Pa. Dep't of Human Servs. v. U.S. Dep't of Health & Human Servs.
| Citation | 349 F.Supp.3d 431 |
| Decision Date | 28 September 2018 |
| Docket Number | Civil Action No. 1:16-CV-194 |
| Parties | Commonwealth of Pennsylvania DEPARTMENT OF HUMAN SERVICES, Plaintiff v. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, et al., Defendants |
| Court | U.S. District Court — Middle District of Pennsylvania |
Jason W. Manne, Manne Law Office, Pittsburgh, PA, for Plaintiff.
D. Brian Simpson, U.S. Attorney's Office, Harrisburg, PA, for Defendants.
Kane, JudgeBefore the Court are cross-motions for summary judgment in this Administrative Procedure Act challenge to decisions of the Departmental Appeals Board ("DAB"), of the United States Department of Health and Human Services ("HHS"). The Commonwealth of Pennsylvania Department of Human Services ("Pennsylvania" or "the Commonwealth"), challenges the decisions by DAB upholding the HHS Secretary's decision to disallow approximately $14.5 million in Medicaid federal financial participation ("FFP") related to Pennsylvania's Medical Assistance Transportation Program ("MATP"), and approximately $25.7 million in FFP related to Pennsylvania's Medical Assistance Aging Waiver ("Aging Waiver").1 Specifically, Pennsylvania challenges the DAB's findings that Pennsylvania (1) failed to show that all administrative costs claimed in connection with the MATP and Aging Waiver were properly allocated to Medicaid, and (2) failed to show that the costs were claimed in accordance with an approved public assistance cost allocation plan. Upon careful review of the administrative records and the parties' briefs, together with the applicable law, the Court finds that the DAB's decisions upholding the disallowances were not arbitrary or capricious. Therefore, the Court will affirm the DAB's decisions and grant summary judgment in favor of Defendants.
Medicaid provides "joint federal and state funding of medical care for individuals who cannot afford to pay their own medical costs." Arkansas Dep't of Health and Human Servs. v. Ahlborn, 547 U.S. 268, 275, 126 S.Ct. 1752, 164 L.Ed.2d 459 (2006). It was enacted in 1965 as Title XIX of the Social Security Act, as added, 79 Stat. 343, 42 U.S.C. § 1396 et seq. (2000 ed. and Supp. III). Id. States are not required to participate in Medicaid, yet all do. Id."The program is a cooperative one; the Federal Government pays between 50% and 83% of the costs the state incurs for patient care, and, in return, the state pays its portion of the costs and complies with certain statutory requirements for making eligibility determinations, collecting and maintaining information, and administering the program." Id. (citing 42 U.S.C. § 1396a ); see also Children's Seashore House v. Waldman, 197 F.3d 654, 655-56 (3d Cir. 1999). Medicaid is administered by the HHS Secretary, who in turn has delegated his authority to regional Centers for Medicare and Medicaid Services ("CMS"). Ahlborn, 547 U.S. at 275, 126 S.Ct. 1752. Under Medicaid, the federal government reimburses states for part of its costs for both "medical assistance" (i.e., medical care and services), and for "the proper and efficient administration" of the Medicaid program. See 42 U.S.C. §§ 1396b(a)(1), 1396d(a), 1396b(a)(7).
Pursuant to statute, in order to participate in Medicaid, each state must develop a state plan ("Medicaid State Plan"), for medical assistance that details the services the state intends to provide to its Medicaid beneficiaries, and how the state will pay for those services. (Doc. No. 29 ¶ 9.) Once CMS approves the plan, the state may claim the federal share for services identified in the Medicaid State Plan. (Id. ¶ 10.)3
In order to claim administrative costs incurred by a state agency operating a Medicaid program, pursuant to regulation, a state must also have an approved public assistance cost allocation plan ("PACAP"). (Id. ¶ 4.) The regulations require that states claim "FFP for costs associated with a program only in accordance with its approved" PACAP. (DAB MATP Op., Doc. No. 12-1 at 2.) One purpose of a PACAP is to ensure that each Medicaid program operated by Pennsylvania bears only its fair share of administrative costs, especially those costs that benefit multiple programs. (Doc. No. 24 ¶ 4.) When a state amends its PACAP, CMS typically issues conditional approvals of a PACAP or PACAP amendment through the HHS component known as Cost Allocation Services ("CAS").4 (Id. ¶ 6.) Federal financial participation for costs of administration of the Medicaid program is 50%. (Doc. No. 24 ¶ 3.)
As noted above, this case involves Pennsylvania's use of approximately $40.2 million in federal funds to pay the administrative costs of two Medicaid programs, the MATP and the Aging Waiver. (Doc. No. 29 ¶ 1.) The MATP provides transportation for Medicaid recipients to medical appointments. (Id. ) The Aging Waiver assists the elderly in remaining in their homes. (Id. ) In Pennsylvania, the Department of Human Services ("DHS"), formerly Department of Public Welfare ("DPW"), is the state agency responsible for the Medicaid program. (Doc. No. 24 ¶ 2; Doc. No. 29 ¶ 5.)
In Pennsylvania, the Aging Waiver is implemented by multiple county Area Agencies on Aging ("AAAs"), serving a broad spectrum of senior citizens, including individuals ineligible for Medicaid. (Doc. No. 29 ¶¶ 24, 26.) In 2010, HHS's OIG reviewed Pennsylvania's claim for administrative costs associated with the Aging Waiver for the period July 2008 through June 2009. (Id. ¶ 27.) In its report, the OIG found that Pennsylvania's claim included approximately $25.7 million FFP claimed as administrative costs on behalf of the county AAAs for Aging Waiver activities. (Doc. No. 29 ¶ 28.) The OIG noted that these costs were not identified in Pennsylvania's PACAP and "may have included costs that did not benefit the Aging Waiver." (Id. ¶ 32.) The OIG recommended, among other things, that Pennsylvania "amend its cost allocation plan to identify all Aging Waiver administrative costs and include detailed allocation methodologies to enable CMS to determine if the costs are being allocated in proportion to benefits received." (Id. ¶ 33; Doc. No. 24 ¶ 23.) Subsequent to the issuance of the OIG report, CMS issued a letter of disallowance, covering the accounting period of July 1, 2008 through June 30, 2009. (Doc. No. 29 ¶ 36; Doc. No. 24 ¶ 24.)
In its disallowance letter, addressing the general requirements of a cost allocation system, CMS stated that relevant administrative costs may be claimed for Medicaid reimbursement only when they: (1) "directly relate to the administration of the Medicaid program;" (2) are included in an approved PACAP; and (3) are "supported by a system which has the capability to isolate the costs which are directly related to the support of the Medicaid program from all other costs incurred by the Agency." (Doc. No. 29 ¶ 37.) Pennsylvania admits that its PACAP lacks detail on county-level administrative costs incurred by the AAAs. (Id. ¶ 39.) Pennsylvania timely appealed the Aging Waiver disallowance to the DAB. (Doc. No. 24 ¶ 27.)
Federal regulations authorize Medicaid reimbursement for "transportation and other related travel expenses determined to be necessary by the agency to secure medical examinations and treatment for a beneficiary," and Pennsylvania provides this transportation through the MATP. (Doc. No. 29 ¶¶ 40, 41.) During the relevant period, in 66 of 67 counties, Pennsylvania chose to claim the expenses of the non-emergency portion of the MATP ("NEMT") as an administrative cost of Medicaid. (Id. ¶ 42.) In the remaining county, Philadelphia, Pennsylvania claimed the MATP costs as a direct medical service. (Id. ¶ 43.) In the 66 counties where Pennsylvania claimed NEMT as an administrative cost, the services were provided by the county through grant agreements executed between Pennsylvania and either the counties or, in one case, a vendor. (Id. ¶ 44.) The MATP provides transportation not only for Medicaid beneficiaries, but also for other Pennsylvanians who are eligible for state-only assistance. (Id. ¶ 45.) The MATP handbook, which DPW provided to the counties, provides a list of additional funding sources besides Medicaid, which may be available for some county transportation programs. (Id. ¶ 46.)
In or around 2012, CMS reviewed Pennsylvania's claim for Medicaid administrative costs in the MATP. (Id. ¶ 48.) Because CMS determined that Pennsylvania did not include a sufficient allocation methodology in its approved PACAP to support claiming the MATP administrative costs, CMS deferred those costs for the quarter ending June 30, 2012, and later deferred the costs for the quarter ending September 30, 2012. (Id. ¶¶ 49-50.)
The deferral letters offered Pennsylvania the opportunity to submit additional documentation, but did not specify the exact nature of that documentation. (Id. ¶ 51.) Ultimately, CMS disallowed approximately $14.5 million in FFP that Pennsylvania had claimed for MATP administrative costs for the two quarters at issue because it stated that Pennsylvania did not "have an approved CAP on file with the Department of Health and Human Services that meets regulatory requirements," as Pennsylvania's PACAP "contain[ed] no detail on county administrative costs." (Id. ¶¶ 52, 53.) Pennsylvania was aware that it was responsible for ensuring that any costs which the local entities passed on to Pennsylvania (and which Pennsylvania in turn passed on to CMS), were allocated in accordance with federal cost principles. (Id. ¶ 55.) Pennsylvania timely appealed the MATP disallowance to the DAB. (Doc. No. 24 ¶ 36.)
The DAB is designed to provide a "fair, impartial, quick and flexible" appeal process, with procedures designed to be "simple enough that a grantee need not feel it must have an attorney." (Doc. No. 24 ¶ 39 (citations omitted).) Regarding the availability of discovery in connection with a DAB appeal, regulations provide that the Board may permit discovery if it finds it...
To continue reading
Request your trial
-
Martin v. Finley, 3:15-CV-1620
...evil motive or his reckless indifference to the rights of others." Id. at 189, 883 A.2d 439 (internal citation and quotation marks 349 F.Supp.3d 431omitted). Reckless indifference, "or as it is sometimes referred to, ‘wanton misconduct’, means that the actor has intentionally done an act of......
- Sherle v. Pa. Dep't of Human Servs.