Family Redirection Inst., Inc. v. Commonwealth

• Decision Date: 16 April 2013
• Docket Number: Record No. 1274–12–2.
• Citation: 739 S.E.2d 916,61 Va.App. 765
• Court: Virginia Court of Appeals
• Parties: FAMILY REDIRECTION INSTITUTE, INC. v. COMMONWEALTH OF VIRGINIA DEPARTMENT OF MEDICAL ASSISTANCE SERVICES.

61 Va.App. 765

739 S.E.2d 916

FAMILY REDIRECTION INSTITUTE, INC.

v.COMMONWEALTH OF VIRGINIA DEPARTMENT OF MEDICAL ASSISTANCE SERVICES.

Record No. 1274–12–2.

Court of Appeals of Virginia, Richmond.

April 16, 2013.

Belinda D. Jones, Richmond (Jonathan M. Joseph; Christian & Barton, L.L.P., on briefs), for appellant.

Usha Koduru, Assistant Attorney General (Kenneth T. Cuccinelli, II, Attorney General; Rita W. Beale, Deputy Attorney General; Kim F. Piner, Senior Assistant Attorney General, on brief), for appellee.

Present: FRANK, HUMPHREYS and KELSEY, JJ.

KELSEY, Judge.

The Virginia Department of Medical Assistance Services (DMAS) ordered Family Redirection Institute, Inc. (FRI) to reimburse the Commonwealth for payments made to FRI. Contesting this reimbursement order, FRI appealed to the circuit court under the Virginia Administrative Process Act (VAPA), Code §§ 2.2–4000 through –4033, claiming DMAS's request was arbitrary and capricious. The circuit court rejected FRI's arguments, as do we.

I.

DMAS administers the federal and state funded Medicaid Program. SeeCode §§ 32.1–323 through –331.17. DMAS entered into an agreement with FRI to provide intensive in-home care services to Medicaid-eligible individuals in Virginia. These services include, among other things, crisis interventions in the homes of at-risk youths with mental, medical, or behavioral health problems. See12 Va. Admin. Code § 30–50–130(B)(5)(a). Due to the specialized needs of the patients receiving these services, DMAS regulations mandate that a professional participating in the program must be either “an LMHP or a QMHP,” 12 Va. Admin. Code § 30–60–61(A)(9), defined as a “Licensed Mental Health Professional” or a “Qualified Mental Health Professional.” 12 Va. Admin. Code § 30–50–226(A).

The qualification pertinent to this case is the QMHP, which DMAS regulations define as “a clinician in the human services field who is trained and experienced in providing psychiatric or mental health services to individuals who have a psychiatric diagnosis.” Id. A QMHP must be a physician, a psychiatrist, a psychologist, a qualified social worker, a registered nurse, or a “[m]ental health worker” who meets particular criteria listed in the regulation. 12 Va. Admin. Code § 30–50–226(A)(1) to (6). Except for certain registered or certified workers, all mental health workers must have varying levels of “clinical experience,” 12 Va. Admin. Code § 30–50–226(A)(6)(a) to (f), ranging from one to four years.

According to the DMAS regulation, “clinical experience” is “practical experience in providing direct services to individuals with mental illness or mental retardation or the provision of direct geriatric services or special education services. Experience may include supervised internships, practicums, and field experience.” 12 Va. Admin. Code § 30–50–226(A).

In 2000, and again in 2007, DMAS and FRI entered into agreements authorizing FRI to participate in the DMAS program. The agreements stated that DMAS would pay FRI for its services on the conditions that FRI “keep such records as [the Virginia Medical Assistance Program (VMAP) ] determines necessary ... regarding payments claimed for providing services under the State Plan” and “comply with all applicable state and federal laws, as well as administrative policies and procedures of VMAP as from time to time amended.” App. at 655–56. DMAS also provided FRI with a Community Mental Health Rehabilitative Services Manual, which stated: “Providers will be required to refund payments made by Medicaid if they are found to have billed Medicaid contrary to law or regulation, failed to maintain any record or adequate documentation to support their claims, or billed for medically unnecessary services.” DMAS Community Mental Health Rehabilitative Services Manual ch. VI, at 2 (rev. June 6, 2003).

Following a utilization review by a DMAS auditor, DMAS requested reimbursement for services provided by four FRI employees who lacked sufficient periods of clinical experience at the time of the services billed and were thus unqualified mental health workers. As the enabling statute requires, DMAS placed the burden of proof on FRI to demonstrate the qualifications of its workers. SeeCode § 32.1–325.1(C). After considering the evidence in the administrative record, DMAS concluded in the final agency decision that FRI did not prove by a preponderance of the evidence that its employees were properly qualified as QMHPs.¹

FRI appealed the final agency decision to the circuit court. The court entered an order affirming DMAS's decision to obtain reimbursement for all four FRI employees. The court's order stated that DMAS's interpretation of 12 Va. Admin. Code § 30–50–226 “cannot require providers to satisfy an unwritten standard.” App. at 305. The court apparently believed, however, that DMAS's interpretation did not violate this principle—for the very next sentence of the order upheld DMAS's decision finding all four FRI employees unqualified.²

II.

On appeal, FRI argues the circuit court should have found DMAS's decision “arbitrary and capricious” because DMAS imposed unwritten “documentation requirements” upon FRI to prove the clinical experience of its four employees. Appellant's Br. at 2. FRI adds that the circuit court's final order (which includes a statement that DMAS cannot enforce unwritten standards) demonstrates why its holding (which finds DMAS properly requested reimbursement for the four unqualified FRI workers) was plainly wrong. Id. On several levels, we disagree.

A. VAPA & the Limited Nature of Judicial Review

Under the VAPA, the circuit court reviews an agency's action in a manner “equivalent to an appellate court's role in an appeal from a trial court.” Mattaponi Indian Tribe v. Commonwealth, 43 Va.App. 690, 707, 601 S.E.2d 667, 676 (2004) (citations omitted), aff'd in relevant part sub nom. Alliance to Save the Mattaponi v. Commonwealth, 270 Va. 423, 621 S.E.2d 78 (2005). “In this sense, the General Assembly has provided that a circuit court acts as an appellate tribunal.” Laurels of Bon Air, LLC v. Med. Facilities of Am. LIV Ltd. P'ship, 51 Va.App. 583, 591, 659 S.E.2d 561, 565 (2008) (quoting Gordon v. Allen, 24 Va.App. 272, 277, 482 S.E.2d 66, 68 (1997)).

The circuit court has no authority under VAPA to reweigh the facts in the agency's evidentiary record. VAPA authorizes the court to “reject the agency's findings of fact only if, considering the record as a whole, a reasonable mind would necessarily come to a different conclusion.” Mattaponi Indian Tribe, 43 Va.App. at 706, 601 S.E.2d at 675 (emphasis in original) (citation and internal quotation marks omitted). “Nor can the court substitute its own judgment for the agency's on matters committed by statute to the agency's discretion.” Boone v. Harrison, 52 Va.App. 53, 62, 660 S.E.2d 704, 708 (2008).

Instead, “when the appellant challenges a judgment call on a topic on which ‘the agency has been entrusted with wide discretion by the General Assembly,’ we will overturn the decision only if it can be fairly characterized as ‘arbitrary or capricious' and thus a ‘clear abuse of delegated discretion.’ ” Citland, Ltd. v. Commonwealth ex rel. Kilgore, 45 Va.App. 268, 275, 610 S.E.2d 321, 324 (2005) (citation omitted). “This standard recognizes the larger premise that, before any legal question can be answered, an a priori question must first be asked—who has the authority to decide. It is the one question that precedes all others.” Boone, 52 Va.App. at 62, 660 S.E.2d at 708.

We generally review legal questions de novo. That is certainly the case when we interpret statutes.³ But we take a very different approach to interpreting administrative regulations. When authorized by the General Assembly to issue regulations, an agency acts securely within its delegable authority to interpret those regulations if it does so reasonably and in a manner consistent with the legislative directive. We thus afford DMAS “great deference” in its administrative “ ‘interpretation and application of its own regulations.’ ” Finnerty v. Thornton Hall, Inc., 42 Va.App. 628, 634 n. 2, 593 S.E.2d 568, 571 n. 2 (2004) (quoting Dep't of Med. Assistance Servs. v. Beverly Healthcare, 41 Va.App. 468, 481, 585 S.E.2d 858, 865 (2003)); cf. Bd. of Supervisors v. State Bldg. Code Tech. Review Bd., 52 Va.App. 460, 466, 663 S.E.2d 571, 574 (2008) (noting limits to such deference).

B. The Circuit Court's Final Order

With these principles framing our review, we next turn to the language of the circuit court's final order. FRI reads in it a fatal inconsistency. According to FRI, the order endorses FRI's main argument that DMAS was enforcing “documentation requirements” not clearly stated in its regulations. Despite this purported endorsement, the order rules in DMAS's favor on the merits with respect to all four FRI employees. FRI argues we should affirm the circuit court's reasoning and reverse its holding. We think just the opposite is true. It seems to us the better approach is to affirm the court's holding and ignore its allegedly inconsistent reasoning.

To begin with, we are not at all confident of FRI's reading of the court's statement that DMAS's interpretation of 12 Va. Admin. Code § 30–50–226 “cannot require providers to satisfy an unwritten standard.” App. at 305. FRI reads the statement to mean that DMAS improperly held FRI to an unwritten standard. The next sentence of the order, however, upholds DMAS's decision in full. Perhaps the court meant only to voice its agreement with FRI's theory in the abstract, while disagreeing that it applied to this case. Viewed through this contextual lens, the court simply said: “Yes, as a general principle, DMAS cannot apply an unwritten standard to FRI; but the court does not believe DMAS did so in this case.”

We acknowledge the conceptual gap between what the court said and what it did seems rather wide, particularly considering the statement of facts...