Court Opinion

ID: 4551479
Source: CourtListenerOpinion
Date Created: 2020-07-28 14:09:17.165301+00
Date Added: 2024-06-11T13:01:08.431136
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                 APPROVAL OF THE APPELLATE DIVISION

                                  SUPERIOR COURT OF NEW JERSEY
                                  APPELLATE DIVISION
                                  DOCKET NO. A-5749-17T1

D.C. and M.L.,
                                    APPROVED FOR PUBLICATION
     Petitioners-Appellants,
                                            July 28, 2020

v.                                      APPELLATE DIVISION

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

     Respondents-Respondents.
______________________________

           Argued February 12, 2020 – Decided July 28, 2020

           Before Judges Koblitz, Whipple and Gooden Brown.

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

           Joshua M. Spielberg argued the cause for appellants
           (Legal Services of New Jersey, attorneys; Joshua M.
           Spielberg, Kristine Marietti Byrnes and Melville D.
           Miller, on the briefs).

           Shereen Youssef, 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; Jacqueline R.
           D'Alessandro, Deputy Attorney General, on the brief).
      The opinion of the court was delivered by

GOODEN BROWN, J.A.D.

      Petitioners D.C. and M.L., a married couple, appeal from the June 27,

2018 final agency decision of the New Jersey Department of Human Services

(DHS), Division of Medical Assistance and Health Services (DMAHS),

adopting the decision of the Administrative Law Judge (ALJ).       The ALJ

determined that the Essex County Board of Social Services (Board) properly

terminated the couple's Medicaid benefits under the New Jersey FamilyCare

Aged, Blind, and Disabled (ABD) Program, 1 and complied with all applicable

requirements, including providing timely notice that their benefits would

terminate effective August 31, 2017.

      On August 30, 2017, petitioners applied for the Specified Low-Income

Medicare Beneficiaries (SLMB) Program.       Although they qualified for the

1
   DMAHS's website explains that the ABD Programs are multiple programs
for people who need help in the community. N.J. Dep't of Health & Human
Servs., Div. of Med. Assistance & Health Servs., The NJ FamilyCare Aged,
Blind,                          Disabled                          Programs,
https://www.state.nj.us/humanservices/dmahs/clients/medicaid/abd/      (last
visited July 6, 2020). In some cases, aged, blind, and disabled Medicaid
enrollees receive medical coverage. In others, aged, blind, and disabled
Medicaid enrollees, who are also low-income Medicare recipients, receive
assistance in paying their monthly Medicare premiums, co-pays and
deductibles. U.S. Centers for Medicare & Medicaid, Your Medicare Costs,
https://www.medicare.gov/your-medicare-costs/get-help-paying-costs     (last
visited July 6, 2020).

                                                                    A-5749-17T1
                                       2
SLMB Program, they were advised their application could not be processed

until the ABD Program benefits were terminated. While petitioners do not

dispute that they no longer qualify for the ABD Program, they contend

DMAHS erred by failing to screen them for other Medicaid programs,

including the SLMB Program, prior to terminating their ABD Program

benefits, and by failing to transfer them from the ABD to the SLMB Program

with no gap in coverage. Because State Medicaid agencies are required under

federal regulations to assess beneficiaries' eligibility for other Medicaid

programs before terminating benefits, we agree that petitioners should have

been transferred to the SLMB Program with no gap in coverage. Accordingly,

we reverse.

                                         I.

     The pertinent facts are undisputed. D.C. is disabled and received $810

per month in Social Security Disability (SSD) benefits. M.L. is also disabled

and received $706 per month in SSD benefits. Because the couple resided

with their son, based on their household size and combined income, pursuant

to N.J.A.C. 10:72-4.1, they qualified for the ABD Program for those at or

below 100% of the Federal Poverty Level (FPL).       ABD Program benefits

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supplemented the couple's Medicare Part B premium payment 2 by $134 per

month. However, once the couple's son turned eighteen years old in April

2017, and began attending college out-of-state in August 2017, their household

was no longer considered a household of three and their income then exceeded

the qualifying amount for the ABD Program under N.J.A.C. 10:72-4.4.

      As a result, the Board sent the couple termination notices dated July 19,

2017, advising them that their benefits would be terminated effective August

31, 2017,3 and the Social Security Administration (SSA) notified the couple

that because the State of New Jersey would no longer pay their Medicare Part

B premiums, $134 would be deducted from their SSD checks.4 The couple

requested a fair hearing, resulting in DMAHS transferring the matter to the

Office of Administrative Law (AOL) and continuing benefits pending

2
  Medicare Part B covers medical services and supplies, including outpatient
care, preventative services, ambulance services, and durable medical
equipment. U.S. Centers for Medicare & Medicaid, What Medicare Covers,
What Part B Covers, https://www.medicare.gov/what-medicare-covers/what-
part-b-covers (last visited July 4, 2020).
3
  Because the couple did not receive earlier termination notices, the Board was
directed by DMAHS to reinstate their benefits until they were properly
notified.
4
   Although SSA was notified about the earlier improper terminations and
reinstatement of benefits, the SSA reimbursements did not occur for several
months, depriving petitioners of needed income in the interim.

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disposition. See N.J.S.A. 52:14B-1 to -15; N.J.S.A. 52:14F-1 to -13. See also

N.J.A.C. 10:49-10.4.

      Prior to the hearing, on August 30, 2017, petitioners submitted an

application for the SLMB Program to the Division of Aging Services

(Division), another Division within DHS.       Although it is undisputed that

petitioners qualify for the SLMB Program, which allows states to pay

Medicare Part B premiums for low-income Medicare beneficiaries like

petitioners, the Division denied the application, stating it could not be

considered until petitioners were terminated from the ABD Program.           See

N.J.A.C. 10:72-4.1(b) ("Effective January 1, 1995," income limits for SLMB

Program beneficiaries "will be set at 120 percent of the [FPL].").

      When the couple's legal representative, Nancy Nichols, a paralegal for

Legal Services of New Jersey (LSNJ), inquired whether the agency could

"guarantee . . . SLMB coverage [would] begin on December 1[, 2017]," if the

ABD Program benefits were "terminated" on "November 30, [2017]," the

agency representative responded in writing:

            I have everything needed to process both . . . cases for
            SLMB and yes they are both eligible based on income
            and assets. NO I cannot and will not guarantee that
            their SLMB coverage would begin on December 1st.
            First we need the Medicaid termination to go through
            before I can even process it and secondly Social
            Security and Medicare would have to update their
            records which is out of my hands, so I am not in a

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            position to say it would begin December 1st. The only
            thing I can say, is once the termination from Medicaid
            is finalized[,] I can process it for SLMB. If they have
            premiums deducted from Social Security they would
            be eligible to be reimbursed by Social Security.

      The OAL hearing was conducted on November 27, 2017, during which

petitioners conceded they no longer qualified for the ABD Program. However,

petitioners asserted DHS failed to comply with Medicaid regulations requiring

"agencies that administer or process Medicaid applications . . . to also screen

for other programs" prior to terminating benefits. According to petitioners,

they should have been screened to facilitate "a seamless" transition with no

gap in benefit payments between the ABD and SLMB Programs.

      Petitioners stated that because "SLMB applications" are processed by "a

different division" within DHS, "and there does not appear to be very good

communication within the Department about . . . screening . . . for other

Medicaid Programs," this scenario has become "a long standing problem for

thousands of individuals every year who move from a Medicaid Program into

SLMB." Although petitioners acknowledged that they would ultimately be

reimbursed for any months in which their Medicare Part B premiums were

deducted from their SSD checks while awaiting approval of their SLMB

application, they asserted such reimbursements were paid "several months

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later," making it difficult to "pay for rent, food[,] and other expenses" in the

interim.

      Denise Collison, the Fair Hearing Liaison representing the Board,

confirmed that the Board provided no pre-screening for the SLMB Program.

Collison asserted that when clients are no longer eligible for Medicaid

programs, but may qualify for other benefits, Board representatives simply

"point the clients to a telephone number" for them to inquire about eligibility

for those benefits.

      After accepting multiple exhibits from both parties and discussing the

respective arguments on the record, without objection, the ALJ concluded

there were no disputed issues of material fact and treated the case procedurally

as cross-motions for summary decision.             See N.J.A.C. 1:1-12.5(b).

Thereafter, on March 28, 2018, the ALJ issued an initial decision affirming the

termination of petitioners' ABD Program benefits. The ALJ acknowledged

petitioners' heavy reliance on "Medicaid Communication No. 15-06," issued by

the DMAHS Director on April 9, 2015, reminding all agencies that "prior to

termination of redetermined NJ FamilyCare cases, individuals must be

assessed for eligibility for all other Medicaid programs" pursuant to "the

requirements of [42 C.F.R. 435.916(f)(1)]" to avoid "gap[s] in coverage."

However, the ALJ determined that pursuant to N.J.A.C. 10:71-8.2(a), requiring

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regular "[r]edetermination of disability . . . for every Medicaid Only

beneficiary . . . except those . . . receiving SSA Disability Insurance Benefits,"

those requirements did not apply to petitioners because they were "[d]isability

[i]nsurance recipients" under N.J.A.C. 10:71, rather than "Medicaid recipients

under N.J.A.C. 10:72."

      The ALJ reasoned that N.J.A.C. 10:72-1.1(c) provided "protection for

beneficiaries having . . . disability status" like petitioners "who might

experience a 'gap in coverage,'" by permitting "retroactive Medicaid eligibility

. . . beginning with the third month prior to the month of application for

Medicaid for any month during which the applicant meets all eligibility criteria

and during which the applicant has unpaid medical expenses for covered

services." Thus, the ALJ concluded that given the retroactivity provision, the

Board and DMAHS were not precluded from "terminating [p]etitioners' ABD

Medicaid benefits without first having to assess eligibility for all other

Medicaid programs" to ensure that there would be no gap in coverage.

      Petitioners filed exceptions, pointing out that the ALJ incorrectly

identified the Medicaid program under which petitioners were receiving

benefits, by referring to "N.J.A.C. 10:71," when "N.J.A.C. 10:72," in fact,

applied.   On June 27, 2018, the DMAHS Director issued a final agency

decision adopting the ALJ's initial decision. While agreeing with petitioners

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that the ALJ "incorrectly identified the [applicable] Medicaid program," the

Director determined "it [did] not change the fact that [petitioners were]

ineligible under any Medicaid program to receive medical benefits."

      However, according to the Director,

            [w]hat they would be eligible for is to have their
            Medicare Part B paid for under SLMB, thus
            eliminating that deduction from the Social Security
            benefit. They were provided with information about
            SLMB by [the Board]. . . . However, they must be
            ineligible for Medicaid in order to be enrolled in the
            SLMB program. As they have elected to continue
            benefits under Medicaid, there is no termination date
            on the system nor does it appear that [p]etitioners
            provided a copy of their termination letter with their
            SLMB application. . . .

                  What [p]etitioners are seeking is perfect
            performance of a system that relies on coordination
            between federal and state agencies. While that is
            desirable, it does not always work.

      While characterizing the SLMB Program as "a Medicare savings

program that allows states to pay Medicare Part B premiums," rather than a

Medicaid program, the Director explained that "[p]etitioners cannot be eligible

for Medicaid and SLMB in the same month." In support, like the ALJ, the

Director pointed out that N.J.A.C. 10:72-1.1(c), which entitles SLMB

recipients "to payment of Medicare Part B Premiums. . . , beginning in the

month of application and up to three prior months," accounts for the

anticipated loss of benefits during the transition from one program to the other

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                                       9
by allowing for up to three months of retroactive SLMB payments. According

to the Director, "[w]hen Essex County enters the termination date of [ABD

Program] benefits, SLMB benefits will be able to be processed," and the

concomitant reduction in their SSD checks while the SLMB application is

being processed will ultimately be reimbursed by Social Security.

      This appeal followed, in which petitioners maintain that DMAHS

"violate[d] federal Medicaid law" by "upholding the termination of petitioners'

Medicaid benefits without first screening for eligibility for all Medicaid

programs." Petitioners also assert that DMAHS predicated its determination

that the "requirement" to screen for other programs prior to termination "[did]

not apply to [them]" on the erroneous "contention that SLMB is not a

Medicaid program." We agree.

                                           II.

      We begin by addressing our standard of review. Our role in reviewing

an agency decision "is limited in scope." Barone v. Dep't of Human Servs.,

Div. of Med. Assistance & Health Servs., 210 N.J. Super. 276, 284 (App. Div.

1986). Our task is to decide

            (1) whether the agency's decision offends the State or
            Federal Constitution; (2) whether the agency's action
            violates express or implied legislative policies; (3)
            whether the record contains substantial evidence to
            support the findings on which the agency based its
            action; and (4) whether in applying the legislative

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                                      10
              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.

              [A.B. v. Div. of Med. Assistance & Health Servs., 407
N.J. Super. 330, 339 (App. Div. 2009) (quoting
              George Harms Constr. Co. v. N.J. Tpk. Auth., 137
N.J. 8, 27 (1994)).]

      "Where action of an administrative agency is challenged, 'a presumption

of reasonableness attaches to the action . . . and the party who challenges the

validity of that action has the burden of showing that it was arbitrary,

unreasonable[,] or capricious.'" Barone, 210 N.J. Super. at 285 (quoting Boyle

v. Riti, 175 N.J. Super. 158, 166 (App. Div. 1980)).       Furthermore, "[a]n

administrative agency's interpretation of statutes and regulations within its

implementing and enforcing responsibility is ordinarily entitled to our

deference."    A.B., 407 N.J. Super. at 339 (alteration in original) (quoting

Wnuck v. N.J. Div. of Motor Vehicles, 337 N.J. Super. 52, 56 (App. Div.

2001)).

      Nevertheless, we are "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)). Moreover, "[w]e do not

. . . simply rubber stamp the agency's decision." Paff v. N.J. Dep't of Labor,

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                                       11
392 N.J. Super. 334, 340 (App. Div. 2007) (citing Henry v. Rahway State

Prison, 81 N.J. 571, 579-80 (1980)). Instead, we will "intervene . . . in those

rare circumstances in which an agency action is clearly inconsistent with its

statutory mission or other state policy."   In re Musick, 143 N.J. 206, 216

(1996). Here, we are satisfied DMAHS violated implied legislative policy,

and rendered a flawed decision based on a factual error.

      Some background on Medicaid is needed for context.          The federal

Medicaid Act, under Title XIX of the Social Security Act, 42 U.S.C. §§ 1396

to 1396v, authorizes a joint federal-state program to provide assistance to

individuals whose income and resources are insufficient to meet the costs for

necessary medical services. 42 U.S.C. § 1396a. See L.M. v. N.J. Div. of Med.

Assistance & Health Servs., 140 N.J. 480, 484 (1995). Participation in the

Medicaid program is optional for states; however, "once a State elects to

participate, it must comply with the requirements" of the federal Medicaid Act

and federal regulations adopted by the Secretary of Health and Human

Services in order to receive federal Medicaid funds. Harris v. McRae, 448
U.S. 297, 301 (1980). See also Mistrick v. Div. of Med. Assistance & Health

Servs., 154 N.J. 158, 165-66 (1998).

      New Jersey's participation in the federal Medicaid program was

authorized by the enactment of the New Jersey Medical Assistance and Health

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                                       12
Services Act (MAHSA), N.J.S.A. 30:4D-1 to -19.5.             Under its enabling

legislation, DHS is designated as "the single State agency to administer the

provisions of [the Act]," N.J.S.A. 30:4D-5, and the Director of DHS has the

authority to promulgate rules, regulations, and administrative orders necessary

to administer the Medicaid program. N.J.S.A. 30:4D-17.1(c). DMAHS is the

agency within DHS responsible for implementing the State Medicaid program.

N.J.S.A. 30:4D-4. Applications for Medicaid benefits are submitted to the

county boards of social services or county welfare agencies (CWAs). N.J.A.C.

10:71-1.5; N.J.A.C. 10:71-2.1.      Under DMAHS's supervision, the county

boards or CWAs are responsible for reviewing applications, making annual re-

determinations of a beneficiary's continuing eligibility for benefits, and

recommending approval, denial, continuation, or termination of benefits.

N.J.A.C. 10.71-2.2, -2.12, and -8.1.

      Each state participating in the Medicaid program is "required to comply

with . . . 'eligibility requirements set by the federal government,'" G.C. v. Div.

of Med. Assistance & Health Servs., ___ N.J. Super. ___ (App. Div. 2020)

(slip op. at 4) (quoting Zahner v. Sec'y Pa. Dep't of Human Servs., 802 F.3d
497, 512 (3d Cir. 2015)), and must adopt "'reasonable standards . . . for

determining eligibility for and the extent of medical assistance . . . consistent

with the objectives of the Medicaid program.'" L.M., 140 N.J. at 484 (quoting

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42 U.S.C. § 1396a(a)(17)(A)). 5 While "[t]he provisions of Title XIX [of the

Social Security Act] regarding eligibility are considerably . . . obtuse,

requiring a roadmap and compass to navigate," G.C., slip op. at 7, persons

eligible for participation in the Medicaid program generally fall into two

classes, "the 'categorically needy,'" and the optional categories. Id. at 6-7

(citations omitted).

      The categorically needy, for whom Congress mandates coverage, among

others, "includes persons eligible to receive benefits under Aid to Families with

Dependent Children (AFDC), 42 U.S.C.A. §§ 601-617, or Supplemental Security

Income for the Aged, Blind, and Disabled under Title XVI of the Social Security

Act (SSI), 42 U.S.C. §§ 1381-1383d." L.M., 140 N.J. at 485. See 42 U.S.C. §

1396a(a)(10)(A)(i); N.J.A.C. 10:69-1.1 to -12.10.          Congress considered

categorically needy persons to be "especially deserving of public assistance

because of family circumstances, age, or disability." Mistrick, 154 N.J. at 166

(quoting Schweiker v. Gray Panthers, 453 U.S. 34, 37 (1981)).

      "States may [also] opt to provide coverage to other groups of individuals."

G.C., slip op. at 6 (quoting L.M., 140 N.J. at 485). "The line between mandatory

and optional coverage is primarily drawn in [42 U.S.C.] § 1396a(a): mandatory

5
   In New Jersey, eligibility for medical assistance is governed by the
regulations adopted by the Commissioner of DHS. N.J.S.A. 30:4D-7a.

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coverage is specified in § 1396a(a)(10)(A)(i), and the state options are set forth in

subsection (ii)." Ibid. (quoting Skandalis v. Rowe, 14 F.3d 173, 175-76 (2d Cir.

1994)). States may elect to provide Medicaid assistance to the "medically needy,"

who are persons "who have income and resources that are insufficient to pay their

medical expenses, but are too high to qualify them for AFDC or SSI, and who

otherwise meet the nonfinancial eligibility requirements for those programs."

Mistrick, 154 N.J. at 166. See also Atkins v. Rivera, 477 U.S. 154, 157-58 (1986);

L.M., 140 N.J. at 487-88.

      Federal law also authorizes, "at the option of the states, the provision of

benefits to 'any reasonable categories' of applicants who do not otherwise qualify

as categorically or medically needy." Mistrick, 154 N.J. at 167 (citing 42 U.S.C. §

1396a(a)(10)(A)(ii)). See also Skandalis, 14 F.3d at 175. Under its "Medicaid

Only" program, which is governed by N.J.A.C. 10:71-1.1 to -9.5, New Jersey

provides benefits to persons considered "optionally categorically needy." Mistrick,
154 N.J. at 167. "Medicaid Only" beneficiaries receive "medical care only," not

"cash payments" available "to the aged, blind and disabled" under "Title XVI" of

the Social Security Act. N.J.A.C. 10:71-1.1. New Jersey, like other states, also

"assist[s] certain low-income [Medicare-Eligible Medicaid] beneficiaries with

payment of their out-of-pocket expenses related to the Medicare program."

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Wheat. v. McCarthy, 800 F.3d 282, 284 (6th Cir. 2015). See 42 U.S.C. §

1396a(a)(10)(E)(iii).

      Pertinent to this appeal, the SLMB Program, governed by N.J.A.C.

10:72-1.1, specifies "the criteria for Medicaid eligibility for certain . . . aged,

blind and disabled persons not eligible under the [Medicaid Only Program]."

N.J.A.C. 10:72-1.1(a). Notably, N.J.A.C. 10:72-1.1(a)(1) provides:

             Because the eligibility criteria established by the rules
             contained within this chapter are more liberal than
             those applicable under AFDC-related Medicaid and
             SSI-related Medicaid, . . . aged, blind or disabled
             individuals losing Medicaid eligibility because of
             financial reasons should be evaluated under the
             provisions of this chapter for the possibility of
             continuing Medicaid eligibility.

      In order to qualify for the SLMB Program, "[a]ged, blind, and disabled

individuals (as defined by Title XIX of the [SSI])," must be "residents of the

State, . . . receiving Medicare benefits, Parts A and B, and must meet the

income and resource requirements specified in N.J.A.C. 10:72-4.1(b) and

4.5(b)." N.J.A.C. 10:72-1.1(b)(4)(i). "Persons determined eligible as [SLMB

Program] beneficiaries are entitled to payment of Medicare Part B Premiums

only, beginning in the month of application and up to three prior months."

N.J.A.C. 10:72-1.1(b)(4)(iii).

      "The enrollment and outreach process for [SLMB Program] beneficiaries

is administered by the Department of Health and Senior Services, through the

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Office of Pharmaceutical Assistance to the Aged and Disabled (PAAD), using

the standard PAAD application form." N.J.A.C. 10:72-1.1(b)(4)(ii). However,

            [DMAHS] shall promptly notify any applicant for, or
            beneficiary of, the [SLMB Program], in writing, of
            any agency decision affecting the application
            disposition or the receipt of the benefit. When a
            decision relates to any adverse action which may
            entitle an individual to a fair hearing, the action may
            not be implemented until at least [ten] days after the
            mailing of the notice. Such notices shall conform with
            provisions at N.J.A.C. 10:72-5.1(b).

            [N.J.A.C. 10:72-1.1(b)(4)(iv).]

      Clearly, the SLMB Program is a Medicaid program administered by

DMAHS.6 Thus, the question to be decided is whether DMAHS is required to

assess eligibility for other Medicaid programs, including the SLMB program,

prior to terminating benefits, and, if the beneficiary is eligible for another

Medicaid program, whether DMAHS is obligated to transition the beneficiary

to the other Medicaid program with no gap in coverage. Faced with a similar

issue, the courts in Stenson v. Blum, 476 F. Supp. 1331 (S.D.N.Y 1979), aff'd

without opinion, 628 F.2d 1345 (2d Cir.), cert. denied, 449 U.S. 885 (1980),

Mass. Ass'n of Older Americans v. Sharp, 700 F.2d 749 (1st Cir. 1983), and

Crippen v. Kheder, 741 F.2d 102 (6th Cir. 1984) concluded the respective

6
   DMAHS acknowledged at oral argument before us that the SLMB Program
is a Medicaid program, and not a Medicare program as implied in the final
agency decision.

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Medicaid agencies violated the regulations promulgated under the Social

Security Act by automatically terminating the benefits of Medicaid recipients

deemed ineligible under one program without determining ex parte whether

they qualify under another program.

            In Stenson, the plaintiff was eligible for [M]edicaid
            benefits as a categorically needy person because of her
            receipt of SSI benefits. When her SSI benefits were
            discontinued . . . , the state terminated her [M]edicaid
            benefits without notice and without providing an
            opportunity for a hearing.         The plaintiff sought
            classwide injunctive and declaratory relief to require
            the state to provide notice and an opportunity to be
            heard prior to termination of [M]edicaid benefits, and
            an ex parte determination of eligibility for [M]edicaid
            benefits independent of her eligibility for SSI benefits,
            before the termination of benefits. The court analyzed
            [42 C.F.R. § 435.930(b), 7 42 C.F.R. § 435.916(c), 8 and
            42 C.F.R. § 435.1003(b) 9] and held that they imposed

7
    42 C.F.R. § 435.930(b) requires the agency to "continue to furnish
[M]edicaid regularly to all eligible individuals until they are found to be
ineligible."
8
   42 C.F.R. § 435.916(c) then required the agency to "promptly redetermine
eligibility when it receives information about changes in a recipient's
circumstances that may affect . . . eligibility," and "redetermine eligibility at
the appropriate time based on those changes." 42 C.F.R. § 435.916(c)(1) and
(2). In 2012, 42 C.F.R. § 435.916 was substantially revised. Among those
revisions, 42 C.F.R. § 435.916(f) was added to specify that "[p]rior to making
a determination of ineligibility, the agency must consider all bases of
eligibility." 42 C.F.R. § 435.916(f)(1).
9
   42 C.F.R. § 435.1003(b) requires the agency to take prompt action to
determine eligibility once it has received notice from the Social Security
Administration that SSI benefits have been discontinued.

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            an obligation upon the state to reconsider ex parte the
            plaintiff's eligibility for [M]edicaid independent of her
            eligibility for SSI benefits upon notification of the
            termination of SSI benefits.

            [Crippen, 741 F.2d 105 (citations omitted) (citing
            Stenson, 476 F. Supp. at 1339-40).]

      Similarly, in Sharp,

            the plaintiffs were a subclass of families whose AFDC
            benefits were being terminated because of a change in
            the law which required that states include the income
            of stepparents in determining a stepchild's eligibility
            for AFDC. 42 U.S.C. § 602(a)(31). Such income is
            specifically excluded from eligibility determinations
            for [M]edicaid benefits. 42 U.S.C. § 1396a(a)(17)(D).
            Nevertheless the state terminated [M]edicaid benefits
            as well as AFDC benefits on this basis. Plaintiffs
            challenged this action, arguing that the regulations
            required the state agency to redetermine [M]edicaid
            eligibility on other grounds before terminating
            benefits. In this case plaintiffs argued that they were
            still categorically needy because stepparent income
            was irrelevant for [M]edicaid purposes. See 42 C.F.R.
            § 113. The First Circuit cited Stenson . . . with
            approval, and held that plaintiffs had made "an
            extremely strong showing of likelihood of success on
            their claim" that their [M]edicaid benefits had been
            improperly terminated.

            [Crippen, 741 F.2d at 105 (citing Sharp, 700 F.2d at
            752-53).]

      Finally, in Crippen, the plaintiff's qualification for Medicaid benefits "as

a categorically needy person" receiving SSI benefits based on her residency in

a licensed "Adult Foster Care [(AFC)] facility . . . for disabled adults" was

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terminated when the AFC's license was revoked. 741 F.2d at 104. Although

she subsequently reapplied for Medicaid and was found eligible "as a

'medically needy' individual," 10 retroactive to her termination date, the plaintiff

filed a class action "seeking declaratory and injunctive relief against the

[agency's] policy of automatically terminating individuals from [M]edicaid

solely upon receipt of information that SSI benefits have been terminated

without making a prior determination of the individual's eligibility as a

medically needy person." Ibid. The plaintiff alleged, among other things, that

the policy "violated the regulations promulgated under the Social Security Act

and the Act itself." Ibid.

      The district court certified the case as a class action but granted the

agency's motion for summary judgment. Ibid. Relying on Stenson and Sharp,

the Sixth Circuit reversed, holding that

            the [agency's] policy of automatically terminating the
            benefits of [M]edicaid recipients solely because their
            SSI benefits have been terminated without
            determining whether they qualify as medically needy
            individuals violates the regulations promulgated under
            the [SSI]. The regulations require instead that, upon
            receipt of notice that an individual has been
            terminated from the SSI program, the [agency] must
            promptly determine ex parte the individual's eligibility

10
      The plaintiff also "received Social Security disability benefits since
childhood" as a "mentally retarded individual with a convulsive disorder."
Ibid.

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             for [M]edicaid independent of his eligibility for SSI
             benefits. While this determination is being made, the
             state must continue to furnish benefits to such
             individuals.

             [Crippen, 741 F.2d at 106-07.]

      Relying on Stenson and Sharp, in 1997, the United States Department of

Health and Human Services, Center for Medicaid and State Operations, issued

a letter to State Medicaid Directors instructing them "to make an ex parte

redetermination of the individual's Medicaid eligibility under any other

eligibility group" when "an individual is about to lose Medicaid because of the

loss of eligibility for cash assistance . . . or . . . SSI benefits." The letter

emphasized that "States [were] not permitted to terminate an individual until

they have determined that the individual is not eligible under any other

eligibility group."

      In January 2015, the Centers for Medicare and Medicaid Services in the

United States Department of Health and Human Services issued an

informational bulletin specifically addressing "[e]nrollment and [r]etention" of

low-income "Medicare-Eligible Medicaid enrollees," like petitioners.         The

bulletin directed state Medicaid agencies "to assess whether [such] individuals

are eligible for any other category of Medicaid coverage," such as the SLMB

Program, "before terminating . . . Medicaid coverage." Shortly thereafter, in

April 2015, DMAHS issued Medicaid Communication No. 15-06, reminding

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CWAs that pursuant to the 2012 amendment to 42 C.F.R. § 435.916, "prior to

termination of redetermined NJ FamilyCare cases, [11] individuals must be

assessed for eligibility for all other Medicaid programs" in order to "ensure[]

no gap in coverage." See 42 C.F.R. § 435.916(f)(1) (providing that "[p]rior to

making a determination of ineligibility, the agency must consider all bases of

eligibility").

      Applying these principles here, we are persuaded that DMAHS was

required to conduct an ex parte assessment of petitioners' eligibility for the

SLMB program prior to terminating their benefits, and, based on their

undisputed eligibility for the program, DMAHS was obligated to transition

them to the SLMB program with no gap in coverage. DMAHS's failure to do

so violated federal regulations as well as its own guidance to CWAs. We

reject DMAHS's contention that "[petitioners] suffered no prejudice" because

the "three months of retroactive benefits once eligibility is established"

adequately "addresses the challenges [petitioners] face." On the contrary, such

a remedy subverts the purpose of a pre-termination review, which is to prevent

unwarranted lapses in Medicaid coverage, and undermines the fundamental

11
     In Medicaid Communication No. 14-12, dated November 17, 2014,
DMAHS announced that for the sake of simplicity, it was "branding" its
"'family' programs and all New Jersey Medicaid programs," "collectively as NJ
FamilyCare."

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tenet of a program designed to provide financial assistance to a "vulnerable

population" subsisting on a low fixed income, like petitioners. E.B. v. Div. of

Med. Assistance & Health Servs., 431 N.J. Super. 183, 205 (App. Div. 2013).

We therefore conclude that petitioners met their burden of showing that

DMAHS's final decision is arbitrary, unreasonable, and erroneous.

      Reversed and remanded for further action consistent with this opinion.

We do not retain jurisdiction.

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