W.M. 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NOT FOR PUBLICATION WITHOUT THE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-4164-16T2
W.M.,
Petitioner-Appellant,
v.
DIVISION OF MEDICAL ASSISTANCE
AND HEALTH SERVICES,
Respondent-Respondent.
_______________________________
Argued May 8, 2018 – Decided June 26, 2018
Before Judges Reisner and Mitterhoff.
On appeal from the New Jersey Department of
Human Services, Division of Medical Assistance
and Health Services.
John Pendergast argued the cause for appellant
(Schutjer Bogar, attorneys; John Pendergast,
on the brief).
Jacqueline R. D'Alessandro, Deputy Attorney
General, argued the cause for respondent
(Gurbir S. Grewal, Attorney General, attorney;
Melissa H. Raksa, Assistant Attorney General,
of counsel; Jacqueline R. D'Alessandro, on the
brief).
PER CURIAM
Appellant W.M. appeals from an April 18, 2017 final agency
determination by the Director of the Division of Medical Assistance
and Health Services (DMAHS) that denied his application for
Medicaid. We reverse.
W.M. was admitted to institutional care at Cranford Rehab in
December 2012. On December 27, 2013, W.M.'s wife, E.M., filed a
Medicaid application on behalf of her husband with the Union County
Division of Social Services ("the County"). On January 27, 2014,
the County requested additional information concerning income
verification, life insurance information, and household expenses.
The Medicaid Coordinator for Cranford Rehab supplied the requested
information. Shifra Weiss1, one of Cranford Rehab's Medicaid
Coordinators, followed up with telephone calls to the County
throughout the remainder of 2014 and into the beginning of 2015.
Weiss received no formal correspondence during that timeframe, but
claimed that she was repeatedly advised verbally that the
application was still under review. On February 2, 2015 and March
26, 2015, the County made additional requests for verifications
regarding bank statements, the surrender of any life insurance
policies, and proof of spend down to the resource limit.
1
DMAHS' assertion that Shifra Weiss was not authorized to act on
W.M.'s behalf does not have sufficient merit to warrant discussion
in a written opinion. R. 2:11-3(e)(1)(E).
2 A-4164-16T2
On April 7, 2015, the County sent a letter dismissing the
application. The reason given for the dismissal was "Excess
Resources and failure to provide verifications." On April 13,
2015, the County sent a letter denying the application. Again,
the reason given for the denial was "Excess Resources and failure
to provide verifications." The County provided further
explanation by providing a list of resources and their values as
of September 1, 2013. These resources included a Lincoln National
Life Insurance policy, a Prudential policy, a Pacific Life Mutual
IRA, and a Sun America account. The letter claimed that the total
balance for the accounts listed was $171,784.30, and that W.M. and
E.M. did not "provide [] documentation that [they] . . . spend
[sic] down to the $119,240.00 resource limit." The letter stated
that if W.M. and E.M. had surrendered any of these resources, they
should "provide verification of date surrendered, the amount, and
account number the check was deposited in." The letter specified
that this proof was required within the next ten days or the case
would remain denied.
In response, Weiss submitted verification that the Pacific
Life Mutual IRA policy was "fully surrendered" as of October 8,
2013, which would have shown that W.M. was clearly under the
$119,240 resource limit at the time his application was filed.
The agency deemed this documentation insufficient, and sent a
3 A-4164-16T2
letter dated April 28, 2015, which confirmed receipt of this
additional information, but also stated:
The Variable Annuity Interim Statement that
was provided for the Pacific Life Mutual IRA
. . . is unacceptable. It only reflects
scheduled withdrawals and does not state the
running balance, which must be provided.
Perhaps that information is on one of the
other pages to the statement. We only received
pages 27 and 28. Please send the missing pages
1-27, as well as page 29. Also, documentation
was not provided verifying that the withdrawn
money was used to pay household expenses.
The letter instructed that proof of any spend down would need
to be submitted within ten days. Via fax dated April 30, 2015,
Weiss sent the entire interim statement, and clarified that the
money had been transferred to a Wells Fargo account for use in
privately paying Cranford Rehab and for other household expenses,
per an invoice from the rehabilitation center. The County
responded that the documentation was still deficient and
maintained the denial of W.M.'s claim.
W.M. filed a request for a fair hearing and the matter was
transferred to the Office of Administrative Law (OAL) on December
14, 2015. At the hearing, agency witnesses urged that the April
30, 2015 submission was inadequate to verify that the Pacific Life
policy was valueless at the time that W.M. applied for Medicaid.
The Administrative Law Judge (ALJ) disagreed and found that:
4 A-4164-16T2
[H]ad they examined the document more closely,
they could have seen that it clearly contains
a running record of withdrawals. Until in or
about November 2012, $1,239.58 was generated
monthly by the annuity. The document reflects
a significant change at the time W.M. entered
full-time institutional care in December 2012.
Large amounts of money, $14,000 per month,
were thereafter withdrawn monthly until
October 8, 2013, when the policy was
surrendered.
The Pacific Life document included a glossary, which stated that
the "surrender value" was "[t]he amount available for withdrawal
on the last day of the statement period, which is the contract
value less any applicable contract debt, annual fee, optional
rider charges and withdrawal charges." The definition of "full
surrender" was "[a] full withdrawal of the contract value." The
Pacific Life document stated that a "Full Surrender" happened on
October 8, 2013, which was more than two months before W.M.'s
application for Medicaid was filed.
In her written decision dated April 28, 2016, the ALJ found
that it was "uncontroverted that W.M. was financially eligible for
Medicaid at this time of his December 2013 application." The ALJ
disagreed that the family and its representatives failed to timely
supply verification that the Pacific Life policy had no value at
the time of W.M.'s Medicaid application. In addition, the ALJ
opined that "the agency woefully failed to meet its obligations
under the administrative code" because the agency failed to move
5 A-4164-16T2
the case promptly through the approval process. Accordingly, the
ALJ concluded that "the action of the agency in denying him
benefits for failure to verify his resource level is baseless, and
should be reversed."
On July 22, 2016, the DMAHS Director issued an Order of Remand
instructing the ALJ to flesh out what efforts E.M. made prior to
April 28, 2015 to provide the requested documentation. The
Director also noted that "I too am curious to know why UCBSS waited
a year to request additional information from E.M."
On remand, the ALJ found that after her initial application
and then submitting additional information, E.M. heard nothing
about her application until it was denied in April 2015. In
response to the question on remand of whether any information was
outstanding at the time of the April 2015 denial, the ALJ found
that no information was outstanding and that it should have been
clear to the County as of April 2015 that the Pacific Life policy
had been surrendered and had no value. The ALJ incorporated her
earlier conclusions of law by reference, and further concluded
that nothing warranted the agency's delay in issuing its denial
letter to W.M.
On April 18, 2017, the DMAHS Director again reversed the
ALJ's determination. The Director noted that "[t]he issue here
is not merely whether Petitioner had properly verified that he
6 A-4164-16T2
surrendered the Pacific Life policy, but rather whether that
information was timely submitted to UCBSS." Because W.M. failed
to provide verification of a Lincoln National Life Insurance
policy, a Prudential policy, a Pacific Life Mutual IRA or a Sun
America account prior to the April 13, 2015 and April 28, 2015
denials, the Director reversed the ALJ's decision and reinstated
UCBSS' denial.
On appeal, W.M. asserts that the Division's refusal to
acknowledge or review the information submitted in response to the
April 13 and April 28, 2015 denial letters was arbitrary,
capricious and unreasonable.
An appellate court will not reverse the decision of an
administrative agency unless it is "arbitrary, capricious or
unreasonable . . . or not supported by the substantial credible
evidence in the record." Barrick v. State, 218 N.J. 247, 259
(2014) (quoting In re Stallworth, 208 N.J. 182, 194 (2011)). In
cases where an agency head reviews the fact-findings of an ALJ, a
reviewing court must uphold the agency head's findings even if
they are contrary to those of the ALJ, if supported by substantial
credible evidence. In re Silberman, 169 N.J. Super. 243, 255-56
(App. Div. 1979).
There is one fact that is completely unrefuted in this case:
at the time of W.M.'s December 17, 2013 application, he met the
7 A-4164-16T2
eligibility requirements for Medicaid. That is so because, equally
unrefuted, the Pacific Life policy with a value of $130,000 had
been fully surrendered on October 8, 2013, two months before the
application. The surrender of the Pacific Life policy put
plaintiff well below the $119,240 spend limit. The other policies
held by W.M. - the Lincoln National Life Insurance policy, the
Prudential policy, and the Sun America account - had, as UCBSS was
aware, only minimal value and thus were incapable of disqualifying
him. Accordingly, the only issue before the court is whether
DMAHS acted reasonably in maintaining its denial based on the fact
that proof of the surrender of the Pacific Life policy was not
provided until after the April 28, 2015 denial.
We find that the agency's persistence in denying this
meritorious claim based on the alleged untimeliness of W.M.'s
document submission was arbitrary, capricious and unreasonable.
At the outset, the agency after receiving the application did not
expeditiously act on the application; rather, as the ALJ found,
the application languished with no action for over a year, only
to be abruptly denied in April 2015.
Moreover, neither the April 13, 2015 denial nor the April 28,
2015 denial were categorical denials. To the contrary, each letter
invited W.M. to submit additional documentation.
8 A-4164-16T2
If any of the above have been surrendered,
provide verification of the date surrendered,
the amount, and the account number the
check(s) were deposited in. Proof of any
spend down to the resource limit is required.
For example, receipts from paying the Nursing
Home or other household expenses may be
submitted.
In response, Weiss submitted verification that the Pacific
Life Mutual IRA policy was "fully surrendered" as of October 8,
2013, which would have shown that W.M. was clearly under the
$119,240 resource limit at the time his application was filed.
Although the agency deemed this documentation insufficient, its
letter dated April 28, 2015, likewise left the door open for a
further response:
The Variable Annuity Interim Statement that
was provided for the Pacific Life Mutual IRA
. . . is unacceptable. It only reflects
scheduled withdrawals and does not state the
running balance, which must be provided.
Perhaps that information is on one of the
other pages to the statement. We only received
pages 27 and 28. Please send the missing pages
1-27, as well as page 29. Also, documentation
was not provided verifying that the withdrawn
money was used to pay household expenses.
The letter instructed that proof of any spend down would need
to be submitted within ten days. Via fax dated April 30, 2015,
Weiss sent the entire interim statement, and clarified that the
money had been transferred to a Wells Fargo account for use in
privately paying Cranford Rehab and for other household expenses,
9 A-4164-16T2
per an invoice from the rehabilitation center. As the ALJ
correctly found, the proofs submitted by Weiss on behalf of W.M.
conclusively established that the Pacific Life policy had no value
as of October 8, 2013 and that W.M. therefore met the eligibility
requirements for Medicaid.
As the ALJ correctly found, it should have been clear to the
County as of April 2015 that the Pacific Life policy had been
surrendered and had no value. We conclude that for DMAHS to
maintain its denial of the application based on the fact that the
documents were submitted two days after the April 28, 2015 denial
letter was arbitrary, capricious and unreasonable.2 Accordingly,
we reverse the agency's April 18, 2017 decision denying the
application and remand with direction that the agency promptly
grant the application.
Reversed and remanded. We do not retain jurisdiction.
2
Having determined that DMAHS' denial must be reversed, we need
not address W.M.'s remaining arguments concerning the agency's
affirmative regulatory obligations to obtain financial
information.
10 A-4164-16T2