Dept. of Health v. Brown

• Decision Date: 27 November 2007
• Docket Number: No. 1572, Sept. Term, 2006.,1572, Sept. Term, 2006.
• Parties: MARYLAND DEPARTMENT OF HEALTH AND MENTAL HYGIENE v. Ida BROWN.
• Court: Court of Special Appeals of Maryland

935 A.2d 1128

177 Md. App. 440

MARYLAND DEPARTMENT OF HEALTH AND MENTAL HYGIENE v. Ida BROWN.

No. 1572, Sept. Term, 2006.

Court of Special Appeals of Maryland.

November 27, 2007.

Lorie A. Mayorga (Douglas F. Gansler, Atty. Gen., on brief), for appellant.

Regan Bailey, Riverdale, Sarah L. Lock, Washington, DC, for appellee.

Panel EYLER, JAMES R., BARBERA, KENNEY, JAMES A., III, (Retired, Specially Assigned) JJ.

BARBERA, J.

We are asked in this appeal to identify the appropriate legal standard to be used when determining medical eligibility for services through the Maryland Medicaid Assistance Home and Community Waiver for Older Adults Program ("Older Adults Waiver Program"). The program permits Medicaid recipients who need health-related care to receive care at home or in a community-based assisted living facility, instead of a nursing home.

The Maryland Department of Health and Mental Hygiene ("Department"), appellant, denied the application of Ida Brown, appellee, for health care services under the Older Adults Waiver Program. The Department concluded that Ms. Brown did not satisfy the level of medical care required for admission. Ms. Brown requested a hearing at the Office of Administrative Hearings ("OAH"). The Administrative Law Judge ("ALJ") affirmed the denial of Ms. Brown's application, agreeing with the Department that she was medically ineligible for the Older Adults Waiver Program. Ms. Brown appealed to the Department's Board of Review ("Board"). The Board held a hearing and thereafter issued an order affirming the ALJ's decision and adopting the "Findings of Fact and Conclusion of the Law set forth therein."

Ms. Brown sought judicial review. The Circuit Court for Baltimore City, following a hearing, reversed the Board's decision. The circuit court ruled from the bench that the All and the Board applied the incorrect standard for determining Ms. Brown's medical eligibility to participate in the Older Adults Waiver Program. The court identified what it believed to be the correct eligibility standard, applied that standard to the facts developed at the hearing before the ALJ, and concluded that Ms. Brown "is eligible for an adult waiver." The court then issued a written order reversing the decision of the Board and finding Ms. Brown eligible for benefits under the Older Adults Waiver Program.

The Department appeals the court's decision and presents two questions, which we have reworded slightly:

I. Did the ALJ, as affirmed by the Board of Review, apply the proper legal standard in determining that Ms. Brown was ineligible for the health care services under the Older Adults Waiver Program?

II. Was the ALJ's decision supported by substantial evidence in the record?

For the reasons that follow, we conclude, as did the circuit court, that the ALJ did not apply the proper legal standard in denying Ms. Brown's application for health-related assistance through the Older Adults Waiver Program. We disagree, however, with the circuit court's decision to apply what it believed to be the correct legal standard to the facts of Ms. Brown's case as they were developed at the evidentiary hearing before the ALJ. The proper standard, as we shall define it in this opinion, should be applied to Ms. Brown's case in the first instance at the agency level. Accordingly, we shall vacate the judgment of the circuit court and direct that the case be remanded to the Board, which, in turn, is directed to remand the case to the OAH for further proceedings.

I.

The principal issue raised by this appeal requires consideration, as a preliminary matter, of the structure of Maryland's Older Adults Waiver Program and how it fits within the overall Medicaid scheme.

A. Medicaid and Maryland's Plan

Medicaid is a joint federal-state program established by Title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq. (2000). The program provides health care to financially and medically needy individuals. Ehrlich v. Perez, 394 Md. 691, 701, 908 A.2d 1220 (2006); Reese v. Dep't of Health and Mental Hygiene, No. 514, Sept. Term 2006, 2007 WL 3227549, at *2 (Md.App. Nov.2, 2007); see 42 U.S.C. §§ 1396 et seq. Beneficiaries include low-income adults and children, the elderly, and mentally and physically disabled individuals. Reese, 2007 WL 3227549, at *2.

State participation in Medicaid is voluntary. Id. Each participating state is given some flexibility in devising its Medicaid program, but the state's plan must be approved by the federal Centers for Medicare and Medicaid Services ("CMS").¹ 42 U.S.C. § 1396a. If the state's proposed plan is approved, the state is eligible for federal funding, and the plan becomes mandatory. 42 U.S.C. § 1396a(a)(1); Ehrlich, 394 Md. at 702, 908 A.2d 1220; Reese, 2007 WL 3227549, at *2.

Maryland has elected to participate in Medicaid. The State's Medicaid plan, known as the Medical Assistance Program ("MAP"), is administered by the Department. Md.Code (2005 Repl.Vol., 2007 Supp.), § 15-103 of the Health General Article; Reese, 2007 WL 3227549, at *2. By participating in Medicaid, Maryland has agreed to abide by federal statutory and regulatory requirements and to provide financial assistance to qualified recipients for seven broad areas of medical treatment. See 42 U.S.C. § 1396a(a)(10)(A); Alexander v. Choate, 469 U.S. 287, 289 n. 1, 105 S.Ct. 712, 83 L.Ed.2d 661 (1985); Jackson v. Millstone, 369 Md. 575, 595-96, 801 A.2d 1034 (2002); see also Ehrlich, 394 Md. at 701, 908 A.2d 1220 (stating that, "[i]f a state chooses to take part in the federal Medicaid program, it must comply with the requirements set forth in Title XIX and its implementing regulations in order to receive federal matching funds"). The areas of treatment include nursing facility services for eligible persons age twenty-one and over. 42 U.S.C. § 1396d(a)(4)(A).

In 1981, Congress created as part of the Medicaid scheme the Home and Community Based Waiver Program ("HCBS"). The HCBS allows states to offer long-term care, not otherwise available through the states' Medicaid programs, to serve eligible individuals in their own homes and communities, instead of nursing facilities. 42 U.S.C. § 1396n(c)(1); see 42 C.F.R. § 441.300 (stating that the federal act "permits States to offer, under a waiver of statutory requirements, an array of home and community-based services that an individual needs to avoid institutionalization"). The HCBS permits participating states to apply for a waiver from the Secretary of the Department of Health and Human Services ("HHS") to fund community-based services, "pursuant to a written plan of care to individuals with respect to whom there has been a determination that but for the provision of such services the individuals would require the level of care provided in a hospital or nursing facility ... the cost of which could be reimbursed under the State plan." 42 U.S.C. § 1396n(c)(1); see 42 C.F.R. § 435.217.

The Older Adults Waiver Program, at the center of the present appeal, is one such program authorized by the HCBS.

B. The Older Adults Waiver Program

We have said that, by participating in Medicaid, MAP must provide Medicaid recipients with, among other services, "nursing facility services." 42 U.S.C. § 1396a(a)(10)(A); 42 U.S.C. § 1396d(a)(4)(A). The Older Adults Waiver Program allows participating states to seek approval from the Secretary of HHS for a plan to excuse the requirement that such services for an eligible Medicaid recipient be provided in a nursing home setting:

The Secretary may by waiver provide that a State plan approved under this subchapter may include as "medical assistance" under such plan payment for part or all of the cost of home or community-based services (other than room and board) approved by the Secretary which are provided pursuant to a written plan of care to individuals with respect to whom there has been a determination that but for the provision of such services the individuals would require the level of care provided in a hospital or a nursing facility or intermediate care facility for the mentally retarded the cost of which could be reimbursed under the State plan.

42 U.S.C. § 1396n(c)(1).

Section 1396n(c)(1) makes plain that, to be eligible for the Older Adults Waiver Program, an individual must require the same level of care as is provided in a Medicaid nursing facility. Ascertaining that level of care is the central focus of this appeal. Bearing in mind that no participating state's Medicaid program may establish more restrictive eligibility requirements than those set by federal law, we look to the Medicaid statute and related regulations that establish the required level of care as the benchmark for eligibility under Maryland's plan. The level of care required for receipt of Medicaid nursing facility care is found in the federal statutory and regulatory provisions that define the terms "nursing facility" and "nursing facility services."

Beginning in the 1970s, the Medicaid program provided benefits for nursing home services at both the "skilled" level of nursing care and at what was known as the "intermediate" level of nursing care. Congress eliminated the distinction between skilled level of nursing care and intermediate level of nursing care in 1987, when it enacted the Nursing Home Reform Law.² See 42 U.S.C. § 1396r(a). The House Committee report said that the new term, "nursing facility services," would "not in any way alter the entitlement of current [or future] Medicaid beneficiaries or applicants . . . to what is now an [intermediate care facility] level of care." H.R. REP. NO. 100-139(I), at 453 (1987), reprinted in 1987 U.S.C.C.A.N. 2313-273. The new, consolidated standard of care includes services "just above `room and board'" at one end, and "just below hospitalization" at the other. Newman v. Kelly, 848 F.Supp. 228, 239 n. 4 (D.D.C.1994).

"Nursing facility" is now defined, in relevant part, as:

[A]n institution (or a distinct part of an...