Hill v. Commonwealth, 2014-CA-001130-MR
| Decision Date | 18 December 2015 |
| Docket Number | NO. 2014-CA-001130-MR,2014-CA-001130-MR |
| Parties | LISA HILL APPELLANT v. COMMONWEALTH OF KENTUCKY, CABINET FOR HEALTH AND FAMILY SERVICES; AND WELLCARE OF KENTUCKY, INC. APPELLEE |
| Court | Court of Appeals of Kentucky |
NOT TO BE PUBLISHED
APPEAL FROM BELL CIRCUIT COURT
WellCare of Kentucky, Inc. (WellCare) is a managed-care organization (MCO) under contract with the Commonwealth of Kentucky to provide its product and administer managed-care services to Kentucky Medicaid recipients. Lisa Hill was an enrollee of Wellcare in March and April of 2012. On March 23, 2012, Hill was admitted to the Psychiatric Unit of Harlan Appalachian Regional Hospital (ARH) as an emergency involuntary admission.
On March 30, 2012, WellCare issued a Notice of Action (NOA) denying Hill's continued stay at ARH past that date. The letter identified the dates of service and the reasons for the denial. The letter also advised Hill of her right to appeal the decision within 30 days, as well as her right to continue receiving services pending any appeal. Hill was discharged from ARH on April 5, 2012.
After that discharge, Phyllis Wilson, an employee of ARH, filed a request for state fair hearing on Hill's behalf. Hill initially challenged the sufficiency of the March 30 NOA. However, the Secretary ultimately concluded that the NOA met all federal and state requirements. The Secretary directed the hearing officer to determine whether (1) the provider was appropriately authorized to request an administrative hearing on behalf of the enrollee for denial of services rather than a denial of payment; (2) the action taken was adverse to Hill, entitling her to an administrative hearing; and if necessary, (3) Hill could demonstrate thatthe denied services were medically necessary in accord with the provisions of 907 KAR1 3:130.
A hearing on these issues was conducted on December 14, 2012. Hill's treating physician, Dr. Syed Raza, did not testify at the hearing. However, Hill's medical records and Dr. Raza's notes were introduced. Wilson and Sheba Hensley, both nurses at ARH, testified concerning the course of Hill's treatment. Dr. Frank DeLand, a psychiatrist who works as a consultant and medical director for WellCare, was the only medical expert to testify at the hearing. Dr. DeLand did not personally see or treat Hill. He testified concerning the InterQual criteria, which set out standards to determine whether particular treatments are clinically appropriate for Medicaid coverage. Dr. DeLand also testified concerning his consultations with Dr. Raza during Hill's treatment, as well as his opinions based upon Dr. Raza's notes.
Based primarily upon Dr. DeLand's testimony, the hearing officer found that Hill was clinically appropriate for discharge on March 31, 2012, as she could have been treated on an outpatient basis as of that date. Consequently, the hearing officer found that Hill's acute inpatient treatment from March 31 through April 5, 2012, was not medically necessary or clinically appropriate. Based upon these findings, the hearing officer concluded that Hill failed to meet her burden of proof and that WellCare's denial of payment was proper.
On June 3, 2012, the Secretary issued a final order adopting the recommended order in its entirety. Hill filed a petition for review with the circuit court pursuant to KRS2 13B.140. In an opinion and order issued on June 5, 2014, the circuit court found that WellCare's March 30, 2012 NOA letter was not defective. The circuit further considered whether the findings properly applied the InterQual criteria to determine whether Hill's inpatient treatment was "medically necessary" and "clinically appropriate." The circuit court also found that the medical records did not compel a finding that inpatient treatment was medically necessary and clinically appropriate after March 31, 2012. Rather, the circuit court concluded that the findings of fact were supported by substantial evidence and may not be disturbed. Consequently, the circuit court affirmed the Secretary's Final Order. This appeal followed.
KRS 13B.150(2) sets out the scope of judicial review of decisions of administrative agencies, as follows:
"Judicial review of an administrative agency's action is concerned with the question of arbitrariness." Commonwealth, Trans. Cab., Dept. of Vehicle Reg. v. Cornell, 796 S.W.2d 591, 594 (Ky. App. 1990), citing American Beauty Homes Corp. v. Louisville & Jefferson Cty. Planning & Zoning Comm'n, 379 S.W.2d 450, 456 (Ky. 1964). In determining whether an agency's action was arbitrary, the reviewing court should look at three primary factors.
The court should first determine whether the agency acted within the constraints of its statutory powers or whether it exceeded them. . . . Second, the court should examine the agency's procedures to see if a party to be affected by an administrative order was afforded his procedural due process. The individual must have been given an opportunity to be heard. Finally, the reviewing court must determine whether the agency's action is supported by substantial evidence. . . . If any of these three tests are failed, the reviewing court may find that the agency's action was arbitrary.
Kentucky Ret. Sys. v. Bowens, 281 S.W.3d 776, 780 (Ky. 2009) quoting Bowling v. Nat. Resources & Environmental Protection Cab., 891 S.W.2d 406, 409 (Ky. App. 1994).
Hill first argues that WellCare's NOA was deficient, and consequently, the Secretary should have automatically granted her appeal pursuantto 907 KAR 17:005E3 § 5(24). Subpart E of Part 431 of Chapter IV under Title 42 of the Code of Federal Regulations (CFR) sets out procedures for an opportunity for a hearing if an agency takes action under Subpart F of Part 438. Part 431 further addresses the contents of the notices that must be given to enrollees in such situations. First, every recipient, at the time of any action affecting her claim, must be informed in writing of: (1) her right to a hearing; (2) the method by which she may obtain a hearing; and (3) that she may represent herself or use legal counsel, a relative, a friend or other spokesperson. 42 CFR §§ 431.206(b)&(c). Hill also points to 42 CFR § 431.210, which also requires the NOA to include, among other things, the specific statute or regulations that support the provider's actions. Kentucky has incorporated these federal requirements into 907 KAR 1:563 § 2.
Hill notes that Wellcare's March 30, 2012 NOA did not set out the specific statutes or regulations under which it was denying payment, nor did it advise her of her right to represent herself, or to be represented by an attorney or non-attorney spokesperson. As such, she contends that the NOA was deficient as a matter of law.
The hearing officer initially agreed with Hill's interpretation, but the Secretary reversed that finding. The Secretary found that the Kentucky regulation applies only to Medicaid-covered services appeals and hearings which are unrelated to MCOs. Section 12 of that regulation sets out special proceduresapplicable to a managed care participant. However, the Secretary found that this section is specifically applicable only to members enrolled in accordance with 907 KAR 1:705. The Secretary concluded that the NOA provided by a managed care organization such as WellCare is governed by 42 CFR § 438.404(b), as adopted in 907 KAR 17:005E § 45(4)(b). This section requires that a NOA include most of the same information set out in 42 CFR § 431.210. However, it does not require that the NOA include references to the particular statute or regulation supporting the denial, or the same level of detail regarding the recipient's right to be represented on appeal by counsel or a non-attorney spokesperson. Based upon this interpretation of the applicable regulations, the Secretary concluded that WellCare's March 30, 2012 NOA complied with the applicable requirements.
As a general rule, courts grant deference to an agency's interpretation of statutes or regulations that it is charged with implementing. See Bd. of Trustees of Judicial Form Ret. Sys. v. Atty. General of Commonwealth, 132 S.W.3d 770, 786-87 (Ky. 2003), citing Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 844-45, 104 S. Ct. 2778, 2782, 81 L. Ed. 2d 694 (1984). A reviewing court is not free to substitute its judgment as to the proper interpretation of the agency's regulations as long as that interpretation is compatible and consistent with the...
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