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Assisted Living Concepts, Inc. v. New Jersey Dep't of Health and Senior Services

April 19, 2010

ASSISTED LIVING CONCEPTS, INC., APPELLANT,
v.
NEW JERSEY DEPARTMENT OF HEALTH AND SENIOR SERVICES, RESPONDENT.



On appeal from the New Jersey Department of Health and Senior Services.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued December 8, 2009

Before Judges Carchman, Lihotz and Ashrafi.

Plaintiff challenges defendant's interpretation of the scope of a certificate of need, issued to operate an assisted living residence. Plaintiff, Assisted Living Concepts (ALC), is a licensed operator of eight assisted living facilities in New Jersey, including Chapin House. On October 29, 2007, defendant, the New Jersey Department of Health and Senior Services (DHSS or the agency), issued a "cease and desist order" notifying ALC that, pursuant to the conditions of Chapin House's certificate of need, ALC was prohibited from discharging residents who converted from private pay to Medicaid waiver status. ALC did not appeal from that determination. Instead, it agreed not to discharge the resident and attempted to negotiate an acceptable proposal to resolve its obligation to accept Medicaid residents.

Correspondence was sent and meetings were held regarding a resolution to the facility's level of participation in the Medicaid program. No consensus was reached. DHSS confirmed ALC's certificate of need application represented it would not discharge residents who spent down their resources and then provided payment through Medicaid. ALC argued the provision had no binding effect, was not a condition of licensure, and requested DHSS to waive the interpretation presented in the October 29, 2007 letter. Negotiations continued.

Prompted by ALC's demand, DHSS advised, in a September 3, 2008 letter, that continued consideration of ALC's proposals for modification of its resident participation in the assisted living Medicaid waiver program was placed "on hold," pending an investigation of whether ALC had already acted to discharge residents.

On appeal, ALC maintains DHSS's imposition of the posited restrictions is unlawful and represents a post hoc restrictive condition on its license. DHSS argues the requirement prohibiting the discharge of residents who become Medicaid eligible, after "spending down" their resources, was part of ALC's licensure proposal, accepted by DHSS when it awarded the certificate of need.

Following our review of the record, we conclude the October 29, 2007 letter was a final agency decision regarding the scope of ALC's certificate of need. In contrast, the September 3, 2008 correspondence was informational only, as DHSS had not rendered a final determination on ALC's informal modification requests. Accordingly, we dismiss the appeal.

The facts are undisputed. On February 1, 1996, ALC submitted a certificate of need application to the DHSS seeking licensing approval to develop a thirty-nine unit, forty-seven bed assisted living facility in Middle Township, which became known as Chapin House.*fn1 The facility offers "an adaptable environment" providing varying levels of care in "a home-like setting," allowing each elderly resident's "aging in place." The narrative portion of ALC's application stated:

[ALC] is committed to serving a moderate to low-income population which would include Medicaid eligible clients. [ALC] will apply to become a contracted Medicaid provider to serve low-income eligible clients. Approximately 20 percent of all residents will be Medicaid clients at the opening of the building. As private-pay residents spend down this percentage may increase to as high as thirty percent. Residents will not be asked to move from the Residence because of spend-down situations.

Neither free nor below cost charity care will be provided by [ALC]. Low income individuals will instead be served primarily through the Medicaid program.

Under the statement of financial feasibility, ALC recited, "Although approximately 20 percent of all tenants are expected to be Medicaid clients, income projections were based on 100 percent private occupancy, as information on the cap for Medicaid rates is not available at this time."

In its review of ALC's application, DHSS requested ALC's proposed policy "when a resident's funds become depleted after he or she has lived in the assisted living facility for some time" and then receives only Medicaid payments. ALC responded:

A Unit Application (attached) is completed by the resident and/or designated agent with basic financial information prior to move-in. At this time, the Program Director, may assist the tenant in facilitating access to financial assistance according to eligibility criteria for applicable programs or other community resources available (i.e. ...


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