J.C. VS. DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES (DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES)

NOT FOR PUBLICATION WITHOUT THE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-4265-16T1

J.C.,

Petitioner-Appellant,

v.

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

Respondents-Respondents.
______________________________

Submitted February 5, 2019 – Decided February 21, 2019

Before Judges Rothstadt, Gilson and Natali.

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,
on the brief).

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).

PER CURIAM

Petitioner, J.C., by her designated authorized representative (DAR),

appeals from the failure of respondent, Division of Medical Assistance and

Health Services (DMAHS), to respond to her request for a hearing before the

Office of Administrative Law (OAL) to challenge a decision of the Union

County Board of Social Services (BSS) regarding her eligibility for Medicaid

benefits. After conducting a thorough review of the record in light of the

arguments raised on appeal, we remand for DMAHS to transfer the matter to the

OAL for a hearing.

On December 21, 2016, BSS posthumously approved J.C. for Medicaid

benefits from March 1, 2016 to May 24, 2016, the date of her death. Prior to

her death, J.C. identified Sharon Phillips-South and Cranford Rehab and Nursing

Center (CRNC) as her DAR. The DAR was executed by J.P., J.C.'s daughter

and power of attorney.

Subsequently, BSS made two determinations, the first on January 9, 2017,

and the second on March 1, 2017, as to J.C.'s available income for pre-eligibility

medical expenses (PEME). J.C.'s counsel, upon receipt of the BSS's January 9,

2017 decision, filed a fair hearing request with DMAHS. The OAL scheduled

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a hearing for March 1, 2017, before an Administrative Law Judge (ALJ), but

J.C.'s counsel cancelled the hearing. 1 That same day, BSS issued a revised

statement of J.C.'s available income for purposes of Medicaid eligibility,

correcting the dates for the PEME. Shortly thereafter, on March 8, 2017, J.C.'s

counsel sent DMAHS another request for a fair hearing to challenge the March

1, 2017 revised PEME calculations.

After requesting a hearing, J.C.'s counsel continued to communicate with

representatives of DMAHS, and asked that the agency honor the January 9, 2017

PEME calculation. DMAHS responded by indicating that its March 2017

calculation correctly limited J.C.'s Medicaid eligibility. Despite J.C.'s March 8,

2017 request, DMAHS failed to transfer the dispute to the OAL for a hearing.

As a result, J.C. filed this appeal.

On appeal, J.C. claims that due to DMAHS's "unlawful inaction," we

should order it to "rescind the March 1, 2017 [PEME determination] and hold

that the January 9, 2017 statement of available income be the final allocation,"

or, direct that J.C.'s appeal regarding BSS's PEME determination be transmitted

to the OAL. DMAHS, for the first time on appeal, argues that in accordance

1
It is unclear from the record why J.C. cancelled the March 1, 2017 hearing.

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with 42 C.F.R. § 435.923(c) 2 and state law, it had no obligation to respond to

CRNC's request for a hearing because CRNC's DAR "extinguished on [J.C.'s]

death" and CRNC is not the personal representative of J.C.'s estate.

J.C. responds by asserting that under a separate Medicaid regulation, 42

C.F.R. § 400.203,3 and related Medicare regulations, J.C. remains a Medicaid

"applicant" and, accordingly, the OAL is required to schedule a fair hearing.

J.C. further maintains that in accordance with the doctrine of in pari materia we

should read "42 C.F.R. § 400.203 and 42 C.F.R. § 435.923(c) as a unified and

2
42 C.F.R. § 435.923(c) provides in relevant part that the:
power to act as an authorized representative is valid
until the applicant or beneficiary modifies the
authorization or notifies the agency that the
representative is no longer authorized to act on his or
her behalf, or the authorized representative informs the
agency that he or she no longer is acting in such
capacity, or there is a change in the legal authority upon
which the individual or organization's authority was
based.
[(emphasis added).]
3
42 C.F.R. § 400.203 defines a Medicaid applicant as:
an individual whose written application for Medicaid
has been submitted to the agency determining Medicaid
eligibility, but has not received final action. This
includes an individual (who need not be alive at the
time of application) whose application is submitted
through a representative or a person acting responsibly
for the individual.
[(emphasis added).]
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harmonious whole" so as to permit CRNC to prosecute J.C.'s application before

the OAL without requiring CRNC to petition the probate court to become a

representative of J.C.'s estate.

The New Jersey Medical Assistance and Health Services Act, N.J.S.A.

30:4D-1 to -19.5, provides the authority for New Jersey's participation in the

federal Medicaid program. The DMAHS is the administrative agency within the

Department of Human Services that is charged with administering the Medicaid

program. N.J.S.A. 30:4D-7. In this regard, the DMAHS has the authority to

oversee all State Medicaid programs and issue "all necessary rules and

regulations." Ibid.

Under applicable state and federal regulations, if an "applicant" is denied

Medicaid benefits, the "applicant . . . [is] to be afforded the opportunity for a

fair hearing in the manner established by the policies and procedures set forth

in N.J.A.C. 10:49-10 and 10:69-6." N.J.A.C. 10:71-8.4(a); 42 C.F.R. § 431.220.

Applicants have the right to fair hearings when "their claims . . . are denied or

are not acted upon with reasonable promptness . . . ." N.J.A.C. 10:49-10.3(b);

42 C.F.R. § 431.220(a)(1). Requests for fair hearings must be submitted to

DMAHS in writing within twenty days of the denial, reduction, or partial denial

of Medicaid benefits. N.J.A.C. 10:49-10.3(b)(1) and (3); 42 C.F.R. §

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431.221(d). According to J.C., a fair hearing can only be denied if "the applicant

withdraws the request in writing, or if the applicant fails to appear at a scheduled

hearing without good cause." See 41 C.F.R. § 431.223.

We interpret DMAHS's argument that it failed to schedule a fair hearing

because CRNC was "an unauthorized third party," as a claim that CRNC did not

have standing, and therefore, no right to request a hearing, as N.J.A.C. 10:71-

8.4 permits fair hearings only for an "applicant." See also 42 C.F.R. § 431.221.

We conclude that DMAHS shall transfer the matter to the OAL for it to address

that standing claim, and if CRNC is successful, the merits of the dispute related

to the BSS's March 1, 2017 revised PEME calculations at a fair hearing

conducted consistent with fundamental notions of due process. A hearing will

permit DMAHS to exercise its "special competence" and address in the first

instance whether CRNC is an applicant with standing, after considering 42

C.F.R. § 400.203, 42 C.F.R. § 435.923(c), and the related Medicare regulations

cited by J.C. See Muise v. GPU, Inc., 332 N.J. Super. 140, 158, (App. Div.

2000) (quoting Daaleman v. Elizabethtown Gas Co., 77 N.J. 267, 269 n.1

(1978)).

At that hearing, it will be necessary for the OAL to make factual findings

regarding the circumstances surrounding the scheduling of the fair hearing on

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March 1, 2017, to address the January 9, 2017 dispute between J.C. and the BSS,

and the legal effect, if any, on that initial referral. As noted, the OAL scheduled

that hearing, despite J.C.'s death, which is contrary to DMAHS's current position

that J.C.'s passing represented a "change in the legal authority upon which the

individual or organization's authority was based," see 42 C.F.R. § 435.923(c),

requiring a new DAR by an estate representative.

If the OAL determines CRNC has standing, it should address J.C.'s

claims on the merits. In the event CRNC is deemed not to have standing, the

OAL should also determine whether J.C.'s estate should be permitted, under the

circumstances, to identify a new DAR for the purposes of prosecuting J.C.'s

claim at a fair hearing. The OAL's ruling may be reviewed or challenged before

the agency, and ultimately by this court if further review is sought.

Accordingly, we remand for DMAHS to transfer the matter for a hearing

before the OAL. We do not retain jurisdiction.

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