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Application of Lewis v. Catastrophic Illness in Children Relief Fund Commission of the State of New Jersey

January 19, 2001

APPLICATION OF ANDREW LEWIS, BY NORMA LEWIS, PARENT AND A TRUSTEE OF THE ANDREW J. LEWIS FUND,
APPELLANT,
V.
CATASTROPHIC ILLNESS IN CHILDREN RELIEF FUND COMMISSION OF THE STATE OF NEW JERSEY,
RESPONDENT.



The opinion of the court was delivered by: Steinberg, J.A.D.

Argued: October 25, 2000

Before Judges Eichen and Steinberg.

On appeal from the Catastrophic Illness in Children Relief Fund Commission of the State of New Jersey.

Norma Lewis (the applicant), who is the mother of Andrew J. Lewis, and a co-trustee of the Andrew J. Lewis Trust,*fn1 appeals from a final determination of the Catastrophic Illness in Children Relief Fund Commission (the Fund) denying her application for reimbursement to the Trust of $41,295 that it paid for a Dodge van and modifications thereto which were necessary to permit Andrew and his wheelchair to be transported. We affirm.

The Catastrophic Illness in Children Relief Fund Act, (the Act), N.J.S.A. 26:2-148 to 159, was passed in 1987, to take effect on January 7, 1988. One of the purposes of the Act was "that each child of this State should have access to quality health care and adequate protection against the extraordinarily high costs of health care services which are determined to be catastrophic and severely impact upon a child and his family." N.J.S.A. 26:2-148(d).

To that end, the legislature considered it incumbent "to provide assistance to children and their families whose medical expenses extend beyond the families' available resources." N.J.S.A. 26:2-148(e).

A catastrophic illness is defined as "any illness or condition the medical expenses of which are not covered by any other State or federal program or any insurance contract and exceed 15% of the first $100,000 of annual income of a family plus 20% of the excess income over $100,000." N.J.S.A. 26:2-149(a).

N.J.S.A. 26:2-154(b) requires the Commission to establish procedures "to provide that, in the case of an illness or condition for which the family, after receiving assistance pursuant to this act, recovers damages for the child's medical expenses pursuant to a settlement or judgment in a legal action, the family shall reimburse the fund for the amount of assistance received, or that portion thereof covered by the amount of the damages less the expense of recovery." N.J.S.A. 26:2-150. The moneys necessary to establish and meet the purposes of the Fund are generated by a one dollar annual surcharge per employee for all employers who are subject to the New Jersey Unemployment Compensation Law. N.J.S.A. 26:2-157.

In addition, the Catastrophic Illness in Children Relief Fund Commission (the Commission) was established, N.J.S.A. 26:2-151, and was charged with the responsibility of administering the fund. Pursuant to N.J.S.A. 26:2-154(c), the Commission is authorized to "adjust the financial eligibility criteria established pursuant to" N.J.S.A. 26:2-149 "based upon the moneys available in the fund." In addition, the Commission is authorized to "[a]dopt rules and regulations in accordance with the 'Administrative Procedure Act,' P.L. 1968, c. 410 (C. 52:14B-1 et seq.) necessary to effectuate the purposes of this Act." N.J.S.A. 26:2-154(i).

The Commission adopted regulations to further aid in determining eligibility under the program. Specifically, N.J.A.C. 10:155-1.2 defines catastrophic illness as follows:

"Catastrophic illness" means any illness or condition for which the incurred medical expenses not covered by any State or Federal program or any other insurance contract or trust funds or settlements relative to the medical condition of a child exceed 10 percent of the first $100,000 of annual income of a family plus 15 percent the excess income over $100,000." [Emphasis added].

The effect of the underscored portion of the regulation is to eliminate from consideration, not only medical expenses that are covered by any other State or federal program or any insurance contract, pursuant to N.J.S.A. 26:2-149(a), but also to eliminate from consideration expenses that are covered by trust funds or settlements relative to the medical condition of the child.

Andrew was born on October 5, 1988, and has severe disabilities resulting from a premature birth. He suffers from cerebral palsy, mental retardation, visual impairments, and experiences grandmal seizures. He is unable to speak, feed himself, bathe himself, or walk further than a few steps at a time with the aid of a walker.

Andrew's parents instituted a medical malpractice claim which resulted in a net recovery of $96,004.07 that was placed in a Special Needs Trust (SNT).*fn2 Under the terms of the SNT, the trustees are authorized to make disbursements for Andrew's special needs, including, inter alia, transportation. The funds are not intended to "displace or supplant public assistance or other sources of support" which might otherwise be available to Andrew. The SNT further provided that "[f]or purposes of determining [Andrew's] public assistance eligibility, no part of the principal or undistributed income of the Trust shall be considered available to [Andrew]." Indeed, in the event the trustees are required to release trust principal or income of the Trust on Andrew's behalf to pay for benefits or services which are also available through public assistance, were it not for the existence of the Trust, the trustees are authorized to take whatever administrative or judicial steps may be necessary to continue Andrew's public assistance program eligibility. Finally, upon Andrew's death, any assets ...


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