Court Opinion

ID: 9963430
Source: CourtListenerOpinion
Date Created: 2024-04-25 15:47:01.221815+00
Date Added: 2024-06-11T08:24:49.085037
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE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-2344-22

R.S.,

          Petitioner-Appellant,

v.

NEW JERSEY DEPARTMENT OF
HUMAN SERVICES,

     Respondent-Respondent.
______________________________

                   Submitted April 15, 2024 – Decided April 25, 2024

                   Before Judges Sabatino and Chase.

                   On appeal from New Jersey Department of Human
                   Services; Office of Program Integrity and
                   Accountability. Docket No. HSL 02080-2022.

                   Hark & Hark, attorneys for appellant (Richard Quinton
                   Hark, on the brief).

                   Matthew J. Platkin, Attorney General, attorney for
                   respondent (Melissa H. Raska, of counsel and on the
                   brief; Andrew C. Munger, Deputy Attorney General, on
                   the brief).

PER CURIAM
      Petitioner R.S.1 appeals from the March 17, 2023 final agency decision of

the Department of Human Services ("DHS"), reversing the Administrative Law

Judge's ("ALJ") decision and placing him on the Central Registry of Offenders

Against Individuals with Developmental Disabilities ("Central Registry") 2,

pursuant to N.J.S.A. 30:6D-77. We affirm.

                                          I.

      T.F. is an adult woman with Down syndrome, intellectual disabilities, and

dementia. She resides full-time at a state-run group home. Her individualized

service plan reflects the need for a high level of support for daily living activities

and she has extremely limited verbal communication skills. T.F. is short in

stature, overweight, and typically wears "a size six women's shoe, or a child's

size shoe . . . a medium[] or large top and . . . a size sixteen[] or eighteen in

pants."

1
  To protect the identity of the individuals, we refer to them by their initials. R.
1:38-3(f)(8).
2
  Placement on the Central Registry prohibits the listed offender from working
for, or volunteering in, DHS funded programs, including employment in
developmental centers, community agencies, and other programs licensed,
contracted, or regulated by DHS.
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                                          2
      Petitioner was employed at the group home as a residence manager with

duties including "[f]ull financial responsibility (as delineated) of consumer

funds, petty cash, and household accounts."

      This matter arises from R.S. filing a Representative Payee Voucher,

requesting $951 to be disbursed from T.F.'s account for the purchase of clothing

on February 18, 2020. The documentary record reflects that, six days later, R.S.

purchased six items from the athletic apparel store Finish Line, totaling $450,

including a pair of slim-cut joggers; a Nike Club hooded sweatshirt; and two

pairs of Nike Air Max sneakers, one in size six and the other in size nine. He

also purchased $143.05 in clothing from J.C. Penney, including multiple pairs

of pants labeled as "slim leg" or "skinny" cuts. R.S. also purchased $343.58 in

items from Walmart, including multiple intimate items such as a pushup and

"strappy" bras, camisoles, hipster-cut underwear, and pajama sets.

      After reviewing some of the items R.S. purchased, staff became concerned

they were inappropriate for T.F. and would need to be returned or exchanged.

This was reported to the assistant manager, who relayed the information to R.S.,

but he disagreed. After searching T.F.'s entire room, closets, hampers, and staff

areas, the staff members, including R.S., were unable to locate many of the items

reflected on the receipts, including the intimate items, the size nine Nike

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sneakers, the Nike joggers, and the Nike hooded sweatshirt. The staff members

then contacted the home's assistant director to review the receipts and inventory

the items.

      By 5:00 p.m. on March 4, several items remained unlocated. R.S. left the

facility at the end of his shift, which per the schedule was 4:00 p.m., but returned

later. Another staff member observed R.S. enter T.F.'s bedroom and then leave

the facility. After R.S.'s off-hours visit, the Nike joggers and sweatshirt were

discovered in T.F.'s hamper and the size nine Nike sneakers were discovered

behind a dry erase board in the staff office's closet. The items appeared to have

been worn and were dirty.

      After renewed searches of the entire facility, it was determined items

totaling $180.29, largely the intimate items from Walmart, remained

unaccounted for. Of the remaining purchases made by R.S., items totaling

$110.89 were deemed by staff to be appropriate for T.F.'s use. Items totaling

$614.83 were deemed inappropriate for T.F. and returned to the stores.

      The facility's director filed an incident report and initiated an internal

audit. R.S. was terminated and T.F.'s account was reimbursed $180.29 for the

missing items. A police report was made to the Hanover Township Police

Department and staff later provided documentary evidence in the form of the

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                                         4
receipts and inventory lists of the items. A summons was ultimately issued, and

R.S. was charged with theft. He later received a conditional dismissal of the

charge.

      Colleen Schanstine from the DHS Office of Investigations initiated an

investigation. She visited the group home, viewed T.F.'s room, and met T.F.

who, based on her disabilities, could not be interviewed. Investigator Schanstine

also spoke with multiple individuals, including R.S. R.S. informed her that on

March 4, he had returned because he forgot his "lunch". Investigator Schanstine

also reviewed several documents, including petitioner's employment and

training records, police reports, the facility's financial records, incident reports,

and itemized inventory lists. She concluded as to the incident of Financial

Exploitation of over $100, a preponderance of the testimonial and documentary

evidence substantiated a finding petitioner had exploited T.F. The Office of

Investigations issued a six-page summary of Investigator Schanstine's findings.

The report reiterated the investigator's observations and the testimonial and

documentary evidence substantiating the alleged exploitation of T.F. by

petitioner.

      The Director notified R.S. of the agency's intent to place him on the

Central Registry and his right to appeal. Petitioner requested a formal Office of

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                                         5
Administrative Law ("OAL") hearing, and the matter was transferred to the OAL

as a contested case.

       At the OAL hearing, the agency called Investigator Schanstine as its only

witness. Investigator Schanstine testified to her eleven-year experience as an

investigator with the Office of Program Integrity and Accountability and the

processes to initiate an investigation. When Investigator Schanstine was asked

about the incident report logged by the facility, petitioner's counsel objected

because it contained statements by an individual not present at the hearing. The

ALJ noted the objection but stated, "[M]any of these documents are full of

hearsay. . . . [W]e survive here in the OAL on the residuum rule and I'm going

to allow . . . it to be testified to."

       Investigator Schanstine testified to researching limitations on T.F.'s

ability to communicate by reviewing her individualized service plan and

identifying her legal guardians for notification. She testified to interviewing the

facility's employees, obtaining documents, contacting the police, and reviewing

the receipts, ledgers of T.F.'s account, and documentation of what items were

found in the home and what remained missing.

       Investigator Schanstine then testified as to her interviews with the

facility's staff, their discovery of the items not appropriate for T.F., and their

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alerting their manager to the situation. She also testified to interviewing the

manager who was called in to audit the purchases and the receipts. She then

testified to interviewing the staff member who observed petitioner returning to

the facility after hours, under the premise he had forgotten his lunch there, and

some of the missing items being discovered later that same evening, after

petitioner departed, and the following morning. Investigator Schanstine also

testified to her contact with the police and her research into the disposition of

petitioner's criminal matter. Petitioner objected to the introduction of the police

report, but stipulated to the fact the incident was reported to police as required

by statute.

      Investigator Schanstine then testified to the receipts and lists of items

deemed inappropriate for T.F., which included some items which, given T.F.'s

disabilities, she would not be able to put on herself. She also noted the receipts

had been initialed by petitioner per agency protocol, and when interviewed,

petitioner had said he made the purchases "on his own at whatever time as some

of the purchase[s] were made late at night. And on days that he wasn't working."

She testified per the receipts and inventory lists, $180.29 worth of items

remained unaccounted for.

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                                        7
         On cross-examination, Investigator Schanstine testified she did not

personally create the underlying documents on which her investigation relied:

the inventory lists of the items purchased, the purchase receipts, and the return

receipts. However, she did compare them, and they appeared to be accurate.

         The ALJ then questioned Investigator Schanstine as to T.F.'s sizes, her

physical stature, and the nature of the undergarments purchased. She also

testified T.F. was unable to communicate verbally in order to participate in an

interview due to the extent of her disabilities.

         The petitioner presented two witnesses, co-workers from a second job

petitioner held at St. Clare's hospital in Denville. Both witnesses testified

petitioner arrived at St. Clare's at approximately 5:00 p.m. or 5:30 p.m. on March

4, 2020, and to the best of their knowledge, did not leave for the duration of his

shift.

         The ALJ issued his decision on February 3, 2023. After summarizing

Investigator Schanstine's professional experience, her investigatory methods,

and the facts of the case as recounted in her report, the ALJ found petitioner

worked as a caregiver at the facility and T.F. was a service recipient under the

Division of Developmental Disabilities. He further found "while on duty, and

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                                         8
as part of his job, [petitioner] bought items with T.F.'s money in excess of $100."

The ALJ did not specifically comment on the credibility of any of the witnesses.

      When applying the law to these facts, the ALJ concluded the agency's case

in chief "offered no direct testimony from any witness nor any evidence to the

events of March 9, 2020." He stated, "there was no residuum of legal and

competent evidence to sustain" the allegations in the case. However, he then

stated "the unfortunate result is that T.F. was taken advantage of and exploited

without any repercussions to the offender." He ended by holding the agency

erroneously determined petitioner exploited T.F. and ordered petitioner's

placement on the registry reversed.

      DHS filed exceptions to the initial decision, arguing the ALJ incorrectly

applied the residuum rule. It argued the facts of the case, supported by the

physical presence of the missing items discovered after petitioner's off -hours

visit to T.F.'s room, as well as the receipts and inventory lists, substantiated the

hearsay evidence in Schanstine's report.       It also noted petitioner had the

opportunity to subpoena those interviewed in the course of the investigation but

did not, and his attorney cross-examined Schanstine at the hearing before the

ALJ. It also emphasized petitioner called two witnesses on his own behalf,

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                                         9
undercutting his argument the State violated his due process rights. The agency

also noted the ALJ's decision did not include any credibility findings.

      The Director issued a final agency decision on March 17, 2023. She stated

the ALJ's Initial Decision was flawed and incorrect by finding no evidence of

the exploitation, because the documentary evidence accompanying Investigator

Schanstine's report, including receipts not subject to exclusion by the hearsay

rule, were entered into evidence at the hearing as joint exhibits. The Director

conceded Schanstine's report contained hearsay but determined the hearsay

statements were minimally relevant and "strongly buttressed by legally

competent evidence."

      Accordingly, the Director rejected and reversed the ALJ's findings and

conclusions. She noted the ALJ declined to assess the witnesses' credibility, did

not cite to any specific instance of hearsay as objectionable, and ignored the

physical, documentary evidence submitted at the hearing. She affirmed the

agency's initial determination petitioner committed an act of exploitation as

defined in N.J.A.C. 10:44D-1.23 and placed him on the Central Registry.

3
  "Exploitation" means the act or process of a caregiver using an individual with a
developmental disability or his resources for another person's profit or advantage.
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                                       10
      This appeal followed, wherein petitioner contends the final agency

decision should be reversed because it relies solely on hearsay uncorroborated

by a residuum of competent evidence.

                                         II.

      Our review of a final decision of an administrative agency is limited.

Circus Liquors, Inc. v. Governing Body of Middletown Twp., 199 N.J. 1, 9

(2009). "[A]n appellate court reviews agency decisions under an arbitrary and

capricious standard." Zimmerman v. Sussex Cnty. Educ. Servs. Comm'n, 237

N.J. 465, 475 (2019). See also Melnyk v. Bd. of Educ. of the Delsea Reg'l High

Sch. Dist., 241 N.J. 31, 40 (2020). "An agency's determination on the merits

'will be sustained unless there is a clear showing that it is arbitrary, capricious,

or unreasonable, or that it lacks fair support in the record.'" Saccone v. Bd. of

Trs., Police & Firemen's Ret. Sys., 219 N.J. 369, 380 (2014) (quoting Russo v.

Bd. of Trs., Police & Firemen's Ret. Sys., 206 N.J. 14, 27 (2011)).

      A reviewing court is not, however, bound by an agency's interpretation of

a statute or its determination of a strictly legal issue outside its charge. Allstars

Auto Grp., Inc. v. N.J. Motor Vehicle Comm'n, 234 N.J. 150, 158 (2018); Dep't

of Child. & Fam. v. T.B., 207 N.J. 294, 302 (2011). See also Greenwood v.

State Police Training Ctr., 127 N.J. 500, 513 (1992) (agencies have no superior

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                                        11
ability to resolve purely legal questions, and a court is not bound by an agency's

determination of a legal issue).

                                        III.

      Petitioner argues administrative decisions may not be based on hearsay

alone but instead require a residuum of legal and competent evidence. Petitioner

also argues "the identity of those whose adverse views formed the foundation of

the judgment against [petitioner] did not come to court." Citing Weston v. State,

60 N.J. 36, 51-52 (1972), he claims he was not given the opportunity to make a

record, and the agency's failure to call witnesses with personal knowledge of the

events meant it failed to carry its burden of proof.

      The Administrative Procedure Act ("APA") governs contested cases

before an ALJ. N.J.S.A. 52:14B-1 to -31. The APA requires findings of fact to

be based "exclusively on the evidence and on matters officially noticed."

N.J.S.A. 52:14B-9(f). In a contested case in the OAL, the parties "shall not be

bound by rules of evidence[,] whether statutory, common law, or adopted

formally by the Rules of Court. All relevant evidence is admissible, except as

otherwise provided[.]" N.J.S.A. 52:14B-10(a)(1).

      The Uniform Administrative Procedure Rules also govern evidentiary

matters in contested cases.        N.J.A.C. 1:1-15.1 to -15.12.     They permit

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                                        12
discretionary exclusion under an N.J.R.E. 403-like analysis but mandate

application of privilege rules. N.J.A.C. 1:1-15.1(c); N.J.A.C. 1:1-15.4. Subject

to exclusion on either of those grounds, the regulations state "hearsay evidence

shall be admissible in the trial of contested cases."       N.J.A.C. 1:1-15.5(a)

(emphasis added). The weight accorded to the admitted hearsay evidence is

subject to the judicial determination of "the nature, character[,] and scope of the

evidence, the circumstances of its creation and production, and, generally, its

reliability."    Ibid.     The regulation continues, "[n]otwithstanding the

admissibility of hearsay evidence, 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).

      This provision, commonly known as the "residuum rule," means hearsay

may be "employed to corroborate competent proof, or competent proof may be

supported or given added probative force by hearsay testimony." DeBartolomeis

v. Bd. of Rev., 341 N.J. Super. 80, 85 (2001) (quoting Weston, 60 N.J. at 51).

By the regulation's plain language, such corroboration goes not to the

admissibility of the hearsay evidence, which is required, but rather to its weight

as assessed by its reliability.

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                                       13
      The residuum rule was applied to uphold the termination of a public

employee charged with unbecoming conduct in In re Tenure Hearing of Cowan,

224 N.J. Super. 737, 742 (App. Div. 1988). One of the charges was supported

by "the testimony of the [employee's supervisor], his contemporaneous

memorandum that he had sent to [petitioner] recounting facts learned from

alleged eyewitnesses, and [petitioner's] memorandum in response." Id. at 748.

The supervisor had not witnessed the incident, and Cowan contended t he

evidence against him was inadmissible hearsay. Id. at 749. We agreed it was

hearsay but concluded the "application of the residuum rule does not require that

hearsay evidence of the assault be ignored." Id. at 750.

      Investigator Schanstine testified to her direct observations of T.F. and her

room during her in-person visit to the home. Additionally, she testified that R.S.

gave a statement to her where he admitted to buying the clothing, suggesting

they had been worn, and returning to the residence on March 4 after his shift

was over when he claims to have forgotten his lunch.          To the extent his

statements were hearsay in that they were offered for their truth, they would

have qualified for an exception to the general exclusionary rule as statements by

a party opponent. N.J.R.E. 803(b)(1).

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                                       14
      Further, it is clear the ALJ did not properly consider the additional

competent evidence before him as supportive of the hearsay statements

contained in Investigator Schanstine's report and testimony, such as the receipts,

articles of clothing, agency's financial records, the inventory lists compiled after

the searches of the facility, and the missing items. See N.J.R.E 803(c)(6) (the

business records hearsay exception) and N.J.R.E. 803(c)(8) (the public records

hearsay exception). These were all legally competent evidence entered as joint

exhibits, supporting the hearsay statements contained inside the investigator's

report and as relayed in her testimony. Despite petitioner's contention, Weston

makes clear the residuum rule is bi-directional; the hearsay can support the

weight of other legally competent evidence, or the other evidence can support

the weight of the hearsay statements. 60 N.J. at 51. No matter which way the

hearsay statements in the report are employed, much like the evidence in Cowan,

their "combined probative force" substantiated the finding of exploitation. The

"bootstrapping and buttressing" to which petitioner has objected to in his brief

is precisely what the residuum rule permits.

                                        IV.

      An agency may reject and modify an ALJ's initial decision, as was done

here, but its authority to do so is limited. Specifically, the Administrative Code

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                                        15
requires that when an agency rejects an ALJ's decision, it shall clearly state the

reasons for doing so and cite specific evidence supporting its final decision and

interpretation of the law. N.J.A.C. 1:1-18.6-10(b). An agency may only reject

or modify findings of fact as to issues of credibility of lay witness testimony if

it first determines on a review of a record that the findings are arbitrary,

capricious, or unreasonable, or are not supported by sufficient, competent, and

credible evidence. N.J.A.C. 1:1-18.6-10(c).

      Here, the ALJ declined to make any credibility findings as to the

testimonial evidence presented and then made conclusory generalizations. The

agency's reasons overturning these errors were clearly and logically outlined in

the comprehensive final determination recounting the initial decision, the

exceptions filed, and a detailed discussion leading to the final determination.

The agency specifically connected the contentions in the report to the supporting

documentary evidence.

      The agency then issued its findings of fact and concluded petitioner

committed exploitation and therefore placement of his name on the Central

Registry was warranted.      Support for these findings include documentary

evidence, in the form of physical receipts from the vendors, of not only what

was purchased, but also what was returned, clearly showing that the items were

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                                       16
wholly inappropriate and unsuitable for T.F. and that R.S. actually purchased

these items for someone else. The agency permissibly amplified the factual

findings and supported them with the same documentary evidence submitted at

the evidentiary hearing. It also supported its conclusion petitioner committed

exploitation as defined in N.J.A.C. 10:44D-1.2, and his placement on the Central

Registry was proper under N.J.A.C. 1:1-18.6(d).

      We have considered all other points raised and conclude they lack

sufficient merit to warrant discussion. R. 2:11-3(e)(1)(D) and (E).

      Affirmed.

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