Nededog v. COLORADO DEP. OF HEALTH CARE POLICY

• Decision Date: 12 August 2004
• Docket Number: No. 03CA1005.,03CA1005.
• Citation: 98 P.3d 960
• Parties: Patricia NEDEDOG, Plaintiff-Appellant, v. COLORADO DEPARTMENT OF HEALTH CARE POLICY AND FINANCING and Karen Reinertson, executive director, in her official capacity only, Defendants-Appellees.
• Court: Colorado Court of Appeals

98 P.3d 960

Patricia NEDEDOG, Plaintiff-Appellant, v. COLORADO DEPARTMENT OF HEALTH CARE POLICY AND FINANCING and Karen Reinertson, executive director, in her official capacity only, Defendants-Appellees.

No. 03CA1005.

Colorado Court of Appeals, Div. V.

August 12, 2004.

Colorado Legal Services, Anne L. Haro Sipes, Fort Collins, Colorado, for Plaintiff-Appellant.

Ken Salazar, Attorney General, Laurie A. Schoder, Assistant Attorney General, Denver, Colorado, for Defendants-Appellees.

Opinion by Judge WEBB.

In this judicial review of administrative action, plaintiff, Patricia Nededog, appeals the district court's judgment upholding a decision of defendants, Colorado Department of Health Care Policy and Financing (CDHCPF) and its executive director, Karen Reinertson, allowing the Larimer County Department of Human Services (County Department) to recover from her $5,795.40 in erroneously paid medical assistance (Medicaid) benefits. We affirm.

The initial decision of the administrative law judge (ALJ) concluded that the County Department could recover the erroneous Medicaid payments and that Nededog was not entitled to a waiver. The final agency decision of the CDHCPF Office of Appeals affirmed the ALJ's initial decision. The district court upheld the final agency decision.

Although the record does not include a transcript or audiotape of the telephone hearing before the ALJ, the parties treat the following facts as undisputed.

Until October 1998, Nededog received Supplemental Security Income (SSI), which made her eligible for Medicaid benefits under § 26-4-201(1)(i), C.R.S.2003, and federal law. Medicaid is a cooperative federal-state program which provides medical assistance to low income persons. When she ceased receiving SSI, she was not eligible for Medicaid benefits on any other basis. Nevertheless, through no fault of Nededog's, she continued to receive Medicaid benefits.

In September 2000, the County Department discovered that Nededog was no longer receiving SSI, determined that she was not otherwise Medicaid eligible, and, on September 19, 2000, gave her written notice terminating her Medicaid benefits effective September 30, 2000. Nededog did not challenge the termination. As relevant here, the County Department then sought recovery of $5,795.40 in Medicaid benefits paid erroneously to Nededog from September 1999 to September 2000. Nededog contested the recovery claim.

I. Scope of Review

In judicial review of administrative action, "the court shall determine all questions of law and interpret the statutory and constitutional provisions involved and shall apply such interpretation to the facts duly found or established." Section 24-4-106(7), C.R.S.2003. While we review an agency's statutory and regulatory interpretations de novo, we accord deference to the interpretation of a statute or regulation by the agency charged with its administration, and we generally accept that interpretation if it has a reasonable basis in the law and is warranted by the record. Stell v. Boulder County Dep't of Soc. Servs., 92 P.3d 910 (Colo.2004).

We reverse final agency action only if it is arbitrary or capricious, contrary to law, an abuse of discretion, in excess of jurisdiction, based on clearly erroneous findings, or unsupported by substantial evidence. Section 24-4-106(7).

II. Recovery of Medicaid Benefits Paid Erroneously Before Notice of Termination

Nededog first contends the County Department cannot recover the erroneous payments because she remained eligible for Medicaid benefits until ten days after she received the September 19, 2000 termination notice. We disagree.

When a person loses SSI, the Social Security Administration so informs the state agency responsible for Medicaid administration, and that agency must then determine whether the person is otherwise eligible for Medicaid benefits. 42 C.F.R. § 435.916(c)(1); § 26-4-106, C.R.S.2003.

If the agency determines that the person has no other basis for Medicaid eligibility, then the person must be sent a termination notice. However, eligibility for Medicaid benefits continues "until such person is determined to be ineligible." Section 26-4-106(1)(a), C.R.S.2003; see 42 C.F.R. § 435.930(b).

Written notice must be mailed at least ten days before the benefits are terminated. 42 C.F.R. § 431.211. The notice must include a description of the action to be taken, the reason for the action, and the legal authority for the action. 42 C.F.R. § 431.210; see also Colorado Department of Health Care Policy and Financing Reg. § 8.057.1.D, 10 Code Colo. Regs. 2505-10.

Termination of Medicaid benefits without the requisite ex parte consideration of other bases for eligibility and advance notice of termination is invalid. Mass. Ass'n of Older Americans v. Sharp, 700 F.2d 749 (1st Cir.1983)(loss of AFDC); Stenson v. Blum, 476 F.Supp. 1331 (S.D.N.Y.1979)(loss of SSI), aff'd without opinion, 628 F.2d 1345 (2d Cir.1980); see also Weston v. Cassata, 37 P.3d 469 (Colo.App.2001)(advance notice required to terminate welfare benefits); Weaver v. Colo. Dep't of Soc. Servs., 791 P.2d 1230 (Colo.App.1990)(advance notice required to terminate Home and Community Based Services benefits, a component of Medicaid).

Federal Medicaid law does not limit a state agency's recovery of benefits paid erroneously. See Oxenhorn v. Fleet Trust Co., 94 N.Y.2d 110, 700 N.Y.S.2d 413, 722 N.E.2d 492 (1999). Indeed, allowing recovery of such payments protects the assets of the Medicaid program as the "payor of last resort." S.Rep. No. 99-146 at 312, reprinted in 1986 U.S.C.C.A.N. 42,279; see Oxenhorn v. Fleet Trust Co., supra (upholding recovery of Medicaid benefits paid erroneously, despite paying agency's error). Moreover, Colorado law requires recovery of Medicaid benefits paid to a person who "was not lawfully entitled" to them. Section 26-4-403(1)(c), C.R.S.2003; see also Colorado Department of Health Care Policy and Financing Reg. § 8.065.11, 10 Code Colo. Regs. 2505-10.

Here, Nededog argues that because the County Department could not terminate her Medicaid benefits until ten days after the September 19, 2000 notice, despite her 1998 loss of SSI and lack of any other basis for Medicaid eligibility, the County Department cannot recoup the erroneous payments going back to September 1999. According to Nededog, to do so would be an unlawful "retroactive" determination of her ineligibility. We are not persuaded.

Nededog's argument conflates the advance notice requirement to terminate Medicaid eligibility with the power to recover benefits paid erroneously. Once granted, a Medicaid recipient's eligibility continues until terminated. However, when Nededog ceased receiving SSI, she was no longer entitled to Medicaid benefits. Recovery under § 26-4-403(1)(c) turns on a lack of entitlement in the first instance, while the advance notice requirement relates to the procedures necessary to terminate payments that a recipient is not entitled to receive. While the County Department must give advance notice before terminating benefits being paid erroneously, its right to recover those payments accrued when the erroneous payments were made, not later when it terminated future payments.

Nededog cites no case, and we have found none, supporting her argument that recovery of erroneous payments constitutes an invalid, prenotice termination of Medicaid benefits. Sharp, Stenson v. Blum, Weaver, and Weston v. Cassata, on which she relies, all invalidated termination of public benefits for lack of advance notice. However, because Nededog does not dispute the adequacy of the notice to terminate her Medicaid benefits, these cases are inapposite to recovery of payments made erroneously before notice of termination.

To the extent that Nededog's argument requires us to reconcile § 26-4-106(1)(a), which provides that eligibility continues "until such person is determined to be ineligible" and requires advance notice of termination, with the mandate in § 26-4-403(1)(c) to recover payments for which the recipient "was not lawfully entitled," we rely on accepted principles of statutory construction and administrative law.

When faced with potentially conflicting statutory provisions, we seek a harmonious interpretation that gives effect to each provision while furthering the general purpose of the legislation. People v. Luther, 58 P.3d 1013 (Colo.2002). At the same time, we avoid an interpretation that would produce an unreasonable or absurd result. Reg'l Transp. Dist. v. Lopez, 916 P.2d 1187 (Colo.1996).

The advance notice requirement affords a recipient of public benefits a pretermination opportunity to be heard, consistent with procedural due process rights inherent in receipt of public benefits. See generally Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970). Thus, due process protects the recipient against an erroneous termination of public benefits. Goldberg v. Kelly, supra.

A claim to recover benefits paid erroneously does not raise the same perils to the recipient as an unannounced termination of public benefits. And consistent with due process, a recipient who, like Nededog, is the subject of a claim to recover benefits paid erroneously is entitled to notice of the recovery action and an opportunity to be heard. Colorado Department of Health Care Policy and Financing Reg. § 8.065.3.31, 10 Code Colo. Regs. 2505-10.

Hence, we discern no conflict between requiring advance notice to terminate eligibility for Medicaid benefits and allowing recovery of benefits paid erroneously before notice of termination. Nededog's argument would preclude many recoveries of erroneous payments, which are usually retroactive in nature because Medicaid benefits can be terminated lawfully only upon advance notice. This would be an unreasonable result, which we reject. Reg'l Transp. Dist. v. Lopez, supra. For these reasons, we defer to CDHCPF's interpretation as having a reasonable basis in law. See Stell...