Court Opinion

ID: 4429814
Source: CourtListenerOpinion
Date Created: 2019-08-20 19:30:47.224779+00
Date Added: 2024-06-11T12:47:15.940089
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NOT FOR PUBLICATION WITHOUT THE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-5024-16T2

M.P.,

          Petitioner-Appellant,

v.

DIVISION OF MEDICAL
ASSISTANCE AND HEALTH
SERVICES, and CAMDEN COUNTY
BOARD OF SOCIAL SERVICES,

     Respondents-Respondents.
_________________________________

                   Argued November 14, 2018 – Decided December 17, 2018

                   Before Judges Fisher and Suter.

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

                   Donald B. Mark argued the cause for appellant.

                   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 M.P. appeals the final agency decision of the New Jersey

Division of Medical Assistance and Health Services (DMAHS) that denied his

application for Medicaid benefits under the Medically Needy Program. We

affirm the decision that M.P. was not eligible because he stipulated his resources

were in excess of the program's requirements.

      M.P. and his wife resided at the Elmwood Hills Healthcare Center in

2014.1 On October 14, 2014, M.P. made application to the Camden County

Board of Social Services (CCBSS) for Medicaid benefits under the Medically

Needy Program. N.J.A.C. 10:70-1.1 to -7.3. The Medically Needy Program

extends limited Medicaid program benefits "to certain groups of medically

needy persons whose income and/or resources exceeds the standards for the

Medicaid program but are within the standards for the Medically Needy

Program, or whose income exceeds the standards for the Medically Needy

Program but is insufficient to meet their medical expenses." N.J.A.C. 10:70-

1.1(a).

1
  M.P. passed away in July 2015. His wife passed away in 2014 and is not an
appellant.
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                                        2
      M.P. applied for benefits under the Medically Needy Program because in

2014, his combined gross monthly income from Social Security and a pension

was $2637.72. This exceeded the Medicaid Only income cap of $2163. In 2015,

his combined gross monthly income was $2660.72, also in excess of the cap.

Thus, he could not qualify for the Medicaid Only program, and made application

to the Medically Needy Program. The Medically Needy Program also had a

resources cap of $4000. N.J.A.C. 10:70-5.1(a).

      When M.P. applied for the Medically Needy Program in October 2014, it

covered nursing facility services. See N.J.A.C. 10:71-4.11(h). Effective on

December 1, 2014, New Jersey amended its Medicaid State Plan to remove

nursing facility benefits from the Medically Needy Program, replacing it with

Qualified Income Trusts (QIT), which allowed individuals to avoid counting

certain income when determining financial eligibility for Medicaid. See 42

U.S.C. §1396p(d)(4)(B); N.J.A.C. 10:71-4.11(h).     DMAHS advised of the

change stating:

            [t]he State of New Jersey is adopting the use of
            Qualified Income Trusts (QITs) to qualify for the
            Medicaid Only program effective December 1, 2014.
            Beginning December 1, 2014, the Medically Needy
            program will no longer be accepting new applications
            to cover nursing facility services. Individuals who
            were receiving nursing facility benefits through the
            Medically Needy program prior to December 1, 2014

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                                      3
            will be permitted to maintain their coverage as long as
            they remain otherwise eligible and remain in the
            nursing facility.

            [Medicaid Communication No. 14-15.]

      M.P.'s application for Medicaid under the Medically Needy Program

remained pending in 2015 and his attorney prepared a QIT for him. The CCBSS

requested financial statements regarding identified bank accounts and copies of

checks that exceeded $500.

      On January 27, 2016, CCBSS denied M.P.'s application for Medicaid

benefits because his available resources exceeded the $4000 resource cap for the

Medically Needy Program. CCBSS stated "his resources were $2744.18 in a

checking account and $23,682.52 in a trust account totaling $26,426.70 as of

[August 31, 2014]."

      The trust account related to an order to show cause and verified complaint

filed in the Superior Court by M.P.'s daughter, Diana, seeking a fee of $15,500

as compensation for her services to her parents as attorney-in-fact. The court

granted her request in September 2014.        Pursuant to a contract titled an

"irrevocable deposit," an agreement was reached by Diana, in her individual

capacity, Diana as attorney-in-fact for M.P. and his wife, and M.P.'s attorney, to

deposit $15,500 in the attorney's trust account. The funds were to be distributed

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                                        4
to the law office to pay "outstanding legal fees and costs incurred for the legal

services rendered by the [l]aw [o]ffice for [M.P. and his wife]"; to pay Diana

fees awarded from the order to show cause and, if funds remained, to pay

Elmwood Center as "reimbursement for the Medicaid benefits that have been

paid" for M.P. and his wife. With the exception of the law firm, the contract

provided that Diana, M.P. and his wife could not be paid without the consent of

Medicaid.

        M.P.'s attorney requested a fair hearing to challenge the denial of

Medicaid eligibility, contending CCBSS erred by including the $15,500 in his

firms' trust account as an available resource and arguing these monies

represented fees awarded to Diana as attorney-in-fact by the Superior Court. He

also alleged CCBSS's delay in processing the application violated Medicaid

regulations.

        Following conferences with the Administrative Law Judge (ALJ), the

parties agreed to a "stipulation of facts" prior to filing cross-motions for

summary disposition. In the stipulation, M.P. agreed his assets from November

1, 2014, to March 1, 2015, exceeded $4000. 2 By April 1, 2015, however, his

2
    The stipulation of facts provided M.P. owned the following assets:

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                                        5
assets were $3937.31 and they continued to decline through July 1, 2015. The

parties stipulated the legal issue in dispute was limited to "[d]oes the DMAHS

Medicaid Communication No. 14-15, issued on December 19, 2014, apply to

M.P.'s Medically Needy application filed on October 14, 2014?"

      The ALJ's Initial Decision denied M.P.'s request for Medicaid eligibility,

finding that although M.P. was clinically eligible for the program and his income

did not deprive him of eligibility in the Medically Needy Program, M.P.'s

"resources were not successfully spent down until April 2015." After December

1, 2014, the State adopted the use of QIT's to qualify for Medicaid, but M.P.

never "properly funded" the QIT.      The ALJ affirmed the denial of M.P.'s

Medicaid eligibility "because he did not meet the financial requirements for the

Medicaid [n]ursing [h]ome [p]rogram as of August 31, 2014."

      Date                     Amount
      11/01/2014               $13,155.18
      12/01/2014               $12,003.75
      01/01/2015               $8,382.18
      02/01/2015               $6,575.89
      03/01/2015               $5,693.96
      04/01/2015               $3,937.31
      05/01/2015               $2,845.31
      06/01/2015               $2,407.94
      07/01/2015               $1,699.82

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      The Final Agency Decision adopted the ALJ's Initial Decision, finding

that M.P. failed to meet the resources standard of the Medically Needy Program

until April 2015, "by which time [that program] no longer covered nursing home

services." The Director noted the State "received federal authority to cease

covering nursing home services" under the Medically Needy Program but

allowed persons who had income above eligibility standards "to place the excess

income in a QIT . . . and obtain Medicaid benefits." This did not apply to persons

who were receiving nursing home services under the Medically Needy Program

before December 1, 2014. M.P. was not part of that program prior to December

1 and his resources exceeded the $4000 resource cap. After December 1, the

Medically Needy Program no longer covered nursing home services and thus,

M.P. was not eligible under that program. The Director found CCBSS correctly

reviewed M.P.'s Medicaid application to determine if he was eligible for any

other Medicaid programs, but found he was not eligible under the Medicaid Only

program, which was "the only other program that covered nursing home

services."

      On appeal, M.P. contends that although DMAHS terminated the

Medically Needy Program for nursing home services for new applications filed

on or after December 1, 2014, this change did not apply to M.P. whose

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application for Medicaid was filed in October 2014, before the change. He also

argues that CCBSS's failure to timely process M.P.'s Medicaid application

should be taken into account because he might have been able to take steps to

remediate his eligibility problem had he known and then transferred the excess

funds into an irrevocable funeral trust under N.J.A.C. 10:71-4.4. There is no

merit in these arguments.

      We review an agency's decision for the limited purpose of determining

whether its action was arbitrary, capricious or unreasonable. K.K. v. Div. of

Med. Assistance & Health Servs., 453 N.J. Super. 157, 160 (App. Div. 2018).

"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, 25 (2011)). "The burden of demonstrating 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) (quoting In re Arenas,

385 N.J. Super. 440, 443-44 (App. Div. 2006)). We "defer to the specialized or

technical expertise of the agency charged with administration of a regulatory

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system." K.K., 453 N.J. Super. at 160 (quoting In re Virtua-W. Jersey Hosp.

Voorhees for Certificate of Need, 194 N.J. 413, 422 (2008)). However, we are

not bound by the "agency's interpretation of a statute or its determination of a

strictly legal issue." In re Virtua-W., 194 N.J. at 422 (quoting Mayflower Sec.

Co. v. Bureau of Sec., 64 N.J. 85, 93 (1973)).

      "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.) (quoting Estate of

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

217 (App. Div. 2004)), certif. denied, 230 N.J. 393 (2017); see also 42 U.S.C. §

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).

      In New Jersey, the Medicaid program is administered by DMAHS

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

N.J.S.A. 30:4D-1 to -19.5. 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 N.J.A.C. 10:71-3.15; N.J.A.C.

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                                       9
10:71-1.2(a). The local county welfare agencies (CWA) evaluate Medicaid

eligibility. N.J.S.A. 30:4D-7a; N.J.A.C. 10:71-1.5, 2.2(c).

      The Medically Needy Program extended Medicaid benefits to persons

whose income and or resources exceeded the standards for the Medicaid Only

program but whose income was not sufficient to meet their medical expenses.

N.J.A.C. 10:70-1.1(a). No one disputed that M.P. was clinically eligible for the

program. N.J.A.C. 10:70-3.4. However, to qualify, the applicant's resources

must be less than the $4000 resource eligibility limit for an individual in

N.J.A.C. 10:70-5.1(a). M.P. stipulated that his resources exceeded this amount

until April 1, 2015. The record supports that he simply did not qualify for the

program when he applied because his resources exceeded the eligibility cap.

      M.P.'s resources dipped below the eligibility resource level on April 1,

2015, but by that time, the Medically Needy Program no longer was available

for nursing home services. M.P. contends that his application was not a "new"

application filed after December 1, 2014, and therefore he argues it should have

been grandfathered into the program once his resources were under $4000.

      M.P. cites no authority for this. The State amended its Medicaid plan

effective on December 1, 2014, to remove nursing facility benefits from the

Medically Needy Program, but provided that the medically needy could apply

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                                      10
for, and establish, Medicaid eligibility through the use of a QIT. DMAHS's

Communication No. 14-15 made clear that unless a person was receiving

Medicaid under the Medically Needy Program by December 1, 2014,

reimbursement for nursing home expenses would no longer be available under

the plan. The State must conform with its State plan to receive available federal

financial participation. Harris, 448 U.S. at 301. DMAHS was not arbitrary,

unreasonable or capricious in denying eligibility to M.P. after December 1,

2014, because he was not receiving Medicaid benefits at that time and the

program was no longer available for these type of expenses.

      M.P. stipulated to his income and resources. DMAHS was not acting in

an arbitrary, capricious or unreasonable manner by relying on the stipulations

made by the parties. 3    "Agencies are well within their authority to adopt

stipulations as fact-finding tools, as long as they evaluate the stipulations and

the parties have had an opportunity to argue against." In re Pub. Serv. Elec. &

Gas Co.'s Rate Unbundling, 330 N.J. Super. 65, 111 (App. Div. 2000). M.P.'s

counsel signed the stipulation which appears to have been prepared by his office.

3
  In light of the stipulation, we have no need to determine whether the $15,500
in the attorney trust account was a countable resource. Counsel for M.P. argues
these funds were not available for M.P. because of the irrevocable deposit, but
all of these funds were paid to that law firm for legal fees that were incurred by
M.P. and his wife for this case.
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                                       11
      CCBSS's evaluation of M.P.'s application for benefits exceeded the

processing time set forth in DMAHS's regulations. See N.J.A.C. 10:70-2.1(d)(1)

(providing with exceptions, that disposition is to be in thirty days). M.P.'s

attorney claims he would have established an irrevocable funeral trust under

N.J.A.C. 10:71-4.4 had he known that CCBSS would deny his application based

on excess available resources. There was nothing, however, that prevented this

during the time the application was pending with CCBSS. There also was no

evidence that CCBSS's delay was based on anything other than the need for

additional financial information.

      CCBSS reviewed M.P.'s eligibility for other programs, including the

Medicaid Only program that covered nursing home services, but his income

exceeded the eligibility amount. The ALJ found that M.P.'s QIT, prepared in

2015, "was never properly funded." Counsel did not argue otherwise. We do

not know if M.P. would qualify were the QIT properly funded.

      After carefully reviewing the record and the applicable legal principles,

we conclude that M.P.'s further arguments are without sufficient merit to warrant

discussion in a written opinion. R. 2:11-3(e)(1)(E).

      Affirmed.

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