Ga. Dep't of Behavioral Health & Developmental Disabilities v. United Cerebral Palsy of Ga., Inc.

• Citation: 298 Ga. 779,784 S.E.2d 781
• Decision Date: 25 March 2016
• Docket Number: No. S15G1183.,S15G1183.
• Parties: GEORGIA DEPARTMENT OF BEHAVIORAL HEALTH AND DEVELOPMENTAL DISABILITIES et al. v. UNITED CEREBRAL PALSY OF GEORGIA, Inc. et al.
• Court: Supreme Court of Georgia

298 Ga. 779

784 S.E.2d 781

GEORGIA DEPARTMENT OF BEHAVIORAL HEALTH AND DEVELOPMENTAL DISABILITIES et al.

v.UNITED CEREBRAL PALSY OF GEORGIA, Inc. et al.

No. S15G1183.

Supreme Court of Georgia.

March 25, 2016.

Kimberly Kilpatrick Anderson, Joshua Barrett Belinfante, Robbins Ross Alloy Belinfante Littlefield, LLC, Jaime L. Theriot, J. Nick Phillips, Troutman Sanders LLP, Atlanta, Samuel S. Olens, Atty. Gen., Dennis R. Dunn, Deputy Atty. Gen., Shalen S. Nelson, Sr. Asst. Atty. Gen., Department of Law, for appellant.

Eric Jon Taylor, Peter F. Busscher, Rebeccah Lynn Bower, Parker Hudsonrainer & Dobbs, LLP, Jonathan Lee Rue, Parker, Hudson, Rainer & Dobbs, Jordan Kearney, Glenn P. Hendrix, William Jerad Rissler, Arnall Golden Gregory LLP, Alysa Beth–Ann Freeman, Law Office of Alysa Freeman P.C., Jason Michel Beach, Lawrence Joseph Bracken, II, Hunton & Williams, LLP, Atlanta, Deepak Jeyaram, Jeyaram & Associates Inc, Duluth, for Appellee.

Gerald Richard Weber, Jr., Law Office of Gerald Weber, Atlanta, for amicus appellee.

NAHMIAS, Justice.

The plaintiffs in this case are providers and recipients of Medicaid services for individuals with intellectual and developmental disabilities who claim that the defendant administrative agencies and their commissioners failed to follow the required procedures before reducing the reimbursement rates paid to the providers and limiting the services available to the recipients. The plaintiffs did not submit their claims to the agencies for administrative review, instead filing this lawsuit in the trial court. The trial court granted the defendants' motion to dismiss the case for failure to exhaust administrative remedies, but the Court of Appeals reversed that ruling. See United Cerebral Palsy of Ga., Inc. v. Georgia Dept. of Behavioral Health & Developmental Disabilities, 331 Ga.App. 616, 771 S.E.2d 251 (2015). We granted certiorari to decide whether the Court of Appeals erred in holding that the defendants' alleged failure to give the plaintiffs proper notice of adverse agency decisions excused the plaintiffs from the exhaustion requirement. As explained below, the plaintiffs were required to raise their defective notice claims in the administrative review process in the first instance. Accordingly, we reverse the judgment of the Court of Appeals.

1. (a) Congress created the Medicaid program in 1965 through amendments to the Social Security Act. See Pharmaceutical Research & Mfrs. of Am. v. Walsh,

538 U.S. 644, 650, 123 S.Ct. 1855, 155 L.Ed.2d 889 (2003). The program provides subsidies to the states to furnish medical assistance to " families with dependent children and of aged, blind, or disabled individuals, whose income and resources are insufficient to meet the costs of necessary medical services." 42 USC § 1396–1. Although a state's participation in the Medicaid program is voluntary, a state that elects to join must administer a state Medicaid plan that meets federal requirements. See Frew ex rel. Frew v. Hawkins, 540 U.S. 431, 433, 124 S.Ct. 899, 157 L.Ed.2d 855 (2004). Georgia participates in the general Medicaid program, and the Department of Community Health ("DCH") is the state agency charged with developing and administering Georgia's Medicaid plan. See OCGA § 49–4–142.

A state Medicaid plan must establish a scheme for reimbursing health care providers for services provided to program beneficiaries. See 42 USC § 1396a (a) ; Wilder v. Virginia Hosp. Assn., 496 U.S. 498, 502, 110 S.Ct. 2510, 110 L.Ed.2d 455 (1990). Since 1981, Congress has authorized states to obtain a waiver allowing the use of Medicaid funds for home and community based care provided to individuals with intellectual and developmental disabilities who otherwise would require institutionalization, including habilitation services, respite care, and case management. See 42 USC § 1396n (c) ; Olmstead v. L.C. ex rel. Zimring, 527 U.S. 581, 601, 119 S.Ct. 2176, 144 L.Ed.2d 540 (1999). This case involves two Georgia waiver programs that the federal government approved in 2007—the Comprehensive Supports Waiver Program, or "COMP," and the New Options Waiver Program, or "NOW." The requirements of these waiver programs were incorporated into contracts, known as statements of participation, that the provider plaintiffs entered into with the Georgia Department of Behavioral Health and Developmental Disabilities ("DBHDD").

(b) The General Assembly has recognized the need for a robust formal administrative review process to address complaints—which the statute refers to as "appeals"—by providers and recipients of Medicaid services, including disputes concerning reimbursement rates and service limitations. See OCGA § 49–4–153.¹ Pursuant to

OCGA § 49–4–153(b),

any Medicaid provider dissatisfied with "a decision of [DCH] with respect to a denial or nonpayment of or the determination of the amount of reimbursement paid or payable to such provider," and any Medicaid recipient " aggrieved by the action or inaction of [DCH] as to any medical or remedial care or service which such recipient alleges should be reimbursed," may obtain a hearing before an administrative law judge ("ALJ") from the Office of State Administrative Hearings ("OSAH") by filing a proper written request with DCH. The ALJ's decision on the dispute may be appealed by the losing party to the DCH Commissioner for a final agency decision. See OCGA § 49–4–153(b).

The statute sets forth various deadlines and other procedural requirements governing this administrative review process, and OCGA § 49–4–153(a) also authorizes DCH to "establish regulations regarding the manner in which the [administrative review] set forth in subsection (b) shall be conducted." DCH has promulgated such regulations. See Ga. Comp. R. and Regs. 350–4–.01 to 350–4–.30 ("DCH Rules"). For example, DCH Rule 350–4–.04 says:

The Department shall offer the opportunity for Administrative Review to any provider against whom it proposes to take an adverse action unless the Department is otherwise authorized by law to take such action without opportunity for appeal by the provider prior to the action's implementation. The procedures and deadlines for obtaining such Administrative Review and the deadlines for decisions thereon shall be published in the Policies and Procedures Manual for each service category to which they apply. Administrative Review shall be completed, if not waived by the provider, prior to implementation of the proposed action. Whenever the opportunity for Administrative Review is available to the provider, such Administrative Review must be timely obtained and completed for the provider to be entitled to a hearing.

See also DCH Division of Medicaid, Policies and Procedures for Medicaid/Peachcare for Kids § 505 (Jan. 1, 2016) (explaining that DCH "offers the opportunity for Administrative Review to any provider against whom it proposes to take an adverse action"); DCH Division of Medicaid, Policies and Procedures for Comprehensive Supports Waiver Program (COMP) and New Options Waiver Program (NOW) General Manual § 709.1 (Jan. 1, 2016) (requiring DCH to provide "written notice of the rights to appeal any reduction of COMP/NOW services" to recipients).²

How and when this administrative review process is initiated is discussed in DCH Rule 350–4–.05.³ DCH Rule 350–4–.06(g) authorizes the ALJ to determine whether a hearing request by which a provider or recipient seeks to initiate the administrative review process should be dismissed because "the requesting party has not met the prerequisites for obtaining a hearing."

The statute also provides the opportunity for judicial review of Medicaid disputes. Under OCGA § 49–4–153(c), an aggrieved provider or recipient dissatisfied with the Commissioner's final decision may petition for review in the appropriate superior court—but only if the aggrieved party first "exhausts all the administrative remedies provided in [ § 49–4–153 ]." See also OCGA § 50–13–19⁴ ; Perkins v. Dept. of Med. Assistance, 252 Ga.App. 35, 37, 555 S.E.2d 500 (2001) ("Under the Georgia Administrative Procedure Act, [judicial] appeal from decisions of [DCH] regarding a denial, nonpayment, or determination of the amount of reimbursement paid or payable requires an administrative appeal filed with [DCH].").

(c) On August 8, 2013, United Cerebral Palsy of Georgia, Inc. and three other Georgia nonprofit corporations that provide services to Medicaid patients with intellectual and developmental disabilities under the COMP and NOW waiver programs, along with four individuals who receive those services (collectively, "plaintiffs"), filed a putative class action complaint against DCH, DBHDD, and their commissioners (collectively, "defendants") in the Superior Court of Fulton County ("trial court"). The complaint alleged that since 2008, the defendants have used various unapproved and secretive methods to avoid paying providers the approved reimbursement rates and to limit the amount of services that recipients can receive, sometimes to below the amount that is medically necessary. According to the plaintiffs, the defendants made these reductions without public notice and comment as required by federal and state law and without giving the plaintiffs proper advance notice as required by the terms of the statements of participation, federal and state law, and constitutional due process. The complaint sought declaratory and injunctive relief, damages, and attorney fees and expenses for alleged breach of contract, as—applied violations of federal constitutional rights, violations of the Social Security Act, and violations of rights to administrative remedies under OCGA § 49–4–153(b)(1). It is undisputed that the plaintiffs had not sought any sort of formal administrative review of their claims; they took their case directly to the trial court.

On September 9, 2013, the defendants filed an answer and a motion to dismiss, arguing among other things that the plaintiffs filed their lawsuit...