Court Opinion

ID: 4545492
Source: CourtListenerOpinion
Date Created: 2020-07-01 15:08:37.265845+00
Date Added: 2024-06-11T08:10:09.387517
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NOT FOR PUBLICATION WITHOUT THE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-2967-18T2

J.M.,

          Petitioner-Appellant,

v.

HORIZON NJ HEALTH,

     Respondent-Respondent.
____________________________

                   Argued telephonically May 27, 2020 –
                   Decided July 1, 2020

                   Before Judges Yannotti and Firko.

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

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

                   Jacqueline D'Alessandro, Deputy Attorney General,
                   argued the cause for respondent (Gurbir S. Grewal,
                   Attorney General, attorney; Melissa H. Raksa,
                   Assistant Attorney General, of counsel; Shereen R.
                   Youssef, Deputy Attorney General, on the brief).
PER CURIAM

      J.M. appeals from a final decision of the Director of the Division of

Medical Assistance and Health Services (Division), dated January 24, 2019,

which denied his application for additional physical therapy (PT) services under

the State's Medicaid program. We reverse and remand for reconsideration.

                                        I.

      We briefly summarize the relevant facts and procedural history. Horizon

NJ Health (Horizon) is the designated Managed Care Organization for New

Jersey's Medicaid program. In 2006, J.M. sustained a back injury and later had

spinal-fusion surgery. Thereafter, J.M. reported that he was suffering from

chronic lower back pain. In 2014, the Medicaid program began to provide J.M.

with PT services to treat that condition.

      In October 2017, Functional Independent Therapy Rehabilitation (Fit

Rehab) conducted a reexamination to assess J.M.'s need for additional PT

services. He was thirty-five-years old at the time. J.M.'s physical therapist

found J.M.'s ability to walk, range of motion, and knee strength were within

normal limits, but his ankles showed some weakness. The therapist noted that

J.M. had complained of pain and decreased ability to tolerate prolonged standing

and walking. He scored a sixty-eight percent on the Modified Oswestry Low

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                                        2
Back Pain Index (ODI), which measures the ability of a person with lower back

pain to function.

      On October 18, 2017, Horizon authorized ten PT sessions for J.M. over a

five-week period, between October 11, 2017, and December 11, 2017. J.M.

attended eight PT sessions on various dates between October 11, 2017, and

December 18, 2017. The therapist noted that at the eighth session, J.M. received

an updated ODI score of sixty-two percent.

      On December 28, 2017, Horizon denied J.M.'s request for additional PT

services. Horizon found the additional PT services were no longer "medically

necessary" because J.M.'s treatment notes did not show a change in his "level of

function" or "strength." Horizon noted that J.M.'s motion was "at a level that

[he] could do [his] daily tasks."   J.M. sought internal review of Horizon's

decision.

      While the denial of his request for additional PT services was under

internal review, J.M. attended additional PT sessions on January 3 and 10, 2018.

On January 15, 2018, Fit Rehab performed another recertification review. J.M.

scored a fifty-four percent ODI.    The therapist recommended that Horizon

authorize ten more PT sessions for J.M.

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      On February 22, 2018, Dr. Arvind Baliga issued a report on Horizon's

internal review and recommended that Horizon affirm the December 28, 2017

decision denying J.M.'s request for additional PT services. Dr. Baliga noted that

from October 11, 2017, to December 18, 2017, J.M. had no significant change

in his ODI score. He found there had been no improvement in J.M.'s functional

outcome measures and no documented carryover of improvement between

therapy sessions. According to Dr. Baliga, J.M. had reached a "therapeutic

plateau."

      By letter dated February 23, 2018, Horizon reaffirmed the December 28,

2017 decision denying additional PT services. In its letter, Horizon noted that

J.M. had PT sessions since October 11, 2017, but he had not shown any

improvement with his back pain or daily functioning. Horizon stated that J.M.

had "reached a point where additional [PT] visits will not be helpful."           It

concluded that additional PT sessions were not "medically necessary."

      J.M. filed an administrative appeal, and the Division referred the matter

to the Office of Administrative Law (OAL) for a hearing before an

Administrative Law Judge (ALJ). At the hearing, Roselle Perrucci, Horizon's

Manager for Prior Authorization for PT, Occupational Therapy (OT), and other

services, testified in support of Horizon's decision. J.M. and his mother testified

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in support of the appeal. J.M.'s treatment records also were submitted to the

ALJ.

       On October 26, 2018, the ALJ issued an initial decision. The ALJ first

rejected J.M.'s contention that Horizon was barred by res judicata and collateral

estoppel from denying his request for additional PT services. The ALJ noted

that in 2016, Horizon had denied J.M.'s request for PT services on the ground

that they were not medically necessary.

       J.M. filed an administrative appeal from that determination and Horizon's

decision was reversed. J.M. v. Horizon, OAL Dkt. No. 09596-16 (Dec. 23,

2016). The ALJ found, however, that the facts and circumstances in the 2015-

2016 timeframe were "entirely different" from this matter. The ALJ concluded

res judicata and collateral estoppel do not apply.

       The ALJ further found that Horizon's decision was premature because

Horizon made that decision before J.M. completed all ten of the PT sessions it

had authorized in October 2017. The ALJ also found that Horizon did not fully

consider the evidence of J.M.'s improvement or response to treatment and

instead appeared to focus almost exclusively on changes to J.M.'s ODI score

between October 11, 2017, and December 18, 2017.

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      The ALJ noted that both Ms. Perrucci and Dr. Baliga found that the

recorded six-percent difference in J.M.'s ODI scores did not meet the standard

for a Minimally Clinical Important Difference (MCID), which was ten percent.

The ALJ stated, however, that the ten-percent standard was not set forth in the

agency's regulations or in Horizon's policy.

      The ALJ wrote that Horizon had been asked to provide a source for the

ten-percent MCID standard. The ALJ pointed out that Horizon's attorney had

provided an explanation from its attorney, indicating that it based the standard

on a database available on the internet. The ALJ found this was not competent

evidence because it was not in the form of an affidavit or certification from Ms.

Perrucci, Dr. Baliga, or other qualified professional.

      The ALJ also pointed out that Horizon did not consider the additional

changes to J.M.'s ODI score following PT sessions nine and ten in January 2018.

The ALJ stated that during his internal review, Dr. Baliga did not have access

to the results of the two PT sessions in January 2018. Ms. Perrucci had testified

she did not believe a sufficient decrease in the ODI score was possible after the

two additional PT sessions.

      The ALJ found that, according to Horizon, the MCID is only one factor

that is considered in determining if additional PT services are medically

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necessary. The ALJ noted that in the December 2017 recertification, J.M.'s

therapist stated that J.M. had made "strength gains" which assisted him in

performing certain tasks around the home. The ALJ also noted that there had

been changes to the type and intensity of the exercises J.M. had been performing.

      The ALJ stated, "Horizon appeared to ignore or minimize these changes

and instead focused solely on the MCID." The ALJ therefore concluded that

Horizon's erred by denying J.M.'s request for additional PT services. The

Division filed exceptions to the ALJ's decision, and Horizon responded to the

exceptions.

      The Director reversed the ALJ's initial decision. The Director found the

record showed additional PT services for J.M. are not medically necessary. The

Director noted that both Ms. Perrucci and Dr. Baliga had explained that in order

to establish a MCID in functional outcome, there should be a ten-percent

difference in the ODI.

      The Director noted that this standard for determining the MCID is publicly

available on the internet. The Director stated that the change in J.M.'s ODI after

eight of the ten PT sessions approved in October 2017 was six percent, which

did not meet the ten-percent threshold for a MCID.

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      The Director also stated that it was "more than reasonable" for Ms.

Perrucci to discount the further reduction in ODI score that J.M. achieved after

the two additional PT sessions in January 2018. The Director noted that J.M.

had only achieved an additional eight-percent reduction in his ODI score. The

Director found this was insufficient to show a required MCID.

      The Director further found the records from J.M.'s therapy sessions

showed that as of December 18, 2017, he had made minimal progress. There

was no carryover or improvement in his functional capability. The Director

decided that the record supported Ms. Perrucci's conclusion that a home-exercise

plan or one performed at a gym would be more appropriate for J.M. than

additional PT services.

                                      II.

      On appeal, J.M. argues that the doctrines of res judicata and collateral

estoppel precluded Horizon from relitigating certain findings of facts and

conclusions reached in the 2016 administrative appeal regarding Horizon's

denial of his request for PT services. We disagree.

      Collateral estoppel, res judicata, and similar doctrines serve important

goals, including "finality and repose; prevention of needless litigation,

avoidance of duplication; reduction of unnecessary burdens of time; and

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                                       8
expenses; elimination of conflicts; confusion and uncertainty; and basic

fairness[.]" First Union Nat'l Bank v. Salem Marina, Inc., 190 N.J. 342, 352

(2007) (quoting Hackensack v. Winner, 82 N.J. 1, 32-33 (1980)). "Adjudicative

determinations in administrative tribunals are entitled to preclusive effect if

rendered in proceedings meriting that deference." Olivieri v. Y.M.F. Carpet,

Inc., 186 N.J. 511, 522 (2006) (quoting Zoneirach v. Overlook Hosp., 212 N.J.

Super. 83, 93-94 (App. Div. 1986)).

      For collateral estoppel or issue preclusion to apply, the party asserting the

bar must show that:

            (1) the issue to be precluded is identical to the issue
            decided in the prior proceeding; (2) the issue was
            actually litigated in the prior proceeding; (3) the court
            in the prior proceeding issued a final judgment on the
            merits; (4) the determination of the issue was essential
            to the prior judgment; and (5) the party against whom
            the doctrine is asserted was a party to or was in privity
            with the party to the earlier proceeding.

            [Ibid. (quoting Hennessey v. Winslow Twp., 183 N.J.
593, 599 (2005)).]

      In addition, res judicata or claim preclusion, applies when a party seeking

to apply the doctrine establishes: (1) a valid judgment on the merits was entered

on the claim in a prior action; (2) the parties in the later action are identical or

in privity with those in the prior action; and (3) the claim in the later actions

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                                         9
arose out of the same transaction or occurrence as the claim in the earlier case.

Watkins v. Resorts Int'l Hotel & Casino, Inc., 124 N.J. 398, 412 (1991) (citations

omitted).

      Here, the record shows that in the previous administrative proceeding,

J.M. challenged Horizon's June 24, 2016 decision, which denied additional PT

benefits on the ground that he had reached maximum improvement and such

services were not medically necessary. In that case, the ALJ noted that J.M.'s

therapist had stated that additional PT was medically necessary, and J.M.

continued to improve.

      The ALJ in the 2016 case found "Horizon's denial was inconsistent with

the clear and unambiguous reports provided by J.M.'s therapist which indicate

that he has not reached maximum medical improvement and that the additional

PT treatment sought in this case for J.M. is medically necessary." The decision

was based on testimony and evidence pertaining to J.M.'s treatment in 2014,

2015, and 2016.

      However, as the ALJ in this case pointed out, the 2016 appeal pertained

to Horizon's denial of PT services on the ground that J.M. had, at that time,

reached maximum improvement and the additional PT services were not

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                                       10
medically necessary. Although the issues, parties, and relief sought were similar

in 2018, the underlying facts are substantially different.

      We therefore conclude the Director correctly determined that the doctrines

of res judicata and collateral estoppel do not apply to this matter. As the Director

aptly observed, a prior decision on an individual's eligibility for Medicaid

services does not preclude a change to that decision "based on future

circumstances."

                                        III.

      J.M. also argues the Director erred by denying his request for additional

PT services because he did not record a ten-percent change in his ODI scores

after eight of the ten sessions approved in October 2017. He contends Horizon

failed to present competent evidence to support its application of the ten-percent

threshold to show a MCID. He further argues that Horizon failed to consider

the progress he made in the previously approved PT sessions.

      We note initially 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). We will not reverse the

agency's decision unless it is arbitrary, capricious, or unreasonable, or lacks fair

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                                        11
support in the record. Id. at 9-10; see also In re Herrmann, 192 N.J. 19, 27-28

(2007). In reviewing an administrative 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)).]

      In addressing 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)).

      It is undisputed that Medicaid recipients are only entitled to services and

supplies that are "medically necessary," a term defined in N.J.A.C. 10:74-1.4 to

mean services that are

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            necessary to prevent, diagnose, correct, prevent the
            worsening of, alleviate, ameliorate, or cure a physical
            or mental illness or condition, to maintain health, to
            prevent the onset of an illness, condition, or disability;
            to prevent or treat a condition that endangers life or
            causes suffering or pain or results in illness or
            infirmity; to prevent the deterioration of a condition; to
            prevent the development or maintenance of maximal
            functioning capacity in performing daily activities,
            taking into account both the function capacity of the
            individual and those functional capacities that are
            appropriate to individuals of the same age; to prevent
            or treat a condition that threatens to cause or aggravate
            a handicap or cause physical deformity or malfunction,
            and there is no other equally effective, more
            conservative or substantially less costly course of
            treatment available or suitable for the enrollee.

      In her decision, the Director noted that, in denying J.M.'s request for

additional PT services, Horizon determined that J.M. did not show sufficient

improvement as a result of his previously-approved PT services, as indicated in

his ODI scores. Horizon based that decision on its written policy.

      Horizon's policy states, in pertinent part, that long-term PT and OT

services are not considered medically necessary under certain circumstances,

including

            1. [t]herapeutic intervention/services show minimal
            progression throughout the episode of care as
            evidenced by a lack of changes in type, frequency or
            intensity of interventions provided resulting in a
            plateau in overall therapeutic benefit

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                  ....

            4. [t]herapy is part of a program of maintenance where
            the member is neither improving nor deteriorating and
            can be provided by a caregiver without a therapist such
            that therapeutic exercises currently performed in the
            clinic [may be] carried out by the member or with the
            assistance of a caregiver in the form of a home exercise
            program

            5. [t]he member has reached a therapeutic plateau,
            defined as the point at which the member:

                  a) [h]as returned to baseline status, OR

                  b) [i]s no longer demonstrating improvement as
            evidenced by minimally clinical important differences
            (MCID) in Functional Outcome Measure scores, OR

                  c) [s]hows no carryover of clinical improvement
            between therapy sessions specifically related to
            objective clinical findings including, but not limited to,
            range of motion, strength or subjective functional
            capabilities.

                  d) [t]reatment is intended to solely regulate pain
            but no carry over or long term reduction in pain has
            been documented.

                  ....

      As the ALJ noted, however, Horizon's policy does not expressly state that

it will use the change in a member's ODI score in determining whether the

recipient has reached a treatment plateau or is "demonstrating improvement" as

shown by a MCID. The ALJ had asked Horizon to provide the basis for the

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position that a ten-percent change in the ODI scores is necessary to establish a

MCID in the recipient's functional outcome measures.

      Horizon's counsel responded in a letter dated August 31, 2018. In that

letter, Horizon's counsel explained that under its written policy, a MCID in

functional outcome measures is one factor that Horizon uses to determine if PT

is no longer medically necessary.

      According to counsel, Horizon uses a "world-renowned database for

clinical benchmarks and outcomes for rehabilitation" when it determines

whether a recipient has shown a MCID in functional outcome measures. The

database is available on the internet through an entity called RehabMeasures.

      Horizon's counsel noted that in his recertifications, J.M.'s therapist had

used the ODI as the measure of J.M.'s functional outcome measure. Counsel

said the ODI is used to assess symptoms and the severity of an individual's low

back pain. He stated that the RehabMeasures database sets the clinical range

that is considered a MCID.

      Counsel noted that in the period from October 11, 2017 through December

18, 2017, J.M.'s ODI score went from sixty-eight percent to sixty-two percent.

He stated that J.M.'s six-percent decrease in functional outcome measure was

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                                      15
insufficient. It showed J.M. was no longer demonstrating improvement from PT

services.

      In her final decision, the Director relied upon the RehabMeasures internet

database as support for Horizon's use of the ten-percent threshold in determining

whether J.M. had achieved a MCID in functional outcome measures. However,

as the ALJ stated, Horizon's explanation for its use of the ten-percent threshold

was provided by Horizon's counsel. It was not contained in an affidavit or

certification from Dr. Baliga, Ms. Perrucci, or another qualified professional.

      The ALJ thus found that counsel's explanation was not competent

evidence and could not be considered. We agree. Therefore, the matter must

be remanded to the Division so that Horizon can provide competent evidence,

in the form of an affidavit or certification from a qualified person, setting forth

the source and basis for use of the ten-percent standard in determining whether

J.M. had reached a treatment plateau or was no longer demonstrating

improvement, as evidenced by the MCID in functional outcome measures.

      In this regard, we note that in its August 31, 2018 letter, Horizon's counsel

stated that the RehabMeasures database produces a clinical range that is

considered the MCID, with scores that typically range from two to fifteen. The

ALJ noted in her decision that Horizon's statement is "somewhat confusing and

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                                       16
appears to contradict [its] claim that a [ten percent] difference is required to

establish MCID."     As the ALJ noted, it is not entirely clear whether the

RehabMeasure database supports the use of a ten-percent threshold for the

MCID.

      Moreover, in its August 31, 2018 letter, Horizon's counsel also stated that

the MCID in functional outcomes is "one factor" that shows PT "is no longer

medically necessary."    However, as the ALJ pointed out in her decision,

Horizon's decision to deny J.M.'s request for additional PT services apparently

was based solely on J.M.'s failure to show a ten-percent change in his ODI score.

      On remand, the Director should clarify the basis for Horizon's decision.

If the ten-percent standard applies, the Director should determine if that was the

sole reason for the denial of J.M.'s request for additional services, or whether

there are other reasons, such as the ability to engage in a home-exercise program,

that would justify a finding that such services are not medically necessary.

      The ALJ also found that Horizon prematurely decided additional P.T.

services are not medically necessary. As we have explained, on October 18,

2017, Horizon approved ten additional PT sessions for J.M. The record shows

that J.M. attended eight PT sessions between October 11, 2017, and December

18, 2017.

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      On December 28, 2017, Horizon denied J.M.'s request for ten additional

sessions. It based its decision, in large part, on the change in J.M.'s ODI scores

between October 11, 2017, and December 18, 2017. As noted, in that timeframe,

J.M.'s ODI went from sixty-eight percent to sixty-two percent. However, the

record shows that after two additional sessions in January 2018, J.M.'s ODI

score dropped to fifty-four percent.

      In her final decision, the Director found that it was reasonable for Ms.

Perrucci to discount J.M.'s reported fifty-four percent ODI score. The Director

noted that the change in J.M.'s ODI score between December 18, 2017, and the

date of the last PT session on January 18, 2018 was only eight percent.

      On appeal, J.M. argues that in determining whether he was making

sufficient improvement in functional outcome to warrant additional PT services,

the Director should have considered the change in his ODI scores after he

completed all ten of the PT sessions approved in October 2017. He notes that

after the tenth session, his ODI score was fifty-four percent, which would satisfy

the ten-percent threshold for the MCID, should that standard apply.

      We agree with the ALJ that Horizon's decision on J.M.'s request for

additional PT services was premature. It was unreasonable for Horizon to

determine if J.M. was making sufficient improvement in his functional outcomes

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                                       18
before he completed all ten of the sessions that were approved in October 2017.

On remand, the Director should reconsider and base her decision on the change

in J.M.'s ODI scores in the period from October 11, 2017, to January 15, 2018,

the date J.M. attended the last of the ten approved PT sessions.

      In her decision, the ALJ further found Horizon apparently failed to

consider certain other evidence in the record, which showed that J.M. had made

some improvement in PT. In her final decision, the Director stated that the

evidence showed that J.M.'s progress was only minimal. It appears, however,

that the Director based this finding on the results shown after J.M. participated

in eight PT sessions, not the ten sessions approved in October 2017.

      On appeal, J.M. argues that the records of all ten PT sessions show

positive changes in the type and intensity of the exercises he performed. He

asserts that over the course of ten PT sessions, his strength increased in

seventeen out of eighteen areas tested.       On remand, the Director should

reconsider her decision in light of J.M.'s alleged improvement after all ten of the

PT sessions approved in October 2017.

      The Director may reconsider her decision based on the record presented

at the OAL, with such additional competent evidence that the parties may

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submit. In her discretion, the Director may again refer the matter to the OAL

for further proceedings and an initial decision by an ALJ.

      Reversed and remanded to the Director for reconsideration of her decision

in accordance with this opinion. We do not retain jurisdiction.

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