A.F. VS. DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES (DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES) ( 2018 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2163-16T1
A.F.,
Petitioner-Appellant,
v.
DIVISION OF MEDICAL ASSISTANCE AND
HEALTH SERVICES and MORRIS COUNTY
BOARD OF SOCIAL SERVICES,
Respondents-Respondents.
_____________________________________
Argued April 11, 2018 – Decided July 23, 2018
Before Judges Fuentes and Manahan.
On appeal from the Division of Medical
Assistance and Health Services.
Lawrence S. Berger argued the cause for
appellant (Berger & Bornstein, LLC, attorneys;
Lawrence S. Berger, on the brief).
Caroline Gargione, Deputy Attorney General,
argued the cause for respondent Division of
Medical Assistance and Health Services (Gurbir
S. Grewal, Attorney General, attorney; Melissa
H. Raksa, Assistant Attorney General, of
counsel; Caroline Gargione, on the brief).
Johnson & Johnson, attorneys for respondent
Morris County Board of Social Services, join
in the brief of respondent Division of Medical
Assistance and Health Services.
PER CURIAM
A.F. suffered an accident twenty years ago that caused severe
injuries to her cervical spine. As a result of this accident, she
is quadriplegic. It is undisputed that A.F. is totally disabled
and needs personal assistance to perform the personal, social, and
biological functions of daily living. She depends upon Medicaid
benefits to provide her with the assistance she needs. On December
9, 2016, the Director of the State Department of Human Services,
Division of Medical Assistance and Health Services, issued an
order upholding the termination of A.F.'s Medicaid benefits. A.F.
now appeals from this order arguing that the Director's decision
was arbitrary, capricious, and unreasonable, and violated the
procedures established in our State's administrative code for
redetermining a Medicaid recipient's eligibility to continue to
receive benefits.
The Director argues the Morris County Board of Social Services
(Board) properly terminated A.F.'s Medicaid benefits because she
failed to provide the Board with necessary information to verify
her continued eligibility to receive benefits. The Director also
argues that A.F.'s argument based on the Board's failure to follow
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established regulatory procedures before terminating her benefits
is "outside the scope of this appeal."
After reviewing the record developed by the parties and
mindful of prevailing legal standards, we reverse. The Board's
failure to follow the procedures codified in N.J.A.C. 10:71-8.1
are not outside the scope of the issues before this court. These
irregularities contributed to the misinformation undermining the
Board's decision to deny A.F.'s redetermination application and
ultimately formed the basis for the wrongful termination of A.F.'s
Medicaid benefits. The Director's decision was thereafter
materially tainted by the Board's threshold error. Finally, the
Director failed to give due deference to the Administrative Law
Judge's (ALJ) findings. Consequently, the Director's decision and
order terminating A.F.'s Medicaid benefits must be vacated as
arbitrary, capricious, and unreasonable.
I
The Board is required to redetermine a recipient's
eligibility to receive Medicaid benefits "at least once every 12
months." N.J.A.C. 10:71-8.1(a). On January 12, 2016, the Board's
"Human Service Specialist" sent A.F. a form-letter that stated:
"In order to determine eligibility for the MEDICAID Program(s),
we require the following verification[.]" The Form contained a
number of categories of information with boxes next to them. Three
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categories were checked with an "X," requiring A.F. to provide the
following: (1) Verification of Address – Utility Bill; (2) a
completed PA-1G-NJR2 forms for September 2014, and September 2015
redetermination; and (3) copies of September 2014, and September
2015 bank statements.
The form-letter directed A.F. to return "the necessary
information IMMEDIATELY" by regular mail or email to Ms. Garcia,
and provided Garcia's email address and fax number. The form-
letter concluded with the following admonition:
If you do not respond [by] 01/22/2016 we will
have to assume that you are no longer in need
of assistance and you will not receive
benefits. If you have any questions, or
cannot provide necessary information, please
contact your caseworker at the number listed
above. We will be happy to help you in any
way that we can.
The record shows that A.F. responded and provided the information
requested on February 10, 2016.
In a second identically formatted letter dated March 11,
2016, the Board placed an "X" next to the boxes requesting the
following information: (1) completed PA-1G-NJR2 forms for
September 2014 redetermination; and (2) "Life Insurances: Banner
Acct. # _______ and Transamerica Acc.# _______."1 The Board did
1
We have not included the actual account numbers to protect
appellant's privacy.
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not provide any additional information concerning these two
insurance policies or explain how they related to A.F.'s
redetermination for Medicaid eligibility. The March 11, 2016
form-letter gave A.F. until March 22, 2016 to respond and concluded
with the same admonition. According to A.F., she did not receive
the Board's letter until March 15, 2016.
For reasons not disclosed in this record, A.F. did not respond
to the Board's request nor make any effort to contact the
caseworker by phone, mail, or email to solicit more information
on the nature of the requested information or request an extension
of the deadline to provide the relevant documents. In a letter
dated April 28, 2016, the Board terminated A.F.'s Medicaid
assistance. The form-letter stated: "This action was taken for
the following reason: CLIENT DID NOT SUPPLY LIFE INSURANCE
INFORMATION." The form-letter apprised A.F. that she had twenty
days to request a fair hearing and again included the telephone
number of caseworker Garcia.
In a letter also dated April 28, 2016, A.F.'s attorney advised
caseworker Garcia that he was "not clear as to what information
is being requested." Counsel asserted that A.F. did not have
insurance policies on her life. However, counsel disclosed that
he had obtained two life insurance policies with Transamerica and
Banner on his life, naming A.F. as beneficiary on both policies.
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Counsel also noted that the policy or account numbers listed in
the Board's March 11, 2016 letter "did not match up with any
policies that we are aware of." The Board did not respond to
counsel's request for clarification.
Unable to reach a suitable resolution, A.F. requested a fair
hearing. The matter was thereafter assigned to the Office of
Administrative Law for a hearing before an ALJ. A.F.'s Medicaid
benefits continued pending the outcome of the hearing. After
conducting two hearings, the ALJ issued his Initial Decision on
October 4, 2016. In his factual findings, the ALJ noted:
The agency conceded at the first day of the
hearing that the Banner Life Insurance policy
is no longer in issue. The issue was solely
whether the term insurance policy issued by
Transamerica was in full force and effect and
if it had any surrender or cash value.
. . . .
I permitted [A.F.'s] counsel an opportunity
to produce confirmation of the expired term
life insurance police previously issued by
Transamerica. When we reconvened on September
27, 2016, counsel presented a letter from
Transamerica dated May 13, 2009, setting forth
that the subject policy had lapsed.
After reviewing the relevant regulatory criteria for continued
Medicaid eligibility, the ALF concluded:
Here, the agency made one attempt to obtain
information on a term insurance policy that
was no longer in effect. The petitioner
sought clarification but that request crossed
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in the mail with the adverse action notice.
Even though it is now clear that the insurance
policy at issue was a term policy with no cash
or surrender value and had lapsed many years
ago, the agency refuses to waive a few weeks
delay on a redetermination application for a
handicapped individual. I have seen this same
agency [take] years of back and forth
communications with an applicant or client
attempting to verify information before taking
positive or adverse action. Its actions here
can only be characterized as ungenerous.
The ALJ recommended that the Director uphold A.F.'s appeal
and reverse the Board's April 28, 2016 denial of redetermination.
The Director rejected the ALJ's Initial Decision. In a Final
Agency Action dated December 9, 2016, the Director made the
following findings:
This is not a situation in which there was an
ongoing exchange of information between
Petitioner and [the Board]. Petitioner was
asked to provide verifications with regard to
two very specific requests. If Petitioner was
still unsure about what was needed, she could
have contacted [the Board] for clarification
and an extension of time to provide the
documentation. Instead, Petitioner received
[the Board's] notice and then waited over a
month to contact the County. The credible
evidence in the record demonstrates that
Petitioner failed to provide the needed
information prior to the April 28, 2016 denial
of benefits. Without this information, [the
Board] was unable to complete its eligibility
determination and the denial was appropriate.
[(Emphasis added).]
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II
On appeal from a final State agency determination, we can
intervene only if the decision is arbitrary, capricious,
unreasonable, Brady v. Bd. of Rev., 152 N.J. 197, 210 (1997), or
not supported by substantial credible evidence in the record. N.J.
Soc'y for the Prev. of Cruelty to Animals v. N.J. Dep't of Agric.,
196 N.J. 366, 384-85 (2008). We have articulated this standard
of review as follows:
Under the arbitrary, capricious, or
unreasonable standard, our scope of review is
guided by three major inquiries: (l) whether
the agency's decision conforms with relevant
law; (2) whether the decision is supported by
substantial credible evidence in the record;
and (3) whether, in applying the law to the
facts, the administrative agency clearly erred
in reaching its conclusion.
[Twp. Pharmacy v. Div. of Med. Assistance &
Health Servs., 432 N.J. Super. 273, 283-84
(App. Div. 2013).]
The Medicaid redetermination process is carefully regulated.
For purposes of redetermination, resources are defined "as any
real or personal property which is owned by the applicant (or by
those persons whose resources are deemed available to him or her,
as described in N.J.A.C. 10:71-4.6) . . . ." N.J.A.C. 10:71-
4.1(b). Moreover, "[b]oth liquid and nonliquid resources shall
be considered in the determination of eligibility, unless such
resources are specifically excluded under the provisions of
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N.J.A.C. 10:71-4.4(b)." Ibid. Here, it is undisputable that the
insurance policies which prompted the cryptic March 11, 2016
request did not have any bearing on A.F.'s continued eligibility
for Medicaid benefits.
Under these undisputed facts, denying redetermination based
on A.F.'s failure to provide information which the agency conceded
would not have affected its determination of her eligibility to
receive benefits is facially an arbitrary and capricious decision.
The Director's unexplained statement concerning "the credibility
of the evidence" also failed to give proper deference to the ALJ.
As our colleague Judge King wrote sixteen years ago: "An agency
head reviewing an ALJ's credibility findings relating to a lay
witness may not reject or modify these findings unless the agency
head explains why the ALJ's findings are arbitrary or not supported
by the record." S.D. v. Div. of Med. Assistance & Health Servs.,
349 N.J. Super. 480, 485 (App. Div. 2002).
The record shows A.F. was eligible to continue to receive
Medicaid benefits at all times relevant to the Board's March 11,
2016 inquiry. The Board conceded before the ALJ that the
information it requested, even if timely received, would not have
provided a valid basis to deny A.F. Medicaid benefits. Distilled
to its essence, the Director's decision to deny Medicaid benefits
to a severely disabled person based only on her failure to timely
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provide irrelevant information does not promote the Medicaid
program salutary policy. Under these circumstances, the
Director's decision was arbitrary and capricious.
Reversed and remanded for the Board to reinstate A.F.'s
Medicaid benefits. We do not retain jurisdiction.
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