Caregiver exemption to Medicaid not proven here R.K. v DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES, and CAPE MAY COUNTY BOARD OF SOCIAL SERVICES,
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2881-17T1
R.K.,
Petitioner-Appellant,
v.
DIVISION OF MEDICAL
ASSISTANCE AND HEALTH
SERVICES, and CAPE MAY
COUNTY BOARD OF SOCIAL
SERVICES,
Defendants-Respondents.
______________________________
Submitted October 8, 2019 – Decided December 5, 2019
Before Judges Gilson and Rose.
On appeal from the New Jersey Department of Human
Services, Division of Medical Assistance and Health
Services.
SB2, Inc., attorneys for appellant (Laurie M. Higgins,
of counsel and on the briefs).
Gurbir S. Grewal, Attorney General, attorney for
respondent Division of Medical Assistance and Health
Services (Melissa H. Raksa, Assistant Attorney
General, of counsel; Mark D. McNally, Deputy
Attorney General, on the brief).
Respondent Cape May County Board of Social Services
has not filed a brief.
PER CURIAM
Petitioner R.K. appeals from a final agency decision by the Division of
Medical Assistance and Health Services (the Division) that imposed a 199-day
period of ineligibility for Medicaid benefits. That ineligibility was based on
R.K. having transferred her ownership interest in a home to her daughter and
son-in-law within sixty months of entering a nursing home facility. R.K. argues
that the Division acted arbitrarily and capriciously in rejecting a determination
by an administrative law judge (ALJ) that R.K. qualified for the caregiver
exemption. The Division found that R.K. submitted insufficient evidence to
support the exemption. Given our deferential standard of review, we discern no
basis to reject the Division's determination and, therefore, we affirm.
I.
R.K. was admitted to the Autumn Lake Healthcare Nursing Home at
Ocean View on April 22, 2015. Four months later, in August 2015, a Medicaid
application was submitted on her behalf to the Cape May County Board of Social
Services, the county welfare agency (CWA) responsible for reviewing such
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applications. The CWA approved R.K. for Medicaid benefits as of May 1, 2015
but imposed an asset transfer penalty. The penalty was based on R.K. having
transferred her one-third interest in her home in 2011 to her daughter and son-
in-law.
R.K. requested a fair hearing to dispute the transfer penalty. The matter
was transmitted to the Office of Administrative Law (OAL) and a hearing was
held before an ALJ in 2016. In May 2016, the ALJ issued an initial decision
reversing the transfer penalty. The ALJ found that R.K.'s 2011 transfer of her
interest in her home met the caregiver exemption. In making that determination,
the ALJ accepted the evidence submitted by R.K. that her daughter had provided
care to her for two years before R.K. went into the nursing home that allowed
R.K. to remain at home rather than be institutionalized.
On administrative appeal, the Division rejected the ALJ's decision
because the record did not support the ALJ's findings. The Division foun d that
R.K. had not provided competent medical evidence about her physical condition
for the two years before she entered the nursing home. Specifically, the Division
rejected an affidavit from Dr. Jenny Lynn Cook because that affidavit did not
state that Dr. Cook had treated R.K. Consequently, the Division remanded the
matter to the OAL for further development of the record. The Division also
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directed the ALJ to clarify who paid for the adult daycare and hospice services
R.K. received before going to the nursing home.
In 2017, a second hearing was held before the same ALJ. After
considering additional evidence, on October 16, 2017, the ALJ again found that
R.K. was entitled to the caregiver exemption and reversed the transfer penalty.
The ALJ relied on records that showed that R.K. had received hospice care since
November 7, 2013. Those records showed that in November 2013, R.K. was
diagnosed with congestive heart failure, atrial fibrillation, cerebral vascular
accident (stroke), dementia, and depression. The ALJ also found that R.K. had
received medical care provided by an adult day care facility from June 2014
until December 2014, and hospice services from November 2013 that continued
through R.K.'s institutionalization. Those services had been paid for by R.K.'s
private insurance and Medicare. The ALJ held that such insurance and Medicare
did not constitute governmental benefits such as Medicaid and, thus, did not
disqualify R.K. from the caregiver exemption.
On a second administrative appeal, the Division again rejected the ALJ's
determination in a final agency decision issued on January 16, 2018. The
Division found that R.K. had not provided medical documentation showing her
medical condition for the full two-year period required by the caregiver
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exemption. Specifically, the Division found that R.K. "provided no medical
evidence whatsoever about her condition from March 2013 through November
2013." In making that finding, the Division pointed out that the records
concerning R.K.'s hospice services began in November 2013. The Division also
stated that it had previously rejected the affidavit of Dr. Cook and R.K. had not
provided any other medical documentation concerning her condition before
November 2013.
In addition, the Division rejected the ALJ's determination that the
healthcare services R.K. received from her private insurer and Medicare should
not be considered in determining whether R.K.'s daughter's care was the reason
that R.K. remained at home for the two-year caregiving period. The Division
held that the ALJ's interpretation was inconsistent with the plain language of the
regulations defining the caregiver exemption, which the Division construed to
require that the care be provided by the daughter.
II.
R.K. now appeals from the Division's January 16, 2018 final agency
determination imposing the transfer penalty. She makes three arguments: (1)
the transfer of R.K.'s interest in her home is exempt from any penalty under the
caregiver exemption; (2) the Division engaged in unlawful rule making when it
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considered the care provided by the adult daycare center and the hospice
provider; and (3) the Division acted arbitrarily, capriciously, and unreasonably
by rejecting the facts found by the ALJ.
Our role in reviewing an agency decision is limited. R.S. v. Div. of Med.
Assistance and Health Servs., 434 N.J. Super. 250, 260-61 (App. Div. 2014)
(citing Karins v. City of Atl. City, 152 N.J. 532, 540 (1998)). We "defer to the
specialized or technical expertise of the agency charged with administration of
a regulatory system." In re Virtua-W. Jersey Hosp. Voorhees for Certificate of
Need, 194 N.J. 413, 422 (2008) (citing In re Freshwater Wetlands Prot. Act
Rules, 180 N.J. 478, 488-89 (2004)). "[A]n appellate court ordinarily should
not disturb an administrative agency's determinations or findings unless there is
a clear showing that (1) the agency did not follow the law; (2) the decision was
arbitrary, capricious, or unreasonable; or (3) the decision was not supported by
substantial evidence." Ibid. (citing In re Herrmann, 192 N.J. 19, 28 (2007)).
A presumption of validity attaches to the agency's decision. Brady v. Bd.
of Review, 152 N.J. 197, 210 (1997); In re Tax Credit Application of Pennrose
Properties, Inc., 346 N.J. Super. 479, 486 (App. Div. 2002). The party
challenging the validity of the agency's decision has the burden of showing that
it was arbitrary, capricious, or unreasonable. J.B. v. N.J. State Parole Bd., 444
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6 N.J. Super. 115, 149 (App. Div. 2016) (quoting In re Arenas, 385 N.J. Super.
440, 443-44 (App. Div. 2006)). "Deference to an agency decision is particularly
appropriate where interpretation of the Agency's own regulation is in issue."
I.L. v. N.J. Dep't. of Human Servs., Div. of Med. Assistance and Health Servs.,
389 N.J. Super. 354, 364 (App. Div. 2006) (citing H.K. v. Div. of Med.
Assistance and Health Servs., 379 N.J. Super. 321, 327 (App. Div. 2005)).
Nevertheless, "an appellate court is '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 and 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)).
When an agency head rejects or modifies an ALJ's "findings of facts,
conclusions of law[,] or interpretations of agency policy in the decision . . ." the
agency head "shall state clearly the reasons for doing so." N.J.S.A. 52:14B- -
10(c). Moreover, an agency is not required to accept an ALJ's findings when
those findings "are arbitrary, capricious[,] or unreasonable or are not supported
by sufficient, competent, and credible evidence in the record." Ibid.
Nevertheless, when rejecting or modifying an ALJ's findings of fact, "the agency
head must explain why the ALJ's decision was not supported by sufficient
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credible evidence or was otherwise arbitrary." Cavalieri v. Bd. of Trs. of Pub.
Employees Ret. Sys., 368 N.J. Super. 527, 534 (App. Div. 2004) (first citing
N.J.S.A. 52:14B-10(c); then citing S.D. v. Div. of Med. Assistance & Health
Servs., 349 N.J. Super. 480, 485 (App. Div. 2002)).
Medicaid is a federally-created, state-implemented program that provides
"'medical assistance to the poor at the expense of the public.'" Estate of
DeMartino v. Div. of Med. Assistance and Health Servs., 373 N.J. Super. 210,
217 (App. Div. 2004) (quoting Mistrick v. Div. of Med. Assistance and Health
Servs., 154 N.J. 158, 165 (1998)); see also 42 U.S.C. § 1396-1. Once a state
elects to participate and has been accepted into the Medicaid program, it must
comply with the Medicaid statutes and federal regulations. See Harris v. McRae,
448 U.S. 297, 301 (1980); United Hosps. Med. Ctr. v. State, 349 N.J. Super. 1,
4 (App. Div. 2002); see also 42 U.S.C. §§ 1396a, 1396b (2019).
New Jersey participates in the federal Medicaid program pursuant to the
New Jersey Medical Assistance and Health Services Act, N.J.S.A. 30:4D-1 to -
19.5. Eligibility for Medicaid in New Jersey is governed by regulations adopted
in accordance with the authority granted by N.J.S.A. 30:4D-7 to the
Commissioner of the Department of Human Services (DHS). The Division is a
unit within DHS that administers the Medicaid program. N.J.S.A. 30:4D-5, -7;
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8 N.J.A.C. 10:49-1.1. Consequently, the Division is responsible for protecting the
interests of the New Jersey Medicaid program and its beneficiaries. N.J.A.C.
10:49-11.1(b).
The Medicaid regulations deem an applicant ineligible for nursing home
benefits if the individual "has disposed of assets at less than fair market value at
any time during or after the [sixty]-month period immediately before . . . the
date the individual applies for Medicaid as an institutionalized individual [,]"
(the look-back period). N.J.A.C. 10:71-4.10(a); see also N.J.A.C. 10:71-
4.10(b)(9)(ii). If it is determined that the applicant transferred an asset for less
than fair market value during the look-back period, the applicant will be subject
to a period of Medicaid ineligibility. N.J.S.A. 30:4D-3(i)(15)(b); N.J.A.C.
10:71-4.10(c)(4).
There are limited exemptions to the transfer penalty rules. Once such
exemption is the caregiver exemption. N.J.A.C. 10:71-4.10(d). Under that
exemption, an individual will not be subject to a penalty when the individual
transfers an "equity interest in a home which serves (or served immediately prior
to entry into institutional care) as the individual's principal place of residence "
and when "title to the home" is transferred to a daughter or son under certain
circumstances. Ibid. Those circumstances include that the son or daughter must
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have resided in the home for "at least two years immediately before" the
individual becomes institutionalized and the son or daughter must have
"provided care to such individual which permitted the individual to reside at
home rather than in an institution or facility." N.J.A.C. 10:71-4.10(d)(4). The
care provided by the son or daughter must exceed "normal personal support
activities" and the individual's physical or mental condition must be such that
he or she "require[d] special attention and care." N.J.A.C. 10:71-4.10(d)(4)(i).
R.K. was admitted to the nursing home in April 2015. Consequently, to
qualify for the caregiver exemption, R.K. must demonstrate that from April 2013
to April 2015, her daughter provided a level of care that allowed R.K. to reside
at home rather than an institution or facility.
The Division determined that there were no medical records
demonstrating that R.K. required a special level of care from March 2013 up to
November 2013. Specifically, the Division focused on the lack of any evidence
concerning R.K.'s medical condition during that period of time. Our review of
the records demonstrates that there was no evidence concerning R.K.'s medical
condition during that period of time. Consequently, the Division's determination
is supported by the record and we discern no basis for rejecting that
determination.
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In her second argument, R.K. contends that the Division engaged in
unlawful rule making when it determined that the care provided by the adul t
daycare center and the hospice provider disqualified R.K. from the caregiver
exemption. More specifically, the Division determined that the care that
allowed R.K. to remain in her home had to be provided by her daughter rather
than from other services. We need not reach this issue. The Division's
determination concerning the regulations was a second and alternative ground
for rejecting the ALJ's determination. We have already accepted the first
ground, which was that there were no records establishing R.K.'s medical
condition between March 2013 and up to early November 2013.
Finally, R.K. contends that the Division acted arbitrarily, capriciously,
and unreasonably in rejecting the ALJ's findings. As already noted, the Division
rejected the ALJ's determination because there were no medical records
establishing R.K.'s medical condition between March 2013 and up to November
2013. The Division has the authority to reject an ALJ's findings when they are
not supported by "sufficient, competent, and credible evidence in the record."
Affirmed.
