E.B. v. Division of Medical Assistance & Health Services, 431 N.J. Super. 183 (App. Div. 2013). This appeal challenged the issuance of Medicaid Communication No. 11-03 by the defendant Division. In that Communication, the Division required a Medicaid applicant or recipient to complete a Medicaid Designation of Authorized Representative (“MDAR”) form promulgated by the Division if the applicant seeks to appoint an authorized representative to act on the applicant’s behalf. Plaintiffs sought a declaration that the MDAR “form requirement and the attendant denial of a fair hearing [regarding eligibility for Medicaid] for failure to complete and submit the MDAR form violate federal and state laws.”
In an opinion by Judge Maven, the Appellate Division applied the deferential standard of review of agency actions and “conclude[d] that the Division did not violate any federal or state laws or regulations regarding its decision to require applicants to complete a standardized assignment form such as the MDAR.” However, since the Division was in the process of rulemaking pursuant to the Administrative Procedure Act, N.J.S.A. 52:14B-1 to -30 (“APA”), the panel decided to allow the MDAR requirement to continue pending the conclusion of the rulemaking and any appeal of any rule that might result from the rulemaking process.
This decision to permit the Division to continue requiring completion of the MDAR was in line with the “temporary validity doctrine,” which Judge Maven described as “allow[ing] an agency to continue using [its] current processes during a remand for agency rulemaking in compliance with the APA.” She traced the origin of that doctrine to K.P. v. Albanese, 204 N.J. Super. 166, 173-74 (App. Div. 1985), and cited other cases that had applied that principle or recognized that “when the public interest requires, a court is not obliged to void immediately administrative rules not adopted in conformity with the APA.” The panel ruled, however, that Communication No. 11-03 would remain in effect only until the earlier of the promulgation of the proposed rule or December 31, 2013. If no rule were promulgated by December 31, 2013, the Communication would be “deemed null and void as of that date.”
The “temporary validity doctrine” recognizes the importance of having in place an administrative procedure that appears to be properly motivated and not violative of parties’ rights, but which was not adopted through the required rulemaking process. It is a practical response that allows an agency time to correct its failure to go through the steps required by the APA to promulgate a rule embodying the procedure. Pending that rulemaking process, the procedure is allowed to remain in place.