Schlapp v. Colo. Dep't of Health Care Policy & Fin.

• Decision Date: 21 June 2012
• Docket Number: No. 11CA1726.,11CA1726.
• Citation: 2012 COA 105,284 P.3d 177
• Parties: Luke SCHLAPP, by and through his parents Todd SCHLAPP and Leah Schlapp, Plaintiff–Appellant, v. COLORADO DEPARTMENT OF HEALTH CARE POLICY AND FINANCING and Mesa Developmental Services, Defendants–Appellees.
• Court: Colorado Court of Appeals

284 P.3d 177

2012 COA 105

Luke SCHLAPP, by and through his parents Todd SCHLAPP and Leah Schlapp, Plaintiff–Appellant,

v.COLORADO DEPARTMENT OF HEALTH CARE POLICY AND FINANCING and Mesa Developmental Services, Defendants–Appellees.

No. 11CA1726.

Colorado Court of Appeals,

Div. I.

June 21, 2012.

Polsinelli Shughart PC, T. Jeffrey Fitzgerald, Denver, Colorado; Faegre Baker Daniels LLP, David W. Stark, Thomas W. Carroll, Denver, Colorado, for Plaintiff–Appellant.

John W. Suthers, Attorney General, Josh G. Urquhart, Assistant Attorney General, Joan E. Smith, Assistant Attorney General, Denver, Colorado, for Defendant–Appellee Colorado Department of Health Care Policy and Financing.

Bechtel & Santo, L.L.P., Betty C. Bechtel, Michael C. Santo, Grand Junction, Colorado, for Defendant–Appellee Mesa Developmental Services.

Opinion by Judge J. JONES.

¶ 1 Plaintiff, Luke Schlapp, a child, appeals the district court's judgment affirming the determination of defendants, the Colorado Department of Health Care Policy and Financing (Department) and Mesa Developmental Services, that he is ineligible for a Medicaid Home and Community Based Services Children's Waiver (Home Services Waiver).¹ We affirm.

I. Background

¶ 2 By enacting the Colorado Medical Assistance Act, Colorado has chosen to provide home and community-based long-term care services (Services) to certain groups who would not otherwise qualify for federal- and state-funded Medicaid under traditional income guidelines. See§§ 25.5–5–202, 25.5–5–203, C.R.S.2011. For each Services group, the state must request a waiver from the Centers for Medicare and Medicaid Services to receive federal funds. 42 U.S.C. § 1396n(c). As relevant here, the General Assembly chose to request the following waiver programs: Home Services Waiver, sections 25.5–6–901 to –902, C.R.S.2011; Children With Autism Waiver, sections 25.5–6–801 to –805, C.R.S.2011; and Children's Extensive Support Waiver, sections 25.5–6–401 to –411, C.R.S.2011.

¶ 3 The Department deemed Luke eligible for a Home Services Waiver in 2006, when he was three or four years old. He received services thereunder until he obtained a Children With Autism Waiver, when he was four years old. Under the Children With Autism Waiver, Luke received occupational, speech, physical, and behavioral therapy services through Medicaid. § 25.5–6–804, C.R.S.2011. However, he became ineligible for that waiver when he turned six in 2009. § 25.5–6–802(1)(b), C.R.S.2011.

¶ 4 Luke applied for a Home Services Waiver to begin upon expiration of the Children With Autism Waiver. Mesa used a standard long-term care assessment tool (ULTC 100.2) to evaluate Luke's eligibility for the Home Services Waiver. See Medical Assistance Rules, 10 Code Colo. Regs. 2505–10:8.401, 2505–10:8.506.11(A)(4). In the “Activities of Daily Living” portion of the ULTC 100.2, Mesa determined that Luke's scores were such that he could be eligible for nursing facility level of care.²

¶ 5 The Department then reviewed Luke's application to determine, as relevant here, whether Luke had medical needs requiring “hospital or nursing home level of care.” In determining Luke's eligibility for the Home Services Waiver, the Department reviewed the portion of the ULTC 100.2 noted above, along with two Professional Medical Information Pages (Physician Pages) provided by Luke's physician, one completed in June 2009 and one completed in September 2009. The June Physician Page stated that Luke had been diagnosed with autism and speech delay, and in the section titled “Other Services Required for Medical Problems,” the physician entered “none.” The September Physician Page included the medical diagnoses of club foot and asthma, and identified speech, physical, and occupational therapies as other required medical services. Based on these Physician Pages, the Department determined that Luke was ineligible for a Home Services Waiver because he did not require the level of care provided in a hospital or skilled nursing facility.

¶ 6 Luke appealed the Department's decision to an administrative law judge, who affirmed the Department's determination. The Department then affirmed its initial decision, and denied Luke's subsequent motion for reconsideration.³ Luke appealed to the district court, which initially reversed the Department's decision, but, upon reconsideration, affirmed.

¶ 7 On appeal, Luke contends that the Department erroneously determined that he was ineligible for a Home Services Waiver because (1) the Department improperly considered criteria other than his score on the “Activities of Daily Living” section of the ULTC 100.2; (2) the Department violated the Administrative Procedure Act (APA) by applying a new and unpublished “medically fragile” eligibility requirement; (3) the new requirement is unlawful because it (a) creates a distinction between “medical” and “cognitive/behavioral” needs, and (b) categorically excludes children with autism from eligibility for the Home Services Waiver; and (4) he met all listed eligibility criteria. We address these contentions in turn.

II. Standard of Review and Interpretation of Administrative Regulations

¶ 8 We review an administrative agency action using the same standard of review as the district court. § 24–4–106(7), (11), C.R.S.2011; Kruse v. Town of Castle Rock, 192 P.3d 591, 601 (Colo.App.2008). We assume an agency action is valid, and therefore will affirm it unless the party challenging it shows that the agency acted arbitrarily and capriciously, contrary to a statutory or constitutional right, without substantial evidentiary support, or otherwise contrary to law. § 24–4–105(7), 24–4–106(7); Urbish v. Lamm, 761 P.2d 756, 761 (Colo.1988); Sapp v. El Paso Cnty. Dep't of Human Servs., 181 P.3d 1179, 1182 (Colo.App.2008); Bethesda Found. of Nebraska v. Colo. Dep't of Health Care Policy & Fin., 902 P.2d 863, 866 (Colo.App.1995).

¶ 9 We construe an administrative regulation or rule using rules of statutory interpretation. Regular Route Common Carrier Conference v. Pub. Utils. Comm'n, 761 P.2d 737, 745 (Colo.1988). We read the provisions of a regulation together, interpreting the regulation as a whole. Id. at 746. Further, we interpret a regulation so as not to conflict with the objective of the statute it implements. Koch Indus., Inc. v. United States, 603 F.3d 816, 821 (10th Cir.2010); Emery Mining Corp. v. Secretary of Labor, 744 F.2d 1411, 1414 (10th Cir.1984); see Bd. of Cnty. Comm'rs v. BDS Int'l, LLC., 159 P.3d 773, 779 (Colo.App.2006) (county regulations are construed so as to harmonize with applicable state statutes and regulations). When the agency's existing interpretation of its promulgated regulations and enabling legislation is reasonable and not contrary to law, we will defer to that interpretation. Bd. of Cnty. Comm'rs v. Colo. Pub. Utils. Comm'n, 157 P.3d 1083, 1088 (Colo.2007); Colo. Consumer Health Initiative v. Colo. Bd. of Health, 240 P.3d 525, 528 (Colo.App.2010).

¶ 10 We review a party's challenge to the sufficiency of the evidence supporting an agency's final decision de novo. Zamarripa v. Q & T Food Stores, Inc., 929 P.2d 1332, 1343 (Colo.1997). But we do not decide the facts; “[w]e examine the record in the light most favorable to the agency decision.” Sapp, 181 P.3d at 1182; accord Martelon v. Colo. Dep't of Health Care Policy & Fin., 124 P.3d 914, 916 (Colo.App.2005); see § 24–4–106(7). In so doing, we determine whether substantial evidence in the record, viewed as a whole, supports the agency's decision. Colo. Office of Consumer Counsel v. Pub. Utils. Comm'n, 786 P.2d 1086, 1091 (Colo.1990); see § 24–4–106(7). “Substantial evidence is the quantum of probative evidence that a fact finder would accept as adequate to support a conclusion, without regard to the existence of conflicting evidence.” Black Diamond Fund, LLLP v. Joseph, 211 P.3d 727, 730 (Colo.App.2009).

III. Statutory and Administrative Medicaid Law

A. Federal Law

¶ 11 Each waiver request by the Department to the Centers for Medicare and Medicaid Services (CMS) must be limited to one of the following target groups (or a subgroup thereof): (1) aged or disabled, or both; (2) “mentally retarded” or developmentally disabled, or both; or (3) mentally ill. 42 C.F.R § 441.301(b)(6). A request must be accompanied by assurances that the state agency will evaluate, initially and periodically, whether an aid recipient would need the Department-designated level of care (hospital, nursing facility, or, in the case of the mentally retarded, intermediate care facility (ICF/MR)) required for the particular waiver, absent provision of waiver services. 42 C.F.R. § 441.302(c).

¶ 12 In this case, the meaning of hospital level of care is not implicated, but the meaning of nursing facility level of care is. Such care is defined by section 1919(a) of the Social Security Act as care which is

(A) skilled nursing care ...,

(B) rehabilitation services ..., or

(C) ... health-related care and services to individuals who because of their mental or physical condition require care and services (above the level of room and board) which can be made available to them only through institutional facilities,

and is not primarily for the care and treatment of mental diseases ....

42 U.S.C. § 1396r(a)(1) (emphasis added).

B. State Law

¶ 13 Section 25.5–6–901 of the Colorado Medical Assistance Act governs the Home Services Waiver program. Consistent with federal Medicaid law, subsection (3)(a)(I) of that statute provides that a Home Services Waiver applicant is eligible for such a waiver only if he has “ medical needs which would qualify [him], pursuant to state department criteria, for institutionalization or place [him] at risk for institutionalization in ... [a]n acute care hospital or nursing facility.” (Emphasis added.) By statute, therefore, a person at risk of institutionalization only in an intermediate care facility for the mentally retarded does not qualify for a Home Services...