Reed v. Hurley Medical Center, Docket No. 81078

CourtCourt of Appeal of Michigan (US)
Citation153 Mich.App. 71,395 N.W.2d 12
Docket NumberDocket No. 81078
PartiesMark Alan REED, Petitioner-Appellee, v. HURLEY MEDICAL CENTER; Michigan Department of Social Services; and Agnes M. Mansour, Director of the Michigan Department of Social Services, Respondent-Appellants. 153 Mich.App. 71, 395 N.W.2d 12
Decision Date05 November 1986

[153 MICHAPP 73] John M. Wright and Jon T. Warren, Flint, for petitioner-appellee.

Frank J. Kelley, Atty. Gen., Louis J. Caruso, Sol. Gen., and William K. Basinger, Asst. Atty. Gen., for respondent-appellants.

Before HOOD, P.J., and HOLBROOK and DAVID P. KERWIN *, JJ.


Respondent, Department of Social Services (DSS), appeals as of right from a circuit court order which set aside a determination by hearing referee Robert H. Mourning that DSS could reduce payments for medical services provided to petitioner, Mark Alan Reed. The circuit court also enjoined Hurley Medical Center, a respondent below,[153 MICHAPP 74] from transferring petitioner, directed DSS to provide petitioner with the level of care he had been receiving at Hurley, barred DSS from reducing payments to Hurley and denied DSS's motion for summary judgment. The issue on appeal is whether the circuit court properly reversed the referee's decision. Because we think it did not, we vacate the circuit court's order and reinstate that of the hearing referee.

Petitioner is a Medicaid recipient who has suffered from muscular dystrophy since he was four years old. At the time of the hearing he was 28. His muscles do not function with the exception that he has minor movement in his fingers and face. In May, 1980, he was rushed to the emergency room at Hurley Medical Center suffering from pneumonia and respiratory failure caused by muscle weakness. He was given a tracheostomy, and ended up spending approximately five months in Hurley's intensive care unit. Thereafter petitioner was transferred to Hurley's transitional care unit. He eventually recovered without suffering brain damage. Petitioner has been dependent upon a ventilator, but his condition had been stable for at least nine months at the time of the hearing.

In October, 1982, the DSS Medical Services Administration reviewed petitioner's case and determined that he could get adequate care at Oak Hill Nursing Home in Farmington. Oak Hill has developed a specialized unit which provides skilled nursing care for patients who require ongoing ventilator or respiratory support. Oak Hill is located five minutes from Botsford Hospital, which is ranked fourth in the state as an acute care facility. Hurley costs the state from $500 to $550 per day for petitioner's care; Oak Hill costs from $200 to $224 per day.

[153 MICHAPP 75] On April 11, 1983, DSS informed Hurley that Medicaid payments for petitioner would be reduced to the cost of services at Oak Hill. As Hurley was given two weeks to transfer petitioner before payments would be reduced, petitioner sought to enjoin the transfer in circuit court later that month. A show cause hearing was scheduled but adjourned when the Attorney General opined that petitioner was entitled to an administrative hearing pursuant to 42 CFR 431.200 et seq., before any reduction in the level of care could be effectuated. The hearing referee, after a hearing, held in August, 1983, that it would be reasonable and proper for DSS to reduce the payments for medical services to petitioner. Petitioner appealed to circuit court pursuant to M.C.L. Sec. 400.37; M.S.A. Sec. 16.437. The circuit court set aside the hearing referee's decision.


We review final decisions and orders from administrative agencies by determining whether they are authorized by law and whether they are supported by competent, material and substantial evidence on the whole record. Const.1963, art. 6, Sec. 28; M.C.L. Sec. 24.306(1)(d); M.S.A. Sec. 3.560(206)(1)(d). The substantial evidence test, which applies to the review of social services cases, requires more than a mere scintilla of evidence but somewhat less than a preponderance. Quality Clinical Laboratories, Inc. v. Dep't of Social Services, 141 Mich.App. 597, 599, 367 N.W.2d 390 (1985); Tompkins v. Dep't of Social Services, 97 Mich.App. 218, 293 N.W.2d 771 (1980); Soto v. Social Services Director, 73 Mich.App. 263, 251 N.W.2d 292 (1977). We must make a careful examination of the whole record and avoid invading the factfinding province of the agency. [153 MICHAPP 76] 141 Mich.App. 599, 367 N.W.2d 390. It is not the function of a reviewing court to resolve evidentiary conflicts or to pass on witnesses' credibility. 73 Mich.App. 272, 251 N.W.2d 292.

Medicaid is a federally established program which enables states to furnish medical assistance to persons otherwise unable to obtain such care. See 42 U.S.C. 1396 et seq.; M.C.L. Sec. 400.105 et seq.; M.S.A. Sec. 16.490(15) et seq. States may pay only for services which the DSS deems are medically necessary under 42 CFR 440.230. Accordingly, the Michigan Legislature has required DSS to limit payments to hospitals to the minimum period of hospitalization which is necessary. M.C.L. Sec. 400.109; M.S.A. Sec. 16.490(19). Moreover, the Director of the DSS must assure that reimbursement is made only for medically appropriate services, M.C.L. Sec. 400.111a(2)(b); M.S.A. Sec. 16.490(21a)(2)(b), and must assure that the state is a prudent buyer according to M.C.L. Sec. 400.111a(2)(e); M.S.A. Sec. 16.490(21a)(2)(e), and pays only for services that are needed or appropriate. M.C.L. Sec. 400.111a(3)(b); M.S.A. Sec. 16.490(21a)(3)(b). Based upon the foregoing, we review the record to determine whether the services provided to petitioner at Hurley were medically necessary or appropriate, or whether the state, as a prudent buyer, could obtain appropriate services at Oak Hill.


The circuit court reversed the hearing referee because it determined that the referee's decision was not supported by substantial evidence on the record. The court found that the referee relied too heavily on the testimony of two pulmonary specialists, Dr. M. Varkey Thomas and Dr. Bert Rabinowitz, and had discounted testimony of Dr. Raymond Failer, who has been petitioner's personal physician since petitioner was four years old. The [153 MICHAPP 77] hearing referee had relied upon Dr. Rabinowitz's testimony that petitioner's condition was stable and that Oak Hill would provide him adequate care. Dr. Thomas had testified that the ventilator at Oak Hill would be adequate, petitioner's tracheostomy tube could be cared for at Oak Hill, and a private room, which petitioner had at Hurley but would not be provided at Oak Hill, was not necessary for his care. The hearing referee believed that Oak Hill's special ventilator unit would give petitioner the care he needed, especially since Botsford Hospital was nearby. He cited testimony from petitioner's social worker, that nothing at Oak Hill would preclude a positive relationship between petitioner and the staff there, in concluding that the evidence did not show a significant likelihood that petitioner would suffer "transfer trauma".

The circuit court, on the other hand, stressed Dr. Failer's opinion that the condition of petitioner's health was grave, i.e., petitioner suffered from muscular dystophry, a slowly progressive disease, along with atelectasis of the left lung, which causes a progressive loss of lung volume. Sterility would be a problem at Oak Hill, Dr. Failer believed, and petitioner's mental health would be jeopardized by the move. The circuit court found that Dr. Failer's testimony was more credible than that of the specialists, as Dr. Failer had treated petitioner for over 25 years and the other physicians had merely reviewed petitioner's medical records. The court opined that the quantity of opposing testimony did not outweigh the quality of Dr. Failer's evaluation. Therefore the circuit court found that the hearing referee's decision was not supported by substantial evidence on the whole record and determined that the services provided to petitioner by Hurley were medically necessary.

[153 MICHAPP 78]


We have reviewed the whole record and conclude that the circuit court erred when it found that the hearing referee's decision was not supported by substantial evidence on the record. We believe the evidence does not support a finding that the services provided at Hurley were medically necessary or that petitioner could not receive adequate care at Oak Hill.


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