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Manuel Guaman, Maria Guaman, Nadia Chery, Deyinira Valenzuela, Rosa v. Jennifer Velez

July 12, 2011


On appeal from the Adoption and Amendment of Regulations by the Department of Human Services, Division of Medical Assistance and Health Services.

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



Motion Argued April 5, 2011

Before Judges Carchman, Graves and Messano.

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

Plaintiffs are legal resident aliens who have resided in this country for less than five years. They seek emergent relief enjoining enforcement of Medicaid Communication 10-01 and N.J.A.C. 10:78-3.2, as amended and adopted on May 28, 2010, which authorized termination of their enrollment in the NJ FamilyCare Program (FamilyCare), a state-funded Medicaid program offering subsidized health insurance to qualifying low-income adults and children. Pursuant to the issuance of the communication by the Division of Medical Assistance and Health Services (the Division), and adoption of the regulation by the Department of Human Services (DHS, and collectively, defendants), several thousand legal resident aliens were terminated from FamilyCare, and several thousand more became ineligible to enroll, resulting in an estimated $29.8 million in savings for the State. See id. at 1405. Plaintiffs argue that the agency actions are ultra vires, violate the equal protection guarantees of the Federal and State Constitutions, and will cause them to suffer irreparable harm unless injunctive relief is ordered.

On January 11, 2011, we granted plaintiffs leave to file a motion for emergent relief on an expedited basis and ordered briefing of the issues presented. In the interim, plaintiffs moved: 1) to file a proposed class member's certification under seal because disclosure of his identity would pose a risk to his safety from terrorist groups in his native country; and 2) to permit thirteen organizations to appear as amici curiae.*fn1 We granted those motions and heard oral argument from the parties and amici on April 5, 2011.

"[A] party who seeks mandatory preliminary injunctive relief must satisfy a 'particularly heavy' burden." Rinaldo v. RLR Inv., LLC, 387 N.J. Super. 387, 396 (App. Div. 2006) (quoting Punnett v. Carter, 621 F.2d 578, 582 (3d Cir. 1980)). A successful applicant must demonstrate by clear and convincing evidence, Am. Emp'rs' Ins. Co. v. Elf Atochem N. AM., 280 N.J. Super. 610-611 n.8 (App. Div. 1995), that a stay is necessary to prevent irreparable harm, that the legal right underlying the claim is settled, that the material facts are substantially undisputed, that the applicant has a reasonable probability of success on the merits, and that a balancing of the equities and the hardships weighs in favor of granting relief. Crowe v. De Gioia, 90 N.J. 126, 132-34 (1982). Having considered the arguments raised in light of the record and these applicable legal standards, we deny plaintiffs' motion for a preliminary injunction staying enforcement of Medicaid Communication 10-01 and N.J.A.C. 10:78-3.2.


We review the relevant statutory framework and provide some factual and procedural background that is undisputed.

While each State has significant discretion in designing its own Medicaid programs, A.K. v. Div. of Med. Assistance & Health Servs., 350 N.J. Super. 175, 178-79 (App. Div. 2002), they are subject to the approval of the United States Secretary of Health and Human Services, and each state must comply with the minimum requirements imposed by the Federal Medicaid Act in order to receive federal matching funds. Atkins v. Rivera, 477 U.S. 154, 157, 106 S. Ct. 2456, 2458, 91 L. Ed. 2d 131, 137 (1986); 42 U.S.C.A. § 1396a.

In 1968, New Jersey elected to participate in the Medicaid program by enacting the "'New Jersey Medical Assistance and Health Services Act,'" N.J.S.A. 30:4D-1 to -19.5, administered by DHS through the Division. N.J.S.A. 30:4D-3(c) and 30:4D-4. The program enables the State:

[T]o provide medical assistance, insofar as practicable, on behalf of persons whose resources are determined to be inadequate to enable them to secure quality medical care at their own expense, and to enable the State, within the limits of funds available for any fiscal year for such purposes, to obtain all benefits for medical assistance provided by the Federal Social Security Act. [N.J.S.A. 30:4D-2 (emphasis added).]

As originally enacted, our statute conformed to the broad federal eligibility guidelines which then mandated coverage for non-citizen lawful permanent residents regardless of their date of entry or length of residency in the United States. L. 1968, c. 413. See Monmouth Med. Ctr. v. Hau Kwok, 183 N.J. Super. 494, 497 (App. Div. 1982); 45 C.F.R. § 233.50 (1973); 42 C.F.R. § 435.402(b) (1990). A "'[q]ualified applicant'" was initially defined as "a resident of this State . . . determined to need medical care and services as provided under this act[.]" L. 1968, c. 413. See Monmouth Med. Ctr., supra, 183 N.J. Super. at 496 (quoting N.J.A.C. 10:94-3.2 (supp. 12-8-76)(repealed 2010)). (an "'applicant must be a resident of the United States who is either a citizen or an alien lawfully admitted for permanent residence or otherwise permanently residing in the United States under color of law'").

In 1996, Congress enacted the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), 8 U.S.C.A. §§ 1601 to 46, and significantly limited a non-citizen's access to federally-subsidized medical benefits. A.B. v. Div. of Med. Assistance & Health Servs., 407 N.J. Super. 330, 343 (App. Div.), certif. denied, 200 N.J. 210 (2009). PRWORA's self-declared purpose was "to remove the incentive for illegal immigration provided by the availability of public benefits."

8 U.S.C.A. § 1601(6).

To that end, PRWORA divided aliens into two categories -- qualified and unqualified -- and limited Medicaid eligibility to "qualified aliens," which it narrowly defined as lawful permanent residents, designated refugees, aliens granted asylum, and other specified categories of lawfully-present aliens. 8 U.S.C.A. §§ 1612(b), 1641(b). Only qualified aliens who entered the country prior to August 22, 1996, or otherwise lived in the country for five years from the date of lawful permanent resident designation (the five-year bar), however, were eligible for non-emergency federal Medicaid benefits. 8 U.S.C.A. §§ 1612(b)(2)(B), 1613(a). For all intents and purposes, federally-funded Medicaid is largely unavailable for people arriving in the United States after August 22, 1996 unless they have resided in this country for at least five years. 8 U.S.C.A. § 1613(a). Further, PRWORA provided:

With respect to the State authority to make determinations concerning the eligibility of qualified aliens for public benefits . . ., a State that chooses to follow the Federal classification in determining the eligibility of such aliens for public assistance shall be considered to have chosen the least restrictive means available for achieving the compelling governmental interest of assuring that aliens be self-reliant in accordance with national immigration policy. [8 U.S.C.A. § 1601(7) (emphasis added).] Nonetheless, PRWORA permits States to provide State-funded benefits to aliens not otherwise eligible for federal Medicaid benefits. 8 U.S.C.A. §§ 1622(a), 1624(a). States may elect to offer state-funded coverage to all, some, or no qualified aliens residing in the United States for less than five years.

Our legislature thereafter amended the statutory definition of "'[q]ualified applicant'" to mean "a person who is a resident of this State, and either a citizen of the United States or an eligible alien[.]" N.J.S.A. 30:4D-3(i). An "'[e]ligible alien'" was defined, in part, as "a lawful permanent resident" who entered the United States prior to August 22, 1996, or if entry occurred after August 22, 1996, "who entered the United States at least five years ago." N.J.S.A. 30:4D-3(q).

In 2005, the Legislature adopted The Family Health Care Coverage Act (FHCCA), N.J.S.A. 30:4J-8 to -19, which reestablished, reformed, and expanded a prior program to provide subsidized health insurance coverage to qualifying children, pregnant women, and low-income parents, guardians, and individuals, "within the limits of funds appropriated or otherwise made available for the program." N.J.S.A. 30:4J-12(a) (emphasis added).*fn2 The new FamilyCare program was intended to address the "most serious health problem" facing state residents, namely, the "lack of access to affordable health care coverage," which forced "families to go without needed preventive and other non-emergency care until serious illness require[d] expensive hospital care." N.J.S.A. 30:4J-9(a). The program, which was re-opened to parents and other low-income adults, was designed, in part, to reduce State appropriations for charity care.

The FHCCA defined a "'[q]ualified applicant'" as a low income child, parent or caretaker, or single adult or couple without children, who had no health insurance, was ineligible for Medicaid, was a resident of the state, and was "a citizen of the United States, or ha[d] been lawfully admitted for permanent residence into and remain[ed] lawfully present in the United States[.]" N.J.S.A. 30:4J-11. Thus, in contrast to other state Medicaid programs, the Legislature elected to offer FamilyCare benefits to qualified aliens otherwise ineligible for federal Medicaid because of the five-year bar. DHS readopted the prior FamilyCare regulations, N.J.A.C. 10:78-1.1 to -11.5, and, in accordance with the statutory scheme, all otherwise-qualified aliens lawfully admitted for permanent residence were eligible to participate in the program regardless of the date of entry into the country or length of residency. N.J.A.C. 10:78-3.2(a) (amended 2010); 38 N.J.R. 2606 (June 19, 2006); 38 N.J.R. 4225 (October 2, 2006).

Eligibility for FamilyCare was expanded by the Legislature in 2008 when it enacted the "New Jersey Health Care Reform Act," N.J.S.A. 26:15-1 to -2, which, in part, expanded eligibility to parents with incomes from 133% to 200% of the federal poverty level, and mandated that all children in the state have health care coverage either through private or public programs.

N.J.S.A. 26:15-1(g). The Legislature did not amend the broad definition of a "qualified applicant" contained in the FHCCA.

On June 29, 2009, the Legislature approved the annual Appropriations Act for fiscal year 2010 (FY 2010 Act), which authorized the Commissioner to promulgate regulations to "change or adjust the . . . non-financial eligibility requirements for some or all of the applicants or beneficiaries in the program," and to "suspend in whole or in part the processing of applications for any or all categories of individuals covered by the program." L. 2009, c. 68. The Commissioner was also authorized to modify the program, based upon a plan approved by the Director of the Division of Budget and Accounting, to ensure that program expenditures would not exceed the amount appropriated. Ibid. On February 12, 2010, Governor Christie signed an Executive Order freezing the level of State spending.

On March 2, 2010, John R. Guhl, Director of the Division, issued Medicaid Communication No. 10-01, which provided:

The State of New Jersey is facing unprecedented financial crisis. The budget appropriation language [FY 2010 Act] grants authority to the Commissioner of the Department of Human Services to modify enrollment levels in the NJ FamilyCare program as deemed necessary to ensure that monies expended for that program do not exceed the amount appropriated. Therefore, the following changes will be made to the NJ FamilyCare program:

Effective March 31, 2010 coverage for non-pregnant Restricted Alien adults, who would have been lawfully admitted for permanent resident [sic] but not in this country five years with that status, will cease. . . . This change will not affect ...

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