G.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NOT FOR PUBLICATION WITHOUT THE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-3067-16T3
G.F.,
Petitioner-Appellant,
v.
DIVISION OF MEDICAL ASSISTANCE
AND HEALTH SERVICES and BERGEN
COUNTY BOARD OF SOCIAL SERVICES,
Respondents-Respondents.
______________________________________
Submitted September 12, 2018 – Decided September 17, 2018
Before Judges Haas and Mitterhoff.
On appeal from the New Jersey Division of Medical
Assistance and Health Services, Department of Human
Services.
Amy S. MacIsaac, attorney for appellant.
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).
PER CURIAM
Appellant G.F. appeals from the February 3, 2017 final decision of the
Director of the Division of Medical Assistance and Health Services (DMAHS)
denying her request for a deduction from her post-Medicaid eligibility income
for the cost of 24-hour per day companion care services. Because there was
confusion as to the proper scope of the proceedings to be conducted at the Office
of Administrative Law (OAL) between the parties and the Administrative Law
Judge (ALJ) on the one hand, and the Director on the other, we vacate the
Director's decision and remand for a contested case hearing on all the issues
presented in this matter.
By way of background, Medicaid recipients who are receiving care in an
institution, such as a medical institution or nursing facility, are generally
required to contribute all of their income to the cost of their care. See 42 U.S.C.
§ 1396a(q). Thus, the recipient must turn over their income on a monthly basis
as a cost share to the facility where the recipient resides. Ibid.
In appropriate circumstances, however, State Medicaid agencies like
DMAHS must allow a recipient to deduct certain expenses designated in the
agency's regulations from their income before that income is turned over to the
care provider. 42 C.F.R. § 435.725(a). Pertinent to the present case, 42 C.F.R.
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§ 435.725(c)(4)(ii) provides that "the agency must deduct . . . from the
individual's total income . . . [n]ecessary medical or remedial care recognized
under State law but not covered under the State's Medicaid plan, subject to
reasonable limits the agency may establish on amounts of these expenses."
Consistent with this federal regulation, DMAHS adopted N.J.A.C. 10:71-
5.7(k)(1) which, in relevant part, states that a Medicaid recipient may deduct
"necessary medical expenses as recognized by [DMAHS] and incurred during .
. . a period of eligibility" from their income before the application of that income
to the cost of his or her care.
Turning to the present case, G.F. is a Medicaid recipient, who receives
care in an assisted living facility. Through her family, G.F. asserted she suffered
from dementia, which made her susceptible to falling. As a result, she was
paying $160 per day to have a companion care provider stay with her in the
facility to assist with her physical needs. G.F. argued that these expenses were
medically necessary under N.J.A.C. 10:71-5.7(k)(1) and, therefore, should be
deducted from her income 1 that would otherwise have to be turned over to the
facility.
1
G.F. received her income from an Irrevocable Income Trust.
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G.F. submitted her request for this deduction to the Bergen County Board
of Social Services, which was her county welfare agency (CWA). The CWA
denied the request, and G.F., through her attorney, asked for a hearing before
the OAL to contest this determination.
In preparation for the hearing, the ALJ proactively asked G.F. and the
CWA to provide him with their respective positions on the factual and legal
issues involved in the case. In response, the CWA submitted a letter in which it
expressed the following rationale for its denial of G.F.'s request for a deduction
of the cost of her companion care services:
Medicaid provides the necessary services
depend[ing] on [G.F.'s] level of care. [If G.F.] needs
extra health care aide services while he/she [sic] is
residing at an Assisted Living facility then [G.F.] needs
to be moved to a nursing home facility. For this reason,
we completely disagree with [G.F.] because it is a
duplication of benefits.
Notably, the CWA did not assert that the companion care services G.F.
was paying for were medically unnecessary. Instead, it argued that if G.F.
needed those services, her assisted living facility should be providing them and,
if the facility was not doing so, G.F. should be transferred to a nursing home
where she could receive a higher level of care.
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The ALJ scheduled a hearing for July 28, 2016. Prior to the start of the
hearing, the ALJ held a conference with the CWA representative and G.F.'s
attorney. Unfortunately, that conference was not conducted on the record and,
therefore, we are not certain as to the full nature of the matters discussed and
agreed upon by the parties. At the conclusion of the conference, however, the
ALJ stated on the record that the sole issue before him appeared to be legal in
nature, and he framed that issue in the following terms:
When a patient is in an assisted living facility and due
to her specific needs (here, a history of falls), she hires
a 24-hour per day companion to assist her with her
physical needs (over and above the services provided
by the assisted living facility), is the cost of the
companion (whose necessity has been verified by the
patient's medical doctor) deductible from the patient's
income?
The ALJ directed the parties to file briefs addressing this issue and submit
any other "relevant documents such as letters from doctors regarding medical
necessity or lack of medical necessity of a companion for G.F." The ALJ further
stated that if there was no dispute between the parties as to the facts, a hearing
would not be necessary and he would simply render his decision on the legal
issue on the papers.
Thereafter, G.F.'s attorney submitted an undated letter from G.F.'s
physician who had "been in charge of [her] medical care" since her admission
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to the assisted living facility. The doctor stated that G.F. had fallen on several
occasions at the facility, and the facility's director "agreed that the facility
cannot offer . . . the necessary aide coverage to support [G.F.] safely."
Therefore, the doctor opined that "the addition of home health aide companion
services on a 24/7 basis [w]as a medical necessity."
In its written response, the CWA again did not directly challenge G.F.'s
contention that, as a factual matter, the companion services were medically
necessary. Instead, the CWA stated its position as follows:
As her attorney presented at the hearing, [G.F.] may
need to have private health care, 24 hours a day, then
she is not eligible for Assisted Living assistance. She
really needs . . . nursing home care so that she is able
to receive appropriate care from a nursing home care
facility.
The CWA also argued that deductions for necessary medical expenses were only
available under N.J.A.C. 10:71-5.7(k)(1) if the recipient was a patient in a
nursing home, rather than an assisted living facility.
Because neither party had identified any factual dispute in the record, the
ALJ rendered an Initial Decision without conducting an evidentiary hearing.
The ALJ noted that G.F. had produced a letter from her doctor "substantiat[ing]"
her claim "that the companion services are medically necessary." The ALJ went
on to reject the CWA's position that deductions for such medically necessary
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services are only available under N.J.A.C. 10:71-5.7(k)(1) for Medicaid
recipients residing in nursing homes. Therefore, the ALJ reversed the CWA's
decision denying G.F. this deduction from her income.
On February 3, 2017, the DMAHS Director rendered her final written
decision, rejected the ALJ's Initial Decision, and denied G.F.'s request for a
deduction from her income for the money she paid each month for companion
care services. The Director noted that the residuum rule, N.J.A.C. 1:1-15.5(b),
requires a litigant to provide "some legally competent evidence" to support their
contentions. Here, the Director found that the only evidence G.F. presented to
support her argument that the services were medically necessary was an undated
letter from her doctor. This letter also contained hearsay statements concerning
a conversation the doctor had with the facility director concerning the facility's
inability to provide the aide coverage needed to protect G.F. from falling.
Because G.F. did not call the doctor or the facility director to testify at the
hearing, the Director determined that she failed to establish through any
competent evidence that the services were medically necessary under N.J.A.C.
10:71-5.7(k)(1).
For these same reasons, the Director concluded that G.F. did not
demonstrate that her assisted living facility was unable to provide sufficient
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services to protect her from falling. Even if the facility director's hearsay
statement to this effect was accepted, the DMAHS Director held that the facility
was required to address this issue and provide the needed services or arrange for
G.F.'s transfer to a more appropriate institution.
Thus, the Director reversed the ALJ's Initial Decision because his "finding
of medical necessity [was] based on . . . unsupported hearsay testimony[,]" and
denied G.F.'s application for a deduction from her income under N.J.A.C. 10:71-
5.7(k)(1). This appeal followed.
On appeal, G.F. asserts that neither party disputed that the companion
services were medically necessary and were not being provided at her assisted
care facility. As a result, she did not provide, and the ALJ did not require, live
testimony or other competent evidence to support her claim. Under these unique
circumstances, G.F. argues that the Director should have remanded the matter
for a new hearing to give her the opportunity to do so. We agree.
Our role in reviewing the decision of an administrative agency is limited.
In re Stallworth, 208 N.J. 182, 194 (2011). "[A] 'strong presumption of
reasonableness attaches'" to the agency's decision. In re Carroll, 339 N.J. Super.
429, 437 (App. Div. 2001) (quoting In re Vey, 272 N.J. Super. 199, 205 (App.
Div. 1993), aff’d, 135 N.J. 306 (1994)). We will not upset the agency's
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determination absent a showing that it was arbitrary, capricious, or
unreasonable; that it lacked fair support in the evidence; or that it violate d
legislative policies. See Lavezzi v. State, 219 N.J. 163, 171 (2014).
Applying these principles to the idiosyncratic facts of this case, we are
constrained to vacate the Director's decision and remand for a new hearing on
all issues. In doing so, we agree that the Director properly applied the residuum
rule in rendering her decision. The residuum rule provides that
"[n]otwithstanding the admissibility of hearsay evidence [in an administrative
proceeding], some legally competent evidence must exist to support each
ultimate finding of fact to an extent sufficient to provide assurances of reliability
and to avoid the fact or appearance of arbitrariness." N.J.A.C. 1:1-15.5(b); see
also Weston v. State, 60 N.J. 36, 51 (1972) (holding that "a fact finding or a
legal determination cannot be based on hearsay alone").
Here, there was no legally competent evidence to support the ALJ's
finding that the companion services were medically necessary because G.F. only
submitted an undated letter from her doctor instead of having the doctor testify
in support of her claim. In addition, G.F. did not call the director of the assisted
living facility to testify, subject to cross-examination by the CWA, concerning
that facility's inability to provide G.F. with these services.
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In rejecting the ALJ's fact findings, however, the Director failed to
consider the fact that the parties agreed, either expressly or implicitly, to permit
the ALJ to decide the matter on the basis of their written submissions rather than
through a contested case hearing. As noted above, the ALJ determined after the
parties' conference that the case presented only a legal issue. In framing the
issue, the ALJ implied that the parties had already agreed that the "necessity" of
the companion services had "been verified by the patient's medical doctor[.]"
Even if that was not the case, however, he gave each side the chance to identify
and address any factual issues in their written submissions. In response, the
CWA never disputed that 24-hour per day companion care services were
warranted, and never objected to G.F.'s doctor's letter on hearsay or any other
grounds.
In the absence of any objection or contrary evidence, the ALJ determined
that the letter was sufficient to establish that the services were medically
necessary under N.J.A.C. 10:71-5.7(k)(1), and proceeded to address the legal
issue of whether a Medicaid recipient in an assisted living facility could claim
an income deduction for these services. In short, the parties tried the case
exactly as contemplated following their unrecorded pretrial conference with the
ALJ.
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It is well established that the final decision-maker in a case is not bound
by a stipulation entered by the parties, and may reject it if not supported by the
record or applicable evidence rules. Negrotti v. Negrotti, 98 N.J. 428, 433
(1985). However, it is equally clear that the party "who is being prejudiced by
the [tribunal's] non-adherence to the stipulation [should] be given the same
opportunity to present his [or her] proofs as he [or she] would have received had
the stipulation not been entered on the record." Ibid.Here, G.F. did not present live testimony to support her claim because the
parties agreed there was no need to do so, and the ALJ determined the matter
could be decided on the papers. In keeping with the Supreme Court's decision
in Negrotti, when the Director thereafter decided that G.F. could not properly
rely on her doctor's letter, even though the CWA did not object, she should have
remanded the case to the ALJ to permit G.F. to present her proofs at a contested
case hearing.
Thus, we vacate the Director's decision and remand the matter for a new
hearing on all issues. If the Director determines not to conduct t he hearing
herself, she should promptly transmit the case to the OAL as a contested case.
In doing so, we suggest that the Director specify the factual and legal issues the
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parties must address at the hearing in order to avoid the confusion that resulted
when the parties and the ALJ determined the matter involved only a legal issue.
Vacated and remanded. We do not retain jurisdiction.
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