Charlotte-Mecklenburg v. Dept. of Health

Decision Date17 November 2009
Docket NumberNo. COA09-9.,COA09-9.
Citation685 S.E.2d 562
PartiesCHARLOTTE-MECKLENBURG HOSPITAL AUTHORITY, Duke University Medical Center, Mission Hospitals, Inc. Moses Cone Health System, North Carolina Baptist Hospital, Wakemed Medical Center, Plaintiffs, v. NORTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES, its Division of Medical Assistance, and Carmen Hooker Odom, Mark T. Benton, Carleen Massey, and Geoff Elting in their Official Capacities; Defendants.
CourtNorth Carolina Court of Appeals

Ott Cone & Redpath, P.A., by Thomas E. Cone, Greensboro, for plaintiffs-appellants.

Attorney General Roy A. Cooper, III, by Special Deputy Attorney General Gerald K. Robbins and Assistant Attorney General Brenda Eaddy, for defendants-appellees.

JACKSON, Judge.

Charlotte-Mecklenburg Hospital Authority; Duke University Medical Center, Mission Hospitals, Inc.; Moses Cone Health System, North Carolina Baptist Hospital; and Wake Medical Center (collectively, "plaintiffs") appeal from a declaratory judgment order granting summary judgment in favor of North Carolina Department of Health and Human Services ("NCDHHS"); its Division of Medical Assistance ("DMA"); and Carmen Hooker Odom, Mark T. Benton, Carleen Massey, and Geoff Elting in their official capacities (collectively, "defendants"). For the reasons set forth below, we affirm.

The material facts of the case sub judice are not in dispute. Plaintiffs operate not-for-profit hospitals in North Carolina and provide medical services to North Carolina Medicaid recipients pursuant to contractual agreements with defendants. Plaintiffs also provide medical services to Medicare recipients pursuant to contractual agreements with the federal Medicare program.

NCDHHS is an administrative agency of the State of North Carolina and is responsible for meeting the human service needs of portions of North Carolina's population. NCDHHS supervises the administration of North Carolina's Medicaid program. DMA is a division of NCDHHS and is responsible for administering the State's Medicaid program.

In 2005, defendants contracted with Health Management Systems, Inc. ("HMS") to identify hospital services which had been billed to and paid for by Medicaid, but for which potential third-party payment sources, including Medicare, also were available.

On 26 October 2005, DMA mailed to plaintiffs lists compiled by HMS of accounts for which Medicaid had been billed and paid, but which were eligible for payment by Medicare. The letters advised plaintiffs to review their records, to submit bills to Medicare, and to send a refund to DMA within sixty days. If plaintiffs failed to bill Medicare or to advise HMS of the reasons for which plaintiffs could not recover payments from Medicare, DMA would recoup funds it had paid through Medicaid that Medicare should have paid or could pay.

Plaintiffs objected to reviewing their records and submitting bills to Medicare as an alternative means of payment for the accounts identified by the HMS lists. On 19 December 2005, plaintiffs filed an action seeking a declaratory judgment to declare defendants' actions to be contrary to law null, and void. On 30 July 2008 and 31 July 2008, plaintiffs and defendants, respectively, filed motions for summary judgment accompanied by supporting affidavits and discovery. On 17 September 2008, the trial court entered a declaratory judgment order in defendants' favor and granted defendants' motion for summary judgment. From the trial court's order, plaintiffs appeal.

Previously, we have held that "summary judgment is an appropriate procedure in a declaratory judgment action." Montgomery v. Hinton, 45 N.C.App. 271, 273, 262 S.E.2d 697, 698 (1980) (citations omitted). See also Hejl v. Hood, Hargett & Assocs., ___ N.C.App. ___, ___, 674 S.E.2d 425, 427 (2009). In reviewing an order for summary judgment, this Court must make a two-step determination as to whether "(1) the relevant evidence establishes the absence of a genuine issue as to any material fact, and (2) either party is entitled to judgment as a matter of law." Guthrie v. Conroy, 152 N.C.App. 15, 21, 567 S.E.2d 403, 408 (2002) (citing Von Viczay v. Thoms, 140 N.C.App. 737, 738, 538 S.E.2d 629, 630 (2000), aff'd 353 N.C. 445, 545 S.E.2d 210 (2001) (per curiam)). Summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law." N.C. Gen.Stat. § 1A-1, Rule 56(c) (2007). By submitting cross-motions for summary judgment, the parties have effectively conceded that there is no genuine issue of material fact. See Erie Ins. Exch. v. St. Stephen's Episcopal Church, 153 N.C.App. 709, 711, 570 S.E.2d 763, 765 (2002). Therefore, we need only determine which party is entitled to judgment as a matter of law.

On appeal, plaintiffs argue that the trial court erred in concluding that DMA has the authority to recoup money from hospitals when the underlying Medicaid claims properly had been billed and paid and that the trial court erred in concluding that the hospitals bear the responsibility for pursuing payment from Medicare as a third-party payor after properly accepting Medicaid as payment in full as required by State and federal law. We disagree. Because plaintiffs' arguments require analysis of substantially interrelated rules, we address together both questions presented.

"`[A]n administrative agency is a creature of the statute creating it and has only those powers expressly granted to it or those powers included by necessary implication from the legislature [sic] grant of authority.'" Boston v. N.C. Private Protective Services Bd., 96 N.C.App. 204, 207, 385 S.E.2d 148, 150-51 (1989) (quoting In re Williams, 58 N.C.App. 273, 279, 293 S.E.2d 680, 685 (1982)). In performing its function, the power of an agency to interpret a statute that it administers is limited by the actions of the legislature. See, e.g., Chevron U.S.A. v. Natural Res. Def. Council, 467 U.S. 837, 842-43, 104 S.Ct. 2778, 81 L.Ed.2d 694, 703 (1984); see also Watson Industries v. Shaw, Comr. of Revenue, 235 N.C. 203, 211, 69 S.E.2d 505, 511 (1952). If the legislature unambiguously expressed its intent in the statute, then the agency administering that statute must give effect to that intent. See N.C. Comm'r of Labor v. Weekley Homes, L.P., 169 N.C.App. 17, 22-23, 609 S.E.2d 407, 412 (2005) (citing Chevron, 467 U.S. at 842-43, 104 S.Ct. at 2781-82, 81 L.Ed.2d at 703). But, if the legislature was silent or ambiguous on the specific issue, then the agency has room to construe the statute. See id. "`Although the interpretation of a statute by an agency created to administer that statute is traditionally accorded some deference by appellate courts, those interpretations are not binding.'" Martin v. N.C. Dep't of Health & Hum. Servs., ___ N.C.App. ___, ___, 670 S.E.2d 629, 632 (2009) (quoting Total Renal Care of N.C., L.L.C. v. N.C. Dep't of Health & Hum. Servs., 171 N.C.App. 734, 740, 615 S.E.2d 81, 85 (2005)). "`The weight of [an administrative agency's] interpretation in a particular case will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.'" Id. (quoting Total Renal Care of N.C., L.L.C. v. N.C. Dep't of Health & Hum. Servs., 171 N.C.App. 734, 740, 615 S.E.2d 81, 85 (2005)).

Under Medicare Part A, the federal government makes payments to "providers of services" for services provided to Medicare beneficiaries. 42 U.S.C. § 1395f(a) (2000). A "provider of services" is a statutorily defined term that includes hospitals and other specified medical facilities. 42 U.S.C. § 1395x(u) (2000). Section 1395f(a)(1) delegates to the Secretary of Health and Human Services ("the Secretary") the authority to determine who may file claims under such agreements:

Except as provided in subsections (d) and (g) and in section 1395mm ..., payment for services furnished an individual may be made only to providers of services which are eligible therefore under section 1395cc of this title and only if —

(1) written request ... is filed for such payment in such form, in such manner, and by such person or persons as the Secretary may by regulation prescribe. ...

42 U.S.C. § 1395f (a)(1) (2000).

Federal regulations promulgated by the Secretary require that all initial claims for payment for medical services pursuant to Part A of the Medicaid program be submitted by the providers of those services. 42 C.F.R. § 424.33 (2005). The Secretary has defined "provider" as follows:

Provider means a hospital, a [critical access hospital], a skilled nursing facility, a comprehensive outpatient rehabilitation facility, a home health agency, or a hospice that has in effect an agreement to participate in Medicare, or a clinic, a rehabilitation agency, or a public health agency that has in effect a similar agreement but only to furnish outpatient physical therapy or speech pathology services, or a community mental health center that has in effect a similar agreement but only to furnish partial hospitalization services.

42 C.F.R. § 400.202 (2005). The requirement applies whether payment is sought in the first instance pursuant to Medicare or whether payment is sought pursuant to Medicare for claims that previously were paid by Medicaid.

At times relevant to the actions in the case sub judice1, North Carolina General Statutes, section 108A-54 gave NCDHHS broad authority to enact rules, regulations, policies and procedures to effectuate the purpose of the Medicaid program, and to direct how payments are to be...

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