On appeal from the Department of Human Services, Division of Medical Assistance and Health Services.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted December 7, 2009
Before Judges Alvarez and Coburn.
Petitioner J.C. appeals final agency decisions of the New Jersey Department of Human Services denying her Medicaid, Work First New Jersey/General Assistance and Food Stamp benefits. The appeals were calendared back-to-back, and we now consolidate them for disposition in a single opinion. We affirm on both appeals.
Some background is necessary. The workers' compensation court awarded petitioner $308 per week on July 16, 2007, finding her to be totally and permanently disabled due to injuries sustained at her place of employment as a result of a fall. After the workers' compensation matter was completed, a document was prepared in her behalf titled "special needs trust," purporting to comply with and, in fact, specifically citing to, the requirements of 42 U.S.C.A. § 1396. Although not corroborated in the record we have been provided, according to petitioner's brief, this document was on an unspecified date presented to a Law Division judge for "approval." The trust document was signed on September 6, 2007, by petitioner, the named trustee, who is petitioner's mother, and the workers' compensation judge.
The trust states that its purpose is to "supplement rather than supplant, impair or diminish governmental entitlements." Contemporaneously with the creation of the trust, petitioner applied for Work First New Jersey/General Assistance and Food Stamp benefits and Medicaid. Because the special needs trust was not deemed to exempt petitioner's workers' compensation funds from inclusion in the eligibility determination, benefits were denied by the Ocean County Board of Social Services (OCBSS).
Overall, on judicial review, "[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)). See also Aqua Beach Condo. Ass'n v. Dep't of Cmty. Affairs, 186 N.J. 5, 15-16 (2006) (citations omitted). The agency decision must be supported by substantial credible 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)). It must not offend either the state or federal constitution and must accord with the agency's legislative mandate. See ibid. (citation omitted). "The burden of demonstrating that the agency's action was arbitrary, capricious or unreasonable rests upon the [party] challenging the administrative action." In re Arenas, 385 N.J. Super. 440, 443-44 (App. Div.), certif. denied, 188 N.J. 219 (2006) (citations omitted). See also Barone v. Dep't of Human Servs., 210 N.J. Super. 276, 285 (App. Div. 1986), aff'd, 107 N.J. 355 (1987) (citations omitted).
The Department of Human Services, Division of Medical Assistance and Health Services (DMAHS), issued its final decision denying petitioner Medicaid benefits on May 31, 2008. In his final decision, the Director of DMAHS reversed the initial decision made by an Administrative Law Judge (ALJ) after the matter was transmitted to the Office of Administrative Law as a contested case upon petitioner's appeal of the OCBSS denial of Medicaid benefits. We affirm the final agency determination essentially for the reasons stated in the May 31, 2008 letter of decision. We make only the following comments.
The matter was heard by the ALJ on February 13, 2008. His initial decision concluded that because J.C. was a disabled adult and the trust was "irrevocable," the workers' compensation payments allotted to her were exempt from inclusion in the calculation for Medicaid eligibility. The matter was then returned to DMAHS, and the OCBSS exceptions to the initial decision followed.
A special needs trust that effectively exempts assets or income from inclusion in Medicaid eligibility calculation can be established for the benefit of an individual deemed disabled pursuant to 42 U.S.C.A. § 1382c(a)(3). 42 U.S.C.A. § 1396p(d)(4)(A). The disability determination, however, can only be made by the Social Security Administration or the state disability review team, and only based on the definition set forth in the federal statute. See N.J.A.C. 10:71-3.10 to -3.12(a). Hence, the workers' compensation court judgment as to petitioner's disability, issued by a judge in the workers' compensation context, is not dispositive of whether she is "disabled" pursuant to the federal definition. See N.J.A.C. 10:71-3.10. As the Director of DMHS stated, unless and until petitioner is found to be disabled by the Social Security Administration or the state disability review team, she is not entitled to protect her assets through the use of a special needs trust. See Determining Disability and Blindness, 20 C.F.R. § 404.1504 (2009); Determining Disability and Blindness, 20 C.F.R. § 416.904 (2009).
For that reason, petitioner's points on appeal that a special needs trust is recognized by state and federal law are irrelevant. Unless petitioner's threshold disability determination is made in the legislatively authorized manner, we need look no further, as no qualified special needs trust can be created for a person not deemed disabled. This agency decision was therefore not arbitrary, capricious or unreasonable. It complied with DMAHS's legislative mandate, both federal and state.
Furthermore, contrary to petitioner's assertion, the fact that the ALJ noted that her disability was not disputed does not relieve her of the obligation to adhere to federal and state requirements. The ALJ did not refer to the federal definition of disability that is a prerequisite to the creation of a special needs trust in his initial decision; he did not address this issue at all. In ...