NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued June 5, 2013.
On appeal from the Department of Human Services, Division of Medical Assistance and Health Services, Docket Nos. HMA 2659-11 (A-2456-11), HMA 12902-11 (A-4744-11), HMA 8956-11 (A-5761-11), and HMA-0890-12 (A-0109-12).
Joshua M. Spielberg argued the cause for appellants (Legal Services of New Jersey, attorneys; Mr. Spielberg, of counsel and on the briefs; Melville D. Miller, Jr., on the briefs).
Jennifer L. Finkel, Deputy Attorney General, argued the cause for respondent (Jeffrey S. Chiesa, Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel and on the brief; Ms. Finkel and Vicki A. Mangiaracina, Deputy Attorney General, on the briefs).
Before Judges Simonelli, Koblitz and Accurso.
Appellants appeal from the final agency decision of respondent New Jersey Department of Human Services (DHS), Division of Medical Assistance and Health Services (DMAHS) terminating them from the New Jersey FamilyCare Medicaid program (NJFC). We affirm.
We begin with a review of the relevant authority and undisputed factual background.
Medicaid is a federally-created, state-implemented program that provides "'medical assistance to the poor at the expense of the public.'" Estate of DeMartino v. Div. of Med. Assist. & Health Servs., 373 N.J.Super. 210, 217 (App. Div. 2004) (quoting Mistrick v. Div. of Med. Assist. & Health Servs., 154 N.J. 158, 165 (1998)), certif. denied, 182 N.J. 425 (2005); 42 U.S.C.A. § 1396-1. Although a state is not required to participate, once it has been accepted into the Medicaid program it must comply with the Medicaid statutes and federal regulations. See Harris v. McRae, 448 U.S. 297, 301, 100 S.Ct. 2671, 2680, 65 L.Ed.2d 784, 794 (1980); United Hosps. Med. Ctr. v. State, 349 N.J.Super. 1, 4 (App. Div. 2002); 42 U.S.C.A. § 1396a(a) and (b). The state must adopt "'reasonable standards . . . for determining eligibility for . . . medical assistance [that are] consistent with the objectives' of the Medicaid program, "
Mistrick, supra , 154 N.J. at 166 (quoting L.M. v. Div. of Med. Assist. & Health Servs., 140 N.J. 480, 484 (1995)), and "provide for taking into account only such income and resources as are . . . available to the applicant." N.M. v. Div. of Med. Assist. & Health Servs., 405 N.J.Super. 353, 359 (App. Div.) (internal quotation marks omitted), certif. denied, 199 N.J. 517 (2009); see 42 U.S.C.A. § 1396a(a)(17)(A)-(B).
New Jersey participates in the federal Medicaid program pursuant to the New Jersey Medical Assistance and Health Services Act, N.J.S.A. 30:4D-1 to -19.5. Eligibility for Medicaid in New Jersey is governed by regulations adopted in accordance with the authority granted by N.J.S.A. 30:4D-7 to the Commissioner of DHS (Commissioner). DMAHS is the agency within DHS that administers the Medicaid program. N.J.S.A. 30:4D—5 & -7; N.J.A.C. 10:49-1.1. Accordingly, DMAHS is responsible for protecting the interests of the New Jersey Medicaid Program and its beneficiaries. N.J.A.C. 10:49-11.1(b).
NJFC is a "federal and state funded health insurance program created to help New Jersey's uninsured children and certain low-income parents and guardians to have affordable health coverage." S.J. v. Div. of Med. Assist. & Health Servs., 426 N.J.Super. 366, 368, n.1 (App. Div.) (citations and internal quotation marks omitted), certif. denied, 212 N.J. 461 (2012). A family whose income does not exceed 133% of the federal poverty level (FPL) may be eligible for NJFC. N.J.A.C. 10:49-2.5(a).
DMAHS provides Medicaid benefits under the umbrella of NJFC through a number of sub-programs, including the Aid to Families with Dependent Children-related Medicaid program (AFDC-related Medicaid), N.J.A.C. 10:69-1.1 to -12.10, which includes the Transitional Medicaid program (TMP), N.J.S.A. 30:4D-6c and N.J.A.C. 10:69-5.13; and the Children's Health Insurance program (CHIP), N.J.S.A. 30:4J-8 to -19 and N.J.A.C. 10:79-1.1 to -8.10. See also N.J.A.C. 10:49-1.2 & -1.3. Although NJFC administers both programs under the NJFC label, they are separate programs with separate funding, application procedures and eligibility requirements. See N.J.A.C. 10:69-1.1 to -12.10 (AFDC-related Medicaid including TMP); N.J.A.C. 10:79-1.1 to -8.10 (CHIP); S.J., supra , 426 N.J.Super. at 375-77.
AFDC-related Medicaid "is a State program with Federal participation. It is designed to make payments to providers for medical care and services on behalf of certain individuals whose income is determined to be inadequate to enable them to secure quality medical care at their own expense." N.J.A.C. 10:69-1.4(a). Benefits are provided through the Medicaid program under Title XIX of the Social Security Act (SSA). 42 U.S.C.A. § 1396;
S.J., supra , 426 N.J.Super. at 368.
CHIP "is a program administered by [DMAHS, DHS] to provide plan-defined health care benefits to certain children" who do not qualify for Medicaid but are in families that cannot afford health insurance. N.J.A.C. 10:79-1.1(a); see also 42 U.S.C.A. § § 1397aa to 1397mm. Benefits are provided under Title XXI of the SSA. 42 U.S.C.A. § 1397aa;
S.J., supra , 426 N.J.Super. at 368.
AFDC-related Medicaid and CHIP are need-based or means-tested assistance programs, meaning, "eligibility is determined on the basis of the income or resources of the recipient." Gifford v. Benjamin, 383 N.J.Super. 516, 519 (App. Div. 2006) (citations and internal quotation marks omitted). Thus, to be eligible for AFDC-related Medicaid, applicants must meet the income standards set forth in N.J.A.C. 10:69-10.1 to -10.4; to be eligible for CHIP, applicants must meet the income standards set forth in N.J.A.C. 10:79-4.1 to -4.5.
For AFDC-related Medicaid, income may be earned or unearned. N.J.A.C. 10:69-10.10. Unemployment insurance (UI), Social Security Disability Income (SSDI) and Temporary Disability Income (TDI) are considered unearned income, N.J.A.C. 10:69-10.18; 20 C.F.R. 416.1121, as is child support, N.J.A.C. 10:69-10.18, -10.21; see also N.J.A.C. 10:69-10.3(a) (explaining that child support is counted in the income eligibility determination). An applicant is ineligible for AFDC-related Medicaid if the household's total earned or unearned income for any month exceeds the applicable amount for the appropriate household size. N.J.A.C. 10:69-10.3.
After an applicant becomes eligible for AFDC-related Medicaid, he or she must submit a yearly redetermination application to determine continuing eligibility. N.J.A.C. 10:69-5.2. In the meantime, the applicant has a continuing obligation to "furnish accurate and timely information . . . concerning changes in income or other circumstances which may affect the receipt of benefits" and must inform NJFC "of any change as soon as possible but in no event later than two weeks after the change takes place." N.J.A.C. 10:69-5.12; see also N.J.A.C. 10:78-2.7 (stating that NJFC recipients have an "ongoing responsibility to report changes in family circumstances"); N.J.A.C. 10:78-11.2 (requiring NJFC recipients to "immediately" report changes that could impact eligibility). In addition, when applicants apply for NJFC they sign a form certifying that "[b]y signing this form, I represent that I have read and understood the . . . [NJFC] program 'Rights and Responsibilities, ' . . . and that I will obey the law and regulations of the program." The "Rights and Responsibilities" notice states, in pertinent part, "I understand that I must tell [NJFC] immediately about any changes in my information, such as a change in income[.]" See "Rights and Responsibilities, NJFAMILYCARE, " http://www.njfamilycare.org/pages/FC_Rights_Resp-en.pdf. (emphasis added.) The notice also provides a telephone number to call to report any changes. Ibid.
An AFDC-related Medicaid recipient who becomes ineligible because of earnings or increased earnings from employment or new employment, increased hours of employment, or UI or TDI benefits, N.J.A.C. 10:69-5.13(a)1i-iii, is eligible for TMP for a period of twenty-four months "beginning with the month in which the family is no longer eligible for AFDC-related Medicaid[.]" N.J.A.C. 10:69-5.13(a). For a recipient who becomes ineligible because of the receipt of child support, AFDC-related Medicaid coverage continues "for a period of four calendar months beginning with the month in which such ineligibility begins." N.J.A.C. 10:69-5.13(a)4.
An NJFC recipient who is terminated from the program must receive "timely and adequate written notice detailing the reasons for the proposed action." N.J.A.C. 10:49-10.4(a); see also N.J.A.C. 10:69-5.11(a). "'Timely notice' means that the notice is mailed at least 10 days before the effective date of the agency action." N.J.A.C. 10:69-6.1; see also N.J.A.C. 10:49-10.4(a)(1). "Adequate advance notice" means
a written notice that includes a statement of the action . . . DMAHS intends to take, reasons for the proposed departmental action, the specific regulations that support, or the change in Federal or State law that requires the action, the claimant's right to request a fair hearing, or in cases of a departmental action based on a change in law, the circumstances under which a hearing shall be granted, and the circumstances under which assistance shall be continued if a fair hearing is requested.
See also N.J.A.C. 10:69-6.1.
In 2009, the Governor acted to severely reduce spending across the entire budget in or to achieve the balanced budget mandated by N.J. Const., art. VIII, § II, ¶2. See Office of Mgmt. & Budget, Fiscal 2011 Budget in Brief, N.J. Dep't of Treasury, 6-8 (Mar. 16, 2010) (Fiscal 2011 Budget in Brief), http://www.state.nj.us/treasury/omb/publications/11bib/BIB.pdf. On February 11, 2010, in face of declining revenues, the Governor issued an Executive order authorizing the Director of the Division of Budget and Accounting (DBA) to freeze spending. 42 N.J.R. 660(b) (Mar. 15, 2010). On March 1, 2010, the Director of DBA adopted a plan to freeze NJFC enrollment for parents and caretakers whose gross income was between 134% to 200% of the FPL, which he projected would save the State $24.63 million. See
Fiscal 2011 Budget in Brief, supra , at 43; Appropriations Act, Fiscal Year 2011 (AA FY2011), L. 2010, c. 35 (June 29, 2010).
In response to the on-going economic downturn, in June 2009, the Legislature approved the Appropriations Act for Fiscal Year 2010 (AA FY2010). L. 2009, c. 68 (June 29, 2009). In AA FY2010, the Legislature expressed its intent to cut funding for and suspend statutory programs:
Notwithstanding any other law or regulation to the contrary, because of the economic downturn and the crisis in the financial markets, it is not possible in Fiscal Year 2010 to appropriate monies to fund all programs authorized by statute. As a result, the Governor's Budget Message and Recommendations for Fiscal Year 2010 recommended, and the Legislature agrees, that either no State funding or less than the statutorily-required amount be appropriated for certain of these statutory programs. To the extent that these or other statutory programs have not received all or some appropriations for Fiscal Year 2010 in this Appropriations Act which would be required to carry out these statutory programs, such lack of appropriations represents the intent of the Legislature to suspend in full or in part the operation of the statutory programs, including any statutorily-imposed restrictions or limitations on the collection of State revenue that is related to the funding of those programs.
[L. 2009, c. 68, § 75]
Regarding DHS, AA FY2010 authorized the Commissioner to make changes to NJFC based on the Director of DBA's plan:
Notwithstanding the provisions of any law or regulation to the contrary, the [NJFC] program benefit service packages, premium contributions, copayment levels, enrollment levels, and any other program features or operations may be modified as the Commissioner of [DHS] deems necessary based upon a plan approved by the Director of [DBA] to ensure that monies expended for the [NJFC] program do not exceed the amount here in above appropriated.
[L. 2009, c. 68, § 1 (emphasis added).]
On March 2, 2010, the Director of DMAHS issued Medicaid Communication 10-01, which explained to county welfare and statewide eligibility determination agencies that "changes will be made to [NJFC, ]" including a change requiring that "[n]ew applications received on or after March 1, 2010 for [NJFC] will no longer be processed for higher income parents." The Director also explained that DMAHS would be sending "[a] more detailed Medicaid Communication explaining these changes and their operational impact . . . for ...