                        NOT FOR PUBLICATION WITHOUT THE
                      APPROVAL OF THE APPELLATE DIVISION
     This opinion shall not "constitute precedent or be binding upon any court."
      Although it is posted on the internet, this opinion is binding only on the
        parties in the case and its use in other cases is limited. R. 1:36-3.




                                       SUPERIOR COURT OF NEW JERSEY
                                       APPELLATE DIVISION
                                       DOCKET NO. A-4164-16T2

W.M.,

        Petitioner-Appellant,

v.

DIVISION OF MEDICAL ASSISTANCE
AND HEALTH SERVICES,

     Respondent-Respondent.
_______________________________

              Argued May 8, 2018 – Decided June 26, 2018

              Before Judges Reisner and Mitterhoff.

              On appeal from the New Jersey Department of
              Human Services, Division of Medical Assistance
              and Health Services.

              John Pendergast argued the cause for appellant
              (Schutjer Bogar, attorneys; John Pendergast,
              on the brief).

              Jacqueline R. D'Alessandro, Deputy Attorney
              General, argued the cause for respondent
              (Gurbir S. Grewal, Attorney General, attorney;
              Melissa H. Raksa, Assistant Attorney General,
              of counsel; Jacqueline R. D'Alessandro, on the
              brief).

PER CURIAM
      Appellant W.M. appeals from an April 18, 2017 final agency

determination by the Director of the Division of Medical Assistance

and   Health    Services     (DMAHS)   that   denied    his   application   for

Medicaid.      We reverse.

      W.M. was admitted to institutional care at Cranford Rehab in

December 2012.      On December 27, 2013, W.M.'s wife, E.M., filed a

Medicaid application on behalf of her husband with the Union County

Division of Social Services ("the County").             On January 27, 2014,

the County requested additional information concerning income

verification, life insurance information, and household expenses.

The Medicaid Coordinator for Cranford Rehab supplied the requested

information.       Shifra Weiss1, one of Cranford Rehab's Medicaid

Coordinators, followed up with telephone calls to the County

throughout the remainder of 2014 and into the beginning of 2015.

Weiss received no formal correspondence during that timeframe, but

claimed   that    she   was    repeatedly     advised    verbally   that    the

application was still under review.           On February 2, 2015 and March

26, 2015, the County made additional requests for verifications

regarding bank statements, the surrender of any life insurance

policies, and proof of spend down to the resource limit.



1
  DMAHS' assertion that Shifra Weiss was not authorized to act on
W.M.'s behalf does not have sufficient merit to warrant discussion
in a written opinion. R. 2:11-3(e)(1)(E).

                                        2                              A-4164-16T2
     On April 7, 2015, the County sent a letter dismissing the

application.    The reason given for the dismissal was "Excess

Resources and failure to provide verifications."         On April 13,

2015, the County sent a letter denying the application.          Again,

the reason given for the denial was "Excess Resources and failure

to   provide   verifications."        The   County   provided   further

explanation by providing a list of resources and their values as

of September 1, 2013.   These resources included a Lincoln National

Life Insurance policy, a Prudential policy, a Pacific Life Mutual

IRA, and a Sun America account.   The letter claimed that the total

balance for the accounts listed was $171,784.30, and that W.M. and

E.M. did not "provide [] documentation that [they] . . . spend

[sic] down to the $119,240.00 resource limit."       The letter stated

that if W.M. and E.M. had surrendered any of these resources, they

should "provide verification of date surrendered, the amount, and

account number the check was deposited in."      The letter specified

that this proof was required within the next ten days or the case

would remain denied.

     In response, Weiss submitted verification that the Pacific

Life Mutual IRA policy was "fully surrendered" as of October 8,

2013, which would have shown that W.M. was clearly under the

$119,240 resource limit at the time his application was filed.

The agency deemed this documentation insufficient, and sent a

                                  3                             A-4164-16T2
letter dated April 28, 2015, which confirmed receipt of this

additional information, but also stated:

            The Variable Annuity Interim Statement that
            was provided for the Pacific Life Mutual IRA
            . . . is unacceptable. It only reflects
            scheduled withdrawals and does not state the
            running balance, which must be provided.
            Perhaps that information is on one of the
            other pages to the statement. We only received
            pages 27 and 28. Please send the missing pages
            1-27, as well as page 29. Also, documentation
            was not provided verifying that the withdrawn
            money was used to pay household expenses.

      The letter instructed that proof of any spend down would need

to be submitted within ten days.          Via fax dated April 30, 2015,

Weiss sent the entire interim statement, and clarified that the

money had been transferred to a Wells Fargo account for use in

privately paying Cranford Rehab and for other household expenses,

per   an   invoice   from   the   rehabilitation   center.    The    County

responded    that    the    documentation    was   still   deficient     and

maintained the denial of W.M.'s claim.

      W.M. filed a request for a fair hearing and the matter was

transferred to the Office of Administrative Law (OAL) on December

14, 2015.    At the hearing, agency witnesses urged that the April

30, 2015 submission was inadequate to verify that the Pacific Life

policy was valueless at the time that W.M. applied for Medicaid.

The Administrative Law Judge (ALJ) disagreed and found that:



                                      4                             A-4164-16T2
          [H]ad they examined the document more closely,
          they could have seen that it clearly contains
          a running record of withdrawals. Until in or
          about November 2012, $1,239.58 was generated
          monthly by the annuity. The document reflects
          a significant change at the time W.M. entered
          full-time institutional care in December 2012.
          Large amounts of money, $14,000 per month,
          were thereafter withdrawn monthly until
          October 8, 2013, when the policy was
          surrendered.

The Pacific Life document included a glossary, which stated that

the "surrender value" was "[t]he amount available for withdrawal

on the last day of the statement period, which is the contract

value less any applicable contract debt, annual fee, optional

rider charges and withdrawal charges."    The definition of "full

surrender" was "[a] full withdrawal of the contract value."     The

Pacific Life document stated that a "Full Surrender" happened on

October 8, 2013, which was more than two months before W.M.'s

application for Medicaid was filed.

     In her written decision dated April 28, 2016, the ALJ found

that it was "uncontroverted that W.M. was financially eligible for

Medicaid at this time of his December 2013 application."   The ALJ

disagreed that the family and its representatives failed to timely

supply verification that the Pacific Life policy had no value at

the time of W.M.'s Medicaid application.    In addition, the ALJ

opined that "the agency woefully failed to meet its obligations

under the administrative code" because the agency failed to move

                                5                          A-4164-16T2
the case promptly through the approval process.    Accordingly, the

ALJ concluded that "the action of the agency in denying him

benefits for failure to verify his resource level is baseless, and

should be reversed."

     On July 22, 2016, the DMAHS Director issued an Order of Remand

instructing the ALJ to flesh out what efforts E.M. made prior to

April 28, 2015 to provide the        requested documentation.    The

Director also noted that "I too am curious to know why UCBSS waited

a year to request additional information from E.M."

     On remand, the ALJ found that after her initial application

and then submitting additional information, E.M. heard nothing

about her application until it was denied in April 2015.           In

response to the question on remand of whether any information was

outstanding at the time of the April 2015 denial, the ALJ found

that no information was outstanding and that it should have been

clear to the County as of April 2015 that the Pacific Life policy

had been surrendered and had no value.     The ALJ incorporated her

earlier conclusions of law by reference, and further concluded

that nothing warranted the agency's delay in issuing its denial

letter to W.M.

      On April 18, 2017, the DMAHS Director again reversed the

ALJ's determination.   The Director noted that "[t]he issue here

is not merely whether Petitioner had properly verified that he

                                 6                          A-4164-16T2
surrendered the Pacific Life policy, but rather whether that

information was timely submitted to UCBSS."                  Because W.M. failed

to provide verification of a Lincoln National Life Insurance

policy, a Prudential policy, a Pacific Life Mutual IRA or a Sun

America account prior to the April 13, 2015 and April 28, 2015

denials, the Director reversed the ALJ's decision and reinstated

UCBSS' denial.

     On   appeal,   W.M.    asserts      that      the    Division's     refusal    to

acknowledge or review the information submitted in response to the

April   13   and   April    28,   2015       denial      letters   was   arbitrary,

capricious and unreasonable.

     An appellate court will not reverse the decision of an

administrative     agency   unless    it      is   "arbitrary,      capricious      or

unreasonable . . . or not supported by the substantial credible

evidence in the record."          Barrick v. State, 218 N.J. 247, 259

(2014) (quoting In re Stallworth, 208 N.J. 182, 194 (2011)).                        In

cases where an agency head reviews the fact-findings of an ALJ, a

reviewing court must uphold the agency head's findings even if

they are contrary to those of the ALJ, if supported by substantial

credible evidence.     In re Silberman, 169 N.J. Super. 243, 255-56

(App. Div. 1979).

     There is one fact that is completely unrefuted in this case:

at the time of W.M.'s December 17, 2013 application, he met the

                                         7                                   A-4164-16T2
eligibility requirements for Medicaid. That is so because, equally

unrefuted, the Pacific Life policy with a value of $130,000 had

been fully surrendered on October 8, 2013, two months before the

application.       The    surrender   of   the   Pacific    Life   policy    put

plaintiff well below the $119,240 spend limit.             The other policies

held by W.M. - the Lincoln National Life Insurance policy, the

Prudential policy, and the Sun America account - had, as UCBSS was

aware, only minimal value and thus were incapable of disqualifying

him.    Accordingly, the only issue before the court is whether

DMAHS acted reasonably in maintaining its denial based on the fact

that proof of the surrender of the Pacific Life policy was not

provided until after the April 28, 2015 denial.

       We   find   that   the   agency's   persistence      in   denying    this

meritorious claim based on the alleged untimeliness of W.M.'s

document submission was arbitrary, capricious and unreasonable.

At the outset, the agency after receiving the application did not

expeditiously act on the application; rather, as the ALJ found,

the application languished with no action for over a year, only

to be abruptly denied in April 2015.

       Moreover, neither the April 13, 2015 denial nor the April 28,

2015 denial were categorical denials. To the contrary, each letter

invited W.M. to submit additional documentation.



                                      8                                A-4164-16T2
          If any of the above have been surrendered,
          provide verification of the date surrendered,
          the amount, and the account number the
          check(s) were deposited in.     Proof of any
          spend down to the resource limit is required.
          For example, receipts from paying the Nursing
          Home or other household expenses may be
          submitted.


     In response, Weiss submitted verification that the Pacific

Life Mutual IRA policy was "fully surrendered" as of October 8,

2013, which would have shown that W.M. was clearly under the

$119,240 resource limit at the time his application was filed.

Although the agency deemed this documentation insufficient, its

letter dated April 28, 2015, likewise left the door open for a

further response:

          The Variable Annuity Interim Statement that
          was provided for the Pacific Life Mutual IRA
          . . . is unacceptable. It only reflects
          scheduled withdrawals and does not state the
          running balance, which must be provided.
          Perhaps that information is on one of the
          other pages to the statement. We only received
          pages 27 and 28. Please send the missing pages
          1-27, as well as page 29. Also, documentation
          was not provided verifying that the withdrawn
          money was used to pay household expenses.

     The letter instructed that proof of any spend down would need

to be submitted within ten days.    Via fax dated April 30, 2015,

Weiss sent the entire interim statement, and clarified that the

money had been transferred to a Wells Fargo account for use in

privately paying Cranford Rehab and for other household expenses,

                                9                          A-4164-16T2
per   an   invoice   from   the   rehabilitation   center.   As   the   ALJ

correctly found, the proofs submitted by Weiss on behalf of W.M.

conclusively established that the Pacific Life policy had no value

as of October 8, 2013 and that W.M. therefore met the eligibility

requirements for Medicaid.

      As the ALJ correctly found, it should have been clear to the

County as of April 2015 that the Pacific Life policy had been

surrendered and had no value.             We conclude that for DMAHS to

maintain its denial of the application based on the fact that the

documents were submitted two days after the April 28, 2015 denial

letter was arbitrary, capricious and unreasonable.2          Accordingly,

we reverse the agency's April 18, 2017 decision denying the

application and remand with direction that the agency promptly

grant the application.

      Reversed and remanded.       We do not retain jurisdiction.




2
  Having determined that DMAHS' denial must be reversed, we need
not address W.M.'s remaining arguments concerning the agency's
affirmative   regulatory   obligations   to   obtain   financial
information.

                                     10                           A-4164-16T2
