Kmc v. Idaho Dept. of Health and Welfare

Decision Date24 September 2009
Docket NumberNo. 34879.,No. 34881.,No. 34880.,34879.,34880.,34881.
Citation216 P.3d 630,147 Idaho 872
PartiesKOOTENAI MEDICAL CENTER re TERESA K., Petitioner-Respondent, v. IDAHO DEPARTMENT OF HEALTH AND WELFARE, Respondent-Appellant. Kootenai Medical Center re Jennifer G., Petitioner-Respondent, v. Idaho Department of Health and Welfare, Respondent-Appellant. Kootenai Medical Center re Joshua M., Petitioner-Respondent, v. Idaho Department of Health and Welfare, Respondent-Appellant.
CourtIdaho Supreme Court

Honorable Lawrence G. Wasden, Attorney General, Boise, for appellant. Whitaker Riggs argued.

Paine Hamblen, Coeur d'Alene, for respondents. Michael Hague argued.

HORTON, Justice.

This appeal consists of three consolidated cases arising from petitions for judicial review of orders issued by Appellant Idaho Department of Health and Welfare (the Department). Respondent Kootenai Medical Center (KMC), through its Northern Idaho Behavioral Health Unit (NIBH), provided inpatient psychiatric care under Idaho's Medicaid program. The Department denied KMC at least some portion of Medicaid reimbursement in all three cases. KMC appealed the Department's reimbursement decisions and filed petitions for judicial review with the district court. The district court reversed the decisions of the Department and ordered that the Department reimburse KMC in full in all three cases. We reverse the decision of the district court and decline to award attorney fees on appeal.

I. FACTUAL AND PROCEDURAL BACKGROUND

In each of these consolidated cases, KMC provided inpatient psychiatric treatment to an adolescent patient and KMC applied for Medicaid reimbursement from the Department. Because none of the patients were admitted to the Medicaid program at the time of their admission to NIBH, the Department retrospectively reviewed each case for medical necessity after the patients had been discharged. The Department contracted with Qualis Health (Qualis), a Quality Improvement Organization (QIO), to perform retrospective reviews in each of the cases. Dr. Robert Lehman, a consultant to Qualis, reviewed each case. Dr. Lehman had practiced medicine as a pediatrician for over 20 years. Dr. Lehman recommended only partial reimbursement to KMC in each case. KMC asked that Qualis reconsider Dr. Lehman's reimbursement decisions. Qualis hired an unidentified peer review psychiatrist, board certified in psychiatry, to review Dr. Lehman's decisions. The peer review psychiatrist agreed with Dr. Lehman's reimbursement decisions. Following administrative hearings, in each case the hearing officer upheld Qualis's reimbursement decisions. Upon petition for review, the Department Director affirmed each of the hearing officer's decisions. The pertinent factual and procedural details as to each case are as follows:

On August 19, 2005, J.M., a 16 year-old male, attempted suicide by cutting his wrists. On August 20, 2005, J.M. was admitted to NIBH for inpatient psychiatric care. J.M. was evaluated and treated at NIBH until his discharge on August 31, 2005. KMC applied to the Department for reimbursement for the entire length of J.M.'s stay. On March 6, 2006, Qualis approved reimbursement for the period of August 20, 2005 through August 24, 2005, but denied reimbursement for the period of August 25, 2005 through August 31, 2005. KMC requested reconsideration of the decision, and on March 23, 2006, Qualis upheld its initial decision. The hearing officer concluded that KMC did not establish by a preponderance of the evidence that the medical chart sufficiently documented the medical necessity of inpatient psychiatric care.

On December 23, 2005, J.G., a fourteen year-old female, was admitted to NIBH. Immediately prior to her admission, J.G. had been in a juvenile detention center and had made several suicidal statements. J.G. also cut herself while incarcerated. NIBH treated J.G. from December 23, 2005 until she was discharged on January 4, 2006. KMC applied to the Department for reimbursement for the entire length of J.G.'s stay. Qualis approved reimbursement for the period of December 23, 2005 through December 28, 2005, but denied reimbursement for the period of December 29, 2005 through January 4, 2006. KMC requested reconsideration of the decision, and on May 25, 2006, Qualis upheld its initial decision. The hearing officer concluded that KMC did not establish by a preponderance of the evidence that the medical chart sufficiently documented the medical necessity of inpatient psychiatric care.

On November 6, 2005, T.K., a nineteen year-old female was admitted to NIBH. T.K. had a history of mental health problems and was previously hospitalized in a youth residential program for approximately two years. T.K. was brought to NIBH by the police from a women's shelter. NIBH treated T.K. from November 6, 2005 through December 14, 2005. On November 19, 2005 T.K. was committed to the custody of the Department. KMC applied for reimbursement for the entire length of T.K.'s stay at NIBH. Qualis Health approved reimbursement for the period of November 6, 2005 through November 8, 2005, but denied reimbursement for the period of November 9, 2005 through December 14, 2005. Subsequently, the Department reimbursed KMC for the period of November 19, 2005 through December 12, 2005 through a non-Medicaid fund. KMC requested reconsideration of the decision, and Qualis Health upheld its initial decision. On appeal, the hearing officer found that the medical record did not justify inpatient hospitalization after November 9, 2005. The Department affirmed the hearing officer's decision.

KMC filed petitions for judicial review in each case. The district court concluded that KMC had a due process right to cross-examine the reviewing psychiatrist and, because KMC was denied this right, ordered that the comments of the reviewer be stricken from the record. The district court further determined that Dr. Lehman's opinions be stricken as "he had no idea what other less restrictive facilities there are in this area." Finally, the district court reversed the decision of the Director of the Department and ordered that the Department pay KMC's claims "in full." The Department timely appealed to this Court.

II. STANDARD OF REVIEW

When reviewing a decision of the district court acting in its appellate capacity, we directly review the district court's decision. Rammell v. State, Dep't of Agric., 147 Idaho 415, 210 P.3d 523, 526 (2009) (citing Losser v. Bradstreet, 145 Idaho 670, 672, 183 P.3d 758, 760 (2008)). The standard of judicial review of an agency action is prescribed by statute. Under the Idaho Administrative Procedures Act, a reviewing court is required to affirm the agency's decision unless its findings, inferences, conclusions, or decisions are: (a) in violation of constitutional or statutory provisions; (b) in excess of the statutory authority of the agency; (c) made upon unlawful procedure; (d) not supported by substantial evidence on the record as a whole; or (e) arbitrary, capricious, or an abuse of discretion. I.C. § 67-5279(3). Accordingly, this Court defers to the agency's findings of fact unless they are clearly erroneous. Lane Ranch P'ship. v. City of Sun Valley, 144 Idaho 584, 588, 166 P.3d 374, 378 (2007) (citing Friends of Farm to Market v. Valley County, 137 Idaho 192, 46 P.3d 9 (2002)). Further, the agency decision must prejudice a substantial right of the Appellant. I.C. § 67-5279(4); Price v. Payette County Bd. of County Comm'rs, 131 Idaho 426, 429, 958 P.2d 583, 586 (1998).

"Due process issues are generally questions of law, and this Court exercises free review over questions of law." Neighbors for a Healthy Gold Fork v. Valley County, 145 Idaho 121, 127, 176 P.3d 126, 132 (2007) (citing Cowan v. Bd. of Comm'rs of Fremont County, 143 Idaho 501, 510, 148 P.3d 1247, 1256 (2006)).

III. ANALYSIS

The Medicaid Act, Title XIX of the Social Security Act (the Act), is a cooperative federal-state program designed to allow states to receive matching funds from the federal government to finance medical services to certain low-income persons. Schweiker v. Gray Panthers, 453 U.S. 34, 36, 101 S.Ct. 2633, 2636, 69 L.Ed.2d 460, 465 (1981). States may choose to participate in the Medicaid program by submitting a plan for medical assistance that is approved by the federal government. 42 U.S.C. § 1396a. Once a state voluntarily elects to participate in the program, it must comply with the requirements imposed by the Act and applicable regulations. McCoy v. Dept. of Health and Welfare, 127 Idaho 792, 794, 907 P.2d 110, 112 (1995) (citing Alexander v. Choate, 469 U.S. 287, 289 n. 1, 105 S.Ct. 712, 714 n. 1, 83 L.Ed.2d 661, 664 n. 1 (1985)). The Act gives participating states considerable flexibility in determining the scope of coverage they must provide, although states must provide care to needy individuals in at least seven general categories of medical services, including inpatient hospital services. Id. (citing Hern v. Beye, 57 F.3d 906, 910 (10th Cir.1995)).

In Idaho, Medicaid services include medically necessary inpatient psychiatric hospital services for individuals under age twenty-one, such as those provided by KMC through NIBH. IDAPA 16.03.09.079.1 Federal law does not appear to require states to provide inpatient psychiatric treatment in their Medicaid programs. 42 U.S.C. § 1396d(r); 42 C.F.R. § 441.56(c). However, even when a state elects to provide an optional service, that service becomes part of the state Medicaid plan and is subject to the requirements of federal law. Tallahassee Mem. Reg'l Med. Ctr. v. Cook, 109 F.3d 693, 698 (11th Cir.1997) (citing Sobky v. Smoley, 855 F.Supp. 1123, 1127 (E.D.Cal.1994)). Idaho hospitals must therefore provide inpatient psychiatric care to their patients as long as medical necessity exists. Id. Once the federal government approves its plan, the State is entitled to federal reimbursement for a portion of the costs of...

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    • United States State Supreme Court of Idaho
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