. We discern no basis to disturb
the decision on this score.
Here, the Division rendered its final decision after interpreting its own
regulations. We may reverse only upon a showing that the Division acted
arbitrarily, capriciously, or unreasonably. "Deference to an agency decision is
particularly appropriate where interpretation of the Agency's own regulation is
in issue." R.S., 434 N.J. Super. at 261 (quoting I.L., 389 N.J. Super. at 364). It
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is not arbitrary, capricious, or unreasonable for the Division to deny an
application that did not have the information necessary to verify eligibility after
giving extensions.
Affirmed.
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