H.R. v. Atlantic County Department of Family and Community Development

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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-3892-24 H.R.,1 Petitioner-Appellant, v. ATLANTIC COUNTY DEPARTMENT OF FAMILY AND COMMUNITY DEVELOPMENT, Respondent-Respondent. ___________________________ Submitted September 22, 2026 – Decided October 5, 2026 Before Judges Natali and Jablonski. On appeal from the New Jersey Department of Human Services, Division of Medical Assistance and Health Services. Law Office of Simon P. Wercberger, LLC, attorneys for appellant (Eliyahu Pekier, on the briefs). 1 Although we understand from the parties that H.R. is now deceased, we nevertheless continue to use her initials to maintain the privacy of her private medical information. R. 1:38-3(a). Jennifer Davenport, Attorney General, attorney for respondent (Sookie Bae-Park, Assistant Attorney General, of counsel; Stephen Slocum, Deputy Attorney General, on the brief). PER CURIAM Petitioner H.R. appeals from a June 26, 2025 initial decision of an Administrative Law Judge (ALJ), later adopted by the New Jersey Division of Medical Assistance and Health Services (Division) as its final agency decision, affirming the denial of her application for NJ Family Care Aged, Blind, and Disabled Medicaid benefits. We affirm. On June 27, 2024, a designated authorized representative (DAR) at H.R.'s nursing facility filed on her behalf an application for Medicaid benefits. 2 In that application, H.R.'s DAR attested that she had no income, assets, nor bank accounts. After submitting the application, the Atlantic County Department of Family and Community Development (ACDFCD) electronically searched for bank accounts and other financial resources using its asset verification system. This search prompted ACDFCD to issue requests for information (RFI) seeking 2 H.R.'s second and third Medicaid applications, which are not the subject of this appeal, were also denied due to H.R.'s and the DAR's failure to provide necessary verifications. According to ACDFCD's merits brief, H.R.'s fourth application was approved, and she was deemed eligible for Medicaid benefits from October 1, 2024, until her death on December 24, 2025. A-3892-24 2 information related to two Bank of America accounts which had not been initially disclosed. ACDFCD also requested copies of all checks and non- electronic deposits in excess of $500, as well as a corrected self-attestation form. On the due date for the additional information requests, the DAR provided the updated attestation and most of the requested documentation but did not provide statements for the two Bank of America accounts. ACDFCD accordingly again requested statements for the two Bank of America accounts and set an August 12, 2024 deadline. On that due date, the DAR provided statements for only one of the two accounts. Those statements revealed transfers totaling $31,834 into one of the accounts from a Vanguard account over a three- month period in 2021, within the sixty-month look-back period provided by N.J.A.C. 10:71-4.10. The DAR also requested additional time to obtain copies of any transactions over $500 stating she was "working on getting" them but had "not been able to" do so. Following the DAR's submissions, ACDFCD denied H.R.'s application. In relevant part, ACDFCD's notice advised that: "H.R. failed to provide requested information required to determine eligibility in a timely manner . . . ." In response, the DAR requested a hearing, and the matter was transmitted to the Office of Administrative Law as a contested case. A-3892-24 3 An ALJ held the requested hearing, at which she heard testimony from H.R.'s DAR and Mary Lange, the Administrative Supervisor for the Medicaid Long Term Care Unit at ACDFCD and also considered the parties' arguments. H.R.'s counsel contended that the DAR "provided all the documents as . . . requested in the [two RFIs]," including "a signed self-attestation form and a request for extension to obtain [the] Bank of America statements . . . ." In relevant part, Lange testified the partial Bank of America statements provided in response to the second RFI revealed the undisclosed Vanguard account for the first time, and that ACDFCD did not receive the Vanguard information until April 2025, after it denied H.R.'s application. Lange stated that the ACDFCD is obligated to process Medicaid applications and determine eligibility within the applicable regulatory periods. She explained although it can grant extensions on "a case-by-case basis" for "extenuating circumstances," there is no requirement to grant extensions, and ACDFCD determined none existed to justify further extensions with respect to H.R.'s first application. Following Lange's testimony, the DAR testified both RFIs requested copies of all transaction documents. She stated she failed to disclose the two Bank of America accounts and the Vanguard account in the Medicaid A-3892-24 4 application because there was a language barrier with the guardian and the guardian did not provide her with any financial information for H.R. The ALJ issued an initial decision on June 26, 2026, which was deemed adopted as the final agency decision. The ALJ affirmed the denial of H.R.'s first Medicaid application "for failure to provide the required documentation to process the application" pursuant to N.J.A.C. 10:71-2.2(e)(2). The ALJ explained verification of the bank accounts were necessary to process that application, and her failure to provide those verifications also justified ACDFCD's denial. She determined the DAR was on notice of the need to provide the verification and the factually inaccurate self-attestation did not bar ACDFCD from requiring further information to determine H.R.'s eligibility. In any event, the ALJ concluded that the self-attestation was untimely because it was not "provided with the [initial] application." The ALJ also found that "the DAR did not alert [ACDFCD] to any extenuating circumstances that were impeding her ability to obtain" the missing verifications or warrant an extension. The ALJ noted the regulations required ACDFCD to process H.R.’s Medicaid application within the applicable regulatory periods and relied upon N.J.A.C. 10:71-2.3(a), N.J.A.C. 10:71- 2.3(b)(1), and N.J.A.C. 10:71-3.9(a)(1). Pursuant to N.J.A.C. 10:71-2.3(c), the A-3892-24 5 ALJ noted the ability to extend that period "under limited circumstances" was "discretionary, not mandatory" and that the DAR did not identify a sufficient basis to support her request. Before us, H.R. argues the ALJ inappropriately based her denial on the applicable processing periods provided by N.J.A.C. 10:71-2.3. She asserts this provision is intended to act as "a shield to protect applicants from unwarranted obstructions in their medical coverage caused by . . . delays in processing and instead wields it as . . . an arbitrary deadline for an applicant making good faith efforts to cooperate with the agency . . . ." Next, H.R. contends ACDFCD failed to adhere to the requirements set forth in N.J.A.C. 10:71-2.2(c) that requires an agency to "take affirmative steps to communicate" with applicants, including its requirement to identify specifically all alleged deficiencies before it is permitted to deny an application. On this point, she argues ACDFCD did not make a specific request for the Vanguard-related information and verification. Finally, H.R. contends that federal regulation, namely 42 C.F.R. 435.907(e)(1), provides that "once a proper self-attestation was submitted, ACDFCD lacked authority to demand five-year lookback documentation." II. A-3892-24 6 On judicial review of an agency decision, "[o]ur function is to determine whether the administrative action was arbitrary, capricious or unreasonable." Burris v. Police Dep't, Twp. of W. Orange, 338 N.J. Super. 493, 496 (App. Div. 2001) (citing Henry v. Rahway State Prison, 81 N.J. 571, 580 (1980)). The agency decision must be supported by "'substantial evidence'" in the record as a whole. Circus Liquors, Inc. v. Middletown Twp., 199 N.J. 1, 10 (2009) (quoting Mazza v. Bd. of Trs., 143 N.J. 22, 25 (1995)). A presumption of validity attaches to an agency's decision. See Brady v. Bd. of Rev., 152 N.J. 197, 210 (1997). This is so because "[i]n administrative law, the overarching informative principle guiding appellate review requires that courts defer to the specialized or technical expertise of the agency charged with administration of a regulatory system." In re Virtua-West Jersey Hosp. Voorhees for a Certificate of Need, 194 N.J. 413, 422 (2008) (citation omitted). But we are "in no way bound by the agency's interpretation of a statute or its determination of a strictly legal issue." In re Carter, 191 N.J. 474, 483 (2007) (quoting Mayflower Sec. Co. v. Bureau of Sec., 64 N.J. 85, 93 (1973)). Finally, the party challenging the validity of an agency's decision has the burden of showing that it was arbitrary, capricious, or unreasonable. J.B. v. N.J. State A-3892-24 7 Parole Bd., 444 N.J. Super. 115, 149 (App. Div. 2016) (citing In re Arenas, 385 N.J. Super. 440, 443-44 (App. Div. 2006)). "Medicaid is a federally-created, state-implemented program that provides 'medical assistance to the poor at the expense of the public.'" Matter of Estate of Brown, 448 N.J. Super. 252, 256 (App. Div. 2017) (quoting Est. 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 funding, a state must comply with all federal statutes and regulations, including eligibility requirements set by the federal government. Harris v. McRae, 448 U.S. 297, 301 (1980); Zahner v. Sec'y Pa. Dep't of Human Servs., 802 F.3d 497, 512 (3d Cir. 2015). Relevant to the appeal before us, one such federal regulation is 42 C.F.R. 435.907(e)(1), which provides the state agency responsible for administering the program "may only require an applicant to provide the information necessary to make an eligibility determination or for a purpose directly connected to the administration of the State plan." Pursuant to the New Jersey Medical Assistance and Health Services Act, N.J.S.A. 30:4D-1 to –19.5, the Division is responsible for administering the Medicaid program in New Jersey and is charged with doing so in a fiscally responsible manner to ensure funds are available for all eligible participants. A-3892-24 8 See Dougherty v. Dep't of Hum. Servs., Div. of Med. Assistance & Health Servs., 91 N.J. 1, 4-5 (1982); Est. of DeMartino, 373 N.J. Super. at 217-19 . "[T]o be financially eligible, the applicant must meet both income and resource standards." Matter of Est. of Brown, 448 N.J. Super. 252, 257 (App. Div. 2017); see also N.J.A.C. 10:71-3.15; N.J.A.C. 10:71-1.2(a). Through its regulations, the Division establishes "policy and procedures for the application process." N.J.A.C. 10:71-2.2(b). In turn, County Welfare Agencies (CWA), like ACDFCD, evaluate eligibility. N.J.S.A. 30:4D-7(a); N.J.A.C. 10:71-1.5, –2.2(c). A CWA exercises direct responsibility in the application process to: 1. Inform the applicants about the purpose and eligibility requirements for Medicaid Only, inform them of their rights and responsibilities under its provisions and inform applicants of their right to a fair hearing; 2. Receive applications; 3. Assist the applicants in exploring their eligibility for assistance; 4. Make known to the applicants the appropriate resources and services both within the agency and the community, and, if necessary, assist in their use; and 5. Assure the prompt and accurate submission of eligibility data to the Medicaid status files for eligible A-3892-24 9 persons and prompt notification to ineligible persons of the reason(s) for their ineligibility. [N.J.A.C. 10:71-2.2(c)(1) to (5).] While the applicant is "the primary source of information," the CWA is responsible for making "the determination of eligibility and to use secondary sources when necessary, with the applicant's knowledge and consent." N.J.A.C. 10:71-1.6(a)(2). Accordingly, the CWA must "verify the equity value of resources through appropriate and credible sources," and "shall evaluate the applicant's past circumstances and present living standards . . . to ascertain the existence of resources that may not have been reported." N.J.A.C. 10:71- 4.1(d)(3). "If the applicant's resource statements are questionable, or there is reason to believe the identification of resources is incomplete, the [CWA] shall verify the applicant's resource statements through one or more third parties." Ibid. To discourage applicants from depleting assets for the sole purpose of becoming eligible for benefits, "[a]n applicant who transfers or disposes of resources for less than fair market value during a sixty-month look-back period before the individual becomes institutionalized or applies for Medicaid is penalized for making the transfer." A.M. v. Monmouth Cnty. Bd. of Soc. Servs., 466 N.J. Super. 557 , 566 (App. Div. 2021); see also N.J.A.C. 10:71-4.10(a); A-3892-24 10 H.K. v. State, Dep't of Hum. Servs., Div. of Med. Assistance & Health Servs., 184 N.J. 367, 380 (2005). The imposition of the penalty is intended to maximize Medicaid resources for those truly in need. See Est. of DeMartino, 373 N.J. Super. at 219 . Because transfers made within the sixty-month look-back period may affect eligibility they "are presumed to be improperly motivated to obtain Medicaid eligibility." W.T. v. Div. of Med. Assistance & Health Servs., 391 N.J. Super. 25, 37 (App. Div. 2007). Further, a CWA is required to process applications within specified timeframes and the "maximum period of time normally essential to process an application for the aged is [forty-five] days," whereas an application for the disabled or blind is given ninety days. N.J.A.C. 10:71-2.3(a). After expiration of the applicable period, the CWA must find an exceptional reason for the delay in order to extend the application time limit. N.J.A.C. 10:71-2.3(c). Thus, if an applicant fails to provide timely a verification, absent an extension, the CWA may determine that eligibility cannot be established and deny an application. We are unpersuaded by H.R.'s arguments and affirm substantially for the reasons stated in the Division's decision, adopting the ALJ's comprehensive written decision. The ALJ's factual findings are fully supported by the record A-3892-24 11 and her legal conclusions fully consistent with applicable law. We provide the following comments to amplify our decision. First, contrary to the authority cited by H.R., ACDFCD did not deny her application based on a newly identified deficiency raised only after H.R. responded. Rather, the record supports the ALJ's finding that ACDFCD twice requested the relevant Bank of America statements. Indeed, in both RFIs, it expressly required verification for all checks and deposits over $500 showing exactly where the deposited funds came from. After the August 12, 2024 submission revealed multiple deposits from Vanguard exceeding $500, those transactions fell within the scope of the preexisting requests and did not constitute a new deficiency requiring a separate Vanguard-specific RFI or inquiry. Nor does the record support H.R.'s contention that ACDFCD failed to communicate with H.R. or her DAR, contrary to its regulatory obligations. The DAR's communication fully confirms she understood an additional transaction verification remained outstanding. Indeed, she expressly advised she was "working on getting" the relevant documents and requested more time. Thus, H.R.'s application was not denied based on an uncommunicated requirement, but rather because the requested verification had not been provided. A-3892-24 12 It is undisputed that H.R. reported no income, investments, nor bank accounts in her application, yet ACDFCD's asset verification revealed two Bank of America accounts that she failed to disclose and closed within the look-back period. On two separate occasions, ACDFCD specifically requested account statements as well transactions in excess of $500. In addition, as noted, H.R.'s August submission evidenced over $31,000 in deposits from the Vanguard account yet H.R.'s DAR failed to provide Vanguard verification before ACDFCD's denial, even though the DAR understood the verification was required. Consistent with applicable case law and the governing regulation, H.R. was obligated to assist ACDFCD to support all necessary and supporting information to establish her eligibility. Particularly where, as here, H.R. could not establish her eligibility with corroborating documentation. ACDFCD was clearly permitted to request additional documentation notwithstanding the self- attestation. We also reject H.R.'s contention the self-attestation precluded ACDFCD from conducting a look-back of her finances or requesting corroborating records. Although we acknowledge in certain circumstances such an attestation may permit approval without a full look-back, that is not the case here, where A-3892-24 13 the application omitted two bank accounts later revealed by the asset verification search and the later produced documents disclosed more than $31,000 in Vanguard deposits within the relevant look-back period. Under such circumstances, ACDFCD was certainly entitled to require further verification and was not bound to accept the attestation. We also discern no error in the ALJ's legal conclusions that granting H.R. an extension beyond the regulatory period was discretionary and that her belated submission did not preclude ACDFCD from obtaining further verifications in the face of an incomplete application. The ALJ also determined that no extenuating circumstances warranted a further extension. In summary, all the ALJ's factual findings were based on the testimony she deemed credible and were further supported by the documentary evidence. To the extent we have not specifically addressed H.R.'s remaining arguments, it is because we have determined they lack sufficient merit to warrant extended discussion in a written opinion. R. 2:11-3(e)(1)(E). The administrative decision is supported by sufficient credible evidence on the record as a whole. R. 2:11-3(e)(1)(D). Affirmed. A-3892-24 14