May 27, 2009 – Joyce Carter v. New Mexico Human Services Department, No. 27,943

IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number: __________
Filing Date: May 27, 2009
NO. 27,943
JOYCE CARTER,
Petitioner-Appellant,
v.
NEW MEXICO HUMAN SERVICES
DEPARTMENT,
Respondent-Appellee.
APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY
Ted Baca, District Judge
New Mexico Legal Aid, Inc.
Marcia Lieberman
Albuquerque, NM
for Appellant
New Mexico Human Services Department
Office of General Counsel
Rachelle Klump
Carol A. Baca
Santa Fe, NM
for Appellee

1 “Fair Hearing” is no more than the title of the statutory section that affords an
applicant who has been denied benefits a hearing: NMSA 1978 § 27-3-3 (1991).
OPINION
KENNEDY, Judge.
{1} 	We granted certiorari in this case to clarify the boundaries of evidentiary
procedure as practiced in state Medicaid benefits hearings. Appellant Joyce Carter
(Carter) applied for home healthcare assistance through New Mexico’s Medicaid
program and was denied benefits because her personal resources exceeded the
allowable statutory limit. Carter appealed and was given a “fair hearing”1 by Appellee
New Mexico Human Services Department, (the Department), which affirmed the
denial by the original caseworker. The hearing officer refused to consider Carter’s
bank statement from February 2006 because the statement was unavailable to the
original caseworker. The district court affirmed the Department’s decision, and we
reverse. We hold that both the district court and the Department misapplied the law
because the hearing officer was required to consider Carter’s February 2006 bank
statement. 	We remand to the Department for a reconsideration of the evidence
consistent with this opinion.
BACKGROUND
{2} 	Medicaid is a federal program which grants appropriations to the states to
provide medical care to eligible disabled and elderly. 42 U.S.C. § 1396-1 (1984). The
federal regulations promulgated by the Department concerning the operation of the

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Medicaid program are found at 42 C.F.R. Section 400.200-505.19 (2009). To comply
with these regulations, the Department has been designated the single state agency to
administer the Medicaid plan. 	NMSA 1978, § 9-8-13 (1981). 	It has the power to
adopt all rules and regulations concerning the operation of Medicaid in accordance
with federal law, federal regulations, and state law. NMSA 1978, § 9-8-13 (2007);
NMSA 1978, § 27-2-12 (2006). The Disabled and Elderly Waiver (D & E Waiver)
program constitutes one of the many benefits available to persons under Medicaid.
It is a state-administered program that provides home healthcare services to
individuals who would otherwise be at risk for institutionalization. 	8.290.400.9
NMAC (2/1/1995). In order to receive a D & E Waiver, applicants must meet both
medical and financial qualifications. The medical qualifications are determined by
private contractors who work in conjunction with the State, and the financial
qualifications 	are 	determined 	by 	the 	Department 	through 	its 	caseworkers.
Competition for admission into the program is fierce, and applicants often wait for
extended periods of time before receiving a slot.
{3} 	Carter is one such applicant. After waiting two years, she finally received a slot
in the D & E Waiver program on September 27, 2005, and was interviewed by a
Department caseworker on November 4, 2005. 	On December 20, 2005, Carter
submitted bank statements from November and December to the caseworker in order
to establish financial eligibility. 	Based on these statements, the caseworker

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determined that Carter exceeded the resource limitations for the program during both
months. On February 9, 2006, by formal letter, the Department informed Carter that
her application had been denied. 	It stated, “At [the] time of your interview, you
[were] not financially eligible for the program.” This letter specifically refers to an
attempt by Carter after the December interview to prove that her resources had
decreased to a point of making her eligible, but states that her finances subsequent to
December (time of application) would not be considered. The letter invites Carter to
reapply for benefits and begin the process anew.
{4} 	Carter appealed the decision of the caseworker to the Administrative Hearings
Bureau and received a hearing in accordance Section 27-3-3. At that hearing, which
was held on March 16, 2006, Carter introduced her bank statement from February
2006 in order to establish her eligibility. The hearing officer admitted the statement
into evidence but did not consider it, and in his report, he stated that “[t]he
[Department] has met its burden of showing that it correctly denied . . . Carter’s
request for D & E Waiver Program services because she exceeded the resource
limits.” In a letter dated May 18, 2006, the Department adopted the hearing officer’s
findings of fact and conclusions of law and officially affirmed the caseworker’s denial
of Carter’s application. The letter reiterates the hearing officer’s language stating that,
“the [Department] met the burden of proving that it correctly denied . . . Carter’s
request for D & E Waiver Program services because she exceeded the resource

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limits.”
{5} 	Carter next appealed to the district court. She urged the court to reverse the
Department’s decision, arguing, among other things, that the hearing officer should
have considered her February bank statement. The court found, in a memorandum
opinion and order, her argument unpersuasive and affirmed the Department’s
determination. 	It analyzed the issue of whether a hearing officer should consider
evidence not available to the original caseworker and held that the Department “acted
in accordance with the law in limiting its review to the months examined by the”
original caseworker. The court stated that the Department could not have examined
any months past December without the aid of a “crystal ball” and that the Department
“must fix a date at some point.”
{6} 	On certiorari, Carter argues that the district court’s order was erroneous. She
reasserts her argument that the hearing officer should have considered her February
bank statements. 	The Department contends that the February bank statement was
properly ignored and that the district court’s decision was correct.
{7} 	Because we hold that both the district court and the Department misapplied the
law and thus erroneously failed to consider Carter’s February bank statement, we have
no need to address Carter’s remaining arguments.
DISCUSSION
A. 	Standard of Review

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{8} 	We will reverse the determination of an administrative agency where it acts
fraudulently, arbitrarily, or capriciously; its decision is not supported by substantial
evidence based on the whole record before it; or its actions are outside the scope of
its authority or otherwise not in accordance with the law. 	Rio Grande Chapter of
Sierra Club v. N.M. Mining Comm’n, 2003-NMSC-005, ¶¶ 14 n.7, 16-17, 133 N.M.
97, 61 P.3d 806. We do not review administrative agency decisions de novo, and we
do not substitute our judgment for that of the agency. Id. ¶ 17. Although we accord
deference to an agency’s interpretation of its own statutes, Groendyke Transp., Inc.
v. N.M. State Corp. Comm’n, 101 N.M. 470, 477, 684 P.2d 1135, 1142 (1984), we
will, nevertheless, reverse an agency determination in order to correct a misapplication
of the law. Rio Grande Chapter of Sierra Club, 2003-NMSC-005, ¶ 13.
B. 	Consideration of Carter’s February Bank Statement
{9} 	Considering whether the hearing officer correctly refused to consider Carter’s
February bank statement, two sections of the New Mexico Administrative Code help
guide our analysis. First, 8.290.500.9 NMAC (1/1/1997) provides that applicants for
Medicaid institutional care “must meet, or expect to meet, all financial eligibility
criteria in the month for which a determination of eligibility is made.” 	Second,
8.281.500.10(A) 	NMAC 	(7/31/1997) 	provides 	that 	in 	order 	to 	determine 	an
applicant’s eligibility, the Division must look at the applicant’s resources as of the
“first moment of the first day of the month.” Id. “Changes in the amount of countable

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resources during a month do not affect eligibility or ineligibility for that month.” Id.
{10} 	Whether an administrative hearing officer may consider evidence unavailable
to the original caseworker has been developed in the line of cases beginning with
Saenz v. N.M. Dep’t of Human Servs., Income Support Div., 98 N.M. 805, 653 P.2d.
181 (Ct. App. 1982), continuing through Cruz v. N.M. Dep’t of Human Servs., Income
Support Div., 100 N.M. 133, 666 P.2d 1280 (Ct. App. 1983), and ending with
Landavazo v. N.M. Dep’t of Human Serv., Income Support Div., 106 N.M. 715, 749
P.2d 538 (Ct. App. 1988). 	In Saenz, we heard the appeal of Sammy Saenz, who
applied for and was denied general assistance benefits when his hearing officer
refused to consider a medical report that was not originally available to his
caseworker. 98 N.M. at 806, 653 P.2d. at 182. We reversed the denial of benefits and
held that the agency had a duty to consider the new evidence even though it was not
available to the original caseworker. 	Id. at 808, 653 P.2d at 184. 	Cruz presented a
similar set of facts. 	Esther Cruz was denied financial assistance under the Aid to
Families with Dependent Children Program when the agency determined that she
exceeded the resource limitations for qualification. 100 N.M at 134-35, 666 P.2d at
1281-82. At the hearing, the hearing officer refused to consider evidence that was
unavailable to the original caseworker, and we again reversed, holding that “[t]he
evidence that we consider is the evidence contained in the record of the ‘fair
hearing.’” Id. at 135, 666 P.2d at 1282 (internal quotation marks and citation omitted).

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It makes no difference that the evidence in question was unavailable to the original
caseworker. Id.
{11} 	In Landavazo, we regarded another similar set of facts and took the opportunity
to refine the holdings of both Saenz and Cruz. Richard Landavazo was denied food
stamps when the agency determined that he exceeded the resource limitation for
benefits as a result of the value of his vehicle. Landavazo, 106 N.M. at 717, 749 P.2d
at 540. 	He appealed, and between the initial denial of benefits and the hearing,
Landavazo, who was physically disabled, made modifications to his vehicle which
would have removed it from consideration as a “resource” because such modifications
were a result of his disability. Id. at 716, 749 P.2d at 539. At the hearing, Landavazo
relied on Saenz and Cruz and argued that the modifications, though evidence of them
was unavailable to the original caseworker, should nevertheless be considered by the
hearing officer. Landavazo, 106 N.M. at 716, 749 P.2d at 539. The hearing officer
rejected the argument and affirmed the decision of the caseworker. 	Id. 	On appeal,
Landavazo renewed his reliance on Saenz and Cruz and urged us to reverse the
agency’s decision. We refused and held that Saenz and Cruz only apply when new
evidence offered by an applicant tends to establish eligibility “at the time HSD’s
representatives 	originally 	took 	action 	terminating 	or 	denying 	. 	. 	. 	benefits.”
Landavazo at 717, 749 P.2d at 540. As we stated, the modifications Landavazo made
to his vehicle were made “after the county office denied his application, and would

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not establish [his] eligibility for benefits” at the time of the original denial. Id. Stated
differently, regardless of whether the original caseworker had access to the evidence,
a hearing officer should consider new evidence that tends to establish eligibility at the
time of the original denial.
{12} 	In light of the rule we announced in Landavazo, we hold that the hearing officer
should have considered Carter’s February bank statement because it tended to
establish Carter’s eligibility at the time of the original caseworker’s denial on
February 9, 2006. The Department would have us hold that Landavazo only applies
to evidence that tends to establish eligibility at the moment the caseworker first
considers an application, but the Department misinterprets that case. As we stated, the
hearing officer must consider the evidence if it tends to “establish the applicants
eligibility for benefits at the time HSD’s representatives originally took action
terminating or denying” benefits. 	Id. at 717, 749 P.2d at 540 (second emphasis
added). The district court likewise misinterprets Landavazo, but interestingly, relies
on the following quote: “[t]he new evidence . . . [Landavazo submitted] constituted
a change in circumstances after the county office denied his application, and would
not establish [his] eligibility for benefits at the time.” Id. (emphasis omitted). This
language supports the notion that the evidence must tend to establish the applicant’s
eligibility prior to termination or denial and not at the time of first consideration, as
the Department urges.

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{13} 	Neither party disputes that the caseworker denied Carter’s application for a D
& E Waiver by formal letter on February 9, 2006, and that the letter is clear that Carter
had presented subsequent information to the case worker that the case worker rejected.
After receiving this notice, Carter appealed for a hearing on February 21, 2006. The
hearing was held on March 16, 2006, at which time the hearing officer refused to
consider her February bank statement. Applying the rule from Landavazo, above, we
hold that the date of official Department denial was February 9, 2006, and because the
Department must assess an applicant’s resources as of the “first moment of the first
day” of the month, 8.281.500.10(A) NMAC (7/31/1997), the hearing officer should
have considered Carter’s February bank statement when proffered. 	As the district
court stated, we must “fix a date at some point,” and today we hold that the
appropriate date is the date of the Department’s official notice of denial.
{14} 	The Department asserts that today’s holding will create a back-up in an already
clogged benefits system, allowing applicants to “delay a decision on . . . [their]
application[s] by continuing to present additional information for subsequent time
periods.” But the Department ignores the language of 8.290.600.10 NMAC (1/1/97),
which states that all applications for D & E Waivers “must be acted upon and notice
of approval, denial, or delay sent out within 30 days from the date of application, or
within 60 days if a disability determination is required.” Since we find no evidence
in the record that a disability determination was required or conducted, 	the

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Department had 30 days from the time of Carter’s completed application to officially
deny her benefits. Carter’s application was completed and submitted on December
20, 2005, and since no disability determination was required, the Department should
have denied Carter’s application by January 20, 2006. Instead, its determination was
not made until February 9, 2006, by which time it became aware of and rejected
further evidence of Carter’s eligibility. Refusal to take this information into account
in the subsequent hearing rendered that proceeding unfair. If the Department had acted
within the regulatory 30-day window, the February bank statement would have
presented no evidentiary problem because it would not have tended to establish
eligibility prior to the caseworker’s original denial of benefits. Since it did not, and
Carter’s situation changed by the time the determination was made by the case worker,
the Department was obligated to take those facts into account.
CONCLUSION
{15} 	We reverse the order of the district court affirming the Department’s decision
which denied Carter’s application for a D & E Waiver. We hold that the Department’s
decision was not in accordance with the law and was therefore erroneous. We remand
to the Department for a consideration of the February bank statement consistent with
this opinion.
{16} 	IT IS SO ORDERED.

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_____________________________________
RODERICK T. KENNEDY, Judge
WE CONCUR:
________________________________
CYNTHIA A. FRY, Chief Judge
________________________________
MICHAEL E. VIGIL, Judge