Court Opinion

ID: 4429864
Source: CourtListenerOpinion
Date Created: 2019-08-20 19:31:38.013807+00
Date Added: 2024-06-11T14:58:19.780133
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NOT FOR PUBLICATION WITHOUT THE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-4385-16T4

C.F.J.,

          Petitioner-Appellant,

v.

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

     Respondents-Respondents.
_________________________________

                    Submitted October 23, 2018 – Decided December 11, 2018

                    Before Judges Yannotti and Rothstadt.

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

                    SB2 Inc., attorneys for appellant (John P. Pendergast
                    and Laurie M. Higgins, on the briefs).

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

PER CURIAM

      C.F.J. appeals from a final administrative decision of the Director of the

Division of Medical Assistance and Health Services (DMAHS), which upheld

the denial of her applications for Medicaid benefits because she failed to submit

certain records required to verify her eligibility for benefits. We affirm.

                                        I.

      In June 2014, C.F.J. was admitted to a nursing home in Jersey City. In

August 2014, an application for Medicaid benefits was submitted on C.F.J.'s

behalf to the Hudson County Board of Social Services, the county welfare

agency (CWA). On September 12, 2014, the CWA requested that C.F.J. submit:

(1) her Direct Express debit card statements from August 2009 to August 2014;

(2) proof that the nursing home is receiving C.F.J.'s social security benefits; (3)

a personal-needs accounting by the nursing home; and (4) power-of-attorney

documentation.    On October 3, 2014, the CWA denied C.F.J.'s application

because she had not submitted the requested Direct Express debit card

statements and the power-of-attorney documents.

      In December 2014, another application for Medicaid benefits was

submitted on behalf of C.F.J. to the CWA. On February 23, 2015, the CWA

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again requested that C.F.J. submit the aforementioned Direct Express debit card

statements and a physician's certification. On March 4, 2015, the CWA denied

the application because C.F.J. had not provided the requested information.

      C.F.J.'s representative challenged the denials of benefits and requested a

hearing.   The DMAHS thereafter transmitted the matter to the Office of

Administrative Law (OAL) for a hearing before an Administrative Law Judge

(ALJ). In May 2015, C.F.J.'s attorney provided the ALJ with copies of some

Direct Express statements.    The CWA noted, however, that C.F.J. had not

submitted all of the Direct Express statements it had requested.

      In June 2015, C.F.J.'s attorney issued a subpoena for the missing records

to Comerica Bank (Comerica), the issuer of the Direct Express card. On June

25, 2015, C.F.J.'s attorney provided the ALJ with copies of the Direct Express

statements for January 2012 through August 2012. In a letter provided in

response to the subpoena, Comerica's analyst asserted that statements for

C.F.J.'s account were only available from August 2011 through August 2014

because the account was inactive prior to August 2011.

      The ALJ filed an initial decision dated August 7, 2015. In the decision,

the ALJ noted that a motion for summary decision had been made. The ALJ

observed that generally the CWA and the applicant both have responsibilities in

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                                       3
the Medicaid application process, and the applicant must assist the CWA in

securing necessary records to determine Medicaid eligibility.

      The ALJ stated that under N.J.A.C. 10:71-2.3(c), the CWA may continue

the application in pending status to afford an applicant additional time to

develop evidence in support of Medicaid eligibility. The ALJ noted that C.F.J.

and her nursing home had not been able to provide the requested Direct Express

statements. According to the ALJ, C.F.J. and the nursing home required the

assistance of an attorney, who eventually was able to obtain the Direct Express

statements after issuing a subpoena.

      The ALJ concluded that the CWA erred by denying the application

because C.F.J. and the nursing home had difficulty obtaining the Direct Express

statements and the records had been provided during the appeal process. The

ALJ vacated the denial of Medicaid benefits and remanded the matter to the

CWA to process C.F.J.'s application.

      The Director of the DMAHS reviewed the ALJ's opinion, and on

September 17, 2015, issued an interim decision on the appeal. The Director

noted that it was not clear from the record which party had filed the motion for

summary decision, and the briefs submitted by the parties did not contain a

statement of material facts. The Director also noted that the parties had not

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                                       4
presented the ALJ with supporting affidavits in support of their respective

arguments. The Director reversed the ALJ's initial decision and remanded the

matter to the OAL for further proceedings "to determine whether the parties

fulfilled their obligations with regard to the Medicaid application process."

      The ALJ conducted the remand hearing and issued another decision dated

January 31, 2017. The ALJ observed that "[t]he CWA is required to verify all

factors related to eligibility, including sources of income and resources.

N.J.A.C. 10:72-2.3(a)." The ALJ stated that Congress had passed legislation

requiring all participating states to implement electronic asset verification

systems (AVS) so that state agencies participating in the Medicaid program

could obtain information regarding the eligibility of applicants for benefits.

      The ALJ also stated that caseworkers for a CWA could obtain information

about a Medicaid applicant using the Public Assistance Reporting Information

System (PARIS).      The ALJ found that if a caseworker could not obtain

information electronically using AVS or PARIS, federal law "requires" the

caseworker to request the information directly from other state and federal

agencies or third-party sources.

      The ALJ observed that federal law "prohibits" caseworkers from requiring

applicants to obtain verifications of information if they are readily available

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                                        5
through an electronic system or from another source. The ALJ stated that under

the applicable federal regulations, state Medicaid agencies have an affirmative

duty to obtain certain information regarding an applicant's eligibility for

Medicaid benefits, and these agencies may not ask applicants to provide

additional information unless it is not available electronically or from other

sources.

      The ALJ found that in this case, the caseworker: (1) did not seek to obtain

C.F.J.'s Direct Express statements electronically through an AVS or PARIS; (2)

did not attempt to obtain this information from a secondary source; and (3) erred

by placing the entire burden of providing this information on C.F.J. The ALJ

concluded that the CWA violated federal and state Medicaid regulations because

it "failed to make any attempt to obtain the verification it needed to process

C.F.J.'s Medicaid applications."    The ALJ reversed the denial of C.F.J.'s

application.

      On April 27, 2017, the Director issued her final decision. The Director

noted that the ALJ found the caseworker was obligated to obtain C.F.J.'s Direct

Express records through an AVS or PARIS, but New Jersey had not

implemented its AVS system until July 2016, which was after the CWA had

denied the applications. The Director nevertheless pointed out that there was a

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                                       6
question as to whether the Direct Express records would even be available

through the AVS system. The Director observed that the Direct Express website

indicates that federal privacy laws prohibit government agencies from obtaining

information about an individual's account without the individual's consent.

      The Director found that there was no evidence that C.F.J. or her

representative made any attempt to obtain the requested Direct Express records

until June 4, 2015, which was well after the motion for summary decision was

presented to the ALJ. The Director found that C.F.J. "would [have been] able

to access her statements and provide them to Hudson County" had she attempted

to do so.

      The Director also noted that pursuant to N.J.A.C. 10:71-2.3(a), CWAs

must determine Medicaid eligibility for elderly applicants within forty-five days

after the application is submitted. The Director stated that the regulation allows

that timeframe to be extended when "exceptional circumstances" prevent the

processing of the application within the prescribed time limits. The Director

stated that "[t]here is simply nothing in the record to demonstrate that there were

exceptional circumstances warranting additional time to provide the requested

verifications."

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                                        7
      The Director concluded that the CWA correctly denied C.F.J.'s

applications for Medicaid benefits because she failed to provide the information

required to verify her eligibility within the time required by regulations. This

appeal followed.

                                       II.

      We note initially that the scope of our review in an appeal from a final

decision of a state administrative agency is limited. Circus Liquors, Inc. v.

Governing Body of Middletown Twp., 199 N.J. 1, 9 (2009). An agency's

decision will not be set aside unless the decision is arbitrary, capricious, or

unreasonable, or lacks fair support in the record. Id. at 9-10; see also In re

Herrmann, 192 N.J. 19, 27-28 (2007). In reviewing the agency's decision, we

consider

            (1) whether the agency's action violates express or
            implied legislative policies, that is, did the agency
            follow the law; (2) whether the record contains
            substantial evidence to support the findings on which
            the agency based its action; and (3) whether in applying
            the legislative policies to the facts, the agency clearly
            erred in reaching a conclusion that could not reasonably
            have been made on a showing of the relevant factors.

            [Circus Liquors, 199 N.J. at 10 (citing Mazza v. Bd. of
            Trs., 143 N.J. 22, 25 (1995)).]

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                                       8
      When considering these factors, we must defer to the agency's "expertise

and superior knowledge of a particular field." Ibid. (quoting Greenwood v. State

Police Training Ctr., 127 N.J. 500, 513 (1992)). Furthermore, deference to an

agency's decision "is particularly appropriate" when the matter involves the

interpretation and application of the agency's own regulations. R.S. v. Div. of

Med. Assistance & Health Servs., 434 N.J. Super. 250, 261 (App. Div. 2014)

(quoting I.L. v. N.J. Dep't of Human Servs., Div. of Medical Assistance &

Health Servs., 389 N.J. Super. 354, 364 (App. Div. 2006)).

      "Medicaid is a federal-state program 'created to provide 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, 217 (App. Div. 2004)

(quoting Mistrick v. Div. of Med. Assistance & Health Servs., 154 N.J. 158, 165

(1998)). States that participate in the Medicaid program must adopt assistance

plans that comply with federal law. Ibid. (citing Harris v. McRae, 448 U.S. 297,

300-01 (1980)). New Jersey has elected to participate in the program, through

the enactment of the Medical Assistance and Health Services Act. N.J.S.A.

30:4D-1 to -42.

      Under the Act and the implementing regulations, a local CWA reviews

applications for Medicaid benefits. N.J.S.A. 30:4D-7(a); N.J.A.C. 10:71-2.2(a);

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                                        9
N.J.A.C. 10:71-3.15. When doing so, the CWA considers an applicant's income

and resources. N.J.A.C. 10:71-4.10(b)(3). The applicant is required to provide

the CWA with verification of his or her resources during a specified "look-back"

period. N.J.A.C. 10:71-4.10. The CWA must process the applications of elderly

applicants within forty-five days, except in unusual or exceptional

circumstances. N.J.A.C. 10:71-2.3(a); 42 C.F.R. § 435.912(c)(3).

                                       III.

      On appeal, C.F.J. first argues that the CWA violated federal law by failing

to obtain her Direct Express debit card statements through an AVS.             We

disagree.

      Federal regulations provide that a state Medicaid agency "must request

and use information relevant to verifying an individual's eligibility for Medicaid

in accordance with § 435.948 through § 435.956 of this subpart." 42 C.F.R. §

435.945(b). State Medicaid agencies must request certain information if such

information is "useful to verifying" an applicant's eligibility for benefits. 42

C.F.R. § 435.948(a). The agency is required to request

             (1) [i]nformation related to wages, net earnings from
            self-employment, unearned income and resources from
            the State Wage Information Collection Agency
            (SWICA), the Internal Revenue Service (IRS), the
            Social Security Administration (SSA), the agencies
            administering the State unemployment compensation

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                                       10
            laws, the State-administered supplementary payment
            programs under section 1616(a) of the Act, and any
            State program administered under a plan approved
            under Titles I, X, XIV, or XVI of the Act; and (2)
            Information related to eligibility or enrollment from the
            Supplemental Nutrition Assistance Program, the State
            program funded under part A of title IV of the Act, and
            other insurance affordability programs.

            [42 C.F.R. § 435.948(a)(1)-(2).]

      The federal regulations further provide that "[t]o the extent that the

information identified in paragraph (a) of this section is available through the

electronic service established in accordance with § 435.949 of this subpart, the

[state Medicaid] agency must obtain the information through such service." 42

C.F.R. § 435.948(b).    A state Medicaid agency may not require additional

verifications when the information is available electronically.     42 C.F.R. §

435.952(c). However, this restriction applies only to the information that the

agency is required to request under 42 C.F.R. § 435.948, 42 C.F.R. § 435.949,

and 42 C.F.R. § 435.956. Ibid.

      Notwithstanding C.F.J.'s arguments to the contrary, the federal regulations

did not require the CWA to obtain C.F.J.'s Direct Express debit card statements

electronically.   As the record shows, when the CWA reviewed C.F.J.'s

applications, New Jersey's AVS was not operational. C.F.J. contends New

Jersey was not in compliance with the federal mandate, which required the State

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                                      11
to establish an AVS by the end of the federal fiscal year 2009, but that is beside

the point. The AVS had not been established and the records could not be

obtained through that source.

      In any event, there is no indication that the CWA could have obtained

C.F.J.'s Direct Express statements through the AVS even if it had been

functioning. As the Director noted in her decision, the Direct Express website

indicates that federal privacy laws may preclude Direct Express from providing

government agencies with information about an individual's account without the

individual's consent.

      Furthermore, as we noted previously, 42 C.F.R. § 435.948 requires state

Medicaid agencies to obtain information about an applicant's wages, net

earnings from self-employment, and unearned income from certain specified

sources, such as the IRS, the SSA, or other federal and state agencies. Bank

records like the Direct Express debit card statements at issue here do not come

within the purview of 42 C.F.R. § 435.948.

      In addition, 42 C.F.R. § 435.949 did not require the CWA to obtain the

Direct Express debit card statements directly from Comerica, the issuing bank.

The regulation requires states to verify information with, or obtain information

from certain federal agencies, if available through an electronic service

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established by the federal government. Ibid. C.F.J.'s bank records were not

available through that source. Moreover, 42 C.F.R. § 435.956 requires state

Medicaid agencies to verify an applicant's citizenship and immigration status

through an electronic service established by the federal government or some

alternative source. The regulation pertains to non-financial information. It does

not apply to an applicant's bank records, such as the Direct Express statements

at issue here.

      Thus, the Director correctly found that C.F.J. had the burden of providing

the Direct Express statements within the time required for the CWA to process

her applications. The CWA properly determined that a review of C.F.J.'s Direct

Express debit card statements was necessary. However, the Direct Express

records were not available through an electronic service, and the CWA was not

required to obtain them directly. The CWA acted consistently with federal and

state Medicaid regulations by requesting C.F.J. to provide the records.

                                      IV.

      Next, C.F.J. argues that the CWA violated state Medicaid regulations by

failing to "assist" her in completing the application. We cannot agree.

      In support of her argument, C.F.J. relies upon N.J.A.C. 10:71-2.10, which

addresses a caseworker's "[c]ollateral investigation" of a Medicaid application.

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                                      13
The regulation states that a collateral investigation consists of "contacts with

individuals other than members of [the] applicant's immediate household, made

with the knowledge and consent of the applicant(s)." N.J.A.C. 10:71-2.10(a).

The regulation also provides that "[t]he primary purpose of [the] collateral

contacts is to verify, supplement[,] or clarify essential information." N.J.A.C.

10:71-2.10(b).

      The regulation therefore indicates that a caseworker may contact certain

individuals to verify information that is deemed essential to the CWA's

eligibility determination, but such contacts may only be made with the

applicant's "knowledge and consent." N.J.A.C. 10:71-2.10(a). The regulation

does not require a caseworker to obtain an applicant's debit card statements

directly from an issuing bank.

      In addition, C.F.J. relies upon N.J.A.C. 10:71-4.2(b)(3), which states that

"[t]he CWA shall verify the existence or nonexistence of any cash, savings[,] or

checking accounts[.]" The regulation also states that "[v]erification shall be

accomplished through contact with financial institutions[.]"         Ibid.   The

regulation provides that at a minimum, "the CWA shall contact those financial

institutions . . . which currently provide or previously provided services to the

applicant." Ibid.

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                                      14
      Therefore, N.J.A.C. 10:71-4.2(b)(3) only requires the CWA to contact

financial institutions to verify the existence of an applicant's accounts. The

regulation does not, however, require a caseworker to obtain copies of any

records directly from a financial institution.

      C.F.J. also relies upon N.J.A.C. 10:71-4.1(d)(3), which provides that

"[t]he CWA shall verify the equity value of resources through appropriate and

credible sources." The regulation also states that "[i]f necessary, the applicant

shall provide written authorization allowing the CWA to secure the appropriate

information." N.J.A.C. 10:71-4.1(d)(3)(i).

      This regulation therefore requires the CWA to verify the equity value of

certain resources, but states that the applicant must provide the necessary

authorization to allow the agency to do so. The regulation does not, however,

require the CWA to obtain records, such as the debit card statements at issue in

this case.

      Accordingly, we reject C.F.J.'s contention that the CWA violated State

Medicaid regulations by failing to "assist" C.F.J complete her application. The

CWA reasonably assisted C.F.J. in completing her application by identifying the

bank statements required and by asking that she provide them. The record shows

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                                       15
that C.F.J. could have obtained the records. Indeed, her own attorney was able

to do so by issuing a subpoena.

                                      IV.

      C.F.J. further argues that in making the final decision on her Medicaid

application, the Director should have considered the Direct Express statements

that her representatives obtained during the pendency of the administrative

appeal and presented to the ALJ. Again, we disagree.

      Here, the issue before the Director was whether C.F.J. had provided the

CWA with the information required to establish her eligibility for Medicaid

benefits in a timely manner. The record shows that C.F.J. failed to present all

of the Direct Express debit card statements the CWA had requested within the

time specified for the CWA to process the applications.

      C.F.J.'s administrative appeal did not extend the time for C.F.J. to submit

the information the CWA had requested, nor did the appeal extend the time

within which the CWA was required to process the applications. The Director

had to decide the administrative appeal based on the information that C.F.J.

presented to the CWA before the CWA issued its decision denying benefits.

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                                      16
      We therefore conclude the Director did not err by deciding the appeal

based on the evidence that C.F.J. and her representatives presented to the CWA

before the CWA denied her applications.

      Affirmed.

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