Easley v. Arkansas Dept. of Human Services, PB-C-84-469.

• Decision Date: 21 October 1986
• Docket Number: No. PB-C-84-469.,PB-C-84-469.
• Parties: Catherine EASLEY, et al., Plaintiffs, v. ARKANSAS DEPARTMENT OF HUMAN SERVICES, DIVISION OF SOCIAL SERVICES, et al., Defendants.
• Court: U.S. District Court — Eastern District of Arkansas

645 F. Supp. 1535

Catherine EASLEY, et al., Plaintiffs, v. ARKANSAS DEPARTMENT OF HUMAN SERVICES, DIVISION OF SOCIAL SERVICES, et al., Defendants.

No. PB-C-84-469.

United States District Court, E.D. Arkansas, Pine Bluff Division.

October 21, 1986.

COPYRIGHT MATERIAL OMITTED

Ben Johnson, Jr., Jan Dewoody Scussel, Legal Services of Arkansas, Monticello, Ark., for plaintiffs.

E. Jeffery Story, Asst. Atty. Gen., Little Rock, Ark., for defendants.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

ROY, District Judge.

This matter comes before the Court on briefs and stipulations of the parties. The parties agreed that the only issues to be decided were legal issues, and therefore agreed to submit the case on briefs. The Court makes the following findings of fact and conclusions of law, which incorporate the stipulations entered into by the parties.

FINDINGS OF FACT

1. Plaintiffs Catherine Easley, Bessie Jenkins, Carolyn Johnson, Mary Matthews and Alice Smith were Medicaid recipients pursuant to Title XIX of the Social Security Act at the time the case at bar was filed (42 U.S.C. § 1396 et seq.). Mary Matthews and Alice Smith continue to be Medicaid recipients.

2. Defendant, Arkansas Department of Human Services, Division of Social Services, is a State agency and Defendants, Ray Scott, Walt Patterson and Ray Hanley, are the state officials responsible for administering the Medicaid program within the State of Arkansas. (Hereinafter referred to as "Department".) The Division of Social Services has been renamed Division of Economic and Medical Services. Curtis Ivery and Kenny Whitlock have been succeeded by Walt Patterson and Ray Hanley.

3. The present lawsuit results from the denial of payment on claims submitted by providers for each of the plaintiffs. In the plaintiffs' cases, Medicaid providers sought payment for the treatment of plaintiffs from the defendant Department by filing requests for payment. In the case of each plaintiff, the request for payment filed by the Medicaid provider was denied in whole or in part because of the providers' failure to comply with the procedural requirements of Arkansas Medicaid or because the service rendered was not covered by Medicaid. The Medicaid providers did not attempt to timely refile corrected requests for payment subsequent to the defendant Department's informing them of their procedural or clerical mistakes.

4. Medicaid is a welfare program in which states that choose to participate work with the federal government to provide medical assistance to eligible individuals. It is a cooperative federal and state cost-sharing venture in which participating states must submit a plan to the Secretary of Health and Human Services for approval and must comply with all federal statutes and regulations governing the Medicaid program. Once its plan is approved, the state agency responsible for administering the program has authority to contract with public and private medical providers relative to the rendition of medical services to eligible Medicaid recipients.

5. In Arkansas there are four types of individuals who are eligible for Medicaid benefits. Low-income individuals who qualify for Supplemental Security Income or Aid to Families with Dependent Children automatically qualify for Medicaid benefits. In addition, foster children and other medically needy individuals may be eligible for benefits. Arkansans may be determined eligible for Medicaid benefits as "categorically needy" if they meet the categorical requirements for Supplemental Security Income or Aid to Families with Dependent Children but are ineligible for those two welfare programs because of their income or assets. (42 U.S.C. § 1396d(a)).

Once an individual is determined eligible for Medicaid benefits, he or she is issued a Medicaid card. When a Medicaid card is presented and accepted by a medical provider who has contracted with Arkansas Medicaid, the provider is obligated to render medical services to the Medicaid recipient and seek payment for those services from Arkansas Medicaid. The provider is also obligated to follow policy and procedural requirements. When a physician, hospital, or other medical provider contracts with Arkansas Medicaid, a Provider's Manual is furnished the provider which outlines the procedures for securing payment for medical services rendered and otherwise complying with Medicaid regulations. When a Medicaid provider seeks payment from the defendant Department, a request for payment is filed specifically delineating the date(s) and nature of the medical services rendered. As a general rule, a Request for Payment will be denied by defendant Department unless the Medicaid provider submits the request within six (6) months from the date the medical services were rendered.

6. The various circumstances under which the defendant Department denies a Medicaid provider's request for payment are:

(a) Prior Authorization. The Department has developed policies that require a provider to seek prior approval for certain listed surgical treatment prior to actually performing surgery. The basis for denying prior authorization is that the anticipated surgery is not medically necessary.

(b) Non-Covered Services. Requests for payments will be denied if the services are not covered within the scope of the program. For example, if prior authorization is denied for a particular surgical procedure and the service is still rendered, request for payment will be denied as a non-covered service.

(c) Lack of Medical Necessity. In addition to denials of prior authorization, the Department will deny a request for payment if the services rendered were not medically necessary. The Department places a limit on the number of days a Medicaid recipient may stay in the hospital for a particular type of surgical treatment (e.g. tonsillectomy—three days in hospital). If a patient stays longer than the Department allows, the extra days will be considered not medically necessary unless the Medicaid provider proves otherwise.

(d) Not Medicaid Eligible. Requests for payments are denied when providers seek payment for services rendered to an individual who has not applied for Medicaid or who did not have a valid Medicaid card at the time the service was rendered.

(e) Technical Denials. If the Medicaid provider fails to correctly complete the request for payment form, the claim is denied. (e.g. wrong Medicaid I.D. number, incorrect diagnosis code).

7. Most of the plaintiffs herein or their children received medical treatment from Medicaid providers at a time at which they were determined eligible for Medicaid benefits. Others were eligible retroactively after medical services had been provided. More specifically, a brief statement of the facts of each plaintiff's case is as follows:

(a) Catherine Easley: Ms. Easley received a retroactive Medicaid card for the period of time she was hospitalized and treated for exogenous obesity and chronic obstructive pulmonary disease. Gastric bypass surgery was performed during her period of Medicaid eligibility. According to defendant Department's regulations, a treating physician must obtain the approval of Arkansas Medicaid prior to performing gastric by-pass surgery. The request for payments filed by Plaintiff Easley's Medicaid providers were denied for failure to obtain prior approval.

(b) Bessie Jenkins: Ms. Jenkins was issued a retroactive Medicaid card for the period of time she was hospitalized and treated for cervical cancer. She provided copies of her Medicaid card to her treating physicians and hospitals. However, several of the requests for payments were denied for clerical or procedural errors made by the Medicaid providers.

(c) Carolyn Johnson: Plaintiff Johnson had a valid Medicaid card at the time she was hospitalized and treated for obstetrical care. However, the bulk of the medical bills incurred by her were not paid by defendant Department because the Medicaid providers made clerical errors in their requests for payment. Specifically, payment to Desha County Hospital was denied because "days billed were not equal to period covered by billing". Effective September 1, 1986, the provider may not hold recipients responsible for a bill when the provider has failed to submit the claim correctly. This is a technical denial and the foregoing policy is being made a part of the Providers' Manual. This policy was not in effect at the time of Ms. Johnson's treatment.

(d) Mary Matthews: Part of plaintiff Matthews' medical bills to the Ola Clinic were not paid by the defendant Department because of the Medicaid provider's failure to put the proper diagnosis code number on the request for payment. However, the Ola Clinic failed to refile a corrected request for payment and, as a result, plaintiff Matthews is faced with payment of the medical bills herself.

(e) Alice Smith: Desha County Hospital and Thomas Lewellan, M.D. submitted claims for payment of services for Felicia and Eli Gibson IV, Ms. Smith's daughter and son, in 1982. The hospital denied a $370.00 bill for recipient ineligibility. The claim had Eli's name on it, but Felicia's I.D. number. The claim could have been corrected and refiled with a copy of the Medicaid card any time within six months of the issue date, but was not refiled. Payment for certain services performed by Dr. Lewellan were denied based upon the fact that the recipients (Eli and Felicia) were ineligible. No remedy on the part of the provider was possible for ineligibility.

8. At the time plaintiffs received medical services that are the subject of this lawsuit, recipients were not notified about the actual collection and payment process unless they contacted the Department. The recipients never received copies of the requests for payment sent to Medicaid by the providers nor did recipients receive notification of payment or non-payment from the defendant Department.

9. In this case, none of the plaintiffs were aware that the requests for...