Gomolisky v. Davis

• Citation: 716 N.E.2d 970
• Decision Date: 29 September 1999
• Docket Number: No. 49A02-9905-CV-339.,49A02-9905-CV-339.
• Parties: Robert GOMOLISKY, et al., Appellants-Plaintiffs, v. Katherine DAVIS, et al., Appellees-Defendants.
• Court: Court of Appeals of Indiana

716 N.E.2d 970

Robert GOMOLISKY, et al., Appellants-Plaintiffs, v. Katherine DAVIS, et al., Appellees-Defendants.

No. 49A02-9905-CV-339.

Court of Appeals of Indiana.

September 29, 1999.

Jacquelyn E. Bowie, Kenneth J. Falk, Indianapolis, Indiana, Attorneys for Appellant.

Jeffrey A. Modisett, Attorney General of Indiana, A. Scott Chinn, Special Counsel to the Attorney General, Indianapolis, Indiana, Attorneys for Appellee.

OPINION

STATON, Judge

Robert Gomolisky ("Gomolisky") appeals from the grant of summary judgment in favor of Katherine Davis and Kathleen Gifford (collectively, "Davis"). Gomolisky raises three issues for our review, which we restate as:

I. Whether Indiana's provision for agency review in Medicaid appeals violates federal Medicaid regulations. II. Whether a de novo evidentiary hearing is required at the agency review stage in order to satisfy due process and federal Medicaid regulations.

III. Whether agency review must be completed within ninety days.

We affirm in part, reverse in part, and remand.

Gomolisky, as class representative, brought this action for injunctive and declaratory relief on behalf of "all Medicaid recipients or applicants in Indiana for whom a favorable administrative law judge decision was reversed or modified, or who will have such a decision reversed or modified, on agency review, on or after July 7, 1997" against Davis in her capacity as Secretary of the Indiana Family and Social Services Administration ("Secretary"), and Gifford in her capacity as Director of the Indiana Office of Medicaid Policy and Planning. Gomolisky seeks to enjoin Davis from performing agency review of the decisions of administrative law judges ("ALJ") that favor Medicaid applicants or recipients ("applicants").

Medicaid is a federal program of medical assistance for the poor, established by Title XIX of the Social Security Act and funded by the federal government and participating states. 42 U.S.C. § 1396. As a participating state, Indiana is required to submit a state plan to the U.S. Department of Health and Human Services to qualify for matching funds. 42 U.S.C. § 1396(a). A necessary provision of this state plan is the right to an administrative hearing for any person whose claim for Medicaid is denied or is not acted upon with reasonable promptness. 42 U.S.C. § 1396(a)(3). The requirements of the fair hearing are set out in Health Care Financing Administration Fair Hearings Rules, 42 C.F.R. §§ 431.200 to 431.250 (1998).

Under Indiana's fair hearing system, applicants whose claims for Medicaid have been denied may request a hearing before an ALJ ("agency hearing"). At that hearing, the applicant has the opportunity to present evidence and witnesses and cross-examine opposing witnesses. The ALJ then issues a decision regarding the applicant's entitlement to benefits. IND. ADMIN. CODE tit. 405, r. 1.1-1-5, -6 (Supp.1999). Any party not satisfied with the ALJ's decision may seek agency review within ten days after receipt thereof. Agency review is based on the record of the agency hearing and is conducted by the Secretary or her designee. IND.ADMIN. CODE tit. 405, r. 1.1-2-1 (Supp.1999).

Gomolisky brought this action in order to enjoin agency review. Both Gomolisky and Davis moved for summary judgment. The trial court granted summary judgment in favor of Davis; Gomolisky appeals. Summary judgment is appropriate only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C). The burden is on the moving party to prove there are no genuine issues of material fact and he is entitled to judgment as a matter of law. When reviewing an entry of summary judgment, we stand in the shoes of the trial court. We do not weigh the evidence but will consider the facts in the light most favorable to the nonmoving party. Reed v. Luzny, 627 N.E.2d 1362, 1363 (Ind.Ct.App. 1994), reh. denied, trans. denied. We may sustain a summary judgment upon any theory supported by the designated materials. T.R. 56(C).

I. Agency Review

Gomolisky contends that 405 IAC 1.1-2-1, providing for agency review of ALJ decisions, violates the federal Medicaid fair hearing requirements. 42 C.F.R. § 431.205(b) states: "The State's hearing system must provide for—(1) A hearing before the agency; or (2) An evidentiary hearing at the local level, with a right of appeal to a State agency hearing." Indiana has established a Medicaid hearing system under subsection (1) by providing for an agency hearing presided over by an ALJ. However, Indiana's hearing system also includes agency review by the Secretary, a procedure not enumerated in 42 C.F.R. § 231.205(b).

Gomolisky argues that the options provided in C.F.R. § 431.205(b) are exhaustive, and that Indiana's implementation of agency review exceeds the scope of, and therefore, violates federal Medicaid law. We disagree. 42 U.S.C. § 1396(a)(3) requires that states participating in the Medicaid program provide applicants with the right to an administrative hearing. Indiana's hearing system does just that. 42 C.F.R. § 431.205(b) sets forth the minimum requirements for the hearing system; it does not prohibit states from implementing more elaborate hearing systems than those specified in the regulation. Although agency review is not mandated by the federal Medicaid regulations, we cannot say that Indiana's Medicaid hearing system, which provides for such review, contravenes those regulations.

Further, we are able to discern no significant harm caused by agency review. While we note that Medicaid benefits cease if a hearing decision in favor of the applicant is reversed on agency review, under Indiana's hearing system that applicant may seek judicial review. IND. ADMIN. CODE tit. 405, r. 1.1-3-1. If the final decision is that the applicant is eligible for Medicaid benefits, corrective payments will be made dating back to the first erroneous decision. 42 C.F.R. § 431.246. Therefore, we hold that 405 IAC 1.1-2-1, providing for agency review of an agency hearing decision, does not contravene federal Medicaid regulations.

II. Due Process

Gomolisky contends that the agency review procedure violates the due process rights of Indiana's Medicaid applicants. 42 C.F.R. § 431.205(d) provides: "The hearing system must meet the due process standards set forth in Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970), and any additional standards specified in this subpart." Goldberg requires that, before benefits can be terminated, the recipient be provided with: timely notice detailing the reasons for the proposed termination, an opportunity to present evidence and confront adverse witnesses, and a decision resting solely on the legal rules and evidence presented at the hearing. 397 U.S. at 267-71, 90 S.Ct. 1011. The additional standards specified in this subpart are set out in 42 C.F.R. §§ 431.240 and 431.242.¹

Gomolisky does not dispute that the requirements of due process under Goldberg and 42 C.F.R. § 431.205(d) are afforded to Medicaid applicants at the agency hearing. Instead, Gomolisky contends that the applicants' due process rights are violated at the agency review stage. Relying on Goldberg, Gomolisky argues that because payment of Medicaid benefits commences upon agency hearing decisions in favor of applicants,² those applicants become Medicaid recipients and are entitled to a de novo evidentiary hearing before their Medicaid benefits can be terminated at the agency review stage. We disagree. 405 IAC 1.1-1-6 provides that the ALJ's hearing decision "shall be final unless a party requests agency review of the decision in accordance with 405 IAC 1.1-2." Thus, in cases where agency review is requested, the payment of Medicaid benefits is not based on a final decision. Further, agency...