G.C. v. Div. of Med. Assistance & Health Servs.

249 N.J. 20

262 A.3d 1195

G.C., Petitioner-Respondent/Cross-Appellant,

v.DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES, Respondent-Appellant/Cross-Respondent,andOcean County Board of Social Services, Respondent.

E.M., Petitioner-Respondent/Cross-Appellant,

v.Division of Medical Assistance and Health Services, Respondent-Appellant/Cross-Respondent,andEssex County Board of Social Services, Respondent.

A-35/36/37 September Term 2020

084417

Supreme Court of New Jersey.

Argued September 14, 2021

Decided November 18, 2021

Stephen Slocum, Deputy Attorney General, argued the cause for appellant/cross-respondent (Andrew J. Bruck, Acting Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel, and Francis X. Baker, Deputy Attorney General, on the briefs).

Joshua M. Spielberg argued the cause for respondent/cross-appellant E.M. (Legal Services of New Jersey, attorneys; Joshua M. Spielberg, Melville D. Miller, Jr., Kristine Marietti Byrnes, Maura Sanders, Newark, and Dawn K. Miller, on the briefs).

Kenneth M. Goldman argued the cause for respondent/cross-appellant G.C. (South Jersey Legal Services, attorneys; Kenneth M. Goldman, Atlantic City, and Thomas LaMaina, Cherry Hill, on the briefs).

Timothy P. Malone argued the cause for amici curiae Community Health Law Project and Disability Rights New Jersey (Pashman Stein Walder Hayden, attorneys; Timothy P. Malone, Hackensack, on the brief).

JUSTICE LaVECCHIA delivered the opinion of the Court.

Medicaid is a shared federal-state program that provides a lifeline of medical services to eligible individuals. New Jersey participates in the Medicaid program by virtue of its adoption of the New Jersey Medical Assistance and Health Services Act (the New Jersey Act), N.J.S.A. 30:4D-1 to -19.5.

Pertinent to this appeal, New Jersey amended the New Jersey Act in 1987 to expand coverage, creating a new category of eligible persons under the state's optional categorically needy program. L. 1987, c. 349 (codified at N.J.S.A. 30:4D-3(i)(11) ). Federal law had been altered to permit states to extend Medicaid coverage to previously ineligible persons who are aged, blind, or disabled and who do not receive Social Security public assistance benefits but whose lack of means renders them unable to afford certain medical expenses not covered through Medicare. Specifically, the amendment to the federal Medicaid law gave states the option to extend Medicaid coverage to certain individuals who are aged, blind, or disabled and whose income is not greater than 100% of the federal poverty guidelines "applicable to a family of the size involved." 42 U.S.C. § 1396a(a)(10)(A)(ii)(X), (m)(1) to (2).¹ The law allows participating states discretion to choose the percentage of the federal poverty guideline up to which coverage will be available. Id. at (m)(1)(B), (m)(2)(A). New Jersey has chosen to use the maximum, 100% limit of the federal poverty guideline. See N.J.S.A. 30:4D-3(i)(11) (defining as qualified an applicant age 65 or older, or who is blind or disabled, "whose income does not exceed 100% of the poverty level, adjusted for family size").

The issue in this consolidated appeal is whether one of the State's regulations that implements this particular expansion of New Jersey's Medicaid Program is inconsistent with the language and intent of the enabling state and federal legislative amendments that authorized the expansion. The challenge focuses on N.J.A.C. 10:72-4.4(d)(1) (the Regulation). This challenge arose when two applicants, one who resided with his spouse and one who resided with her husband and two children, filed for benefits under this Medicaid program, known as the NJ Medicaid -- Aged, Blind, and Disabled Program (ABD program).

The Division of Medical Assistance and Health Services (DMAHS) dismissed the claims of the two applicants. Each was denied coverage on the basis that the applicant's income -- as an individual and irrespective of his or her family size -- exceeded the maximum income permitted under the federal poverty guideline for a single individual because N.J.A.C. 10:72-4.4(d)(1) provides in relevant part that, "[i]f the countable income ... of the aged, blind, or disabled individual exceeds the poverty income guideline for one person he or she is ineligible for benefits." (emphasis added).

New Jersey's regulatory calculation does not adjust the individual's income based on family size when comparing that income to the federal poverty guideline. Rather, the Regulation compares the applicant's individual income against the federal poverty guideline at the 100% limit for an individual. If the applicant's income exceeds that limit by even one dollar, the analysis stops there. He or she is excluded from the ABD program at that first step. There is no adjustment for family size.

In a consolidated opinion, the Appellate Division reversed DMAHS's determination in each of the cases before us, concluding that the Regulation violated the state statutory law enabling the ABD program. That said, the appellate court was unpersuaded by the applicants’ arguments that the Regulation was also invalid under federal Medicaid law.

We granted DMAHS's petition for certification seeking our review of whether N.J.A.C. 10:72-4.4(d)(1) conflicts with N.J.S.A. 30:4D-3(i)(11). 245 N.J. 75 (2021). We also granted the cross-petitions filed by the individual claimants, G.C. and E.M., who maintain that the Regulation conflicts with federal law. 245 N.J. 53 (2021); 245 N.J. 54 (2021). And we granted amicus status to Community Health Law Project and Disability Rights New Jersey, who participated jointly.

We now affirm and modify the Appellate Division judgment holding invalid the challenged Regulation. We agree that the Regulation is contrary to the plain language and evident legislative intent of the state law amendment that authorized this Medicaid extension for New Jersey's Medicaid State Plan. We modify because, although we need not reach the question, we have grave concerns that the Regulation's method of operation is also inconsistent with the federal Medicaid law that enabled this expansion of Medicaid eligibility. Accordingly, for the reasons expressed, we vacate that portion of the Appellate Division's analysis that rejected the federal-law argument by cross-petitioners.

I.

For necessary context, we begin by reviewing the structure and key provisions of the federal and state law governing Medicaid.

A. Federal Legislation

With respect to the intent and structure of the shared program known as Medicaid, it is well recognized that "Medicaid, enacted in 1965 as Title XIX of the Social Security Act, [ 42 U.S.C. §§ 1396 to 1396w-6 ], is designed to provide medical assistance to persons whose income and resources are insufficient to meet the costs of necessary care and services." Atkins v. Rivera, 477 U.S. 154, 156, 106 S.Ct. 2456, 91 L.Ed.2d 131 (1986). "The Federal Government shares the costs of Medicaid with States that elect to participate in the program," and "[i]n return, participating States are to comply with requirements imposed by the Act and by the Secretary of Health and Human Services." Id. at 156-57, 106 S.Ct. 2456 (citing 42 U.S.C. § 1396a ).

The basic operational principles are as follows. The federal administration of Medicaid authorizes annual appropriations of money for payments to states whose plans for medical assistance have been approved by the Secretary of Health and Human Services. 42 U.S.C. § 1396-1. The parameters that a "State plan for medical assistance must" follow are set forth in 42 U.S.C. § 1396a. Within such a plan, participating states are required to provide coverage to certain groups and can choose to provide coverage to other groups. As the Second Circuit has succinctly explained, "[t]he line between mandatory and optional coverage is primarily drawn in § 1396a(a) : mandatory coverage is specified in § 1396a(a)(10)(A)(i), and the state options are set forth in subsection (ii)." Skandalis v. Rowe, 14 F.3d 173, 175-76 (2d Cir. 1994).

Within the mandatory category, which has been referred to as the "categorically needy," see L.M. v. Div. of Med. Assistance & Health Servs., 140 N.J. 480, 485, 659 A.2d 450 (1995), subsection (a)(10)(A)(i)(I) includes, among other groups, "all individuals ... who are receiving aid or assistance under any plan of the State approved under [Title] I [‘Grants to States for Old-Age Assistance for the Aged’], X [‘Grants to the States for Aid to the Blind’], XIV [‘Grants to States for Aid to the Permanently Disabled’], or XVI [‘Supplemental Security Income for the Aged, Blind, and Disabled’]" of the Social Security Act. 42 U.S.C. § 1396a(a)(10)(A)(i)(I).

Within the optional category, referred to as the "optional categorically needy," see L.M., 140 N.J. at 485, 659 A.2d 450, subsection (a)(10)(A)(ii) includes

any group of individuals described in [ 42 U.S.C. § 1396d(a)² ] ... who are not individuals described in clause (i) of this subparagraph but --

(I) who meet the income and resources requirements of the appropriate State plan described in clause (i) or the supplemental security income program ..., [or]

....

(X) who are described in subsection (m)(1) ....

[ 42 U.S.C. § 1396a(a)(10)(A)(ii)(I), (X) (emphasis added).]

Subsection (a)(10)(A)(ii)(X) references subsection (m)(1), which is also found in 42 U.S.C. § 1396a. Due to the importance of subsubsection (m), we quote its relevant provisions in full:

(m) Description of individuals.

(1) Individuals described in this paragraph are individuals --

(A) who are 65 years of age or older or are disabled individuals (as determined under [ 42 U.S.C. § 1382c(a)(3) ]),

(B) whose income (as determined under [ 42 U.S.C. § 1382a ] for purposes of the supplemental security income program, except as provided in paragraph (2)(C)) does not exceed an income level established by the State consistent with paragraph (2)(A), and

(C) whose resources (as determined under [ 42 U.S.C. § 1382b ] for purposes of the

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