Full Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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-0766-25 I.L.,1 Petitioner-Appellant, v. MIDDLESEX COUNTY BOARD OF SOCIAL SERVICES, Respondent-Respondent. ____________________________ Submitted October 13, 2026 – Decided October 27, 2026 Before Judges Sabatino and Berdote Byrne. On appeal from the New Jersey Department of Human Services, Division of Medical Assistance and Health Services. Simon P. Wercberger LLC, attorneys for appellant (Eliyahu Zaghi, on the briefs). 1 We use appellant's initials to protect the confidentiality of Medicaid applicant information concerning medical services, financial circumstances, and eligibility. See Rule 1:38-3(a). Apruzzese McDermott Mastro & Murphy, attorneys for respondent Middlesex County Board of Social Services (Kyle J. Trent, of counsel and on the brief). Jennifer Davenport, Attorney General, attorney for respondent New Jersey Department of Human Services, Division of Medical Assistance and Health Services (Sookie Bae-Park, Assistant Attorney General, of counsel; Francis X. Baker, Deputy Attorney General, on the brief). PER CURIAM This appeal from a final agency decision arises from the Middlesex County Board of Social Services ("MCBSS")'s denial of petitioner I.L.'s December 1, 2023 application for Medicaid benefits. Once again, we are asked in the present appeal to determine whether a county welfare agency ("CWA") met its statutory obligation to assist an applicant. Once again, we conclude a CWA failed to meet the minimum requirements of its statutory obligation. As a result, we vacate the final agency decision and award decedent's estate retroactive Medicaid coverage, commencing as of October 1, 2023. I.L., a now-deceased elderly, nursing-home resident, submitted the application through her designated authorized representative ("DAR") on December 1, 2023. The application was received by MCBSS on December 5, 2023. MCBSS issued its first and only Request for Information ("RFI") on March 8, 2024, ninety-four days after the application was received. A-0766-25 2 The DAR thereafter submitted various items of documentation in several batches from May 2024 to June 2024. In addition, between May 2024 and September 2024, the DAR sent at least nine successive emails seeking an update or asking MCBSS to identify any remaining deficiency. MCBSS did not respond to any of those inquiries before denying the application on September 10, 2024. I.L. argues that the final agency decision should be reversed, claiming MCBSS failed to comply with state and federal regulations requiring the CWA assist her. We agree. MCBSS's statutory affirmative duty to assist was not satisfied merely by issuing a broad RFI and later denying the application. Once MCBSS received appellant's submissions, identified a specific remaining deficiency, and received repeated inquiries from the DAR asking whether anything else was needed to review the application, MCBSS was required to identify that deficiency and afford petitioner a reasonable opportunity to cure it before denying the application. We have consistently held an appellate court's scope of review of a final administrative agency decision is limited. See Parsells v. Bd. of Educ. of Somerville, 254 N.J. 152, 162 (2023); In re Carter, 191 N.J. 474, 482 (2007). An agency decision is entitled to a presumption of reasonableness, and we A-0766-25 3 generally will not disturb it unless there is a clear showing that the agency: "(1) did not follow the law; (2) the decision was arbitrary, capricious, or unreasonable; or (3) the decision was not supported by substantial evidence." In re Virtua-West Jersey Hosp. Voorhees for a Certificate of Need, 194 N.J. 413, 422 (2008). That standard of review remains constant despite the United States Supreme Court's recent decision in Loper Bright Enters. v. Raimondo, 603 U.S. 369 (2024). See Board of Education of Sparta v. M.N. ex rel. A.D., 258 N.J. 333, 342 n.4 (2024) ("Loper Bright is not binding on this Court.")2 The burden of demonstrating the agency acted arbitrarily, capriciously, or unreasonably rests with the party challenging the decision. In re Arenas, 385 N.J. Super. 440, 443-44 (App. Div. 2006). In reviewing an agency decision, we consider: (1) whether the agency's action violates express or implied legislative policies, that is, did the agency follow the law; (2) whether the record contains substantial evidence to support the findings on which the agency based its action; and (3) whether in applying the legislative policies to the facts, the agency clearly erred 2 See also, In re State, 484 N.J. Super. 442, 453 n.6 (App. Div. 2026) (noting the Court otherwise "has not yet decided whether our deference to agency decisions should track Loper [Bright]"); In re P.T. Jibsail Fam. Ltd. P'ship, 263 N.J. 208, 217 (2026) (stating "[w]e do not attempt to . . . grapple with the reasoning of Loper Bright, because our decision in this case would be the same regardless of whether we deferred to the [Commissioner's] interpretation . . . or review the [regulatory language] de novo."). A-0766-25 4 in reaching a conclusion that could not reasonably have been made on a showing of the relevant factors. In re Protest Filed by El Sol Contracting & Const. Corp., 260 N.J. 362, 373-74 (2025) (quoting In re Quest Acad. Charter Sch., 216 N.J. 370, 385 (2013)). A reviewing court may not substitute its own judgment for that of the agency merely because it might have reached a different result on the same record. Campbell v. N.J. Racing Commission, 169 N.J. 579, 587 (2001). However, there are limits to this deference. We review legal conclusions, including those reached by administrative agencies, de novo. El Sol, 260 N.J. at 373. We are not bound by an agency's interpretation of a statute, regulation, or purely legal question. Allstars Auto Grp., Inc. v. N.J. Motor Vehicle Comm'n, 234 N.J. 150, 158 (2018). Nor is an agency's interpretation of its own regulation entitled to deference when it is plainly unreasonable or inconsistent with the regulation's language. U.S. Bank, N.A. v. Hough, 210 N.J. 187, 200 (2012). As a result, we review de novo here the obligations imposed by N.J.A.C. 10:71- 2.2(c) upon MCBSS during the processing of petitioner's application. We begin our analysis by reviewing the statutory and legal principles applicable to petitioner's claim. Medicaid is a federally created, state- implemented program designed for individuals who cannot otherwise afford necessary medical care. 42 U.S.C. § 1396-1. Although not required to A-0766-25 5 participate in Medicaid, once a state elects to do so, it must comply with federal law. A.B. v. Div. of Med. Assistance & Health Servs., 407 N.J. Super. 330, 342 (App. Div. 2009). New Jersey participates in Medicaid through the New Jersey Medical Assistance and Health Services Act, N.J.S.A. 30:4D-2. The Division of Medical Assistance and Health Services ("DMAHS") is required to take all steps necessary for the proper administration of the program. N.J.S.A. 30:4D -7. County welfare agencies, referred to in the governing regulations as "CWAs" including, for purposes of the present appeal, MCBSS, are charged with evaluating Medicaid eligibility at the local level. N.J.A.C. 10:71-2.2(a). The regulations divide responsibility for the application process between the CWA and the applicant. N.J.A.C. 10:71-2.2(c); N.J.A.C. 10:71-2.2(e). The CWA "exercises direct responsibility in the application process to" inform applicants of the eligibility requirements and their right to a fair hearing. N.J.A.C. 10:71-2.2(c)(1). The CWA must also assist applicants "in exploring their eligibility for assistance." N.J.A.C. 10:71-2.2(c)(3). The CWA must "make known to the applicants the appropriate resources and services both within the agency and the community, and, if necessary, assist in their use." N.J.A.C. 10:71-2.2(c)(4). The applicant must complete required forms, with the CWA's assistance if needed, "assist the C[W]A in securing evidence that A-0766-25 6 corroborates his or her statements," and promptly report any change affecting their circumstances. N.J.A.C. 10:71-2.2(e)(1)-(3). The regulations describe the resulting process as one of review "for completeness, consistency, and reasonableness." N.J.A.C. 10:71-2.9. The CWA must process an application within a defined period, and it must notify the applicant of its decision in a timely manner. See N.J.A.C. 10:71-2.3. Furthermore, if an application is denied, the CWA must include the reasons for the denial and the right to request a fair hearing. 42 C.F.R. § 435.911; N.J.A.C. 10:71-2.3; N.J.A.C. 10:71-8.3. Where an applicant fails to provide requested documentation in a timely manner, the CWA may deny the application. 42 C.F.R. § 435.952; N.J.A.C. 10:71-2.2(e), -2.9, -3.1(b). The regulations nonetheless recognize there will be instances in which the ordinary processing period cannot be met, including where "[c]ircumstances wholly outside the control of both the applicant and the [CWA]" have delayed the applicant's ability to produce required information. N.J.A.C. 10:71-2.3(c). In such cases, the CWA may extend the application's deadline instead of denying it. Federal and state regulations impose a forty-five-day processing period for typical Medicaid eligibility applications. 42 C.F.R. § 435.912(c)(3); N.J.A.C. 10:71-2.3. When the ordinary period cannot be met, the CWA has two A-0766-25 7 responsibilities. First, the CWA "shall be prepared to demonstrate that the delay resulted from one of the following:" (1) Circumstances wholly within the applicant's control; (2) A determination to afford the applicant, whose proof of eligibility has been inconclusive, a further opportunity to develop additional evidence of eligibility before final action on his or her application; (3) An administrative or other emergency that could not reasonably have been avoided; or (4) Circumstances wholly outside the control of both the applicant and [CWA]. [N.J.A.C. 10:71-2.3(c).] Second, the CWA must provide "written notification . . . to the applicant on or before the expiration of such period, setting forth the specific reasons for delay. " N.J.A.C. 10:71-2.3(d). Federal law places specific limits on when an agency may require additional information and when it may deny an application on that basis. Critically, "the agency may not deny or terminate eligibility… unless the agency has sought additional information from the individual in accordance with paragraph (c) of this section, and provided proper notice and hearing rights to the individual." 42 C.F.R. § 435.952(d). In addition, "[t]he agency may only require an applicant to provide the information necessary to make an eligibility A-0766-25 8 determination or for a purpose directly connected to the administration of the State plan." 42 C.F.R. § 435.907(e)(1). As previously noted in our introduction, on December 1, 2023, I.L. submitted an application for Medicaid benefits through her DAR. She also sought retroactive coverage of Medicaid benefits from October 1, 2023, as requesting retroactive coverage is permissible for "the three-month period prior to the month of application." N.J.A.C. 10:71-2.16. The application was received on December 5, 2023. MCBSS issued its first and only RFI on March 8, 2024, ninety-four days after the application was received. The RFI directed I.L. and her DAR to "answer all questions below and return by March 22, 2024" advising that "the application cannot be processed until all the information requested is received." The RFI requested bank statements for three Bank of America accounts dating back to January 2019, and a copy of a $4,197.57 John Hancock Life Insurance check with an explanation of how the funds were spent. In addition, the RFI stated that "all deposits, withdrawals, and transfer transactions from these accounts will need to be explained and verified." As to cash deposits, the RFI required "[d]eposit slips for cash deposits along with a written explanation detailing source of funds. " A-0766-25 9 The DAR submitted documentation in batches, including bank statements and the John Hancock insurance materials. Between May 8, 2024, to September 2, 2024, the DAR emailed MCBSS nine times regarding the application: • On May 8, 2024, after sending the first batch of documentation, the DAR wrote, "please let me know if there is anything you are still waiting on at this time in order to approve the case." • The DAR followed up on May 27, 2024, and after sending the second batch of documentation, the DAR wrote, "[c]an you please have this processed and the case approved?" • On May 31, 2024, after sending the third batch of documentation, the DAR wrote, "[c]an you please update us on the approval of this case?" • On June 3, 2024, the DAR sent the fourth and last batch of documentation in two separate emails. In the first email, the DAR wrote, "if anything is still needed to approve this case, please let me know what that would be so we can work on getting it to you!" In the second email, the DAR attached some bank statements that were too large to fit in the first email and wrote "[p]lease confirm receipt of all requested documents." A-0766-25 10 • Even after sending the documentation, the DAR continued to email MCBSS. On June 19, 2024, the DAR wrote, "I believe all requested documents were submitted for this client. What is the update on the approval?" • On July 15, 2024, the DAR wrote, "[c]an I please receive an update on this application? When can we expect the approval to be processed? As it's been months." • On August 15, 2024, the DAR wrote, "Is there any update on this client's Medicaid application? [I]s anything still needed for an approval to be processed?" • On September 2, 2024, the last email sent before the denial was issued, the DAR wrote: The requested documents for this client were submitted in the beginning of June. Were they reviewed? Is anything else needed for an approval to be processed? The client is in need of Medicaid as of October of last year, it's almost been a full year. When can we expect this case to be processed? On September 10, 2024, MCBSS denied the application. The denial letter stated only generally that I.L. had "failed to provide requested information required to determine eligibility in a timely manner," citing 42 C.F.R. § 435.952. A-0766-25 11 It is undisputed MCBSS did not respond to any of the DAR's emails before issuing the blanket denial. After the denial, MCBSS informed the DAR that the missing information concerned supporting documentation for two cash deposit slips. The DAR supplied that information in a subsequent Medicaid application. After the denial, the DAR requested a fair hearing. MCBSS's witness testified the denial was based on an alleged failure to provide verification of two cash deposits totaling $410.00 in 2019 ($150.00 deposited January 11, 2019, and $260.00 deposited May 7, 2019). Although the explanations were missing, the bank statements reflecting those deposits had been provided to the CWA before the denial date. On cross-examination, MCBSS's witness conceded the RFI "never, explicitly, asked for information on these two deposits." When asked about the necessity of the verification of the $410.00 for the Medicaid eligibility determination, the witness stated: "I did not process this case nor review it, so I don't know why these were requested." He also could not confirm or deny whether the deposits represented an essential income source. The agency's witness also acknowledged on cross examination that the CWA "never responded to the multiple request[s] for anything that was needed" despite agreeing it has a duty to assist applicants. When further asked whether A-0766-25 12 ignoring the DAR's emails for approximately six months constituted assistance, he answered, "[n]o." He confirmed MCBSS's position is that it will step in to help only if the DAR advised it "specifically what help [it] would need," for example, that it could not obtain verification of particular deposits. As we noted above, N.J.A.C. 10:71-2.2(c) imposes direct and affirmative responsibilities upon a CWA. Those responsibilities include informing applicants of eligibility requirements, assisting applicants in exploring eligibility, identifying appropriate resources and services, and, where necessary, assisting in their use. N.J.A.C. 10:71-2.2(c)(1), (3)-(4). Those obligations were not met here. As an aside, we observe that if a DAR, who is specially trained in Medicaid eligibility applications, cannot complete an application successfully, there is little hope for an elderly or infirm applicant to navigate this process, particularly when the CWA has decreed the only method of communication will be by email, which will often go unanswered. A confused applicant has no ability to speak with the CWA to get his or her questions answered. The record abundantly demonstrates MCBSS's lack of compliance with its minimum statutory obligations. The CWA's duty to assist is clearly set forth as a continuing obligation rather than a single act discharged by issuing an RFI and A-0766-25 13 another act in denying the application. N.J.A.C. 10:71-2.2(c) describes the CWA's functions in ongoing, present-tense terms, stating it "exercises direct responsibility in the application process," and "inform[s]" applicants, and "assist[s]" them. N.J.A.C. 10:71-2.2(c)(1), (3)-(4). Our plain language reading of this regulation imposes a responsibility upon CWAs to help applicants throughout the entire Medicaid eligibility determination process, not limited to a one-time request at the outset. See U.S. Bank, 210 N.J. at 199 (explaining courts "must construe the regulation as written" because "the drafter's intent is found in the actual language of the enactment."). The federal verification framework reinforces our interpretation. 42 C.F.R. § 435.952 structures the agency's duty to "seek additional information from the individual" around the moment at which submitted information "is not reasonably compatible," that is, after the agency has reviewed what the applicant provided. 42 C.F.R. § 435.952(c)(2). That structure imposes an ongoing duty to assist and make the applicant aware the agency has identified a specific deficiency in the applicant's submission. Once MCBSS reviewed the DAR's materials and identified the two cash deposits as a disqualifying deficiency, its duty to assist the applicant required it to bring that deficiency to the DAR's A-0766-25 14 attention, particularly given the numerous requests from the DAR to provide information regarding any deficiency. 42 C.F.R. § 435.952(d) provides the agency "may not deny or terminate eligibility" unless it "has sought additional information from the individual in accordance with paragraph (c)" and provided proper notice and hearing rights. Read in light of the cooperative structure of N.J.A.C. 10:71-2.2, the regulation's requirement to seek additional information is evident. A blanket RFI issued at the outset does not discharge the duty to seek additional information where the agency has subsequently isolated a deficiency that the applicant does not know exists. MCBSS never issued a supplemental or clarifying request identifying the two deposits totaling $410.00. MCBSS never responded to the DAR's nine follow-up emails, several of which expressly requested information as to whether anything was outstanding. In fact, the first time the DAR learned that supporting documentation for the two deposit slips was missing and that was the basis for the denial was only after the denial had already been issued. It is undisputed only MCBSS knew which items it had determined were missing. It is also undisputed the DAR's repeated inquiries placed MCBSS on actual notice the applicant believed her submission was complete and was A-0766-25 15 seeking direction. Finally, it is undisputed the deficiency was readily curable. Therefore, it is indisputable MCBSS fell far short of its statutory obligation to "inform" and "assist" the applicant. N.J.A.C. 10:71-2.2(c)(1), (3). Accordingly, the final agency decision is arbitrary, capricious, and unreasonable as applied to the uncontroverted facts of this record. Although we appreciate the Medicare program is a high-volume program to administer, with many technical eligibility requirements, the chronology of this case exemplifies a failure to adhere to basic norms of fairness and transparency. Government must "turn square corners," despite the administrative burdens and resource limitations that may be involved. See Twp. of Jackson v. Getzel Bee, LLC, 264 N.J. 531, 550 (2026) ("When the government interacts with the public, it 'must turn square corners.'" (quoting F.M.C. Stores Co. v. Borough of Morris Plains, 100 N.J. 418, 426-27 (1985))). The final agency decision of September 22, 2025 is vacated and this matter is remanded to DMAHS for further proceedings and retroactive coverage consistent with this opinion. We do not retain jurisdiction. A-0766-25 16