Jackson v. NC DEPT. OF HUMAN RESOURCES

Decision Date20 October 1998
Docket NumberNo. COA97-1169.,COA97-1169.
Citation131 NC App. 179,505 S.E.2d 899
CourtNorth Carolina Court of Appeals
PartiesCathy JACKSON, Guardian Ad Litem for Timothy Randall JACKSON, minor, Plaintiff-appellant, v. NORTH CAROLINA DEPARTMENT OF HUMAN RESOURCES DIVISION OF MENTAL HEALTH, DEVELOPMENTAL DISABILITIES, AND SUBSTANCE ABUSE SERVICES, and Orange Person Chatham Mental Health Developmental Disabilities and Substance Abuse Authority, Defendant-appellees.

Attorney General Michael F. Easley by Special Deputy Attorney General Robert T. Hargett, and Assistant Attorney General Bruce S. Ambrose, for North Carolina Department of Human Resources Division of Mental Health, Developmental Disabilities, and Substance Abuse Services.

Brown & Bunch by M. LeAnn Nease and Scott D. Zimmerman, Chapel Hill, for defendant-appellee, Orange-Person-Chatham Mental Health, Developmental Disabilities and Substance Abuse Authority.

JOHN C. MARTIN, Judge.

In this action, plaintiff, who is the duly appointed guardian ad litem for her minor son, Timothy Randall Jackson (Randy), seeks monetary damages as well as injunctive and declaratory relief. In her amended complaint, plaintiff alleged that Randy, who resides with her in Orange County, North Carolina, suffers from bipolar and attention deficit disorders, which have caused him to exhibit severe aggression and impulsivity since he was four years old. Randy has been placed on a number of psychotropic drugs to control his behavior. Randy is a Medicaid eligible child enrolled in the North Carolina Alternatives Mental Health Managed Care Program (Carolina Alternatives). Defendant North Carolina Department of Human Resources Division of Mental Health, Developmental Disabilities, and Substance Abuse Services (DMH) is the single state agency designated by G.S. § 108A-54 to administer the State's Medicaid Assistance Program through which Medicaid is provided, including Carolina Alternatives. Defendant Orange-Person-Chatham Mental Health, Developmental Disabilities and Substance Abuse Authority (OPC) is an area authority which implements the managed care plan in its geographical area in accordance with the provisions of Chapter 122C of the General Statutes.

In January 1996, Randy was admitted to the Child Neuropsychiatry Unit at the University of North Carolina Hospital for treatment and remained there, except for a brief discharge, until 17 February 1996. By the end of February, Randy's behavioral problems were escalating and, on 1 March 1996, his treating physician, Dr. Thomas Gualtieri, an approved care provider, recommended that Randy be readmitted to the hospital for adjustment of his medication and stabilization. Approval from OPC was required for Randy's readmission to the hospital; OPC refused to approve and fund his readmission. Plaintiff alleged that, despite her repeated requests, OPC never provided her with written information concerning Randy's appeal rights, and did not provide her with written notice of the denial of care until 15 March 1996. Plaintiff alleged that as a result of the denial of care, Randy's condition worsened and he "developed medication side effects that required discontinuation of the medication, worsening his aggression and impulsivity, and increasing his insomnia and destructiveness." As a result, Randy "could not safely attend school, play with others, or leave the confines of his home."

On 26 March 1996, plaintiff filed her original complaint in this action in which she sought injunctive relief requiring OPC to approve payment for Randy's hospitalization. On 28 March 1996, OPC gave approval for Randy's immediate admission to the hospital. Plaintiff alleged that she received, on 4 April 1996, a document entitled "Carolina Alternatives Appeals and Grievances Procedure."

On 18 October 1996 plaintiff applied for the appointment of a guardian ad litem for Randy and moved to amend the complaint to add DMH as a defendant. On 15 November 1996 the trial court appointed plaintiff as guardian ad litem and allowed the motion to amend. In her amended complaint, plaintiff alleged that Randy was damaged by defendants' denial of the medical care to which he was entitled, that he was damaged by their denial of his due process rights, and that the "Carolina Alternatives Appeals and Grievances Procedure" is unconstitutional. She sought compensatory damages for defendants' alleged denial of medical care and denial of due process, injunctive relief to prevent future care and due process denials by defendants, and a declaratory judgment that defendants' appeals process is unconstitutional.

Defendants answered and moved to dismiss pursuant to G.S. § 1A-1, Rule 12(b)(1). The trial judge granted the motions of both defendants, dismissing the complaint without prejudice for plaintiff's failure to exhaust administrative remedies. Plaintiff gave notice of appeal from the dismissal of her claims for injunctive relief and damages, but specifically did not give notice of appeal from that portion of the order dismissing her claim for declaratory relief.

By multiple assignments of error, plaintiff contends the trial court erred when it dismissed her complaint pursuant to G.S. § 1A-1, Rule 12(b)(1) on the grounds that it lacked subject matter jurisdiction because plaintiff had failed to exhaust her administrative remedies. As a general rule, it is the policy of this State that disputes between its administrative agencies and its citizens be resolved pursuant to the provision of the Administrative Procedure Act, G.S. § 150B-22, and that judicial review of an administrative decision may be had only after all administrative remedies have been resolved. N.C. Gen.Stat. § 150B-43.

[F]ive requirements must generally be satisfied before a party may ask a court to rule on an adverse administrative determination: (1) the person must be aggrieved; (2) there must be a contested case; (3) there must be a final agency decision; (4) administrative remedies must be exhausted; and (5) no other adequate procedure for judicial review can be provided by another statute.

Huang v. N.C. State University, 107 N.C.App. 710, 713, 421 S.E.2d 812, 814 (1992). "Whether one has standing to obtain judicial review of an administrative decision is a question of subject matter jurisdiction." Carter v. N.C. State Bd. of Registration for Professional Engineers & Land Surveyors, 86 N.C.App. 308, 313, 357 S.E.2d 705, 708 (1987).

I.

By her first assignment of error, plaintiff contends the trial court's dismissal of her complaint for failure to exhaust administrative remedies was error, because defendants did not provide plaintiff with information with respect to administrative remedies during the period in which Randy was being denied care, and because defendants violated Randy's due process rights by their failure to publish or promulgate appeal procedures as required by the North Carolina Administrative Procedure Act, G.S. § 150B-1 et seq. (NCAPA). Plaintiff contends that the only applicable rule is found in the codification of the Carolina Alternatives Program at 10 Admin. Code tit. 26M, r. .0305, and that it is insufficient to satisfy Randy's due process rights. The aforementioned rule provides only that enrollees have a right to appeal decisions of the OPC, but does not explain the appropriate appellate procedures: "Enrollees and sub-contractors shall have the right to appeal decisions of an Area Authority as required by 42 CFR et seq." 10 N.C. Admin. Code tit. 26M, r. .0305. Plaintiff argues, therefore, that the trial judge erred by ruling that she was required to exhaust remedies that she was unable to find, because they were not properly promulgated and published. We hold, however, that in the absence of administrative rules promulgated by the OPC, the NCAPA itself provides adequate remedies for Randy's grievance which must be exhausted before the complaint is justiciable.

The NCAPA was drafted to "`establish a uniform system of administrative rule making and adjudicatory procedures for agencies.'" Empire Power Co. v. N.C. Dept. of E.H.N.R., 337 N.C. 569, 586, 447 S.E.2d 768, 778 (1994), reh'g denied, 338 N.C. 314, 451 S.E.2d 634 (1994) (quoting N.C. Gen.Stat. § 150B-1(a) (1991)). Administrative decisions of State agencies are subject to review only under the provisions of the NCAPA, unless the agency is specifically exempted from its provisions by NCAPA itself or some other statute. Id. "[T]he General Assembly has shown itself to be quite capable of specifically and expressly naming the particular agencies to be exempt from the provisions of the Act and has clearly specified the extent of each exemption." Id. at 587, 447 S.E.2d at 779 (quoting Vass v. Bd. of Trustees of Teachers' and State Employees' Comprehensive Major Medical Plan, 324 N.C. 402, 379 S.E.2d 26 (1989)). G.S. § 122C-131 et seq., establishes a statewide system to provide treatment for individuals suffering from mental health disorders, developmental disabilities and substance abuse. The statutory scheme does not exclude either defendant from the administrative procedures codified in the NCAPA. N.C. Gen.Stat. § 150B-1(c); N.C. Gen.Stat. § 122C-131 et seq. Therefore, the provisions of the NCAPA apply to defendants OPC and DMH as entities established to administer Carolina Alternatives under contract with the State of North Carolina.

Plaintiff's argument relies erroneously upon G.S. § 150B-18, which states that "[a] rule is not valid unless it is adopted in substantial compliance with this Article." N.C. Gen.Stat. § 150B-18 (1991). The necessary procedures for substantial compliance are outlined in G.S. § 150B-21.2 (1995). While it is true that the NCAPA requires that an agency follow the specified procedures to validate any rules it decides to promulgate, the Act does not require agencies to promulgate appellate procedures as plaintiff contends. The NCAPA anticipates that agencies will not always promulgate administrative remedies, and accordingly...

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