Court Opinion

ID: 4530248
Source: CourtListenerOpinion
Date Created: 2020-04-30 14:09:35.321299+00
Date Added: 2024-06-11T12:25:26.170121
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NOT FOR PUBLICATION WITHOUT THE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-6014-17T1

L.M.,

          Petitioner-Appellant,

v.

DIVISION OF MEDICAL
ASSISTANCE AND HEALTH
SERVICES,

     Respondent-Respondent.
__________________________

                    Argued February 6, 2020 – Decided April 30, 2020

                    Before Judges Nugent and DeAlmeida.

                    On appeal from the New Jersey Department of Human
                    Services, Division of Medical Assistance and Health
                    Services.

                    Richard J. Kozel and Brian Neil Rath argued the cause
                    for appellant (Buchanan Ingersoll & Rooney, PC,
                    attorneys; Richard J. Kozel, on the briefs).

                    Jacqueline R. D'Alessandro, Deputy Attorney General
                    argued the cause for respondent (Gurbir S. Grewal,
                    Attorney General, attorney; Melissa H. Raksa,
            Assistant Attorney General, of counsel; Jacqueline R.
            D'Alessandro, on the brief).

PER CURIAM

      Petitioner L.M. 1 appeals from the July 20, 2018 final decision of the

Director, Division of Medical Assistance and Health Services (DMAHS) finding

a prior designated authorized representative (DAR) acting on her behalf lacks

standing to appeal the decision of a county welfare agency (CWA) imposing a

transfer penalty on her eligibility for Medicaid benefits. We affirm.

                                       I.

      The following facts are derived from the record. L.M. was permanently

institutionalized in July 2015. On February 24, 2016, L.M.'s husband, R.M.,

pursuant to a power of attorney, authorized Future Care Consultants, LLC

(Future Care) to act as L.M.'s DAR for the purpose of obtaining Medicaid

benefits.

      On February 26, 2016, Future Care applied for Medicaid benefits on

behalf of L.M. The CWA asked Future Care to provide verification of cash

withdrawals from various bank accounts held individually by L.M. and jointly

1
   We identify petitioner and her husband by their initials to protect the
confidentiality of petitioner's medical records.
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                                       2
by L.M. and R.M. during the period August 2011 through February 2015. The

withdrawals, for which L.M. was not compensated, totaled $138,533.38.

      On October 3, 2016, the CWA sent Future Care notice that although L.M.

was eligible for Medicaid benefits as of November 1, 2015, it imposed a transfer

penalty of 417 days to account for the uncompensated transfers from L.M.'s

accounts. See N.J.A.C. 10:71-4.10(m)(1). Future Care thereafter requested an

undue hardship waiver of the transfer penalty. See N.J.A.C. 10:71-4.10(q).

Future Care argued a waiver is warranted because R.M., along with L.M.'s

children, unlawfully converted L.M.'s funds for their own use without her

consent. The CWA denied the hardship waiver based on its finding L.M. had

not shown she made a good faith effort to recover the transferred assets. See

N.J.A.C. 10:71-4.10(q)(1)(ii).

      On November 1, 2016, Future Care, acting on behalf of L.M., requested a

fair hearing with respect to the transfer penalty. The matter was transferred to

the Office of Administrative Law.

      On December 15, 2016, L.M. died. Two months later, Future Care filed

a complaint in the Law Division as the fiscal agent of Alaris Health of Cherry

Hill (Alaris Health), the owner of the facility at which L.M. received treatment,

against R.M. and the couple's children. The complaint alleged R.M. and the

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children are responsible for the outstanding balance for services provided to

L.M. by Alaris Health.       The complaint also alleged conversion of the

$138,533.38 in uncompensated transfers from L.M.'s account, as well as

fraudulent transfers under N.J.S.A. 25:2-25, unjust enrichment, and breach of

contract. L.M. is not a party to the Law Division action.

      R.M. died on June 30, 2017. Administrative Law Judge (ALJ) Kathleen

M. Calemmo inquired of R.M.'s estate whether the continued appeal of the

transfer penalty was authorized. R.M.'s daughter, the Executrix of his estate,

signed a DAR form purporting to act on behalf of her deceased father to

authorize Future Care to continue the appeal of the transfer penalty. The record

contains no evidence L.M.'s estate authorized continuation of the appeal.

      On September 18, 2017, an attorney representing Future Care moved

before the ALJ to amend the petition for a fair hearing to name as petitioner the

estate of L.M. by Future Care, as DAR for the estate. In addition, Future Care

moved for summary decision of its appeal of the denial of the hardship waiver.

The CWA opposed the motion to amend and cross-moved for summary decision

on the waiver issue.

      In her initial decision, ALJ Calemmo concluded Future Care lacked

authority to act on behalf of L.M. or her estate. Relying on N.J.S.A. 46:2B-8.5,

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the ALJ concluded R.M.'s power of attorney, through which he appointed Future

Care as L.M.'s DAR, terminated on L.M.'s death and that Future Care lacked

authority to act on L.M.'s behalf once aware of her death. The ALJ explained,

"[a]fter the death of the principal, it is the fiduciary appointed by a will or

ordered by the [c]ourt, under the laws of intestacy, who has the authority to act

for the decedent. N.J.S.A. 3B:14-23." ALJ Calemmo found that Future Care

was not given authority to act on L.M.'s behalf after her death by her estate or

by court order.

      In addition, the ALJ rejected Future Care's argument that federal

regulations permitted it to continue its representation of L.M. after her death.

As the ALJ noted, federal regulations are "abundantly clear that anyone

authorized to act in place of the actual individual . . . does so only as agent for

and on behalf of that individual. The party in interest . . . is always the

individual."2

      On July 20, 2018, the Director, DMAHS issued a final agency decision

adopting ALJ Calemmo's initial decision. On the issue of Future Care's standing

to continue the appeal on behalf of L.M., the Director noted that although 42

2
  Despite her conclusion Future Care lacked authority to represent L.M., the
ALJ considered the merits of the appeal and concluded the CWA's denial of a
hardship waiver was appropriate.
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C.F.R. § 435.923(a)(1) permits an applicant to designate an individual or

organization to assist with an application for benefits, a DAR designation "'is

valid until . . . there is a change in the legal authority upon which the individual

or organization's authority was based.' 42 C.F.R. § 435.923(c)." The Director

agreed with the ALJ that R.M.'s designation of Future Care to act on behalf of

L.M. terminated with her death and "absent substitution by [L.M.'s] executrix,

Future Care is not authorized and 'has no standing to pursue the appeal on behalf

of [L.M.].'"3

      This appeal followed.      L.M. raises the following arguments for our

consideration:

            POINT I

            L.M.'S DESIGNATION OF  A                      MEDICAID
            AUTHORIZED REPRESENTATIVE                     SURVIVES
            HER DEATH.

            POINT II

            THE REGULATIONS MUST BE READ AND
            INTERPRETED IN A CONSISTENT MANNER
            ACCORDING TO THE DOCTRINE OF IN PARI
            MATERIA.

3
  The Director also upheld the AJL's determination that CWA's denial of a
waiver was appropriate.
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            POINT III

            THE RIGHT TO PURSUE A[N] [UNDUE HARDSHIP
            WAIVER] OR SEEK RECOVERY OF ASSETS MAY
            SURVIVE THE DEATH OF L.M. AND IS NOT
            REQUIRED BY STATE OR FEDERAL LAW TO
            OCCUR IN A PARTICULAR ORDER.

            POINT IV

            L.M.'S TRANSFERRED ASSETS WERE NOT
            ACCESSIBLE    TO     L.M.  AND    WERE
            TRANSFERRED THROUGH NO FAULT OF HER
            OWN; THEREFORE, THE TRANSFERRED ASSETS
            SHOULD HAVE BEEN EXCLUDED FROM L.M.'S
            MEDICAID ELIGIBILITY DETERMINATION.

                                       II.

      "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.'" R.S. v. Div. of Med. Assistance & Health Servs., 434

N.J. Super. 250, 261 (App. Div. 2014) (quoting Russo v. Bd. of Trs., Police &

Firemen's Ret. Sys., 206 N.J. 14, 27 (2011)). "The burden of demonstrating that

the agency's action was arbitrary, capricious or unreasonable rests upon the

[party] challenging the administrative action." E.S. v. Div. of Med. Assistance

& Health Servs., 412 N.J. Super. 340, 349 (App. Div. 2010) (alteration in

original) (quoting In re Arenas, 385 N.J. Super. 440, 443-44 (App. Div. 2006)).

"[I]f substantial credible evidence supports an agency's conclusion, a court may

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not substitute its own judgment for the agency's even though the court might

have reached a different result." Greenwood v. State Police Training Ctr., 127

N.J. 500, 513 (1992).

      "Medicaid is a federally-created, state-implemented program that

provides 'medical assistance to the poor at the expense of the public.'" In re

Estate of Brown, 448 N.J. Super. 252, 256 (App. Div. 2017) (quoting Estate of

DeMartino v. Div. of Med. Assistance & Health Servs., 373 N.J. Super. 210,

217 (App. Div. 2004)); see also 42 U.S.C.A. § 1396-1. To receive federal

funding the State must comply with all federal statutes and regulations. Harris

v. McRae, 448 U.S. 297, 301 (1980).

      Pursuant to the New Jersey Medical Assistance and Health Services Act,

N.J.S.A. 30:4D-1 to -19.5, DMAHS is responsible for administering the

Medicaid program in our State. Through its regulations, DMAHS establishes

"policy and procedures for the application process . . . ." N.J.A.C. 10:71-2.2(b).

"[T]o be financially eligible, the applicant must meet both income and resource

standards."   Brown, 448 N.J. Super. at 257; see also N.J.A.C. 10:71-3.15;

N.J.A.C. 10:71-1.2(a).

      Having carefully reviewed the record and applicable legal principles, we

conclude the agency's decision is supported by substantial credible evidence in

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                                        8
the record as a whole and comports with controlling law. DMAHS must permit

Medicaid applicants "to designate an individual or organization to act

responsibly on their behalf in assisting with the individual's application and

renewal of eligibility and other ongoing communications with the agency." 42

C.F.R. § 435.923(a)(1). The Division also must allow applicants to terminate

or modify the appointment of a DAR at any time. 42 C.F.R. § 435.923(c).

      "[U]nless the context indicates otherwise" an

            [a]pplicant means an individual whose written
            application for Medicaid has been submitted to the
            agency determining Medicaid eligibility, but has not
            received final action. This includes an individual (who
            need not be alive at the time of application) whose
            application is submitted through a representative or a
            person acting responsibly for the individual.

            [42 C.F.R. § 400.203.]

We disagree with Future Care's argument that this regulation permits it to

continue the appeal on behalf of L.M. after her death based on R.M.'s

authorization of Future Care as her DAR.        We see no ambiguity in the

regulation's plain language. Medicaid applicants are entitled to be represented

by an organization such as Future Care. This is what the CWA permitted here.

L.M. was represented by Future Care pursuant to R.M.'s authorization when he

held L.M.'s power of attorney.

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                                      9
      The regulation does not provide, however, that the designation of a

representative by someone holding the applicant's power of attorney survives

the applicant's death. As a threshold matter, the regulation provides that an

applicant "need not be alive at the time of application . . . ." 42 C.F.R. § 400.203

(emphasis added). Thus, an applicant who is deceased at the time an application

is submitted may be represented by a duly appointed fiduciary, such as the

administrator of the applicant's estate or a person or organization appointed by

the estate's representative. This provision of the regulation is inapplicable here,

as L.M. was alive at the time an application was filed on her behalf.

      In addition, permitting an applicant to be represented after the applicant's

death is not the equivalent of providing that a designation as DAR made while

the applicant is alive through a power of attorney remains effective after the

applicant's death. To the contrary, 42 C.F.R. § 435.923(c) provides that a DAR

appointment terminates when "there is a change in the legal authority upon

which [it] was based." It was not arbitrary, capricious, or unreasonable for the

Director to apply New Jersey law regarding the expiration of a power of attorney

on the principal's death to determine whether there was a change in the legal

authority on which Future Care's status as L.M.'s DAR was based. Here, Future

Care was appointed L.M.'s DAR by R.M. through a power of attorney that

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                                        10
expired on L.M.'s death. Once Future Care was aware of L.M.'s death, its

authority as her DAR expired because it was aware R.M.'s authority to execute

the DAR had also ended. In addition, there was no legal authority for the

Executrix of R.M.'s estate after his death to execute a DAR on behalf of L.M.

      Nor do we agree with Future Care's argument that 42 C.F.R. §

405.910(m)(3)(ii), which applies to Medicare appeals, is applicable here. There

is no indication in the federal regulations that the rules for processing and

appealing applications for Medicare benefits apply in the context of Medicaid.

Nor is there support for Future Care's argument that the two sets of regulations

should be read in pari materia. To the contrary, given that a Medicare regulation

might permit an appeal to proceed in the circumstances present here, the absence

of such authority in the corresponding Medicaid regulation might well be

indicative of federal authorities having adopted different approaches for the two

benefits programs.

      To the extent we have not addressed Future Care's remaining arguments,

we consider them to be without sufficient merit to warrant discussion in a written

opinion. R. 2:11-3(e)(1)(E). In light of our holding with respect to Future Care's

authority to continue L.M.'s appeal, we need not reach the merits of the waiver.

      Affirmed.

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                                       11