Court Opinion

ID: 4695946
Source: CourtListenerOpinion
Date Created: 2021-06-16 14:08:19.997288+00
Date Added: 2024-06-11T08:05:37.792123
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NOT FOR PUBLICATION WITHOUT THE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-0433-19

G.M.,

          Petitioner-Appellant,

v.

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

     Respondents-Respondents.
____________________________

                   Argued May 26, 2021 – Decided June 16, 2021

                   Before Judges Whipple and Firko.

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

                   Michael Heinemann argued the cause for appellant.

                   Mark D. McNally, Deputy Attorney General, argued
                   the cause for respondent Division of Medical
                   Assistance and Health Services (Gurbir S. Grewal,
                   Attorney General, attorney; Melissa H. Raksa,
            Assistant Attorney General, of counsel; Mark D.
            McNally, on the brief).

PER CURIAM

      Petitioner G.M. 1 appeals from the final agency decision of respondent

New Jersey Department of Human Services, Division of Medical Assistance and

Health Services (Division) denying her Medicaid application. We affirm.

      The record in this case reveals petitioner was eighty-three years old at the

relevant time, suffered from dementia, and was permanently institutionalized at

a long-term skilled nursing facility. Petitioner's nephew, B.J., held petitioner's

power-of-attorney (POA). On January 20, 2018, the Camden County Board of

Social Services (CWA) received petitioner's application for Medicaid benefits.

The application included a form designating Senior Planning Services (SPS) as

petitioner's designated authorized representative (DAR) for Medicaid purpo ses.

Naomi Steinmetz of SPS was named as petitioner's DAR.

      On October 9, 2018, the CWA sent a letter to Steinmetz requesting

verification of financial information regarding ten specific items. The CWA

advised in its letter that petitioner's application would remain in pending status

1
   We learned during oral argument that regrettably, petitioner passed away on
December 19, 2019. On May 28, 2021, we granted counsel for G.M.'s motion
to substitute her estate as appellant nunc pro tunc to May 26, 2021.
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until October 24, 2018, to allow time for the documentation to be provided. Item

number five requested verification of the source and purpose of recurring

transactions appearing on petitioner's 2013 bank statements labelled, "ACH

DEPOSIT UNITEDCAPITALCRE UNITED CAP" (UCC), in the amount of

$300. The transactions included debits and credits to and from petitioner's

account.

      On October 25 and November 26, 2018, petitioner's DAR provided

additional information for nine out of the ten items listed in the CWA's October

9, 2018 letter. However, item number five—the UCC transactions—remained

unresolved. Item number four was a request for information verifying a set of

recurring transactions "ACH DEBIT MILTONBOUHOUTSOS" in the amount

of $180. The DAR forwarded a letter from Milton Bouhoutsos, an attorney-at-

law, outlining the background of the transactions and explaining the debits

against petitioner's account were applied to satisfy previously incurred debts.

      Steinmetz's November 26, 2018 letter noted petitioner's family believed

the UCC transactions were part of a scam that she was a victim of. In addition,

Steinmetz provided unauthenticated screenshots indicating UCC was no longer

in business, and therefore, she was unable to provide formal documentation

detailing petitioner's UCC transactions.

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      On November 28, 2018, Deena Teichman, Director of Operations at SPS,

sent an email to the CWA claiming SPS hit a "dead end" in obtaining documents

regarding the UCC transactions and queried as to "what else [SPS] should/could

do"? On November 30, 2018, petitioner was notified by the CWA that her

application for Medicaid benefits was denied because she failed to provide

sufficient verification of the UCC transactions.

      Steinmetz requested a fair hearing, and the matter was transferred to the

Office of Administrative Law (OAL) as a contested case. At the May 13, 2019

fair hearing, Michelle Acevedo appeared on behalf of the CWA and Abe

Jankelovits of SPS appeared on behalf of petitioner. Acevedo admitted the

CWA took longer than the proscribed time to review petitioner's application due

to understaffing and an overwhelming caseload.         And, candidly, Acevedo

acknowledged that the UCC was a defunct collection agency. The CWA took

the position that this matter constitutes a "gray area," but it needed "something

more specific, an agreement, a billing summary, anything that could really show

what those payments were for."

      Steinmetz did not testify at the hearing. B.J. testified petitioner was

disorganized and that he did not become her POA until 2017; therefore, he had

no information about the UCC transactions or her finances prior to 2017.

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Following the hearing, the SPS representative provided a May 16, 2019 letter

from Bouhoutsos advising he had no record of any transactions involving

petitioner and the UCC transactions. The parties submitted written summations.

      On July 12, 2019, the ALJ issued an initial decision affirming the denial

of petitioner's Medicaid eligibility, finding that petitioner "failed to

demonstrate, by a preponderance of the evidence, that appropriate verifications

were submitted in a timely fashion to the [CWA], regarding the UCC

transactions." The ALJ further commented that there was a lack of testimony

from petitioner's POA as to any steps or efforts undertaken to determine the

nature of the UCC transactions.

      In addition, the ALJ noted "[n]othing was presented as to additional

efforts made by the DAR to obtain further information about [the] UCC

[transactions], except for a subsequent letter from an attorney, which was dated

after testimony was taken in this matter." The ALJ also found that although the

CWA "admittedly did not process [petitioner's] Medicaid application in a timely

fashion, apparently due to understaffing," the CWA "did extend additional time

to [Steinmetz] to provide supplemental verifications regarding multiple issues."

      On August 16, 2019, the Division issued its final administrative decision

adopting the ALJ's initial decision. The Assistant Commissioner emphasized

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the information provided regarding the UCC transactions was "circumstantial at

best" and highlighted discrepancies in the screenshots and documentation

provided by the DAR attempting to substantiate petitioner's argument that UCC

was no longer doing business. In conclusion, the Assistant Commissioner found

petitioner failed to corroborate the nature of the transactions or their source.

This appeal followed.

      Petitioner argues that: (1) the subject verifications were not required under

Medicaid regulations for a determination of Medicaid eligibility; (2) the CWA's

ten-month delay in receiving G.M.'s application was an egregious violation of

Medicaid regulations and prejudiced her ability to obtain the verifications; and

(3) the Division's denial of Medicaid benefits was arbitrary and capricious since

the verifications were impossible to obtain, and the CWA refused to provide

guidance or assistance as required by Medicaid regulations. We disagree.

      Appellate review of the Division's final agency action is limited. K.K. v.

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

2018). We "defer to the specialized or technical expertise of the agency charged

with administration of a regulatory system." In re Virtua-West Jersey Hosp.

Voorhees for a Certificate of Need, 194 N.J. 413, 422 (2008). "[A]n appellate

court ordinarily should not disturb an administrative agency's determinations or

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                                        6
findings unless there is a clear showing that (1) the agency did not follow the

law; (2) the decision was arbitrary, capricious, or unreasonable; or (3) the

decision was not supported by substantial evidence." Ibid.

      A presumption of validity attaches to the agency's decision. See Brady v.

Bd. of Rev., 152 N.J. 197, 210 (1997). The party challenging the validity of an

agency's decision has the burden of showing that it was arbitrary, caprici ous, or

unreasonable. J.B. v. N.J. State Parole Bd., 444 N.J. Super. 115, 149 (App. Div.

2016) (quoting In re Hermann, 192 N.J. 19, 27-28 (2007)). "Deference to an

agency decision is particularly appropriate where interpretation of the Agency's

own regulation is in issue." I.L. v. Div. of Med. Assistance & Health Servs.,

389 N.J. Super. 354, 364 (App. Div. 2006). However, "an appellate court is 'in

no way bound by the agency's interpretation of a statute or its determination of

a strictly legal issue.'" R.S. v. Div. of Med. Assistance & Health Servs., 434

N.J. Super. 250, 261 (App. Div. 2014) (quoting 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)).

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

"medical assistance to the poor at the expense of the public."          Estate of

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

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                                        7
217 (App. Div. 2004) (quoting Mistrick v. Div. of Med. Assistance & Health

Servs., 154 N.J. 158, 165 (1998)); see also 42 U.S.C. § 1396-1. Although a state

is not required to participate, once it has been accepted into the Medicaid

program it must comply with the Medicaid statutes and federal regulations. See

Harris v. McRae, 448 U.S. 297, 301 (1980); United Hosps. Med. Ctr. v. State,

349 N.J. Super. 1, 4 (App. Div. 2002); see also 42 U.S.C. § 1396a(a) and (b).

      The State must adopt "'reasonable standards . . . for determining eligibility

for . . . medical assistance . . . [that are] consistent with the objectives' of the

Medicaid program[,]" Mistrick, 154 N.J. at 166 (first alteration in original)

(quoting L.M. v. Div. of Med. Assistance & Health Servs., 140 N.J. 480, 484

(1995)), and "provide for taking into account only such income and resources as

are . . . available to the applicant." N.M. v. Div. of Med. Assistance & Health

Servs., 405 N.J. Super. 353, 359 (App. Div. 2009) (quoting Wis. Dep't of Health

& Family Servs. v. Blumer, 534 U.S. 473, 479 (2002)); see also 42 U.S.C. §

1396a(a)(17)(A)-(B).

      New Jersey participates in the federal Medicaid program pursuant to the

New Jersey Medical Assistance and Health Services Act, N.J.S.A. 30:4D-1 to -

19.5. Eligibility for Medicaid in New Jersey is governed by regulations adopted

in accordance with the authority granted by N.J.S.A. 30:4D-7 to the

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                                         8
Commissioner of the Department of Human Services (DHS). The Division is

the agency within the DHS that administers the Medicaid program. N.J.S.A.

30:4D-5, -7; N.J.A.C. 10:49-1.1. Accordingly, the Division is responsible for

protecting the interests of the New Jersey Medicaid Program and its

beneficiaries. N.J.A.C. 10:49-11.1(b).

      In this State, in order to qualify for Medicaid benefits, an applicant's

resources cannot exceed $2000. N.J.A.C. 10:71-4.5(c). Resources are defined

as:

            any real or personal property which is owned by the
            applicant (or by those persons whose resources are
            deemed available to him or her, as described in
            N.J.A.C. 10:71-4.6) and which could be converted to
            cash to be used for his or her support and maintenance.
            Both liquid and non[-]liquid resources shall be
            considered in the determination of eligibility, unless
            such resources are specifically excluded under the
            provisions of N.J.A.C. 10:71-4.4(b).

            [N.J.A.C. 10:71-4.1(b).]

      The regulations explain that a resource must be "available" to be

considered by the CWA in determining an applicant's eligibility. N.J.A.C.

10:71-4.1(c). A resource is deemed "available" when: "1. [t]he person has the

right, authority or power to liquidate real or personal property or his or her share

of it; 2. [r]esources have been deemed available to the applicant ([pursuant to

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                                         9
N.J.A.C. 10:71-4.6]); or 3. [r]esources arising from a third-party claim or action"

under certain circumstances. Ibid.

      The value of the resource is "defined as the price that the resource can

reasonably be expected to sell for on the open market in the particular

geographic area minus any encumbrances (that is, its equity value)." N.J.A.C.

10:71-4.1(d). Importantly, the regulation explains that "[t]he CWA shall verify

the equity value of resources through appropriate and credible sources."

N.J.A.C. 10:71-4.1(d)(3) (emphasis added). A determination regarding resource

eligibility is made "as of the first moment of the first day of each month."

N.J.A.C. 10:71-4.1(e). The CWA may deny eligibility for Medicaid if the

applicant fails to timely provide verifying information or "verifications."

N.J.A.C. 10:71-2.2(e); N.J.A.C. 10:71-3.1.

      In order to discourage an applicant from disposing of assets for the sole

purpose of becoming eligible for Medicaid nursing home facility services,

regulations impose a period of ineligibility to an applicant receiving an

institutional level of benefits who transfers resources for less than fair market

value during a sixty-month look-back period.          N.J.A.C. 10:71-4.10(a)(2).

Transfers made within the look-back period "are presumed to be improperly

motivated to obtain Medicaid eligibility." W.T. v. Div. of Med. Assistance and

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                                       10
Health Servs., 391 N.J. Super. 25, 36 (App. Div. 2007). However, an applicant

retains the right to rebut the presumption.       N.J.A.C. 10:71-4.10(j).     If the

presumption is not rebutted, the State imposes a transfer penalty, calculating the

period of ineligibility following a transfer of an available resource. N.J.A.C.

10:71-4.10(b)(4) and 10:71-4.10(c).2 Where an applicant’s resource statements

are questionable, or there is reason to believe the identification of resources is

incomplete, the CWA can request verification of the applicant’s resource

statements through one or more third parties. N.J.A.C. 10:71-4.1(d)(3).

      Applicants must provide the CWA with the information necessary to

enable it to determine if the applicant is eligible for benefits. Further, applicants

must "[a]ssist the CWA in securing evidence that corroborates his or her

statements," N.J.A.C. 10:71-2.2(e)(2), and the applicant must do so from

pertinent sources. See N.J.A.C. 10:71-3.1(b). The CWA is permitted to deny

an application if the applicant fails to timely provide verifying information or

"verifications." See N.J.A.C. 10:71-2.2(e); -2.12; -3.1(b).

      We address the documents and information the CWA requested the

petitioner provide. The CWA requested petitioner provide source and purpose

2
  "The transfer penalty is calculated by dividing the uncompensated portion of
the transferred resource by the monthly average cost of nursing home care in
this State." W.T., 391 N.J. Super. at 37.
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                                        11
verification for the recurring debit and deposit transactions from UCC appearing

on her bank statements from April 2, 2013, through December 2, 2013.

Steinmetz merely submitted webpage screen shots ostensibly taken from a

Facebook page, the Better Business Bureau, internet search results, and a copy

of UCC's former website.        Petitioner's former attorney could not provide

answers to the CWA's inquiry. As the ALJ noted in her decision, the CWA

"cannot read between the lines and hypothesize what was the purpose of the

[UCC] debit and deposit transactions."       Because the CWA is tasked with

ensuring that applicants have below $2000 in resource levels, and petitioner's

proof of eligibility was inconclusive, the Division's decision to deny petitioner's

application was not arbitrary, capricious, or unreasonable.

      Moreover, we reject petitioner's argument that the UCC verifications were

unnecessary under the Medicaid regulations for a determination of eligibility.

"The CWA shall verify the equity value of resources through appropriate and

credible sources. . . . If the applicant's resource statements are questionable, or

there is reason to believe the identification of resources is incomplete, the CWA

shall verify the applicant's resource statements through one or more third

parties." N.J.A.C. 10:71-4.1(d)(3). This condition is not waivable and was not

satisfied here by petitioner.

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                                       12
      Petitioner claims she complied with N.J.A.C. 10:71-2.2(d)(2) by assisting

the CWA in trying to verify the account. She argues the CWA did not assist her

as required by N.J.A.C. 10:71-2.2(c).         However, although the CWA is

responsible for assisting an applicant, the regulations did not create an

affirmative duty upon the CWA to procure all documents necessary to complete

the application, especially when petitioner had Steinmetz as her representative.

      The regulations establish timeframes to process a Medicaid application,

with the "[d]ate of effective disposition" being the "effective date of the

application" where the application has been approved.             N.J.A.C. 10:71-

2.3(b)(1). "The maximum period of time normally essential to process an

application for the aged is [forty-five] days." N.J.A.C. 10:71-2.3(a). New

Jersey regulations recognize:

            there will be exceptional cases where the proper
            processing of an application cannot be completed
            within the [forty-five day] period. Where substantially
            reliable evidence of eligibility is still lacking at the end
            of the designated period, the application may be
            continued in pending status. In each such case, the
            [CWA] shall be prepared to demonstrate that the delay
            resulted from one of the following:

                  ....

            (2) A determination to afford the applicant, whose
            proof of eligibility has been inconclusive, a further

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                                       13
            opportunity to develop additional evidence of
            eligibility before final action on his or her application.

            (3) An administrative or other emergency that could not
            reasonably have been avoided; or

            (4) Circumstances wholly outside the control of both
            the applicant and the CWA.

            [N.J.A.C. 10:71-2.3(c).]

      Petitioner's application was made in January 2018 and was still pending

in November 2018. The record shows petitioner's DAR was granted extensions

of time to submit sufficient verification of the UCC transactions in dispute. The

ALJ found the CWA was understaffed and was processing an "overwhelming"

number of applications that led to the delay in reviewing petitioner's application.

Given the deference we accord the ALJ's findings, and having determined that

they are supported by sufficient credible evidence in the record, we conclude the

decision was neither arbitrary nor unreasonable. We discern no basis to disturb

the decision on this score.

      Here, the Division rendered its final decision after interpreting its own

regulations. We may reverse only upon a showing that the Division acted

arbitrarily, capriciously, or unreasonably. "Deference to an agency decision is

particularly appropriate where interpretation of the Agency's own regulation is

in issue." R.S., 434 N.J. Super. at 261 (quoting I.L., 389 N.J. Super. at 364). It

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is not arbitrary, capricious, or unreasonable for the Division to deny an

application that did not have the information necessary to verify eligibility after

giving extensions.

      Affirmed.

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