Lackey v. North Carolina Dept. of Human Resources, Div. of Medical Assistance

• Citation: 293 S.E.2d 171,306 N.C. 231
• Decision Date: 13 July 1982
• Docket Number: No. 88PA82,88PA82
• Court: United States State Supreme Court of North Carolina
• Parties: George Mitchell LACKEY v. NORTH CAROLINA DEPARTMENT OF HUMAN RESOURCES, DIVISION OF MEDICAL ASSISTANCE.

Page 171

293 S.E.2d 171

306 N.C. 231

George Mitchell LACKEY v. NORTH CAROLINA DEPARTMENT OF HUMAN RESOURCES, DIVISION OF

MEDICAL ASSISTANCE.

No. 88PA82.

Supreme Court of North Carolina.

July 13, 1982.

Atty. Gen. Rufus L. Edmisten by Asst. Atty. Gen. Henry T. Rosser, Raleigh, for defendant-appellant.

Turner, Enochs & Sparrow, P.A., Turner, Enochs, Foster, Sparrow & Burnley by Wendell H. Ott and B. J. Pearce, Greensboro, for petitioner-appellee.

BRITT, Justice.

We agree with the Court of Appeals that the appropriate standard of review in this action is provided by the review provisions of the Administrative Procedures Act. G.S. 150A-51 provides in pertinent part that a reviewing court may reverse the decision of an agency if:

"[T]he substantial rights of the petitioners may have been prejudiced because the agency findings, inferences, conclusions or decisions are:

* * *

* * *

(4) Affected by ... error of law; or

(5) Unsupported by substantial evidence admissible under G.S. 150A-29(a) or G.S. 150A-30 in view of the entire record as submitted ...."

We also agree with the Court of Appeals that the defendant erroneously denied plaintiff's application for Medicaid benefits in that defendant's decision was both affected by errors of law and unsupported by substantial evidence. However, careful study of the Social Security and Medicaid laws requires us to modify some of the holdings made by the Court of Appeals in reaching its decision to reverse.

I

The elemental question we must answer is whether defendant's decision that plaintiff was not disabled was supported by substantial evidence. However, before that question can be answered we need to address several other issues bearing directly on the ultimate outcome. The first of these requires a determination of the law applicable to this case.

Medicaid, established by Congressional enactment of Title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq., is a cooperative federal-state program providing medical assistance and other services to certain classes of needy persons. States which adopt the program and administer it in conformity with federal laws and regulations receive federal funds which defray a substantial portion of the program costs. Participation by a state in the Medicaid program is entirely optional. However, once an election is made to participate, the state must comply with the requirements of federal law. Harris v. McRae, 448 U.S. 297, 100 S.Ct. 2671, 65 L.Ed.2d 784 (1980); Smith v. Miller, 665 F.2d 172 (7th Cir. 1981); Alabama Nursing Home Association v. Harris, 617 F.2d 388 (5th Cir. 1980). North Carolina adopted the Medicaid program through the enactment of Part 5, Article 2, Chapter 108 of the General Statutes, amended and recodified effective 1 October 1981 at Part 6, Article 2, Chapter 108A.

In order for the state Medicaid program to qualify for federal grant funds, the state must develop a "plan for medical assistance", the contents of which are prescribed by 42 U.S.C. § 1396a. 42 U.S.C. § 1396a(a)(5) indicates that the determination of eligibility for medical assistance shall be made under the disability standards of Title XVI of the Social Security Act, Supplemental Security Income (SSI). 42 U.S.C. § 1381 et seq.

Disability under Title XVI is partially defined as follows:

"An individual shall be considered to be disabled for purposes of this sub-chapter if he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months ...." 42 U.S.C. § 1382c(a)(3)(A).

The statutes establishing the medical assistance program in North Carolina specifically provide that "[a]ll of the provisions of the federal Social Security Act providing grants to the state for medical assistance are accepted and adopted and the provisions of this Part shall be liberally construed in relation to such act so that the intent to comply with it shall be made effectual ...." G.S. 108A-56 (formerly G.S. 108-61).

The federal judiciary has amassed a substantial body of case law interpreting the disability provisions of the Social Security Act and the regulations promulgated thereunder. The vast majority of these cases involve interpretation of the disability definition under Title II of the Social Security Act, Federal Old Age, Survivors and Disability Insurance Benefits. 42 U.S.C. § 401 et seq. There are notably few decisions directly interpreting and applying the Title XVI SSI disability definition. In those disability cases which have arisen under Title XVI, however, the federal courts have looked to decisions under Title II and found them to be persuasive authority. Strickland v. Harris, 615 F.2d 1103 (5th Cir. 1980). This is so because the relevant provisions of Title II are identical to those of Title XVI. Further, judicial review of Title XVI SSI disability determinations, is governed by the judicial review provisions of Title II, 42 U.S.C. § 405(g). 42 U.S.C. § 1383(c)(3).

In its effort to resolve the legal issues presented by the case at bar, the Court of Appeals found that the federal decisions interpreting the Title II disability definition were binding on the North Carolina courts. We disagree. These federal decisions, and those interpreting and applying the Title XVI SSI disability definition are not necessarily controlling on this court. See Unemployment Compensation Commission v. Trust Co., 215 N.C. 491, 2 S.E.2d 592 (1939). However, we do deem them to be persuasive authority on the relevant issues.

II

We next focus on the issue of whether the report evaluating plaintiff's medical evidence prepared by defendant's medical advisor, Dr. Cozart, was admissible evidence. The Court of Appeals, without discussing the question, held that the evaluation was not evidence. We disagree.

It is clear that the written medical reports of physicians are admissible evidence in social security hearings. Allen v. Weinberger, 552 F.2d 781, 786 (7th Cir. 1977); Landess v. Weinberger, 490 F.2d 1187, 1189 (8th Cir. 1974); see also Richardson v. Perales, 402 U.S. 389, 91 S.Ct. 1420, 28 L.Ed.2d 842 (1971). ²

Further, such reports are acceptable as evidence under state law as recognized by the N.C. Administrative Procedures Act, G.S. 150A et seq. Specifically:

"An Agency may use its experience, technical competence, and specialized knowledge in the evaluation of evidence presented to it." G.S. 150A-30.

One of the purposes behind the creation of administrative agencies was the necessity for the supervision and experience of specialists in difficult and complicated fields. See Elmore v. Lanier, 270 N.C. 674, 155 S.E.2d 114 (1967); 1 Am.Jur.2d, Administrative Law § 12 (1962).

The complex area of disability determinations under the Social Security Act is indubitably an appropriate area for the use of experts, especially medical experts, and is essential to its purpose and function. The reports resulting from defendant's medical advisor's evaluation of an applicant's medical records obviously represent a proper and acceptable use of defendant's "experience, technical competence and specialized knowledge." Such reports are admissible evidence in administrative hearings and subsequent judicial review. The Court of Appeals should have so considered Dr. Cozart's report in its review of the evidence.

III

Having concluded that the report of defendant's medical advisor was evidence, we are now confronted with the issue of the proper weight to be given it in our evaluation of the record. That report was the sole evidence presented by defendant which supports its decision to deny disability benefits to plaintiff. We must determine, therefore, whether Dr. Cozart's report constituted substantial evidence to support defendant's decision.

As indicated above, our conclusion will rest on whether there was substantial evidence in view of the entire record as submitted. G.S. 150A-51(5). This standard of judicial review in North Carolina is known as the "whole record" test. Thompson v. Wake County Board of Education, 292 N.C. 406, 233 S.E.2d 538 (1977). The "whole record" test does not permit the reviewing court to substitute its judgment for the agency's as between two reasonably conflicting views; however, it does require the court to take into account both the evidence justifying the agency's decision and the contradictory evidence from which a different result could be reached. Id. at 410, 233 S.E.2d 538.

"Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Comr. of Insurance v. Fire Insurance Rating Bureau, 292 N.C. 70, 80, 231 S.E.2d 882, 888 (1977). It is more than a scintilla or a permissible inference. Comr. of Insurance v. Automobile Rate Office, 287 N.C. 192, 214 S.E.2d 98 (1975).

With these principles in mind we now turn to the medical evidence presented in the record.

Plaintiff's evidence revealed that he was initially admitted to Statesville's Iredell Memorial Hospital through the emergency room on 6 May 1978 with a stab wound in his abdomen. The following day an exploratory laparotomy disclosed that the wound had penetrated the dome of his liver causing severe hemorrhaging. A large Penrose drain was inserted into the wound.

On 8 May 1978 plaintiff was admitted to Baptist Hospital in Winston-Salem. His admission history and physical examination revealed the same stab wounds described above plus a collection of blood in the right pleural cavity. Plaintiff was discharged from Baptist Hospital back to the care of Dr. Goode in Statesville on 17 May 1978 following a clearing of the pleural cavity and removal of the Penrose drain.

On 1 June 1978 plaintiff was readmitted to Baptist Hospital, bleeding from the injury to his liver. He underwent two additional surgical operations to address problems...