Reese v. Dept. of Health, 514 September Term, 2006.

Citation934 A.2d 1009,177 Md. App. 102
Decision Date02 November 2007
Docket NumberNo. 514 September Term, 2006.,514 September Term, 2006.
CourtCourt of Special Appeals of Maryland

Daniel L. Robinowitz (Nirali D. Patel, Sidley Austin, LLP, on the brief), Washington, DC, for Appellant.

Kathleen A. Ellis (J. Joseph Curran, Jr., Atty. Gen., on the brief), Baltimore, for Appellee.

Panel: HOLLANDER, JAMES R. EYLER and THEODORE G. BLOOM,* (Retired, specially assigned), JJ.


The State of Maryland has "long supported the reduction of inpatient psychiatric hospital beds in favor of community-based programs." Williams v. Wasserman, 164 F.Supp.2d 591, 634 (D.Md.2001) (Blake, J.). Indeed, since the 1970's, the State's "deinstitutionalization" of patients diagnosed with mental illness and developmental disabilities "has been dramatic." Id. In large measure, that change was prompted by advocates for the disabled, based on their view that disabled individuals are entitled to, and would prefer, community treatment in lieu of institutional care. But, as this case demonstrates, not every developmentally disabled person who needs professional care prefers placement in the community. In this appeal, the guardian of a mentally retarded adult complains because the State has declined to institutionalize her ward in a State-run facility for the mentally retarded.

In 2004, Mary L. Reese, appellant, and the late William Massa,1 as guardians of Virginia Massa, sought to admit Ms. Massa, the mentally retarded daughter of Mr. Massa, to a State-operated intermediate care facility, known as a State residential center ("SRC"). As we shall see, in this case the application process implicated federal and State law.

By letter dated July 19, 2005, S. Anthony McCann, then the Secretary of the Maryland Department of Health and Mental Hygiene (the "Department"), appellee, denied the application, based on his determination that placement in the community was an appropriate, less restrictive alternative. The Department subsequently opposed appellant's request for a hearing at the Office of Administrative Hearings ("OAH"), at which appellant sought to present evidence as to Ms. Massa's condition. The Department claimed that the denial of a request for admission to a SRC is not a contested case under the Administrative Procedure Act ("APA"), Md.Code (2004, 2006 Supp.), §§ 10-201 through 10-226 of the State Gov't. Article ("S.G."), and therefore there was no entitlement to such a hearing. OAH agreed with the Department and denied the request.

Thereafter, Ms. Reese appealed the OAH decision to the Department's Board of Review (the "Board"), which upheld OAH by order dated December 12, 2005. She then filed a petition for judicial review in the Circuit Court for Montgomery County. On March 15, 2006, the court granted the Department's motion to dismiss. This appeal followed.

Appellant presents three issues, which we quote:

1. Whether the State's policy of preventing individuals with qualifying developmental disabilities from obtaining admission to State Residential Centers ("SRCs") violates the freedom of choice requirement of the federal Medicaid statute and its implementing regulations.

2. Whether the State has failed to furnish Medicaid services it agreed to provide Ms. Massa with "reasonable promptness" in violation of federal Medicaid law.

3. Whether the State's interpretation of Md.Code Ann. Health-Gen. Art. § § 7-503 and 7-504, which forecloses any review of the Secretary's denial of SRC admission, violates Appellant's due process rights.

For the reasons that follow, we shall vacate and remand.


To understand the facts and the issues, it is helpful to begin with a brief review of the federal and State statutory schemes.

The Medicaid program, established by Title XIX of the Social Security Act, Title 42 U.S.C. § 1396, et seq., is a "jointly funded collaboration" in which the federal and state governments furnish medical services to low income persons who are unable to meet the costs of their own medical care, as well as long-term care for eligible persons. Dept. of Health & Mental Hygiene v. Campbell, 364 Md. 108, 112, 771 A.2d 1051 (2001); see 42 U.S.C. §§ 1396-1396v; Md.Code (1982, 2000 Repl. Vol., 2005 Repl.Vol., 2006 Supp.), § 15-103(a)(2) of the Health-General Article ("H.G."). Medicaid beneficiaries include low income adults and children, the elderly and the disabled. 42 U.S.C. § 1396a(a)(10)(A); COMAR (including a disabled person in the list of "Medically Needy").

State participation in Medicaid is voluntary. Campbell, 364 Md. at 112, 771 A.2d 1051. But, once a state opts to participate, it must operate its program in compliance with federal statutory and regulatory requirements. 42 U.S.C. 1396a(a)(1). A participating state must develop a state Medicaid Plan for the provision of services that the state intends to provide under the program, which is reviewed by the Health Care Financing Administration ("HCFA"). 42 U.S.C. § 1396a. Once HCFA approves the plan, the state is eligible for federal funding. Campbell, 364 Md. at 112, 771 A.2d 1051. When the state implements a plan for medical assistance, the plan becomes mandatory. 42 U.S.C. § 1396a(a)(1).

Maryland has opted to participate in the Medicaid program through the Maryland Medical Assistance Program. Campbell, 364 Md. at 112, 771 A.2d 1051. The program is administered by the Department and overseen at the federal level by the Department of Health and Human Services ("HHS").2

According to appellant, Maryland's State Medicaid Plan indicates that Maryland provides services to eligible retarded persons in an Intermediate Care Facility for the Mentally Retarded ("ICF-MR"). 42 U.S.C. § 1396d(d).3 ICF-MRs provide residential health and rehabilitative services to mentally retarded individuals under "such standards as may be prescribed by the Secretary [of HSS]." 42 U.S.C. § 1396d(d).4

Maryland has four ICF-MR facilities, all of which are designated SRCs. See MARYLAND HEALTH CARE COMMISSION, AN ANALYSIS AND EVALUATION OF THE CON PROGRAM (2002).5 They are operated by the Maryland Developmental Disabilities Administration ("DDA"), an agency within the Department. H.G. §§ 7-201, 7-501.

In 1981, Congress created the Home and Community Based Services Waiver program ("HCBS"), which allows states to offer long-term care, not otherwise available through their Medicaid programs, to serve eligible individuals in their own homes and communities, instead of hospitals, nursing facilities, or ICF-MRs. 42 U.S.C. § 1396n(c)(1). See S.Rep. No. 97-139 & H.R.Rep. No. 97-208, 97th Cong., 1st Sess. 1981, reprinted in 1981 U.S.Code Cong. & Admin.News p. 396 & 1981 U.S.Code Cong. & Admin.News p. 1010. The federal regulation states: "Section 1915(c) of the Act permits States to offer, under a waiver of statutory requirements, an array of home and community-based services that an individual needs to avoid institutionalization." 42 C.F.R. § 441.300. Under 42 U.S.C. § 1396n(c)(1), the Medicaid statute allows states to apply for a waiver from HHS to pay for community-based services "pursuant to a written plan of care to individuals with respect to whom there has been a determination that but for the provision of such services the individuals would require the level of care provided in a hospital or nursing facility or [ICF-MR] the cost of which could be reimbursed under the State plan."6

Pursuant to 42 C.F.R. § 441.302(d), a waiver will not be granted unless a state furnishes adequate assurances that,

when a recipient is determined to be likely to require the level of care provided in a hospital, NF, or ICF/MR, the recipient or his/ her legal representative will be—

(1) Informed of any feasible alternatives available under the waiver; and

(2) Given the choice of either institutional or home and community-based services.

See 42 U.S.C. § 1396n(c)(2) ("A waiver shall not be granted under this subsection unless the State provides assurances satisfactory to the Secretary that . . . such individuals who are determined to be likely to require the level of care provided in a hospital, nursing facility, or intermediate care facility for the mentally retarded are informed of the feasible alternatives, if available under the waiver, at the choice of such individuals, to the provision of inpatient hospital services, nursing facility services, or services in an intermediate care facility for the mentally retarded[.]").

Like many other states, Maryland strongly favors home and community based care for the developmentally disabled over state-run institutional care.7 As the State has recognized, its efforts in regard to deinstitutionalization have led to the closure or downsizing of many state residential facilities. Indeed, Maryland "has been in the forefront" in developing community and home based care for the mentally disabled. Williams, 164 F.Supp.2d at 634.8

H.G. § 7-102 reflects the State's policy favoring community placement. It provides, in part:

§ 7-102. Legislative policy.

To advance the public interest, it is the policy of this State:

* * *

(4) To foster the integration of individuals with developmental disability into the ordinary life of the communities where these individuals live;

(5) To support and provide resources to operate community services to sustain individuals with developmental disability in the community, rather than in institutions;

The statutory scheme implements the policy favoring non-institutional placements by setting strict institutional admissions requirements and by imposing on the Department the burden to demonstrate to a hearing officer, by clear and convincing evidence, that such an admission is appropriate. H.G. § 7-502 provides:

§ 7-502. Admissions.

(a) Approval by Secretary. — The Secretary shall approve the admission of an individual to a State residential center only if:

(1) The findings...

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