Harlingen Family Dentistry, P.C. v. Tex. Health & Human Servs. Comm'n

• Decision Date: 25 November 2014
• Docket Number: NO. 03–14–00069–CV,03–14–00069–CV
• Citation: 452 S.W.3d 479
• Parties: Harlingen Family Dentistry, P.C. ; and Trueblood Dental Associates, P.A., Appellants v. Texas Health and Human Services Commission and Office of the Inspector General, Appellees
• Court: Texas Court of Appeals

452 S.W.3d 479

Harlingen Family Dentistry, P.C. ; and Trueblood Dental Associates, P.A., Appellants

v.Texas Health and Human Services Commission and Office of the Inspector General, Appellees

NO. 03–14–00069–CV

Court of Appeals of Texas, Austin.

Filed: November 25, 2014

Jason D. Ray, Bill Aleshire, Riggs, Aleshire & Ray, P.C., Austin, TX, for appellant.

Ann Hartley, Assistant Attorney General, Financial and Tax Litigation Division, Austin, TX, for appellee.

Before Chief Justice Jones, Justices Rose and Goodwin

OPINION

J. Woodfin Jones, Chief Justice

Harlingen Family Dentistry, P.C. and Trueblood Dental Associates, P.A. (collectively, the Dental Groups) filed suit in Travis County district court challenging certain rules adopted by the Texas Health and Human Services Commission (HHSC). See Tex. Gov't Code § 2001.038 (permitting challenge to validity or applicability of agency rule). The challenged rules permit HHSC and its Office of Inspector General (OIG) to impose a payment hold against a Medicaid provider in certain circumstances. See 1 Tex. Admin. Code § 371.1709(a)(2), (3), (4) (2012) (Tex. Health & Human Servs. Comm'n, Payment Hold). The Dental Groups also challenged a rule permitting the OIG to retain funds that were accumulated during a payment hold even after the hold has been terminated and to use those funds to offset any monies that may be determined to be owed as a result of an ongoing investigation of the provider. Id. § 371.1709(e)(2). After the trial court rendered judgment that the challenged rules were valid, the Dental Groups perfected this appeal. We will reverse the trial court's judgment and render judgment that the challenged rules are not valid.

ANALYSIS

In their sole issue on appeal, the Dental Groups contend the trial court erred in finding that the challenged administrative rules are a valid exercise of HHSC's statutory rulemaking authority. We presume that an agency rule is valid, and the party challenging the rule has the burden of demonstrating its invalidity.See Texas Ass'n of Psychological Assocs. v. Texas State Bd. of Exam'rs of Psychologists, 439 S.W.3d 597, 603 (Tex.App.–Austin 2014, no pet.). To establish a rule's facial invalidity, the challenger must show that the rule (1) contravenes specific statutory language; (2) is counter to the statute's general objectives; or (3) imposes additional burdens, conditions, or restrictions in excess of or inconsistent with the relevant statutory provisions. See Ware v. Texas Comm'n on Law Enforcement Officer Standards & Educ., No. 03–12–00740–CV, 2013 WL 2157244, at *2 (Tex.App.–Austin May 16, 2013, no pet.) (mem.op.); Office of Pub. Util. Counsel v. Public Util. Comm'n, 131 S.W.3d 314, 321 (Tex.App.–Austin 2004, pet. denied). An agency's rules must comport with the agency's authorizing statute. See id. A state administrative agency has only the authority expressly provided by statute or necessarily implied in order to carry out the express powers the legislature has given it. See Public Util. Comm'n v. City Pub. Serv. Bd., 53 S.W.3d 310, 315 (Tex.2001) ; Public Util. Comm'n of Tex. v. GTE–Southwest, Inc., 901 S.W.2d 401, 407 (Tex.1995). An agency may not exercise what is effectively a new power on the theory that such exercise is expedient for the agency's purposes. GTE Southwest, 901 S.W.2d at 407.

The Dental Groups contend that HHSC exceeded its statutory authority by promulgating the challenged rules permitting certain pre-notice payment holds. The dispute, therefore, turns principally on the construction of a statute, a question of law that we review de novo. See First Am. Title Ins. Co. v. Combs, 258 S.W.3d 627, 632 (Tex.2008). Our primary objective in construing statutes is to give effect to the legislature's intent. Galbraith Eng'g Consultants, Inc. v. Pochucha, 290 S.W.3d 863, 867 (Tex.2009). The plain meaning of the text is the best expression of legislative intent unless a different meaning is supplied by legislative definition or is apparent from the context, or unless the plain meaning would lead to absurd or nonsensical results that the legislature could not have intended. City of Rockwall v. Hughes, 246 S.W.3d 621, 625–26 (Tex.2008) ; see Tex. Gov't Code § 311.011 (“Words and phrases shall be read in context and construed according to the rules of grammar and common usage.”). We look to the entire act in determining the legislature's intent with respect to a specific provision. Taylor v. Firemen's & Policemen's Civil Serv. Comm'n, 616 S.W.2d 187, 190 (Tex.1981) ; Northwest Austin Mun. Util. Dist. No. 1 v. City of Austin, 274 S.W.3d 820, 828 (Tex.App.–Austin 2008, pet. denied). The doctrine of unius est exclusio alterius has long been recognized in this state: “[I]t is a settled rule that the express mention or enumeration of one person, thing, consequence or class is equivalent to an express exclusion of all others.” Johnson v. Second Injury Fund, 688 S.W.2d 107, 108–09 (Tex.1985). Although the doctrine is not an absolute rule, it can be helpful in determining legislative intent. Mid–Century Ins. Co. v. Kidd, 997 S.W.2d 265, 274 (Tex.1999). We believe it is helpful in the present case.

The Challenged Rules

The first set of challenged rules purports to grant HHSC and the OIG authority to impose a pre-notice payment hold on providers under certain circumstances. The Dental Groups argue that the rules exceed the limited authority the legislature granted HHSC to impose such payment holds on a Medicaid provider's reimbursement claims for services provided. Specifically, the Dental Groups maintain that because the challenged rules purport to permit a payment hold in instances that do not involve evidence of fraud by the provider, they exceed HHSC's statutory authority and therefore are invalid. The issue in this case, then, reduces to whether HHSC has the authority to adopt rules permitting the OIG to impose a pre-notice payment hold on a Medicaid provider for a program violation that does not involve evidence of or allegations of fraud.

When the challenged rules were promulgated in 2005, two statutes expressly authorized a pre-notice hold on payment to a Medicaid provider. Government Code section 531.102(g)(2) provided:

In addition to other instances authorized under state or federal law, the [OIG] shall impose without prior notice a hold on payment of claims for reimbursement submitted by a provider to compel production of records or when requested by the state's Medicaid fraud control unit, as applicable. The office must notify the provider of the hold on payment not later than the fifth working day after the date the payment hold is imposed.

Act of June 2, 2003, 78th Leg., R.S., ch. 198, § 2.19(a), 2003 Tex. Gen. Laws 611, 652 (emphasis added) (amended 2005) (current version at Tex. Gov't Code § 531.102(g)(2) ). Section 531.102 also provided that, on timely written request by the provider, HHSC “shall file a request with the State Office of Administrative Hearings for an expedited administrative hearing regarding the hold.” Id. (current version at Tex. Gov't Code § 531.102(g)(3) ).

In addition, Human Resources Code section 32.0291(b) provided:

Notwithstanding any other law, [HHSC] may impose a postpayment hold on payment of future claims submitted by a provider if the department has reliable evidence that the provider has committed fraud or wilful misrepresentation regarding a claim for reimbursement under the medical assistance program. The department must notify the provider of the postpayment hold not later than the fifth working day after the date the hold is imposed.

Act of June 2, 2003, 78th Leg., R.S., ch. 198, § 2.103, 2003 Tex. Gen. Laws 611, 690 (emphasis added) (amended 2013) (current version at Tex. Hum. Res. Code § 32.0291(b) ). The plain language of these statutes authorized HHSC to impose a payment hold if it had “reliable evidence that the provider has committed fraud or wilful misrepresentation” and required the OIG to impose a payment hold “to compel production of records or when requested by the state's Medicaid fraud unit.”

It was within the context of the foregoing statutory framework that HHSC adopted rule 371.1703(b), since amended, which provided in pertinent part:

§ 371.1703(b) Payment Hold. A payment hold on payments of future claims submitted for reimbursement will be imposed, without prior notice, after it is determined that prima facie evidence exists to support the payment hold.... The instances in which a payment hold may be imposed without prior notice are:

(1) to compel production of records;

(2) when requested by the Attorney General's Medicaid Fraud Control Unit, as applicable;

(3) in the instance of fraud or willful misrepresentation;

(4) when the U.S. Health and Human Services imposes a payment hold (suspension of payments) against the provider for Medicare violations and that provider or person is also a provider in the Medicaid program;

(5) for any reason specified in §§ 371.1609, 371.1617, 371.1621 of this subchapter, or any other provisions delineated in these rules; or

(6) for any other reason specified by statute or regulation.

1 Tex. Admin. Code § 371.1703(b) (2005) (Tex. Health & Human Servs. Comm'n, Payment Hold) (emphasis added) repealed 37 Tex. Reg. 7989–90 (2012) (proposed August 10, 2012). Subsections (5) and (6) of the rule clearly expanded the circumstances under which a pre-notice payment hold could be imposed beyond those identified in Government Code section 531.021(g)(2) and Human Resources Code section 32.0291(b). For instance, subsection (5) of old rule 371.1703(b) provided that a hold would be imposed, without prior notice, for the “program violations” listed in rule 371.1617, which set out a “non-exclusive” list of acts that constituted program violations, including submitting claims for non-reimbursable items, failing to properly maintain records, and failing to comply with the terms of the Medicaid program contract or provider agreement.¹ Subsection (6) of old rule 371.1703(b) stated...