R.K. VS. DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES (DIVISON OF MEDICAL ASSISTANCE AND HEALTH SERVICES) ( 2019 )


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  •                                 NOT FOR PUBLICATION WITHOUT THE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-2881-17T1
    R.K.,
    Petitioner-Appellant,
    v.
    DIVISION OF MEDICAL
    ASSISTANCE AND HEALTH
    SERVICES, and CAPE MAY
    COUNTY BOARD OF SOCIAL
    SERVICES,
    Defendants-Respondents.
    ______________________________
    Submitted October 8, 2019 – Decided December 5, 2019
    Before Judges Gilson and Rose.
    On appeal from the New Jersey Department of Human
    Services, Division of Medical Assistance and Health
    Services.
    SB2, Inc., attorneys for appellant (Laurie M. Higgins,
    of counsel and on the briefs).
    Gurbir S. Grewal, Attorney General, attorney for
    respondent Division of Medical Assistance and Health
    Services (Melissa H. Raksa, Assistant Attorney
    General, of counsel; Mark D. McNally, Deputy
    Attorney General, on the brief).
    Respondent Cape May County Board of Social Services
    has not filed a brief.
    PER CURIAM
    Petitioner R.K. appeals from a final agency decision by the Division of
    Medical Assistance and Health Services (the Division) that imposed a 199-day
    period of ineligibility for Medicaid benefits. That ineligibility was based on
    R.K. having transferred her ownership interest in a home to her daughter and
    son-in-law within sixty months of entering a nursing home facility. R.K. argues
    that the Division acted arbitrarily and capriciously in rejecting a determination
    by an administrative law judge (ALJ) that R.K. qualified for the caregiver
    exemption. The Division found that R.K. submitted insufficient evidence to
    support the exemption. Given our deferential standard of review, we discern no
    basis to reject the Division's determination and, therefore, we affirm.
    I.
    R.K. was admitted to the Autumn Lake Healthcare Nursing Home at
    Ocean View on April 22, 2015. Four months later, in August 2015, a Medicaid
    application was submitted on her behalf to the Cape May County Board of Social
    Services, the county welfare agency (CWA) responsible for reviewing such
    A-2881-17T1
    2
    applications. The CWA approved R.K. for Medicaid benefits as of May 1, 2015
    but imposed an asset transfer penalty. The penalty was based on R.K. having
    transferred her one-third interest in her home in 2011 to her daughter and son-
    in-law.
    R.K. requested a fair hearing to dispute the transfer penalty. The matter
    was transmitted to the Office of Administrative Law (OAL) and a hearing was
    held before an ALJ in 2016. In May 2016, the ALJ issued an initial decision
    reversing the transfer penalty. The ALJ found that R.K.'s 2011 transfer of her
    interest in her home met the caregiver exemption. In making that determination,
    the ALJ accepted the evidence submitted by R.K. that her daughter had provided
    care to her for two years before R.K. went into the nursing home that allowed
    R.K. to remain at home rather than be institutionalized.
    On administrative appeal, the Division rejected the ALJ's decision
    because the record did not support the ALJ's findings. The Division foun d that
    R.K. had not provided competent medical evidence about her physical condition
    for the two years before she entered the nursing home. Specifically, the Division
    rejected an affidavit from Dr. Jenny Lynn Cook because that affidavit did not
    state that Dr. Cook had treated R.K. Consequently, the Division remanded the
    matter to the OAL for further development of the record. The Division also
    A-2881-17T1
    3
    directed the ALJ to clarify who paid for the adult daycare and hospice services
    R.K. received before going to the nursing home.
    In 2017, a second hearing was held before the same ALJ.            After
    considering additional evidence, on October 16, 2017, the ALJ again found that
    R.K. was entitled to the caregiver exemption and reversed the transfer penalty.
    The ALJ relied on records that showed that R.K. had received hospice care since
    November 7, 2013. Those records showed that in November 2013, R.K. was
    diagnosed with congestive heart failure, atrial fibrillation, cerebral vascular
    accident (stroke), dementia, and depression. The ALJ also found that R.K. had
    received medical care provided by an adult day care facility from June 2014
    until December 2014, and hospice services from November 2013 that continued
    through R.K.'s institutionalization. Those services had been paid for by R.K.'s
    private insurance and Medicare. The ALJ held that such insurance and Medicare
    did not constitute governmental benefits such as Medicaid and, thus, did not
    disqualify R.K. from the caregiver exemption.
    On a second administrative appeal, the Division again rejected the ALJ's
    determination in a final agency decision issued on January 16, 2018. The
    Division found that R.K. had not provided medical documentation showing her
    medical condition for the full two-year period required by the caregiver
    A-2881-17T1
    4
    exemption. Specifically, the Division found that R.K. "provided no medical
    evidence whatsoever about her condition from March 2013 through November
    2013."   In making that finding, the Division pointed out that the records
    concerning R.K.'s hospice services began in November 2013. The Division also
    stated that it had previously rejected the affidavit of Dr. Cook and R.K. had not
    provided any other medical documentation concerning her condition before
    November 2013.
    In addition, the Division rejected the ALJ's determination that the
    healthcare services R.K. received from her private insurer and Medicare should
    not be considered in determining whether R.K.'s daughter's care was the reason
    that R.K. remained at home for the two-year caregiving period. The Division
    held that the ALJ's interpretation was inconsistent with the plain language of the
    regulations defining the caregiver exemption, which the Division construed to
    require that the care be provided by the daughter.
    II.
    R.K. now appeals from the Division's January 16, 2018 final agency
    determination imposing the transfer penalty. She makes three arguments: (1)
    the transfer of R.K.'s interest in her home is exempt from any penalty under the
    caregiver exemption; (2) the Division engaged in unlawful rule making when it
    A-2881-17T1
    5
    considered the care provided by the adult daycare center and the hospice
    provider; and (3) the Division acted arbitrarily, capriciously, and unreasonably
    by rejecting the facts found by the ALJ.
    Our role in reviewing an agency decision is limited. R.S. v. Div. of Med.
    Assistance and Health Servs., 
    434 N.J. Super. 250
    , 260-61 (App. Div. 2014)
    (citing Karins v. City of Atl. City, 
    152 N.J. 532
    , 540 (1998)). We "defer to the
    specialized or technical expertise of the agency charged with administration of
    a regulatory system." In re Virtua-W. Jersey Hosp. Voorhees for Certificate of
    Need, 
    194 N.J. 413
    , 422 (2008) (citing In re Freshwater Wetlands Prot. Act
    Rules, 
    180 N.J. 478
    , 488-89 (2004)). "[A]n appellate court ordinarily should
    not disturb an administrative agency's determinations or 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. (citing In re
    Herrmann, 
    192 N.J. 19
    , 28 (2007)).
    A presumption of validity attaches to the agency's decision. Brady v. Bd.
    of Review, 
    152 N.J. 197
    , 210 (1997); In re Tax Credit Application of Pennrose
    Properties, Inc., 
    346 N.J. Super. 479
    , 486 (App. Div. 2002).          The party
    challenging the validity of the agency's decision has the burden of showing that
    it was arbitrary, capricious, or unreasonable. J.B. v. N.J. State Parole Bd., 444
    A-2881-17T1
    
    6 N.J. Super. 115
    , 149 (App. Div. 2016) (quoting In re Arenas, 
    385 N.J. Super. 440
    , 443-44 (App. Div. 2006)). "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 and Health Servs.,
    
    389 N.J. Super. 354
    , 364 (App. Div. 2006) (citing H.K. v. Div. of Med.
    Assistance and Health Servs., 
    379 N.J. Super. 321
    , 327 (App. Div. 2005)).
    Nevertheless, "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 and 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)).
    When an agency head rejects or modifies an ALJ's "findings of facts,
    conclusions of law[,] or interpretations of agency policy in the decision . . ." the
    agency head "shall state clearly the reasons for doing so." N.J.S.A. 52:14B -
    10(c). Moreover, an agency is not required to accept an ALJ's findings when
    those findings "are arbitrary, capricious[,] or unreasonable or are not supported
    by sufficient, competent, and credible evidence in the record." 
    Ibid. Nevertheless, when rejecting
    or modifying an ALJ's findings of fact, "the agency
    head must explain why the ALJ's decision was not supported by sufficient
    A-2881-17T1
    7
    credible evidence or was otherwise arbitrary." Cavalieri v. Bd. of Trs. of Pub.
    Employees Ret. Sys., 
    368 N.J. Super. 527
    , 534 (App. Div. 2004) (first citing
    N.J.S.A. 52:14B-10(c); then citing S.D. v. Div. of Med. Assistance & Health
    Servs., 
    349 N.J. Super. 480
    , 485 (App. Div. 2002)).
    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 and Health Servs., 
    373 N.J. Super. 210
    ,
    217 (App. Div. 2004) (quoting Mistrick v. Div. of Med. Assistance and Health
    Servs., 
    154 N.J. 158
    , 165 (1998)); see also 42 U.S.C. § 1396-1. Once a state
    elects to participate and 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, 1396b (2019).
    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
    Commissioner of the Department of Human Services (DHS). The Division is a
    unit within DHS that administers the Medicaid program. N.J.S.A. 30:4D-5, -7;
    A-2881-17T1
    8
    N.J.A.C. 10:49-1.1. Consequently, 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).
    The Medicaid regulations deem an applicant ineligible for nursing home
    benefits if the individual "has disposed of assets at less than fair market value at
    any time during or after the [sixty]-month period immediately before . . . the
    date the individual applies for Medicaid as an institutionalized individual [,]"
    (the look-back period).     N.J.A.C. 10:71-4.10(a); see also N.J.A.C. 10:71-
    4.10(b)(9)(ii). If it is determined that the applicant transferred an asset for less
    than fair market value during the look-back period, the applicant will be subject
    to a period of Medicaid ineligibility. N.J.S.A. 30:4D-3(i)(15)(b); N.J.A.C.
    10:71-4.10(c)(4).
    There are limited exemptions to the transfer penalty rules. Once such
    exemption is the caregiver exemption. N.J.A.C. 10:71-4.10(d).           Under that
    exemption, an individual will not be subject to a penalty when the individual
    transfers an "equity interest in a home which serves (or served immediately prior
    to entry into institutional care) as the individual's principal place of residence "
    and when "title to the home" is transferred to a daughter or son under certain
    circumstances. 
    Ibid. Those circumstances include
    that the son or daughter must
    A-2881-17T1
    9
    have resided in the home for "at least two years immediately before" the
    individual becomes institutionalized and the son or daughter must have
    "provided care to such individual which permitted the individual to reside at
    home rather than in an institution or facility." N.J.A.C. 10:71-4.10(d)(4). The
    care provided by the son or daughter must exceed "normal personal support
    activities" and the individual's physical or mental condition must be such that
    he or she "require[d] special attention and care." N.J.A.C. 10:71-4.10(d)(4)(i).
    R.K. was admitted to the nursing home in April 2015. Consequently, to
    qualify for the caregiver exemption, R.K. must demonstrate that from April 2013
    to April 2015, her daughter provided a level of care that allowed R.K. to reside
    at home rather than an institution or facility.
    The Division determined that there were no medical records
    demonstrating that R.K. required a special level of care from March 2013 up to
    November 2013. Specifically, the Division focused on the lack of any evidence
    concerning R.K.'s medical condition during that period of time. Our review of
    the records demonstrates that there was no evidence concerning R.K.'s medical
    condition during that period of time. Consequently, the Division's determination
    is supported by the record and we discern no basis for rejecting that
    determination.
    A-2881-17T1
    10
    In her second argument, R.K. contends that the Division engaged in
    unlawful rule making when it determined that the care provided by the adul t
    daycare center and the hospice provider disqualified R.K. from the caregiver
    exemption.   More specifically, the Division determined that the care that
    allowed R.K. to remain in her home had to be provided by her daughter rather
    than from other services.    We need not reach this issue.      The Division's
    determination concerning the regulations was a second and alternative ground
    for rejecting the ALJ's determination.     We have already accepted the first
    ground, which was that there were no records establishing R.K.'s medical
    condition between March 2013 and up to early November 2013.
    Finally, R.K. contends that the Division acted arbitrarily, capriciously,
    and unreasonably in rejecting the ALJ's findings. As already noted, the Division
    rejected the ALJ's determination because there were no medical records
    establishing R.K.'s medical condition between March 2013 and up to November
    2013. The Division has the authority to reject an ALJ's findings when they are
    not supported by "sufficient, competent, and credible evidence in the record."
    N.J.S.A. 52:14B-10(c).
    Affirmed.
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    11