C.M. VS. SUSSEX COUNTY BOARD OF SOCIAL SERVICES (NEW JERSEY DEPARTMENT OF HUMAN SERVICES)

NOT FOR PUBLICATION WITHOUT THE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-1337-19
C.M.,
Petitioner-Appellant,
v.
SUSSEX COUNTY BOARD
OF SOCIAL SERVICES,
Respondent-Respondent.
__________________________
Submitted October 25, 2021 – Decided November 17, 2021
Before Judges Messano and Enright.
On appeal from the New Jersey Department of Human
Services, Division of Medical Assistance and Health
Services.
C.M., appellant pro se.
Andrew J. Bruck, Acting Attorney General, attorney for
respondent Division of Medical Assistance and Health
Services (Melissa H. Raksa, Assistant Attorney
General, of counsel; Jacqueline R. D'Alessandro,
Deputy Attorney General, on the brief).
Hollander, Strelzik, Pasculli, Hinkes, Vandenberg,
Hontz & Olenick, LLC, attorneys for respondent
Sussex County Board of Social Services (Michelle L.
Olenick, on the brief).
PER CURIAM
Petitioner C.M. 1 appeals from the October 28, 2019, final agency decision
of the Division of Medical Assistance and Health Services (DMAHS)
terminating her household's Medicaid benefits. We reverse and remand.
The calculation of C.M.'s household income for 2019 forms the basis for
the instant appeal. When this matter commenced, C.M. lived in Sussex County,
New Jersey with her husband, J.L.M., and their four tax-dependent children. In
2018, C.M.'s family was financially eligible for New Jersey FamilyCare (NJFC)
Medicaid benefits based on the household's income for the 2017 tax year. But
in December 2018, the Sussex County Board of Social Services (the County
Welfare Agency, or CWA) discovered C.M.'s earnings were $3,917.26 per
month, that her husband's business losses equated to $1,217.50 per month, and
that her son, J.M., had earnings from his employment at ShopRite averaging
$1,348.91 per month (J.M. had started his part-time job with ShopRite in May
2018). Thus, the CWA calculated petitioner's projected household income for
1
We use initials to protect the privacy interests of petitioner and her family
members.
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2019 to be $4,048.67 per month, which exceeded the Modified Adjusted Gross
Income (MAGI) limit of $3,881 per month for the household.2 Accordingly, by
letter dated December 27, 2018, the CWA informed C.M. that her Medicaid
benefits, as well as those of her husband and their three older children, would
be terminated on January 31, 2019, and her youngest child's benefits would end
on March 31, 2019.
C.M. appealed the termination, and her request was transmitted to the
Office of Administrative Law (OAL). The ALJ conducted a fair hearing on
February 25, 2019, and on March 4, 2019, she issued an initial decision
reversing the termination. Noting J.M. was a college student, the ALJ concluded
it could not "be assumed at this point" that J.M. would continue to work at
ShopRite consistently throughout 2019 so that he would be required to file a
2019 tax return.
In May 2019, DMAHS rejected the ALJ's initial decision and affirmed the
termination of benefits for C.M.'s household. DMAHS found the CWA properly
2
This MAGI limit is reflected in the merits briefs of C.M. and the CWA, as
well as the March 4, and September 3, 2019 opinions of Administrative Law
Judges (ALJs) respectively; respondent DMAHS asserts the MAGI limit for
2019 was $3,978. It is unnecessary for us to resolve the conflicting figures,
because as of December 2018, C.M.'s projected household income for 2019
exceeded both amounts.
A-1337-19
3
considered J.M.'s prospective income as of December 2018 when assessing the
family's household income, and that the CWA appropriately informed C.M. her
household Medicaid benefits would terminate based on its projection C.M.'s
household income would exceed the MAGI threshold.
In June 2019, C.M. sought emergent relief before us. We determined there
were "factual disputes regarding whether [J.M.] will continue to work similar
hours throughout the 2019 tax year, whether he will be required to file a tax
return for the 2019 tax year, and whether his projected average monthly income
would disqualify the family from Medicaid/[NJFC] Program benefits."
Therefore, we stayed the termination of benefits and on June 6, 2019, we
remanded the matter "for a plenary hearing before the [OAL] regarding [J.M.]'s
projected work schedule and income for the 2019 tax year."
A different ALJ conducted the remand hearing on August 30, 2019. C.M.
and J.M. each provided testimony at the hearing. C.M. stated that J.M. worked
at ShopRite "temporarily" on a "part[-]time" basis; J.M. testified he "stopped
working at Shop[]Rite at the end of March" 2019, when he left college and
moved back home. He stated he only used his income from ShopRite "to pay
for [his] rent . . . , utilities and food expenses." J.M. further testified he had not
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4
received any other income in 2019 and had not applied for unemployment
insurance.
In her September 3, 2019 decision, the ALJ found that J.M.'s yearly gross
income for 2019 as of August 30 was $3,710.63. She further concluded that
J.M. had "not been employed for five months and there is no indication of future
employment." Thus, the ALJ's initial decision following our remand reversed
the agency's termination decision and reinstated Medicaid benefits for C.M.'s
household. On October 28, 2019, DMAHS rejected the ALJ's initial decision
and terminated petitioner's benefits effective February 1, 2019. In its October
28 decision, DMHAS acknowledged our remand order, but concluded that J.M.'s
updated income information was "not available to the [CWA] in December
2018, nor was it part of the record at the first . . . hearing before [the] ALJ
. . . ." Accordingly, it found "[i]t was reasonable for [the CWA] to predict that
Petitioner's son would remain employed at an estimated monthly salary of
$1,348.91," and that "Petitioner's household's eligibility was properly
terminated." C.M. sought to stay the October 28 order pending appeal and we
granted her request.
C.M. asks us to consider the following arguments on appeal:
POINT I: THE AGENCY VIOLATED THE INCOME
COUNTING RULES OF THE AFFORDABLE CARE
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ACT [ACA] WHEN THEY INCLUDED THE
EXEMPT INCOME OF A TAX-DEPENDENT INTO
THE HOUSEHOLD UNIT'S INCOME
CALCULATION.
POINT II: THE AGENCY INCORRECTLY USED
PROJECTED FUTURE INCOME OF THE
APPLICANT'S TAX-DEPENDENT SON AS A
MEANS TO TERMINATE THE HEALTH BENEFITS
OF THE APPLICANT'S HOUSEHOLD. 3
Appellate courts have a limited role in reviewing the decision of an
administrative agency. In re Stallworth, 208 N.J. 182, 194 (2011) (citing Henry
v. Rahway State Prison, 81 N.J. 571, 579 (1980)). As such, a strong presumption
of reasonableness is afforded to an agency's exercise of its statutorily delegated
responsibility, City of Newark v. Nat'l Res. Council, Dep't of Env't Prot., 82 N.J.
530, 539 (1980), and its factual findings are entitled to deference, Utley v. Bd.
of Rev., Dep't of Labor, 194 N.J. 534, 551 (2008) (citing Jackson v. Concord
Co., 54 N.J. 113, 117-18 (1969)).
3
In her reply brief, C.M. raises two additional arguments, i.e., that "the agency
decision, which included the projected income of a tax dependent, does not
conform to federal regulations," and "the agency violated federal income
counting guidelines mandated by the [ACA] and did not adhere to the tax filing
concepts for the taxable year in which eligibility for Medicaid was being
determined." Given our conclusion that reversal is warranted and considering
these arguments were raised in C.M.'s reply brief, we need not address them .
See Pannucci v. Edgewood Park Senior Hous. – Phase 1, LLC, 465 N.J. Super.
403, 409-10 (App. Div. 2020) (citing State v. Smith, 55 N.J. 476, 488 (1970)
(noting impropriety of raising argument for first time in reply brief)).
A-1337-19
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We will not upset the determination of an administrative agency absent a
showing "that it was arbitrary, capricious or unreasonable, that it lacked fair
support in the evidence, or that it violated legislative policies[.]" Parascandolo
v. Dep't of Labor, Bd. of Rev., 435 N.J. Super. 617, 631 (App. Div. 2014)
(quoting Campbell v. Dep't of Civ. Serv., 39 N.J. 556, 562 (1963)). "Arbitrary
and capricious action of administrative bodies means willful and unreasoning
action, without consideration and in disregard of circumstances." Worthington
v. Fauver, 88 N.J. 183, 204 (1982) (quoting Bayshore Sewerage Co. v. Dept.
Environ. Protection, 122 N.J. Super. 184, 199 (Ch. Div. 1973)).
Nonetheless, we are not tethered to an agency's interpretation of a statute
or its decision on a legal issue. See Univ. Cottage Club of Princeton N.J. Corp.
v. N.J. Dep't of Env't Prot., 191 N.J. 38, 48 (2007). Moreover, when an appellate
court directs an administrative agency to take action, "the appellate judgment
becomes the law of the case and the agency is under a peremptory duty not to
depart from it." Lowenstein v. Newark Bd. of Educ., 35 N.J. 94, 116-17 (1961).
Whether or not in agreement with the court, agencies have "a duty to obey the
mandate of [the Appellate Division] 'precisely as it is written.'" In re Denial of
Reg'l Contribution Agreement Between Galloway Twp. & City of Bridgeton,
418 N.J. Super. 94, 100-01 (App. Div. 2011) (quoting Flanigan v. McFeely, 20
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N.J. 414, 420 (1956)). An appellate court's instructions "must be enforced as
written, and relief from its direction 'can be had only in the appellate court whose
judgment it is.'" Tomaino v. Burman, 364 N.J. Super. 224, 233 (App. Div. 2003)
(quoting In re Plainfield-Union Water Co., 14 N.J. 296, 303 (1954)). "[T]he
very essence of the appellate function is to direct conforming judicial action."
Ibid.; see also Pritchett v. State, 248 N.J. 85, 110, 113 (2021) (confirming that
any relief from the court's remand direction can be had only in the courts, even
if flawed).
Medicaid is considered a "'cooperative federal-state endeavor' where, in
return for federal monies, states must comply with federal requirements." A.B.
v. Div. of Med. Assistance & Health Servs., 407 N.J. Super. 330, 342 (App. Div.
2009) (quoting L.M. v. State, Div. of Med. Assistance & Health Servs., 140 N.J.
480, 484 (1995)). Participating states must create "'reasonable standards . . . for
determining eligibility for and the extent of medical assistance . . . [that is]
consistent with the objectives' of the Medicaid program." L.M., 140 N.J. at 484(quoting 42 U.S.C. § 1396a(a)(17)(A)). The purpose of Medicaid is to "provide
medical assistance to the poor[.]" Estate of DeMartino v. Div. of Med.
Assistance & Health Servs., 373 N.J. Super 210, 217 (App. Div.
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2004) (quoting Mistrick v. Div. of Med. Assistance & Health Servs., 154 N.J.
158, 165 (1998)); see also 42 U.S.C. § 1396-1.
The NJFC program was created "to help New Jersey's uninsured children
and certain low-income parents and guardians to have affordable health
coverage." S.J. v. Div. of Med. Assistance & Health Servs., 426 N.J. Super.
366, 368, n.1 (App. Div. 2012) (citations and internal quotation marks omitted).
As part of the NJFC program, DMAHS oversees the administration of Medicaid
benefits. See generally N.J.A.C. 10:78-1.1 to - 11.5. CWAs are required to
estimate a household's prospective income to determine its eligibility for
benefits. N.J.A.C. 10:78-4.2(a)(1). The CWA's "best estimate" of prospective
income is generally "based on the household unit's income for the month
preceding the date of application or redetermination." Ibid. However,
"[a]djustments shall be made to the estimated income to reflect changes in
income that either have occurred or which are reasonably anticipated to occur
which would affect the household unit's income during a period of eligibility."
Ibid.An applicant must "[c]omplete, with the assistance of the [CWA], as
needed, any forms required as part of the application process; and . . . [a]ssist
the [CWA] in securing evidence that verifies his or her statements regarding
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eligibility." N.J.A.C. 10:78-2.1(c). The CWA then reviews the application
"for completeness, consistency, and reasonableness[.]" N.J.A.C. 10:78-
2.1(b)(2).
NJFC regulations require that income include "the income of all members
of the household unit." N.J.A.C. 10:78-4.3(a). The regulations go on to provide
that "natural or adoptive children under the age of 21" are members of the
household unit. N.J.A.C. 10:78-3.5(a)(1)(iii). Nevertheless, income eligibility
determinations for the expanded Medicaid program under the ACA are required
to be made pursuant to the federal income counting methodology known as the
MAGI method. 42 C.F.R. § 435.603(a)(2). Under federal regulations, income
of a dependent is not included in the household income when the dependent is
not required to file a federal tax return. 42 C.F.R. § 435.603(d)(2)(i). In that
regard, the applicable federal regulation states:
The MAGI-based income of an individual who is
included in the household of his or her natural, adopted
or step-parent and is not expected to be required to file
a tax return under section 6012(a)(1) of the Code for
the taxable year in which eligibility for Medicaid is
being determined, is not included in household income
whether or not the individual files a tax return.
[Ibid.]
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Federal law requires that a tax return be filed for every individual having
taxable yearly gross income that equals or exceeds the exempt amount. 26
U.S.C. § 6012(a)(1). In 2019, a single dependent was required to file a federal
tax return if that individual's earnings were at least $12,200. Thus, we do not
fault the CWA for using the income information it had at its disposal for J.M. in
December 2018, calculating that he averaged earnings of $1,348.91 per month,
and projecting he would need to file a federal tax return for 2019.4 We also do
not question the CWA's December 2018 determination that based on J.M.'s
projected income, C.M.'s household income would exceed the household's
eligibility threshold. Likewise, we do not take issue with DMAHS finding in
May 2019 that the CWA was correct in projecting C.M.'s household income for
2019 rendered her ineligible for Medicaid benefits going forward.
However, because we granted C.M. emergent relief in June 2019, and
remanded the matter for a hearing to reassess J.M.'s projected earnings for 2019,
the agency was bound to consider J.M.'s updated income information as revealed
during that August 2019 remand hearing. Such information included the ALJ's
4
Although the calculation of J.M.'s monthly income varies throughout the
record, for purposes of this appeal, we accept the agency's calculation that J.M.'s
income averaged $1,348.91 per month, as this is the figure set forth in the
challenged order of October 28, 2019.
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findings that J.M. left ShopRite as of March 23, 2019, that his gross income for
2019 was $3,710.63, and that he had "not been employed for five months and
there is no indication of a future employment opportunity for J.M." Importantly,
the ALJ also concluded, "J.M.'s yearly gross income of $3,710.63 would not
require him to file a tax return for the tax year of 2019." These findings were
amply supported in the record.
On appeal, DMAHS does not take issue with any of the ALJ's findings.
Instead, it simply concludes the information disclosed during the remand
hearing we ordered was "not available to the [CWA] in December 2018 or during
the February 25, 2019 hearing." But because the agency was aware after the
remand hearing that J.M.'s projected income for 2019 fell far short of its initial
estimation, and that he would not be required to file a tax return for that calendar
year, we are satisfied it was not free to ignore this updated information as a basis
to reverse the September 3 order reinstating the Medicaid benefits for C.M.'s
household. See N.J.A.C. 10:78-4.2(a)(1) (compelling the agency to account for
"changes in income that . . . have occurred" when calculating prospective
income).
In sum, given the unusual circumstances in this case where we ordered the
agency to conduct a remand hearing for the express purpose of having it reassess
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J.M.'s projected income for 2019, as well as the likelihood he would need to file
a federal tax return for 2019, we are persuaded DMAHS erred by failing to
consider the supplemental information flowing from that hearing and by
rejecting the ALJ's September 3, 2019 decision reinstating Medicaid benefits for
C.M.'s household.
Reversed. Because we are unaware of the current financial circumstances
of C.M.'s household, we remand for the CWA to consider the family's current
eligibility status. We do not retain jurisdiction.
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