Court Opinion

ID: 9861102
Source: CourtListenerOpinion
Date Created: 2023-09-24 23:41:11.387888+00
Date Added: 2024-06-11T11:27:13.372108
License: Public Domain

PASHMAN, J.
dissenting.
For the second time this year in a medical assistance case, this Court has needlessly remanded to an administrative agency a case that has only one reasonable disposition. Texter v. Human Services Dept., 88 N.J. 376 (1982). The air purifier at issue here has saved young Michael Dougherty substantial suffering from his severe asthma. It has also saved the State and federal governments several thousand dollars in Medicaid reimbursements. No one disputes these facts. Yet the majority suggests that this Court does not have the authority, or ought not use its authority, to order the State to reimburse Ms. Dougherty for the *13$269 she spent on her son’s air purifier. I disagree. Our authority to reverse unreasonable agency action is clear under our prior cases and is supported by both federal and State regulations. I would order the State to reimburse Ms. Dougherty. I therefore dissent.
No one can question that denial of reimbursement under these circumstances would be unreasonable. Before his mother purchased an air purifier, Michael’s asthma caused him great difficulty and pain. He was subject to acute attacks during which he wheezed, lost his breath and was unable to walk. His condition also necessitated an average of two emergency room visits each month, at a cost to the Medicaid program of $40 per visit. In the two years before the purchase, Michael was hospitalized twice, at a cost to Medicaid of roughly $1,000 each time.1 The air purifier, in contrast,' cost $269. The issue is thus whether Medicaid should fund an air purifier for the Dougherty home, preventing attacks at minimal expense, or whether Michael must await severe attacks in order to receive expensive hospital care. The purpose of N.J.A.C. 10:59-1.6(a)(6), on which the majority relies to deny reimbursement, is to prevent reimbursement for “comfort items” that are not real medical necessities. But there is no dispute here that an air purifier is a medical necessity for young Michael.
The majority all but agrees that a denial of reimbursement in this situation would be unreasonable. The majority recognizes that reimbursement in this instance “would be not only practical but also humane.” Ante at 12. Yet the majority refuses to reverse the denial. I do not believe this Court is powerless to reverse this irrational application of Medicaid regulations.
N.J.A.C. 10:49 — 5.3(b)(4)(ii), in effect at the time of the Dougherty hearing, requires that Medicaid fair hearings consider whether application of the relevant regulations to the particular *14facts of the petitioner’s case would be inequitable or unreasonable.2 The regulation states:
“4. The fair hearing shall include consideration of:
ii. The department’s interpretation of the law and the reasonableness and equitableness of the policies promulgated under law if the claimant is aggrieved by their application to his situation.” [Emphasis added]
Thus, the regulation mandates at least some case-by-case consideration of the application of regulations. The Department, of course, cannot ignore this rule. See State v. Atlantic City Electric Co., 23 N.J. 259, 270 (1957); Rutgers Council v. N.J. Bd. of Higher Education, 126 N.J.Super. 53, 63 (App.Div.1973).
Similarly, federal regulation precludes unreasonable application of State Medicaid regulations. In Monmouth Medical Center v. State, 80 N.J. 299 (1979), this Court held that a regulation which is unreasonable “under the circumstances presented” is “in clear conflict with federal requirements and [therefore] invalid under the Supremacy Clause of the United States Constitution.” Id. at 313.
The majority concedes that the Department is required by regulation to consider whether the application of its regulations to particular situations is reasonable. It is for this reason that the majority remands to the Department.
The issue therefore becomes whether this Court can have any role in reviewing the Department’s determination pursuant to N.J.A.C. 10:49-5.3(b)(4). The majority suggests that if the Commissioner finds that the application of the Medicaid regulations to these facts is not unreasonable, his judgment will stand. Thus, the majority implies that the Commissioner’s decision is unreviewable, despite a clear line of New Jersey cases concluding that unreasonable agency action is to be set aside. As this Court recently stated in Worthington v. Fauver, 88 N.J. 183, 204 (1982),
*15[i]t is firmly settled that arbitrary and capricious action by an administrative or executive agency should be overturned. Henry v. Rahway State Prison, 81 N.J. 571, 580 (1980); Mayflower Securities v. Bureau of Securities, 64 N.J. 85, 93 (1973); Campbell v. Civil Service Dept., 39 N.J. 556, 562 (1963).
There is no question that the Department’s decision in this case on remand will be subject to judicial review for reasonableness.
The majority nonetheless adheres to the formality of remanding to the Department. In my view, a remand is totally unnecessary. A Department decision reaffirming its denial of reimbursement would be irrational. I cannot imagine a more open-and-shut case of unreasonable agency action than denying reimbursement in this case. Michael’s air purifier not only improved his health, but saved the State money as well. A Department decision affirming its denial of reimbursement would have to be set aside.
Instead of remanding to the Department, only to again reverse the Department if it reaches that result, we should simply hold that reimbursement is mandated by law. In this regard, Monmouth Medical Center is precisely on point. In that case, we dealt with a regulation which unequivocally denied Medicaid reimbursement to hospitals for patients awaiting placement in a skilled nursing facility, thereby giving hospitals incentive to place patients in lesser care facilities. We found the regulation generally reasonable but held that it “paints with too broad a brush” and thus is unreasonable as applied to hospitals unable to arrange a placement through no fault of their own. 80 N.J. at 310. We held that the Department “must exercise discretion” to grant reimbursement in those circumstances. Id. at 311. Instead of remanding, we ordered reimbursement on the basis of the facts in that case. I would follow the same approach here.
According to the majority, only the agency is qualified or legally empowered to decide whether to apply its regulations rigidly or to waive them in appropriate instances. However, contrary to what the majority states, my position in no way seeks to increase the power of the judiciary at the expense of agencies. In fact, it is based on firmly established principles of administrative law.
*16The majority recognizes that the Department’s own regulation mandates consideration of whether application of its rules to the particular facts of this case is reasonable and equitable. N.J.A.C. 10:49-5.3(b)(4). The Department is not free to ignore that regulation. That is why the majority has ordered a remand. The Department’s decision on remand, like all other agency decisions, is subject to judicial review for reasonableness. On these basic principles of administrative law, we are in agreement.
The majority concludes that an agency decision denying reimbursement should be upheld on appeal. They argue that such a result would not be unreasonable because there are good reasons of economy and efficiency in the administration of statutes to enforce rigid rules of general application rather than using case-by-case determination. This argument fails to give- any force to the regulation which requires the agency to make particularized determinations in certain cases. Although it may be reasonable in some cases for an agency to preclude any case-by-case determinations, this agency has not done so. It has adopted a regulation that places a binding duty on it to determine whether its rigid rules are applicable to certain specific cases.
Thus, the majority’s discussion of the dangers of ad hoc determinations is inapposite. That issue has been decided by the Department. It has determined that requiring consideration of the equities of particular cases best serves to direct medical assistance to those who need it. I defer to that judgment. So apparently does the majority since it remands the case for a determination “of whether the rule is reasonable or equitable as applied to Michael Dougherty’s situation.” Ante at 9.
Nor am I persuaded by the majority’s fear that setting aside regulations when their application would be unreasonable will necessitate ad hoc determinations in every case. Most applications of a regulation will be routine, clearly fitting within both the fact situation intended to be covered by the regulation and *17the policy underlying it. These applications of the rules will rarely be challenged. Only in a minority of cases will there even be a question as to the application of the regulation.
The real issue is not the requirements of N.J.A.C. 10:49-5.-3(b)(4). Those are unambiguous. Nor is the issue the power of this Court to reverse unreasonable agency action. That is conceded. This leaves only the reasonableness of this particular denial of reimbursement and the necessity of a remand on these facts as possible points of dispute. On these facts, a failure by the Department to waive the rule pursuant to N.J.A.C. 10:49-5.-3(b)(4) would be arbitrary and unreasonable. In fact, I doubt that the majority really disputes the unreasonableness of denying reimbursement in this case. They concede that reimbursement “would be not only practical but also humane.” Ante at 12. I could not have said it better. If ever it would be arbitrary and capricious not to waive a regulation, this is such a case.
Why then the remand? The situation admits of only one answer. The majority hopes the Department will reverse itself, thereby reaching the correct result without giving the appearance of an exercise of judicial power. But this solution requires further hearings by the Department, unnecessarily diverting monies better spent for medical assistance to the poor. Rather than follow the empty formality of remanding, only to reverse if the Department fails to waive the rule, we should simply order reimbursement as we did in Monmouth Medical Center. The majority opinion does not address our holding in that case.
The issue dividing my position from- that of the majority is really minor. My dissent in no way seeks to extend judicial power beyond its well-established parameters. I ask only a common-sense application of the Department’s own rules, N.J. A.C. 10:49-5.3(b)(4), and of our traditional supervision of agency action.
Reason suggests that the State should not spend more money to create more suffering. Yet the majority finds it necessary to *18defer to the expertise of the Department of Human Services in this case. In my view, this is a poor case for deference to rigid rule application. Michael Dougherty’s air purifier has improved his health dramatically and saved the government money in the process. There is no question that for Michael the air purifier was a medical necessity. There also should be no question of Medicaid reimbursement. Humanity and economy demand it. I am surprised that this Court does not.
For modification and remandment —Chief Justice WILENTZ and Justices CLIFFORD, SCHREIBER, HANDLER, POLLOCK and O’HERN — 6.
Dissenting — Justice PASHMAN — 1.

lronically, Michael’s hospital treatment consisted of placing him in a croup tent, which contained an air purifier.

N.J.A.C. 10:49-5.3(b)(4)(ii) has since been repealed. 12 N.J.R. 561, 581 (1980); 13 N.J.R. 1, 17 (1981).