Court Opinion

ID: 2650814
Source: CourtListenerOpinion
Date Created: 2014-01-24 01:03:58.326173+00
Date Added: 2024-06-11T12:56:25.844493
License: Public Domain

RECORD IMPOUNDED

                NOT FOR PUBLICATION WITHOUT THE
               APPROVAL OF THE APPELLATE DIVISION

                                     SUPERIOR COURT OF NEW JERSEY
                                     APPELLATE DIVISION
                                     DOCKET NO. A-5798-11T1

R.S.,

     Petitioner-Appellant,               APPROVED FOR PUBLICATION

v.                                             January 23, 2014

                                           APPELLATE DIVISION
DIVISION OF MEDICAL ASSISTANCE
AND HEALTH SERVICES AND
UNION COUNTY BOARD OF
SOCIAL SERVICES,

     Respondents-Respondents.
———————————————————————————————————————

         Argued October 2, 2013 – Decided January 23, 2014

         Before Judges       Sapp-Peterson,1     Lihotz    and
         Hoffman.

         On appeal from the Department of Human
         Services, Division of Medical Assistance and
         Health Services, and Union County Board of
         Social Services.

         Eugene S. Rosner argued the cause for
         appellant (Fink, Rosner, Ershow-Levenberg,
         LLC, attorneys; Mr. Rosner, on the brief).

         Kay R. Ehrenkrantz, Deputy Attorney General,
         argued the cause for respondent Division of
         Medical Assistance and Health Services (John
         J.   Hoffman,   Acting     Attorney   General,
         attorney;   Melissa   H.    Raksa,   Assistant
         Attorney    General,     of    counsel;    Ms.
         Ehrenkrantz, on the brief).

1
  Judge Sapp-Peterson did not participate in oral argument. She
joins the opinion with the consent of counsel. R. 2:13-2(b).
            Respondent Union County Board                     of    Social
            Services has not filed a brief.

      The opinion of the court was delivered by

HOFFMAN, J.A.D.

      In this appeal, we are asked once again to address "the

continuing       tension     between    the       State's     effort       to    conserve

Medicaid resources for the truly needy and the legal ability of

institutionalized Medicaid recipients to shelter income for the

benefit of their non-institutionalized spouses."                           H.K. v. Div.

of Med. Assistance & Health Servs., 379 N.J. Super. 321, 323

(App. Div. 2005).          Petitioner R.S. appeals from a final agency

decision    of     the   Division      of    Medical      Assistance        and       Health

Services (Division) finding that the community spouse monthly

income     allowance       (CSMIA)     for       his    wife,      D.S.,     should      be

calculated in accordance with 42 U.S.C.A. § 1396r-5(e)(2)(B) and

N.J.A.C.     10:71-5.7(e),       rather         than    pursuant     to     a    separate

maintenance order entered by the Family Part.                          Following our

review,     we     conclude      the    Division,         when      determining         the

institutionalized spouse's obligation for his nursing home care,

is   not   bound    to   abide    by   the      terms    of   a    Family       Part   non-

dissolution       separate    maintenance         order,      entered       in    a    non-

contested proceeding,          without notice to the Division, because

the Order was designed to circumvent the regulations governing

                                            2                                     A-5798-11T1
the CSMIA.        We affirm, concluding the Order "transgressed the

permissible       limits   of   Medicaid      planning[.]"        H.K.,   supra      379

N.J. Super. at 323.

                                         I.

      R.S. and D.S. were married on September 9, 1978.                            As a

result of physical and mental ailments, R.S. began residing at

the     Kessler     Rehabilitation       Center      on     November      1,     2010.

Thereafter,       R.S.     moved    to   the    Cornell      Hall    Nursing        and

Rehabilitation Center for further rehabilitation and long-term

custodial care, which he will require for the rest of his life.

Since    November     1,    2010,    R.S.      and   D.S.    have    been       living

separately, with D.S continuing to reside in the marital home.

      On November 4, 2010, D.S. filed a complaint for separate

maintenance wherein she requested a judgment compelling R.S. to

pay her support equaling the amount of R.S.'s Social Security

income, asserting R.S.'s income is necessary for D.S. "to meet

her basic expenses to remain in the marital home . . . [and]

maintain a reasonable approximation of the marital standard of

living enjoyed prior to the separation of the parties."                        In the

complaint, D.S. claimed R.S. had "separated himself from [D.S.]

and ha[d] refused and neglected to support [D.S.] within the

meaning of N.J.S.A. 2A:34-24."             D.S. attached to her complaint a

Family    Part     case    information     statement      (CIS)     detailing       her

                                         3                                     A-5798-11T1
income, expenses, assets and liabilities, in which she disclosed

she was employed and earning an annual salary of $22,679.

       On November 24, 2010, R.S.'s attorney accepted service of

the    complaint.          Neither      the    Union     County      Board        of     Social

Services (Board) nor the Division received notice of the Family

Part proceedings, even though D.S.'s complaint stated she was

"about    to     file    a[n]    application          for . . . Medicaid            benefits

pursuant N.J.S.A. 30:4D et seq. and N.J.A.C. 10:71 et seq." on

R.S.'s        behalf,    and     further      alleged     that       R.S.     "meets          the

financial and medical criteria for eligibility."

       R.S. did not oppose his wife's action nor is there evidence

a hearing was held.              An order issued by the court on December

10, 2010 required R.S. to pay D.S. "an amount equal to [R.S.'s]

net Social Security benefit; that is, after the deduction of the

Medicare        premium,       supplemental          insurance       premium           and    the

Medicaid       'Personal       Needs    Allowance,'      for     her    support."             The

order     was     retroactive          to     November     2010.            Because          D.S.

inadvertently          omitted       income    R.S.    received        from    a       worker's

compensation       award,       on    March    30,    2011,    the     judge       issued       an

amended order (the Order) including this additional income as

part     of     R.S.'s    support       obligation.           Therefore,          the        Order

required R.S. to pay D.S. $3460.20 per month in spousal support,

consisting        of     his     monthly       social     security          and        worker's

                                               4                                        A-5798-11T1
compensation income benefits, less the designated offsets for

R.S.'s personal allowance and health insurance premiums.

       On May 12, 2011, the Board received a Medicaid application

for R.S.2       On September 20, 2011, the Board determined R.S.

eligible      for   Medicaid       as     a       "medically    needy"       recipient,

effective April 1, 2011.           The Board did not recognize the Order

in its "Statement of Available Income for Medicaid Payment."

Rather, the Board decided, D.S. was entitled to a CSMIA3 of

$1514.93 per month, allowing her to meet her minimum monthly

maintenance     needs     amount    (MMMNA),         as   calculated      pursuant     to

N.J.A.C. 10:71-5.7(c).

       R.S. appealed the Board's determination at a hearing before

the Office of Administrative Law (OAL), claiming that N.J.A.C.

10:71-5.7(f) required the allocation of R.S.'s income consistent

with    the   Order     rather     than       in    accordance     with      the   CSMIA

calculated     by   the   Board.        R.S.       further     sought   an    award   of

2
  Appellant's brief indicates that D.S. made the application on
R.S.'s behalf; however, the application bears the signature of
Irene Quesada, designated as R.S.'s "authorized representative."
According to respondent's brief, Ms. Quesada is a legal
assistant employed by Fink, Rosner, Ershow-Levenberg, LLC, who
represented D.S. in the initial family court matter and R.S. on
this appeal.
3
  42 U.S.C.A. § 1396r(D)(2) uses the term "community spouse
monthly income allowance," while N.J.A.C. 10-71:5.7(c) refers to
this amount as "community spouse's maintenance deduction." For
purposes of clarity and consistency, we use the former (CSMIA).

                                              5                                A-5798-11T1
attorney's fees and costs under 42 U.S.C.A. §§ 1983 and 1988,

alleging    the     Board's   findings,     as    adopted       by   the     Division,

denied his rights under federal and state law.

       Administrative Law Judge Caridad Rigo (ALJ) rejected R.S.'s

contentions in an initial decision issued on April 5, 2012.                        The

ALJ noted the Board was not provided notice of the Family Part

proceedings nor did it have an opportunity to be heard; further,

"the   issue   in    Superior   Court    was     not    the    community      spousal

support in relation to Medicaid[,] but rather spousal support in

relation to the Family Law statutes and regulations."                         Relying

on H.K., Judge Rigo found the appeal represented an attempt to

use a support order "to circumvent the Medicaid regulations

concerning . . . spousal allowance[,]" and concluded "this case

does not exhibit the requisite medical and financial duress or

any    exceptional     circumstances      where    an    increase       of    spousal

maintenance allowance is required [or] justified."

       On July 2, 2012, the Division adopted the ALJ's decision

agreeing D.S.'s "ordinary and regular expenses" did not meet the

"exceptional circumstances threshold" required for an increase

in the CSMIA, pursuant to 42 U.S.C.A. § 1396r-5(e)(2)(B).                            In

declining   to    give   effect   to    the    amended        support   order,     the

Division noted:

            A review of the record indicates that the
            wife's action in family court was not

                                        6                                     A-5798-11T1
             adversarial   and  was   chosen   to   avoid
             following      the     Medicaid      spousal
             impoverishment rules so as to "protect"
             income for her monthly expenses such as:
             $150 for hair care or $1,800 yearly; . . .
             $50 for unspecified contributions or $600 a
             year; $100 for life insurance or $1,200 a
             year.

After reviewing the legislative history of 42 U.S.C.A. § 1396r-

5(d)(5),     the    Division        emphasized     that    R.S.'s      wife    "has    not

claimed any 'special circumstances' in this matter or before the

family court" that would warrant enforcement of the amended

support     order.          Appellant    appeals      from    this      final     agency

decision.

                                             II.

       Established by Title XIX of the Social Security Act, the

Medicaid program is a joint federal-state program in which the

federal government provides "financial assistance to states that

choose to reimburse certain costs of medical treatment for needy

persons."     Harris v. McRae, 448 U.S. 297, 301, 100 S. Ct. 2671,

2680, 65 L. Ed. 2d 784, 794 (1980); see also 42 U.S.C.A. § 1396.

Simply put, Medicaid "provide[s] medical assistance to the poor

at   the    expense      of   the    public."       Mistrick      v.    Div.    of    Med.

Assistance & Health Servs., 154 N.J. 158, 165 (1998).                           Although

participation       is    optional,      states     that     do   participate         must

adhere to the requirements of Title XIX.                       Harris, supra, 448

U.S.   at    301,     100     S   Ct.   at    2680,   65     L.   Ed.    2d     at    794.

                                              7                                  A-5798-11T1
Participating states must develop a plan including "'reasonable

standards . . . for determining eligibility for and the extent

of     medical    assistance . . . [that                 is]    consistent       with       the

objectives' of the Medicaid program."                          L.M. v. Div. of Med.

Assistance & Health Servs., 140 N.J. 480, 484 (1995) (alteration

in original) (quoting 42 U.S.C.A. § 1396a(a)(17)(A)).

       New Jersey elected to participate in the Medicaid Program

by     adopting    the     New   Jersey        Medical         Assistance       and     Health

Services    Act     (the    Act).         N.J.S.A.        30:4D-1       to    -19.5.        The

Division     is    the     "'single       [s]tate         agency'       responsible         for

administering New Jersey's Medicaid program."                            In re A.N., 430

N.J. Super 235, 243 (App. Div. 2013); see also N.J.S.A. 30:4D-7

(authorizing commissioner to issue through the Division "all

necessary         rules      and        regulations              and         administrative

orders . . . to secure for the State of New Jersey the maximum

federal    participation         that     is       available      with       respect     to    a

program of medical assistance”).                    In administering New Jersey's

Medicaid    program,       the   Division          has   promulgated          comprehensive

regulations       delineating       the    program's           scope    and     procedures.

See, e.g., N.J.A.C. 10:71-2.1 to -2.16 (establishing application

process); N.J.A.C. 10:71-3.1 to -3.16 (establishing eligibility

factors).        County welfare agencies, such as the Board, "assist

[the    Division]     in    processing         applications            for    Medicaid      and

                                               8                                       A-5798-11T1
determining whether applicants have met the income and resource

eligibility standards."              Cleary v. Waldman, 959 F. Supp. 222,

229 (D.N.J. 1997), aff’d, 167 F.3d 801 (3d Cir.), cert. denied,

528 U.S. 870 (1999).

      Among the objectives of Medicaid is to "provide[] medical

assistance to needy persons who are institutionalized in nursing

homes as a result of illness or other incapacity."                         M.E.F. v.

A.B.F.,       393    N.J.   Super.    543,    545    (App.   Div.   2007),      certif.

denied, 192 N.J. 479 (2007).                Before 1988, couples would "spend

down" their assets so an institutionalized spouse could qualify

for Medicaid assistance to defray the cost of his or her care.

Ibid.        This practice often rendered the spouses who remained in

the community impoverished.                Ibid.

      In response to this trend, Congress incorporated "spousal

impoverishment provisions" in the Medicare Catastrophic Coverage

Act     of    1988    (MCCA).         42    U.S.C.A.     §   1396r-5(a)        to   (h).

Generally, Medicaid-eligible individuals pay part of the cost of

their care and "the remainder is paid by the State and Federal

governments through Medicaid."                H.K., supra, 379 N.J. Super. at

324   n.2      (quoting     H.R.     Rep.    No.    100-105(II),    at    66    (1987),

reprinted in 1988 U.S.C.C.A.N. 857, 899 (1987)).                         Furthermore,

these provisions provide that certain allowances must be made

from the institutional spouse's income before determining how

                                             9                                  A-5798-11T1
much of the monthly income is applied to the cost of care in the

institution.       42 U.S.C.A. § 1396r-5(d).        One such allowance is

made for the CSMIA.        42 U.S.C.A. § 1396r-5(d)(1)(B).4

    The CSMIA is "the amount by which the community spouse's

needs   in   the    form    of   a   minimum   monthly    maintenance     needs

allowance (MMMNA), established by each state in compliance with

federal   standards,       exceeds   the    community's   spouse's   income."

M.E.F., supra, 393 N.J. Super. at 546 (citing 42 U.S.C.A. §

1396r-5(d)(2)-(3)).         "The provision for this allowance ensures

that income transferred from the institutionalized spouse to the

community spouse to meet the latter's basic needs is not also

considered available for the former's care."                 Wis. Dep't of

Health & Family Servs. v. Blumer, 534 U.S. 473, 482, 122 S. Ct.

962, 968, 151 L. Ed. 2d 935, 945 (2002).            Consequently, Medicaid

pays a greater share of the institutionalized spouse's costs of

care than it would without the CSMIA provisions.             Ibid.

    The MCCA also revises the minimum monthly maintenance needs

allowance by providing:

             If either such spouse establishes that the
             community spouse needs income, above the
             level otherwise provided by the minimum
             monthly maintenance needs allowance, due to

4
  Congress repealed the MCCA through the Medicare Catastrophic
Coverage Repeal Act of 1989, but the spousal impoverishment
prevention provisions remain in effect. Pub.L. No. 101-234, 103
Stat. 1979; Mistrick, supra, 154 N.J. at 171 n. 1.

                                       10                               A-5798-11T1
            exceptional    circumstances    resulting   in
            significant financial duress, there shall be
            substituted,    for   the    minimum   monthly
            maintenance needs allowance in subsection
            (d)(2)(A)   of   this   section,   an   amount
            adequate to provide such additional income
            as is necessary.

            [42 U.S.C.A. § 1396r-5(e)(2)(B).]

Pursuant to its grant of authority in the Act, the Division

issued    parallel   regulations.        The   State's   CSMIA    regulation

reads:

            There   shall    be   deducted   from   the
            institutionalized individual's income an
            amount for the maintenance of the community
            spouse.    Except as specifically provided
            below, the deduction for the maintenance of
            the community spouse shall not exceed
            $1,821.25 per month . . . . In arriving at
            the amount that may be deducted for the
            maintenance of the community spouse, the
            deductions authorized by this section shall
            be reduced by the gross income of the
            community spouse.     The community spouse
            deduction is authorized only to the extent
            that the income deducted is actually made
            available to (or for the benefit of) the
            community spouse.

            [N.J.A.C. 10:71-5.7(c).]

Similar   to   the   federal   statute,    the   New   Jersey    regulations

provide for a fair hearing to contest a determination of the

deduction.     N.J.A.C. 10:71-5.7(e).

    Both the MCCA and the New Jersey regulations allow for

recognition of court orders for spousal support in determining

the CSMIA.     Further, the MCAA provides "[i]f a court has entered

                                    11                               A-5798-11T1
an order against an institutionalized spouse for monthly income

for the support of the community spouse, the community spouse

monthly income allowance for the spouse shall be not less than

the amount of the monthly income so ordered."       42 U.S.C.A. §

1396r-5(d)(5).   The analogous New Jersey regulation states:

         If a court has entered an order against an
         institutionalized spouse for monthly income
         for the support of a community spouse and
         the amount of the order is greater than the
         amount of the community spouse deduction,
         the amount so ordered shall be used in place
         of the community spouse deduction.

         [N.J.A.C. 10:71-5.7(f).]

    Guided by the applicable legislation, we note our review of

administrative agency decisions is limited.     Karins v. City of

Atl. City, 152 N.J. 532, 540 (1998).    An administrative agency's

decision will be upheld "unless there is a clear showing that it

is arbitrary, capricious, or unreasonable, or that it lacks fair

support in the   record."    Russo v. Bd. of Trs., Police and

Firemen's Ret. Sys., 206 N.J. 14, 25 (2011) (quoting In re

Herrmann, 192 N.J. 19, 27-28 (2007)).    The judicial role focuses

on three inquiries:

         (1) whether the agency action violates the
         enabling    act's   express    or    implied
         legislative policies; (2) whether there is
         substantial evidence in the record to
         support the findings upon which the agency
         based application of legislative policies;
         and (3) whether, in applying the legislative
         policies to the facts, the agency clearly

                                12                         A-5798-11T1
             erred by reaching a conclusion that could
             not reasonably have been made upon a showing
             of the relevant factors.

             [H.K., supra, 379 N.J. Super. at 327
             (quoting Pub. Serv. Elec. v. N.J. Dep't of
             Envtl. Prot., 101 N.J. 95, 103 (1985)).]

    "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 & Health Servs., 389 N.J. Super. 354, 364 (App. Div.

2006); see also Estate of F.K. v. Div. of Med. Assistance &

Health Servs., 374 N.J. Super. 126, 138 (App. Div.) (indicating

that we give "considerable weight" to the interpretation and

application     of    regulations    by    agency   personnel     within     the

specialized concern of the agency), certif. denied, 184 N.J. 209

(2005).      On the other hand, an appellate court is "in no way

bound   by    the    agency's    interpretation     of   a    statute   or   its

determination of a strictly legal issue."            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).

                                     III.

    R.S. argues that the final agency decision, declining to

enforce the Order, violates the plain language of the Medicaid

law and regulations.        Specifically, R.S. contends the Division

ignored the clear and unambiguous language of N.J.A.C. 10:71-

                                      13                                A-5798-11T1
5.7(f) and 42 U.S.C.A. § 1396r-5(d)(5), by refusing to give

effect to the Order in determining the CSMIA for D.S.                             We reject

this argument.          Not only does R.S.'s rigid construction ignore

the   context     of    the    Medicaid    Program        provisions         he    seeks     to

apply, but also           abrogates the well-defined policies of the

program and would lead to an absurd result.                            We conclude the

Division's       determination      declining        to    follow      the        Order     was

neither arbitrary nor capricious.

                                          A.

      The first issue is one of statutory construction.                                    R.S.

argues    for    a    strict    application     of    the    canons         of    statutory

interpretation,          contending       the    Board          and     the        Division

disregarded       the   mandatory     language       of    42    U.S.C.A.          §    1396r-

5(d)(5)     and       N.J.A.C.     10:71-5.7(f).                R.S.        contends        the

regulations' plain language directs the Order to control the

Board's review.         Such a crabbed construction cannot stand as it

abrogates       the    clear   intent     and   purpose      of       the    statute        and

obviates the Division's role in safeguarding limited Medicaid

resources.

      Our Court has emphasized repeatedly "when interpreting an

enabling statute or any other law, a court's obligation is to

determine and give effect to the Legislature's intent."                                    N.J.

Ass'n of School Adm'rs v. Schundler, 211 N.J. 535, 549 (2012).

                                           14                                          A-5798-11T1
"The primary task for the Court is to effectuate the legislative

intent in light of the language used and the objects sought to

be achieved."      Mun. Council v. James, 183 N.J. 361, 370 (2005)

(internal citations omitted) (quoting Merin v. Maglaki, 126 N.J.

430, 435 (1992)).        Our Legislature expressly articulated the

Medicaid program's goal of providing assistance to the medically

needy, declaring:

           the intent of the Legislature . . . to
           provide   medical  assistance,  insofar   as
           practicable, on behalf of persons whose
           resources are determined to be inadequate to
           enable them to secure quality medical care
           at their own expense, and to enable the
           State, within the limits of funds available
           . . . to obtain all benefits for medical
           assistance provided by the Federal Social
           Security Act[.]

           [N.J.S.A. 30:4D-2.]

    Another       provision     authorizes    the     Commissioner        of   the

Division   to    issue   "all   necessary     rules   and    regulations       and

administrative     orders . . . to     secure       for   the     State   of   New

Jersey the maximum federal participation that is available with

respect to a program of medical assistance, consistent with

fiscal responsibility and within the limits of funds available

for any fiscal year[.]"          N.J.S.A. 30:4D-7.          The Legislature's

intention is to align New Jersey's rules and regulations with

federal    objectives     and    assure      effective      use     of    limited

resources.      See ibid.; N.J.S.A. 30:4D-2; see also M.E.F., supra,

                                      15                                  A-5798-11T1
393 N.J. Super. at 547 (quoting A.K., supra, 350 N.J. Super. at

180)    ("[W]hen    discussing       Medicaid     regulations       concerning

resource       allocation . . . the         New      Jersey     regulations

'essentially track the federal statute.'").              Also, in deciding

whether a particular agency action is authorized, a reviewing

court "may look beyond the specific terms of the enabling act to

the statutory policy sought to be achieved by examining the

entire statute in light of its surroundings and objectives."

N.J. Ass'n of School Adm'rs, supra, 211 N.J. at 549.

       The   legislative   history    of   the    MCCA   reflects    Congress'

concern for proper allocation of financial resources.                 The New

Jersey Supreme Court reviewed the legislative history of the

"spousal impoverishment" provisions of the MCCA and explained:

             Those provisions were intended to end the
             pauperization of the community spouse by
             allowing   that    spouse   to    protect    a
             sufficient, but not excessive, amount of
             income and resources to meet his or her own
             needs while the institutionalized spouse was
             in a nursing home at Medicaid expense.
             Congress also recognized that because the
             allocation of resources depended wholly on
             whether a resource was in the name of one
             spouse or the other, couples could shelter
             their resources in the name of the community
             spouse while the institutionalized spouse
             would receive Medicaid coverage.          MCCA
             closed this loophole by considering a
             couple's   resources   in   their    entirety,
             regardless   of  the   name   in   which   the
             resources were held.

                                      16                               A-5798-11T1
           [Mistrick, supra, 154 N.J. at 170 (internal
           citations omitted).]

Congress   enacted    the   MCCA    to     "assure   that   the   community

spouse . . . has income and resources sufficient to live with

independence and dignity."         M.E.F., supra, 393 N.J. Super. at

552-53 (quoting H.R. Rep. No. 100-105(II) (1988), reprinted in

1988 U.S.C.C.A.N. 857, 892).

    Legislative history concerning 42 U.S.C.A. § 1396r-5(d)(5)

also supports a finding that Congress sought to strike a balance

between    the   maintenance   of    the    community   spouse    and     the

preservation of limited resources:

           [I]ndividuals now can have their unique
           financial circumstances reviewed on a case
           by case basis in state court to determine
           the institutionalized spouse's financial
           responsibility to the community spouse. In
           this way, special circumstances can be
           accounted for that might otherwise not be
           foreseen by federal regulations.       Under
           [the] proposed legislation, state Medicaid
           agencies would be required to recognize such
           support orders.

           [M.E.F., supra, 393 N.J. Super. at 556 n.8
           (quoting 132 Cong. Rec. H 11437 (October 17,
           1986) (statement of Rep. Mikulski)).]

Those   provisions   protecting     community    spouses    "place    strict

limits on the amount of a Medicaid recipient's income that can

be used for the community spouse allowance."            H.K., supra, 379

N.J. Super. at 324 (citing Blumer, supra, 534 U.S. at 481-82,

122 S. Ct. at 967-69, 151 L. Ed. 2d at 945-46).             Finally, this

                                    17                               A-5798-11T1
concern for community spouses is reflected in 42 U.S.C.A. §

1396r-5(e)(2)(B), which allows for an adjustment of the MMMNA

"due     to    exceptional      circumstances   resulting     in    significant

financial distress[.]"

       We     conclude    the   Division's    decision   comports     with   the

legislative policies.           The decision is consistent with the broad

federal and state goals of preventing the impoverishment of

community spouses, while ensuring limited Medicaid resources are

allocated prudently among those most in need.

       In H.K., supra, 379 N.J. Super. at 323-26, we affirmed a

Division decision refusing to give effect to a support order

obtained in a divorce from a "bed and board" proceeding, entered

after the institutionalized spouse applied for Medicaid.                     This

court concluded the agency's decision was "consistent with the

language and purpose of the Medicaid statute," id. at 327, and

noted holding otherwise would invite collusive agreements to

divert an institutionalized spouse's income to the community

spouse in a manner contrary to the intent underlying Medicaid.

Ibid. (citing Estate of G.E. v. Div. of Med. Assistance & Health

Servs., 271 N.J. Super. 229, 239 (App. Div. 1994)) ("We have

previously disapproved such potentially unlimited transfers of

income        from   an   institutionalized     spouse   to   the    community

spouse.").

                                        18                              A-5798-11T1
     Thus,      R.S.'s    invocation         of   the    canons   of   statutory

interpretation fails to adequately account for the complexity of

the Medicaid statutes and regulations, the policies underlying

Medicaid, the legislative history regarding 42 U.S.C.A. § 1396r-

5(d)(5), and the significant deference accorded agency decisions

in the Medicaid context.        As the Federal District Court for the

District of New Jersey observed:

           The    Medicaid   Act    contains   complex,
           interrelated provisions, and it would be
           foolhardy to impute a plain meaning to any
           of its provisions in isolation.    A statute
           must be read as a whole; words depend upon
           context;   they   have   only    a  communal
           existence; and not only does the meaning of
           such interpenetrate the other, but all in
           their aggregate take their purport from the
           setting in which they are used.

           [Cleary, supra, 959 F. Supp. at                    228-29
           (internal quotation marks omitted).]

                                        B.

    R.S. next contends the agency's decision was unsupported

and must be set aside.           In considering whether a reviewing

"court owes substantial deference to the agency's expertise and

superior knowledge of a particular field[,]" a key inquiry is

"whether the record contains substantial evidence to support the

findings   on   which    the   agency    based     its   action."      Herrmann,

supra, 192 N.J. at 28 (citation omitted).                  As demonstrated by

our review of the statutory context and legislative history, the

                                        19                               A-5798-11T1
claimed "plain language" reading suggested by R.S. is unfounded.

N.J. Dep't of Envtl. Prot. v. Exxon Mobil Corp., 420 N.J. Super.

395, 404 (App. Div. 2011) (quoting DiProsopero v. Penn, 183 N.J.

477,   493   (2005))   ("A   reviewing         court   'may    also    resort    to

extrinsic evidence if a plain reading of the statute leads to an

absurd result or if the overall statutory scheme is at odds with

the plain language.'").      As noted in H.K., an interpretation of

N.J.A.C. 10:71-5.7(f) "permit[ting] a community spouse to obtain

an unlimited increase in the spousal allowance by obtaining a

court order for support . . . would nullify the statutory and

regulatory    limitations    on    the      community    spouse       allowance."

H.K., supra, 379 N.J. Super. at 328.

       The Division's findings are supported by calculations of

R.S. and D.S.'s income and expenses, and its decision is further

supported by R.S.'s failure to allege any special circumstances

necessitating    enforcement      of     the    Order.        Moreover,    strict

enforcement of the amended             support order would produce the

absurd result of providing D.S. with a monthly spousal allowance

$1945.27 greater than her MMMNA, while depleting the limited

resources available to provide for other individuals in need.

We conclude the record supports the Division's adoption of the

Board's sound methodology, which is consistent with the policies

of New Jersey's Medicaid program, specifically, N.J.A.C. 10:71-

                                       20                                 A-5798-11T1
5.7(c) (providing for calculation of CSMIA) and N.J.A.C. 10:71-

5.7(e) (providing for an increase in CSMIA upon demonstration of

exceptional     circumstances        resulting         in    financial       distress).

Using D.S.'s actual shelter costs, including a mortgage of $2320

per month, and other preset standards, the Board determined

D.S.'s MMMNA (labeled "total community deduction standard" on

the community spouse deduction worksheet) to be $3972.19.                               The

Board   then   subtracted      $2457.26,           D.S.'s     monthly    total       gross

income, to calculate her CSMIA as $1514.93.

    Pursuant to N.J.A.C. 10:71-5.7(c) and U.S.C.A. § 1396r-

5(d)(3),     the    Board    determined         that    this     "total       community

deduction"     (the   CSMIA)    would      be      deducted     from    R.S.'s       total

monthly    income     of    $3597.27.           After       accounting       for     minor

deductions including the personal needs allowance ($35.00) and

health insurance premiums ($102.07), R.S.'s remaining monthly

income, totaling $1945.27, would be paid toward the costs of his

care.     If the March 2011 award were given effect, that $1945.27

would have been paid to D.S., making her net monthly income

$5917.46 (comprised of all of her earned income and almost all

of R.S.'s unearned income).                To give effect to the amended

support    order    would    cause   the      CSMIA     for    D.S.     to   more      than

double,     despite    the     absence        of     exceptional        circumstances

resulting in financial duress.              Such a result demonstrates the

                                         21                                        A-5798-11T1
arbitrariness         of    isolating     the       language    of   N.J.A.C.      10:71-

5.7(f), as R.S. contends.                Indeed, the obvious intent of the

Order     was    to        maintain     D.S.'s       lifestyle       prior   to     R.S's

institutionalization at the expense of the Medicaid program.

                                              C.

      R.S. asserts that we should defer to the Order citing the

Appellate Division's deference to the special expertise of the

Family    Part    in       dealing    with    family    matters.        However,     this

argument is inappropriately broad.                    Rather, in our review of a

trial court's order, we grant substantial deference to the trial

court's findings of facts following a hearing in which the court

is able to assess the evidence.                    Cesare v. Cesare, 154 N.J. 394,

411-413 (1998).            This deference is specifically appropriate when

the     trial    court       "hears     the     case,    sees    and    observes       the

witnesses, [and] hears them testify," because "it has a better

perspective than a reviewing court in evaluating the veracity of

witnesses."        Id.       at   412   (alteration       in    original)    (internal

quotation marks omitted) (quoting Pascale v. Pascale, 113 N.J.

20, 33 (1988)).            Further, the Court has held that "an

appellate court should not disturb the 'factual findings and

legal conclusions of the trial judge unless [it is] convinced

that they are so manifestly unsupported by or inconsistent with

the competent, relevant and reasonably credible evidence as to

                                              22                                  A-5798-11T1
offend     the    interests        of        justice.'"      Ibid.       (alteration     in

original) (quoting Rova Farms Resort, Inc. v. Investors Ins.

Co., 65 N.J. 474, 484 (1974)).

    In this case, the Family Part Judge did not hold a fact-

finding hearing to which we owe deference.                         The Order was not

supported        by    "adequate,        substantial,       credible       evidence[;]"

rather, the evidence presented does not support the Order and

thus, we need not defer to the Order.                     Moreover, the incongruity

between    the        regulatory     CSMIA      calculations       and    those   factors

considered by the Family Part in awarding support orders further

demonstrates the potential for an absurd result in applying the

plain     language        of   N.J.A.C.          10:71-5.7(f).       While    the      MCCA

provisions on the whole focus on preventing the pauperization of

community        spouses,      the       family       courts   have        latitude      to

contemplate factors that are irrelevant in calculation of CSMIA,

such as "[t]he standard of living established in the marriage or

civil union and the likelihood that each party can maintain a

reasonably comparable standard of living."                     N.J.S.A. 2A:34-23.

    Here, the record clearly indicates the Order was entered to

allow     for    the     payment        of     all   of   D.S.'s     living   expenses,

including monthly expenses of $150 for hair care, $100 for life

insurance, and $50 for unspecified contributions.                              Diverting

income toward payment of these expenses reflects a paradigm of

                                                23                                A-5798-11T1
maintaining a spouse's lifestyle, rather than the more modest

goal of ensuring personal needs.         As noted by the Division, the

difference would be at the taxpayer's expense.

    The record also contains substantial evidence to support

the Board's treatment of R.S.'s income.          R.S. attempts to limit

relevant   evidence    to   the   proceedings    in       the   Family     Part,

including D.S.'s complaint and CIS, and the two support orders.

Because agency discretion must accord with express and implied

legislative policies, the Division was not required to divert

all income to a community spouse without considering whether

there are "exceptional circumstances" warranting the payment.

Additionally, R.S.'s own application for medical assistance, the

Board's eligibility decision, and the community spouse deduction

worksheet are all relevant in determining the post-eligibility

treatment of his income; without these forms, R.S would not be

deemed eligible for Medicaid in the first instance.

    We also address R.S.'s argument the ALJ and the Division

improperly undertook an "exceptional circumstances" analysis.

However, R.S. sought relief in a letter dated September 21,

2011,   specifically   requesting    a   "Fair   Hearing"         pursuant      to

N.J.A.C.   10:71-5.7(e),    which   allows   for      a    fair   hearing       to

determine whether an increase is warranted due to "exceptional

circumstances."   Therefore, the appropriate standard was applied

                                    24                                   A-5798-11T1
according to R.S.'s requested relief.                  However, we will still

address this issue.

      Our   review     asks    "whether,       in    applying       the    legislative

policies to the facts, the agency clearly erred by reaching a

conclusion     that    could    not    reasonably      have    been       made       upon    a

showing of the relevant factors."               H.K., supra, 379 N.J. Super.

at 327 (quoting Pub. Serv. Elec., supra, 101 N.J. at 103).                                The

Division    relied     on     the   factual     findings       of    the       ALJ     which

appropriately considered R.S.'s financial information submitted

to calculate the CSMIA in accordance with N.J.A.C. 10:71-5.7(c)

and U.S.C.A. § 1396r-5(d)(3).

      The   record     clearly      supports    the    Board's       calculation            of

D.S.'s CSMIA and accordingly, the primary question at the fair

hearing, and in the Division's subsequent review of the hearing,

was whether or not D.S. was entitled to a revision of her CSMIA

based   upon    "exceptional        circumstances      resulting          in   financial

duress[.]"      N.J.A.C. 10:71-5.7(e).              Relying on the contents of

the   record,    the    ALJ    found    that    R.S.     had    averred          no      such

circumstances:

            D.S. does not qualify for an increase in the
            community    spouse   monthly    maintenance
            allowance      based     on      exceptional
            circumstances.    D.S. does not claim any
            medical/physical impairments of her own.
            She is gainfully employed.      There is no
            showing that the community spouse needs
            specialized medical care or attention. The

                                         25                                          A-5798-11T1
            instant case does not involve the type of
            long-term health and financial problems as
            contemplated   in   the   term  "exceptional
            circumstances."     In sum, D.S. has not
            demonstrated    the   requisite   level   of
            significant financial duress to justify an
            increase above the $1,514.93 she has already
            received from the respondent.

After reviewing all documents in the record, including those

submitted to the Family Part, the Division similarly found that

D.S.'s CSMIA should not be increased to cover her "ordinary and

regular expenses."         The Director further found "interesting[]

[that] even without her husband in the household, her monthly

expenses remain nearly the same ($5,827 vs. $5,651)."5                       This

meager      $176     decrease       in        monthly        expenses        upon

institutionalization of R.S. reasonably led to the skepticism of

the Division in considering D.S.'s calculations concerning her

expenses.    In reviewing the record for any possible "exceptional

circumstances," the Division recognized the credit card debt of

R.S. may warrant an increase in income for D.S. "depending on

the circumstances such as when and how the charges were incurred

and if the expenses were charged for the couple's sole use."

       Considering   the    foregoing    in   light     of   the   implied   and

express legislative policies and legislative history discussed

above, the Director's decision was well-reasoned and made in

5
    D.S. made this representation in her CIS.

                                    26                                  A-5798-11T1
reliance on relevant guiding principles and a sufficient factual

record.      To conclude, the Division's decision was not arbitrary,

capricious     or   unreasonable,      having    passed     muster    under    the

three-pronged test.

                                        D.

      R.S.    makes   additional      arguments,     also    rejected     by   the

Division,     which   we     find    lack    sufficient     merit    to   warrant

extensive discussion.        R.S. asserts that the Division engaged in

improper rule-making by imposing an "exceptional circumstances"

criterion for post-eligibility treatment of a recipient's income

and   by   imposing   a    requirement       that   R.S.    give    "notice"     to

Medicaid on the support action.              This argument lacks merit.          In

Metromedia, Inc. v. Dir., Div. of Taxation, 97 N.J. 313, 330-31

(1984), the Supreme Court held, for due process reasons, that an

administrative      agency    must    conduct    formal     rulemaking     before

imposing new standards upon those it regulates.                      Six factors

guide our analysis of when such formal rulemaking is necessary:

             (1) [the decision] is intended to have wide
             coverage encompassing a large segment of the
             regulated or general public, rather than an
             individual or a narrow select group; (2) is
             intended   to   be   applied   generally and
             uniformly to all similarly situated persons;
             (3) is designed to operate only in future
             cases,    that    is,    prospectively;  (4)
             prescribes a legal standard or directive
             that is not otherwise expressly provided by
             or clearly and obviously inferable from the
             enabling    statutory    authorization;  (5)

                                        27                                A-5798-11T1
              reflects an administrative policy that (i)
              was not previously expressed in any official
              and    explicit     agency    determination,
              adjudication or rule, or (ii) constitutes a
              material and significant change from a
              clear, past agency position on the identical
              subject matter; and (6) reflects a decision
              on administrative regulatory policy in the
              nature of the interpretation of law or
              general policy.

              [Id. at 331.]

These   factors,     "either       singly      or       in    combination,"       determine

whether    agency        action    amounts         to        the   promulgation     of     an

administrative rule.          Id. at 332.           Having considered each of the

six enumerated Metromedia factors, we are satisfied that the

decision to apply an "exceptional circumstances" criterion for

post-eligibility         treatment       of    a    recipient's          income    was     an

unassailable exercise of the agency's pre-existing authority.

       R.S.'s      argument       is     based      on        a    misreading      of    the

administrative decisions of the ALJ adopted by the Division.                               In

her decision, Judge Rigo referred to the language of 42 U.S.C.A.

§ 1396r-5(e)(2)(B), which expressly allows for revision of the

MMMNA   "in     exceptional       circumstances              resulting   in   significant

financial distress," and N.J.A.C. 10:71-5(e), which allows for

revision if the community spouse or recipient establishes at a

fair    hearing     that      "exceptional          circumstances         resulting        in

financial duress" exist.               Relying on the record and the express

language      of   the    Medicaid       law       and       regulations,     Judge      Rigo

                                              28                                    A-5798-11T1
concluded an increase in the MMMNA was not warranted.                              This was

not rule-making, but the application of the criterion already

established      in   42    U.S.C.A.       §     1396r-5(e)(2)(B)          and     N.J.A.C.

10:71-5.7(e).

       Next,    regarding      the        alleged     creation        of     a     "notice"

requirement, when Judge Rigo considered the Order, she noted

that the Board had not been provided notice or an opportunity to

be heard.      Judge Rigo did not, however, adopt a rule; rather,

she    analogized     the    facts     of      this    case    to     those       of     H.K.,

ultimately      concluding,        based       on     the     record,      that         R.S.'s

"obtaining the court order was an attempt to circumvent the

Medicaid       regulations         concerning         the     levels         of     spousal

allowance."       Similarly,         in    its      final   agency      decision,           the

Division adopts this finding, noting "[n]either [R.S.] nor his

wife    appears       to    have     informed         the     court     of        the      true

ramifications of the support order on Medicaid[.]"                                 Although

this was a circumstance relevant to the Division in deciding not

to give effect to the amended support order, it did not amount

to formulating a rule.

       Furthermore, R.S. further contends that the outcome of this

appeal is controlled by our decision in M.E.F., supra, 393 N.J.

Super. 54.      In M.E.F., the community spouse who "received $576

per month from Social Security as her sole source of independent

                                            29                                         A-5798-11T1
income,"     was     allocated       a   community    spouse    allowance     of

approximately $445 upon a determination of her institutionalized

spouse's Medicaid eligibility.             Id. at 548.    Dissatisfied with

this amount, the community spouse sought relief from the Family

Part in the form of separate maintenance, pursuant to N.J.S.A.

2A:34-24.    Id. at 548-49.

    At issue was whether the administrative hearing and the

Family Part constitute alternative avenues to seek relief from

the determination of an allegedly inadequate CSMIA, as well as

what standard applied in such a review.              Id. at 545, 549-51.      We

reached    our     decision    on    procedural    grounds,    reasoning    that

"M.E.F.'s effort to obtain [a support] order, perfected only

after her MMMNA had been reconsidered and increased, albeit not

to her satisfaction, constituted parallel litigation and a form

of forum shopping of a sort that we are unwilling to recognize

as valid."       Id. at 557.        We added that the "present appeal does

not require [a] decisive construction of the effect of the court

ordered support provision[.]"            Ibid.    We explained:

            An award of support entered against an
            institutionalized spouse prior to Medicaid
            eligibility would clearly be governed by the
            standards articulated in N.J.S.A. 2A:34-23.
            We see no principled reason why those
            standards would change simply because the
            spouse was found to be eligible for Medicaid
            and subject to the spousal income protection
            provisions of the Act. We do note, however,
            that the standards for calculating support,

                                         30                            A-5798-11T1
           set forth in N.J.S.A. 2A:34-23, permit
           consideration of spousal "actual need,"
           ability to pay, and "[a]ny other factors
           which   the   court    may   deem    relevant."
           N.J.S.A. 2A:34-23b(1) and (13).        The dual
           purposes of the MCCA — to ensure that the
           community spouse has sufficient, but not
           excessive,   income    and   to   ensure    that
           individuals not be permitted to avoid
           payment of their own fair share for long-
           term   care   —    are    certainly     relevant
           considerations in this regard.

           [Id. at 557-58.]

      Thus, we were concerned with preserving the standards of

the   family    proceedings      and    ensuring      that    such      proceedings

consider the goals of the Medicaid program when relief is sought

by a community spouse.            Ibid.        While this quote regards the

standard to be applied in Family Court proceedings, it envisions

a flexibility that should be extended to the Division to allow

for deviations from the statutorily calculated MMMNA where the

circumstances warrant special consideration.                 Ibid.

      R.S. next asserts the "forum shopping" found in M.E.F.,

supra,   393    N.J.    Super.   at    557,    is   absent   here,      since    D.S.

obtained her support order prior to R.S.'s Medicaid application;

however,   M.E.F.       is   otherwise     distinguishable.             There,    the

community spouse's sole source of independent income was monthly

payments   of    $545    from    Social    Security.         Id.   at    548.      In

contrast, D.S. earns $2457.26 in monthly income.                     Importantly,

there was a hearing held by the Family Part in                          M.E.F., as

                                          31                                A-5798-11T1
opposed    to    the   record       here,     which     indicates         an   uncontested

application decided on the papers.

      We find H.K., supra, 379 N.J. Super. 321, more on point.

There, an institutionalized spouse qualified for Medicaid "even

though    he     had    Social          Security       and     pension          income     of

approximately $4,500 per month and his wife worked full-time and

earned    over   $2,000      per    month."        Id.    at       324.        Because   the

community spouse's monthly income was too high to entitle her to

an allowance, the couple "attempted to invoke the 'court order'

exception of N.J.A.C. 10:71-5.7(f), by obtaining a divorce from

'bed and board' with a property settlement agreement providing

for   support    to    be    paid     to    [the   community        spouse]       from   the

[institutionalized spouse's] pension."                       Id. at 325-26.               The

Division adopted the decision of the ALJ not to give effect to

the   court-ordered         spousal     support    obligation,            reasoning      that

"giving effect to the divorce judgment would be contrary to the

purpose    and    intent      of    the     [MCCA]."         Id.    at    326    (internal

quotation marks omitted).

      We agreed, reasoning that, "given the facts of [the] case,

the   agency's     decision        is      consistent    with       the    language      and

purpose of the Medicaid statute."                     Id. at 327.          Additionally,

accepting the petitioner's position in that case "would nullify

the statutory and regulatory limitations on the community spouse

                                             32                                     A-5798-11T1
allowance[,]" thereby yielding an "absurd result."                              Id. at 328.

We further stated that

            [t]his is not a situation where a court has
            held    an    evidentiary     proceeding    and
            determined independently that the community
            spouse is in need of support or that she has
            "special circumstances." Nor was the court
            that entered the order even notified that
            [the institutionalized spouse] was receiving
            Medicaid benefits. This is also not a case
            where   there    was   an   existing    support
            obligation   that    pre-dated   the   Medicaid
            application and was entered at a time when
            such   application    was   not    anticipated.
            Rather, the property settlement agreement in
            this case was an undisguised attempt to
            circumvent     the     Medicaid     regulations
            concerning the appropriate level of spousal
            allowance.

            [Id. at 329.]

Supporting       this    conclusion        was    our        observation         that    the

proceeding       in   the    Family    Part      in    H.K.        was    not    "genuinely

adversarial" because the State Medicaid program had not been

provided notice; further, "no factual record was made to support

the alimony award, and the court that entered the order did not

determine    whether        the    award   was    justified          in    light    of   the

countervailing interests of the State[.]"                     Id. at 329-30.

    The record here similarly lacks any evidence that R.S.

contested D.S.'s allegations or computations of financial needs

asserted    in    her   complaint.         Because          R.S.    did    not    file   any

opposition       to   D.S.'s      application,        the    entire       record    in   the

                                           33                                       A-5798-11T1
Family Part proceeding consisted of D.S.'s verified complaint

and CIS, the acknowledgment of service, and two orders.              In sum,

as the Division noted, "[a] review of the record indicates that

the wife's action in family court was not adversarial and was

chosen to avoid following the Medicaid spousal impoverishment

rules[.]"    "Generally, an appellate court does not substitute

its judgment of the facts for that of an administrative agency."

Campbell v. N.J. Racing Comm'n, 169 N.J. 579, 587 (2001).

      These circumstances raise the concern noted in H.K. and

echoed in the final agency decision that spouses may collude and

use   support   orders    "to   circumvent      the    Medicaid   regulations

concerning   the    appropriate    level   of    the    spousal   allowance."

H.K., supra, 379 N.J. Super. at 329.            As the Division noted:

            The instant matter shows how one couple
            could obtain legal counsel to seek judicial
            fiat     to    circumvent    the    spousal
            impoverishment rules. . . . [y]et another
            couple, without income or wherewithal to
            hire counsel, would have to abide by the
            statutory calculation and the statutory
            remedy to have additional income set aside
            for the community spouse.

In light of the substantial deference afforded agency decisions,

the   express      and   implied   legislative         policies   underlying

Medicaid, and the circumstances of this case, we affirm the

Division's approval of D.S.'s CSMIA determined in accordance

with N.J.A.C. 10:71-5.7(c) and 42 U.S.C.A. § 1396r-5(d).

                                     34                               A-5798-11T1
    R.S. finally claims entitlement to attorney's fees pursuant

to 42 U.S.C.A. §§ 1983, 1988, alleging the Division's refusal to

enforce the amended support order amounted to an arbitrary and

capricious violation of established law and his civil rights.

Because R.S. failed to prevail on any issue in the litigation,

his claim for attorney's fees clearly lacks merit.   See Singer

v. State, 95 N.J. 487, 494, cert. denied, 469 U.S. 832, 105 S.

Ct. 121, 83 L. Ed. 2d 64 (1984).

    Affirmed but without prejudice as to any reconsideration by

the Division of a potential adjustment to the MMMNA concerning

the extensive credit card balances of R.S.

                               35                        A-5798-11T1