DULTZ v. VELEZ

726 F.Supp.2d 480

Harvard DULTZ, Matilda Romagnoli and Michalena Woolley, Plaintiffs,

v.Jennifer VELEZ, Commissioner New Jersey Department of Human Services, et al., Defendants.

Civil Action No. 09-1049 (FLW).

United States District Court,D. New Jersey.

March 30, 2010.

John William Callinan, Wall, NJ, for Plaintiffs.

Zoe Jeanne McLaughlin, Office of the NJ Attorney General, Dianna Rosenheim State of New Jersey, Trenton, NJ, for Defendants.

Opinion

WOLFSON, District Judge:

Presently before the Court is Defendants' Motion to Dismiss Plaintiffs' Complaint for injunctive and declaratory relief against the New Jersey Department of Human Services and Division of Medical Assistance and Health Services pursuant to 42 U.S.C. § 1983 (“section 1983”) and the Supremacy Clause of the U.S. Constitution. Defendants argue that Plaintiffs have no enforceable right under section 1983 and, in any event, this court should abstain under the Younger abstention doctrine. For the following reasons, Defendants' motion to dismiss is denied.

I. BACKGROUND

Plaintiffs are elderly individuals residing in assistant living residences who applied for benefits under New Jersey's home- and community-based services Medicaid waiver program (“HCB-services”). See Am. Compl. at ¶ 3. This program assists eligible individuals with the costs of their assisted living residences. ¹ Defendants Jennifer Velez, Commissioner of the New Jersey Department of Human Services (“DHS”) and John R. Guhl, Director of the New Jersey Division of Medical Assistance and Health Services (“DMAHS”), are responsible for administering this program. Each plaintiff applied for HCB-services and was denied immediate participation as explained in more detail fully infra. Plaintiffs brought this suit to challenge their denials, asserting claims under section 1983 and the Supremacy Clause for violation of the federal Medicaid Act, 42 U.S.C. § 1396 et seq.,

A. New Jersey's Medicaid Administrative Process

[1] [2] A cooperative federal-state program, the Medicaid Act is jointly financed by states and the federal government. Wilder v. Virginia Hospital Ass'n, 496 U.S. 498, 501, 110 S.Ct. 2510, 110 L.Ed.2d 455 (1990). The Medicaid program provides medical assistance to low income individuals. West Virginia Univ. Hosps., Inc. v. Casey, 885 F.2d 11, 15 (3d Cir.1989). State participation in the program is voluntary; however, once a state chooses to participate, it must comply with the provisions of the Medicaid Act and its accompanying regulations. Sabree v. Richman, 367 F.3d 180, 182 (3d Cir.2004). States seeking to participate must submit a “plan for medical assistance” to the U.S. Secretary of Health & Human Services, and have that plan approved. See 42 U.S.C. § 1396a(a). The plan should contain a “comprehensive written statement submitted by the [state] describing the nature and scope of its Medicaid program and giving assurance that it will be administered in conformity with the specific requirements of [the Medicaid Act and accompanying regulations].” 42 CFR § 430.10. Included within the Medicaid Act are financial eligibility guidelines, and provisions related to the transfer of assets by certain Medicaid applicants. ² See e.g., 42 U.S.C. § 1396p(c) (requiring states to impose a penalty period upon applicants who transfer assets for less than market value).

New Jersey authorizes its participation in the Medicaid program through the New Jersey Medical Assistance and Health Services Act, N.J.S.A. 30:4D-1, et seq. , See generally, Johnson v. Guhl, 91 F.Supp.2d 754, 760 (D.N.J.2000). As noted, DMAHS, an agency contained within DHS, generally administers New Jersey's Medicaid program. See N.J.S.A. 30:4D-4; N.J.A.C. § 10:49-1.1(a). Assisted living-related Medicaid waiver services, such as those denied plaintiffs here, are administered by the Department of Health & Senior Services (“DHSS”) instead. See § N.J.A.C. § 10:49-1.1(b). ³

Initial applications for Medicaid waiver services must be made through the County Boards of Social Services (“CBOSS”). These county welfare agencies assist the state agency in administering Medicaid “by processing applications ... including determining whether an applicant has met the income and resource eligibility standards.” N.J.S.A. 30:4D-7a; N.J.A.C. 10:71-3.15. CBOSS staff members review information received from an applicant in making their determination. They also conduct their own investigations to verify the information. See e.g., N.J.A.C. 10:71-3.13(a) (“The CBOSS shall furnish the Medical Review Team with current, pertinent social and medical information, and obtain any special or additional reports on request.”).

When CBOSS denies an application, the denied applicant has the option of seeking a “fair hearing” before an Administrative Law Judge (ALJ) to challenge the denial. See 42 C.F.R. 431.1; N.J.A.C. 10:49-10.3. ⁴ To exercise that option, the applicant must request the hearing within twenty days of the adverse decision. See N.J.A.C. 10:49-10.3(b). If a hearing is granted, the ALJ issues an initial decision based on testimony, documents, and arguments, stipulations, and matters of judicial notice. N.J.A.C. 10:49-10.6 (incorporating N.J.A.C. 1:1-18.1's hearing requirements). ⁵ An unfavorable decision by the ALJ may be appealed to the Director of the DMAHS by the aggrieved party filing “exceptions.” N.J.A.C. 1:1-18.4(a). Whether or not exceptions are filed, the Director must adopt, modify, or reverse the ALJ's decision. N.J.A.C. 1:1-18.6; N.J.A.C. 10:49-10.12. If the Director does not act, the ALJ's decision becomes final. N.J.A.C. 1:1-18.6(e). An applicant has a right to appeal the Director's decision to the New Jersey Superior Court, Appellate Division. N.J. Ct. R. 2:2-3(a)(2). In connection with an appeal to the Appellate Division, parties may raise constitutional claims. See Loigman v. Township Committee of Tp. of Middletown, 185 N.J. 566, 578, 889 A.2d 426 (2006) (“[Section] 1983 allows a person who has been denied his constitutional rights by an official acting under color of state law to seek redress both in state and federal courts.”).

B. New Jersey's Assisted Living-Related Medicaid Waiver Program

[3] In 2001, New Jersey created the Enhanced Community Options (ECO) Medicaid Waiver program in order to facilitate community-based care options for qualified individuals who would otherwise require care at a nursing facility. See N.J.A.C. 10:60-10.1; Medicaid Communication No. 00-10, Enhanced Community Options (ECO) Medicaid Waiver and Jersey Assistance for Community Caregiving (JACC) Program, http:// www. state. nj. us/ humanservices/ dmahs/ info/ resources/ medicaid/# 11 at 4 (May 22, 2000) (hereinafter “Med. Comm. 00-10”) (visited March 30, 2010). A Medicaid “waiver” program is one designed for those who are “medically needy,” though they not be “categorically needy” such that they cannot cover the costs of their basic needs and/or are receiving public assistance. Roach v. Morse, 440 F.3d 53, 59 (2d Cir.2006); 42 U.S.C. § 1396a(a)(10)(A)(i)(II). In other words, the medically needy are those have sufficient income to cover their basic needs, but insufficient income to cover their necessary medical care. Roach, 440 F.3d at 59.

The ECO Waiver provided financial assistance to individuals receiving care in an assisted living facility. N.J.A.C. 10:60-1.1. Applicants were required to demonstrate that they met the Medicaid financial eligibility requirements. See Community Choice, Dept. of Health & Senior Services, http:// www. state. nj. us/ health/ senior/ ccbrochure/ cchoice 14. shtml (visited March 11, 2010). Once approved for participation in the program, the individuals' medical care expenses were paid by the State. The individual was responsible for his or her housing expenses at the assisted living facility. Id.

On January 1, 2009, near the time Plaintiffs' applications were denied, DMAHS consolidated its ECO Waiver program into the Global Options Long-Term Care Waiver (“GO”) program. See Health/Medical Programs, Dept. of Health & Senior Svcs, http:// www. state. nj. us/ health/ senior/ benefits/ health. shtml# longterm (visited March 11, 2010). ⁶ The eligibility qualifications under the GO program are the same as under the ECO Waiver program; to qualify, an individual must be 65 years of age or older, clinically and financially eligible for Medicaid nursing facility level of care, and display a reasonable indication that he or she needs an institutional level of care. See generally N.J.A.C. 10:60-10.2; N.J.A.C. 10:71-3.1 et seq. ; N.J.A.C. 8:85-1.8.

C. Medicaid Income and Resource Eligibility and Look-back Periods

Under the federal Medicaid Act, “the State plan must provide that if [a non-] institutionalized individual ... disposes of assets for less than fair market value on or after the look-back date ..., the individual is ineligible for medical assistance for services during the period beginning on the date specified in subparagraph (D) and equal to the number of months specified in subparagraph (E).” 42 U.S.C. § 1396p(c)(1)(A). Upon completing the calculation whose terms are supplied by subparagraphs (D) and (E), one can compute the penalty period applicable to a non-institutionalized applicant who transferred property for less than full value within the look-back period. The look-back period is up to five years preceding the individual's Medicaid waiver application, for those transfers made on or after February 8, 2006. See 42 U.S.C. § 1396p(c)(1)(B)(i).

D. Plaintiffs' Transfers of Assets and Medicaid Waiver Denials

Plaintiffs each applied for Medicaid waiver benefits (initially under the ECO Waiver Program, which was then incorporated into the Global Options Long-Term Care Waiver program). It is alleged that each applicant is medically needy, and otherwise meets the financial and medical requirements of the Medicaid waiver program. See Am. Compl. ¶¶ 29, 33-35, 49. And, each Plaintiff was denied...