R.P. VS. DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES (DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES) ( 2021 )

NOT FOR PUBLICATION WITHOUT THE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-3451-17
R.P.,
Petitioner-Appellant,
v.
DIVISION OF MEDICAL
ASSISTANCE AND
HEALTH SERVICES,
Respondent-Respondent.
__________________________
Argued January 25, 2021 – Decided April 26, 2021
Before Judges Hoffman and Suter.
On appeal from the New Jersey Department of Human
Services, Division of Medical Assistance and Health
Services.
Cari-Ann R. Levine argued the cause for appellant
(Cowart Dizzia, LLP, attorneys; Cari-Ann R. Levine
and Jenimae Almquist, on the briefs).
Jacqueline R. D'Alessandro, Deputy Attorney General,
argued the cause for respondent (Gurbir S. Grewal,
Attorney General, attorney; Melissa H. Raksa,
Assistant Attorney General, of counsel; Jacqueline R.
D'Alessandro, on the brief).
PER CURIAM
R.P. appeals the February 9, 2018 final agency decision by the Director
of the Division of Medical Assistance and Health Services (DMAHS), which
adopted the decision of the Administrative Law Judge (ALJ), affirming the
denial of R.P.'s application for Medicaid benefits based on a failure to provide
certain financial information. We affirm the final agency decision.
I.
R.P. was admitted to the Hammonton Center for Rehabilitation and
Healthcare (Hammonton Center) on September 25, 2015. She was seventy-nine
and resided in the dementia unit. Her daughter, D.P.S., promptly applied for
Medicaid coverage for R.P.'s residence and care at Hammonton Center.
The Medicaid application listed assets that included a house, social
security income, and a 401K account with Merrill Lynch. There were two bank
accounts: one with Bank of America and another with the South Jersey Federal
Credit Union. R.P. and her daughter were named on both of those accounts,
according to the Medicaid application. Testimony at the hearing in this case
revealed there was more than one Merrill Lynch account. The application
indicated that the cash value of a life insurance policy was liquidated in August
A-3451-17
2
2015, just before R.P.'s admission to Hammonton Center. The Medicaid
application did not designate D.P.S. as an attorney-in-fact or guardian. This was
the second Medicaid application for R.P.; the first was denied in February 2015,
based on lack of information.
On September 28, 2015 — the same day that R.P. applied for Medicaid —
the Atlantic County Board of Social Services (ACBSS) gave D.P.S. a "letter of
need," advising her what information and documents it needed to evaluate if
R.P. was eligible for Medicaid. ACBSS requested the information to perform
the required five-year look back. Only a portion of the requested information
was provided.
On January 11, 2016, Jannell Thomas became the Medicaid Coordinator
for Hammonton Center. She followed up with the ACBSS case worker in April
2016, because R.P.'s application was still pending approval. Thomas testified
that she "believe[d]" the ACBSS caseworker told her "he had all the documents
necessary." Thomas was appointed as R.P.'s designated authorized
representative (DAR) thereafter.
In May 2016, counsel for Hammonton Center sent a letter expressing its
understanding that all requested information had been received by the ACBSS.
Thomas called again on June 7, 2016, to inquire about the status of the
A-3451-17
3
application. Counsel for Hammonton Center asked for a fair hearing on R.P.'s
Medicaid application.
A new caseworker, Mary Lange, was assigned to R.P.'s file. On July 27,
2016, counsel for Hammonton Center wrote to Lange asking the status. Lange
responded to Thomas on August 2, 2016, by requesting additional financial
information that included:
1. Credit Union Account [account number redacted]
a. All 2015 statements
b. Statements from April 2013-May
2014
2. Deposit histories for the enclosed highlighted
deposits
3. Withdraw history for the enclosed highlighted
withdraw
4. Look back on Merrill Lynch account [account
number redacted]
5. Merrill Lynch account was opened with funds
from a Rollover account. Need information on
the account that was rolled over.
Thomas testified she received the August 2, 2016 "needs list" letter, but
that she could not obtain the information because she was not designated the
attorney-in-fact for R.P., nor did R.P. have a guardian. She testified that R.P.
herself was not able to provide the requested information. Thomas testified she
met with D.P.S., who said she would try to obtain the information, but never
A-3451-17
4
did. Thomas did not respond to the August 2, 2016 letter for Hammonton
Center.
In September 2016, a year after R.P.'s admission, Hammonton Center filed
a verified complaint to appoint a guardian for R.P. However, just a week or two
later, on October 7, 2016, R.P. died before a guardian could be appointed.
The ACBSS was not aware of R.P.'s death when it sent Thomas a ten-day
notice on October 11, 2016, requesting the same financial information it
requested in August. The letter advised R.P.'s application would be denied on
October 28, 2016, if the information were not supplied. Less than a week later,
on October 17, 2016, counsel representing Hammonton Center notified the
caseworker that R.P. died, and they were working with the family of R.P. to
have an administrator appointed to complete the Medicaid application. At
counsel's request, the case was held open pending appointment of an
administrator.
Nearly ninety days later on January 10, 2017, the caseworker sent another
ten-day notice letter warning that R.P.'s Medicaid application would be denied
on January 27, 2017, unless the requested information were provided. Counsel
for Hammonton Center responded the day before that deadline, asking that R.P.'s
application remain open. Counsel explained she could not reach D.P.S., and that
A-3451-17
5
Hammonton Center would be seeking to have an administrator appointed for the
estate. A copy of Hammonton Center's application for letters of administration,
dated three days earlier on January 23, 2017, were attached. Because notice to
out-of-state heirs could take up to sixty days, counsel advised she did not know
when to expect the letters of administration.
On January 31, 2017, the ACBSS denied R.P.'s Medicaid application for
"[f]ailure to provide the information needed to make a determination."
Hammonton Center requested an administrative hearing on behalf of R.P. The
case was transmitted to the Office of Administrative Law (OAL) as a contested
case.
Letters of administration were issued on August 3, 2017, appointing
Hershy Alter from Hammonton Center as administrator of R.P.'s estate. In
September 2017, Alter reappointed Thomas as decedent's DAR. Despite this,
Hammonton Center's counsel could not obtain records from Merrill Lynch,
claiming that the Merrill Lynch account was a "transfer on death account," it
was closed before R.P. died and a court order was required for further
information. Counsel certified the South Jersey Federal Credit Union required
an original death certificate. Counsel did not explain why this could not be
A-3451-17
6
obtained from the funeral facility or why it did not have multiple originals of
the death certificate.
The hearing at the OAL was conducted on October 27, 2017. Barbara
Boaugh, a Medicaid supervisor, testified Hammonton Center never provided the
requested information prior to the January 2017 denial and still had not provided
information from the accounts by the time of the hearing. Prior to the January
2017 denial, there was no evidence of the steps taken to obtain the evidence.
Thomas testified about D.P.S.'s failure to provide information. On the
credit union account, D.P.S. was unclear whether she could produce the
requested information. On a joint account that D.P.S. had with R.P., Thomas
testified that D.P.S. "should be able to" produce that information. Thomas
testified that D.P.S. was not listed on account statements in 2014 and 2015, and
probably could not provide that information.
The ALJ's initial decision from November 17, 2017, concluded R.P.'s
Medicaid application was properly denied based on a lack of financial
information even though extra time was provided to respond. The ALJ found
there was delay by ACBSS. However, there were no "exceptional
circumstances" to keep the application open. R.P.'s representatives did not show
"details of timely and diligent efforts" to obtain letters of administration so as
A-3451-17
7
to obtain the requested financial information. The ALJ concluded that D.P.S.
was "the best source to obtain the documents." The ALJ noted that no one on
behalf of Hammonton Center ever advised ACBSS it needed "assistance to
secure the additional documents."
In the exceptions filed on November 22, 2019, Hammonton Center as the
designated representative of R.P. challenged two findings by the ALJ; that
D.P.S. had access to the accounts and that decedent's death did not constitute
exceptional circumstances.
The Director of DMAHS adopted the initial decision as final, finding
"[t]here is nothing in the record to demonstrate that [p]etitioner's authorized
representative sought to collect any of the missing information or explain the
thousands of dollars that washed through [p]etitioner's bank account monthly."
The decision detailed the amounts of money deposited and withdrawn in January
2012, March 2013, and August 2014, which was part of the missing information.
The Director found D.P.S. had provided some of the information and the
application listed her as co-account holder. The Director found "credible
evidence in the record . . . that [p]etitioner failed to provide the needed
information prior to the January 31, 2017 denial of benefits." Without that,
ACBSS could not "complete its eligibility determination . . . ."
A-3451-17
8
On appeal from the final agency decision, Hammonton Center makes the
following arguments for R.P.:
I. THE MEDICAID DECISION DENYING
BENEFITS TO R.P. WAS ARBITRARY,
CAPRICIOUS, AND CONTRARY TO LAW (not
Raised below)
A. It Was Erroneous to Forgive ACBSS's
Prejudicial Delay in Processing the
Medicaid Application While Holding R.P.
and Her Estate to an Insurmountable and
Arbitrary Standard
1. DMAHS Was Granted Leeway
For Untimely Processing Under The
"Exceptional Circumstances
Standard," But R.P. Arbitrarily Was
Not (Not Raised Below)
2. The Agency's Refusal to Treat
Death as an "Exceptional
Circumstance" Warrants Reversal
Where It Undermines the Purpose of
Medicaid to Afford Benefits for
Indigent Elderly Persons
B. The Medicaid Denial to R.P. Should be
Reversed as Contrary to Applicable
Federal and State Law Concerning
Available Resources (Not Raised Below)
1. R.P. Should Not be Denied
Medicaid for "Failure to Provide"
Where She Lacked a Legal
Representative and Assets are
Unavailable (Not Raised Below)
A-3451-17
9
2. The Agency Relied on Inaccurate
Facts Concerning Account Access,
Disregarded Critical Evidence of
Unavailability, and Unreasonably
Favored ACBSS
3. Treatment of Institutionalized and
Deceased Medicaid Applicants as
Untimely Failing to Provide
Information Threatens Access to
Care and Discriminates Against The
Population Medicaid was Intended to
Protect (Not Raised Below)
II.
We review an agency's decision for the limited purpose of determining
whether its action was arbitrary, capricious or unreasonable. "An administrative
agency's decision will be upheld 'unless there is a clear showing that it is
arbitrary, capricious, or unreasonable, or that it lacks fair support in the record.'"
R.S. v. Div. of Med. Assistance & Health Servs., 434 N.J. Super. 250, 261 (App.
Div. 2014) (quoting Russo v. Bd. of Trs., Police & Firemen's Ret. Sys., 206 N.J.
14, 27 (2011)). "The burden of demonstrating that the agency's action was
arbitrary, capricious or unreasonable rests upon the [party] challenging the
administrative action." E.S. v. Div. of Med. Assistance & Health Servs., 412
N.J. Super. 340, 349 (App. Div. 2010) (alteration in original) (quoting In re
Arenas, 385 N.J. Super. 440, 443-44 (App. Div. 2006)).
A-3451-17
10
Hammonton Center contends for R.P. that DMAHS delayed its evaluation
of the Medicaid application but would not provide R.P. with enough time to
obtain the information requested. It argues R.P.'s death should have been treated
as an exceptional circumstance, and it was arbitrary and capricious not to give
her more time. Hammonton Center argues that D.P.S. could not access the
financial records and it was error to assume she could. Hammonton Center
claims the DMAHS's action in denying R.P.'s claim was contrary to the policy
directives of the legislature and profoundly discriminatory. Hammonton Center
argues that after R.P.'s death she had no ability to liquidate or share her assets
and thus, they no longer were "available" to her and she needed more time to
provide verification of the accounts.
"Medicaid is a federally-created, state-implemented program that
provides 'medical assistance to the poor at the expense of the public.'" In re
Estate of Brown, 448 N.J. Super. 252, 256 (App. Div.2017) (quoting Estate of
DeMartino v. Div. of Med. Assistance & Health Servs., 373 N.J. Super. 210,
217 (App. Div. 2004)); see also 42 U.S.C. § 1396-1. To receive federal funding,
the State must comply with all federal statutes and regulations. Harris v. McRae,
448 U.S. 297, 301 (1980).
A-3451-17
11
In New Jersey, the Medicaid program is administered by DMAHS
pursuant to the New Jersey Medical Assistance and Health Services Act,
N.J.S.A. 30:4D-1 to -19.5. Through its regulations, DMAHS establishes "policy
and procedures for the application process . . . ." N.J.A.C. 10:71-2.2(b). "[T]o
be financially eligible, the applicant must meet both income and resource
standards." Brown, 448 N.J. Super. at 257; see N.J.A.C. 10:71-3.15; N.J.A.C.
10:71-1.2(a). The county welfare boards such as ACBSS evaluate eligibility.
They exercise "direct responsibility in the application process to . . . [r]eceive
applications." N.J.A.C. 10:71-2.2(c)(2). "The process of establishing eligibility
involves a review of the application for completeness, consistency, and
reasonableness." N.J.A.C. 10:71-2.9.
It was not arbitrary, capricious or unreasonable for DMAHS to deny an
application that did not have the information necessary to verify eligibility after
giving several extensions. Medicaid is intended to be a resource of last resort,
reserved for those who have a proven financial or medical need for assistance.
See N.E. v. Div. of Med. Assistance & Health Servs., 399 N.J. Super. 566, 572
(App. Div. 2008).
The regulations establish timeframes to process Medicaid applications.
"The maximum period of time normally essential to process an application for
A-3451-17
12
the aged is [forty-five] days . . . ." N.J.A.C. 10:71-2.3(a). New Jersey
regulations recognize "there will be exceptional cases where the proper
processing of an application cannot be completed" within these time frames.
N.J.A.C. 10:71-2.3(c). However, "[w]here substantially reliable evidence of
eligibility is still lacking at the end of the designated period, the application may
be continued in pending status." Ibid. One basis for delay is to "afford the
applicant, whose proof of eligibility has been inconclusive, a further opportunity
to develop additional evidence of eligibility before final action on his or her
application." N.J.A.C. 10:71-2.3(c)(2).
There was nothing arbitrary, capricious or unreasonable by the agency in
denying this application. R.P.'s second application was made in September
2015. A needs list was provided to her daughter on the same day. The
application was still pending in January 2017. This was considerably past the
standard timeframe to approve or reject the application. There was no or limited
follow-up by the first assigned caseworker, and when the newly assigned one
did follow-up with a needs list, Hammonton Center pursued a guardianship to
obtain the information. Unfortunately, R.P. died, and an administrator was
needed for R.P.'s estate. Counsel for Hammonton Center twice acknowledged
the need for an administrator but did not pursue this for nearly ninety days after
A-3451-17
13
R.P.'s death. Hammonton Center's representative submitted an application for
letters of administration for R.P.'s estate just a few days before the extended
deadline expired. Hammonton Center did not explain to ACBSS what actions it
had taken to pursue the outstanding financial information, its plan to obtain it,
or when it would do so.
The final agency decision was not arbitrary and capricious by forgiving
ACBSS's "prejudicial delay" but not that by petitioner. There was nothing in
the decision about forgiveness. The decision expressed the Director's concern
that questions remained about R.P.'s Medicaid eligibility because the financial
records showed significant sums of money passing through R.P.'s accounts
without any explanation about the source or use of the funds. R.P.'s
representatives do not provide an explanation for these monies or argue that
DMAHS incorrectly pursued this issue.
Hammonton Center does not explain what would have been done
differently to obtain the financial information between September 2015, when
R.P was admitted, and August 2016, when the ACBSS sent the needs letter.
There is no indication R.P. was able to respond to the need for financial
information at any time during her admission. After R.P.'s death in October
2016, Hammonton Center was aware of the need for an administrator, and never
A-3451-17
14
explained its efforts to obtain that appointment or to obtain the requested
financial information. The ACBSS gave two extensions to Hammonton Center
to obtain an administrator for the estate. The ACBSS declined to keep the
application open and denied petitioner's application on January 31, 2017 , for
failure to provide the information needed to decide it.
This case is distinguishable from I.L. v. N.J. Dep't. of Human Servs., 389
N.J. Super. 354 (App. Div. 2006), on which Hammonton Center relies. In I.L.
the question was whether life insurance policies were countable assets in
determining Medicaid eligibility. Here, the application was denied because
requested financial information was not supplied; the agency did not reach the
issue about countable resources.
The final agency decision was consistent with the DMAHS regulations.
The DMAHS was not arbitrary, capricious or unreasonable in enforcing its
eligibility regulations when there was no explanation for the monies in these
accounts and no explanation by Hammonton Center of its efforts.
After carefully reviewing the record and the applicable legal principles,
we conclude that appellant's further arguments are without sufficient merit to
warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
A-3451-17
15