Schreur v. Dep't of Human Serv..

• Decision Date: 22 June 2010
• Docket Number: Docket No. 285792.
• Parties: SCHREURv.DEPARTMENT OF HUMAN SERVICES.
• Court: Court of Appeal of Michigan — District of US

289 Mich.App. 1

795 N.W.2d 192

SCHREUR

v.DEPARTMENT OF HUMAN SERVICES.

Docket No. 285792.

Court of Appeals of Michigan.

Submitted Nov. 10, 2009, at Lansing.Decided June 22, 2010, at 9:00 a.m.

Foster, Swift, Collins & Smith, P.C., Lansing, (by Richard C. Kraus), for petitioner.Michael A. Cox, Attorney General, B. Eric Restuccia, Solicitor General, and Joshua S. Smith, Assistant Attorney General, for respondent.Before: BORRELLO, P.J., and WHITBECK and K.F. KELLY, JJ.PER CURIAM.

Respondent, the Department of Human Services (the Department) appeals by leave granted a circuit court order that held that the Department failed to provide proper notice to petitioner, Amanda Schreur, of her right to request a hearing regarding a denial of her application for Medicaid benefits. This Court also granted the Department's motion for a stay of the benefit payments.¹ We reverse.

I. BASIC FACTS AND PROCEDURAL HISTORY

On April 29, 2005, Schreur filed an application for Medicaid disability benefits. Schreur, then 24 years old, had undergone back surgery in January 2005 to remove a tumor from her spine. She claimed that she was physically unable to work because she suffered from low back pain and weakness. Schreur could not stand or walk for more than a half-hour before her back got sore, but she had no problem sitting for long periods. Previously, Schreur had worked at a day-care center. Schreur sought benefits retroactively, in part, from January 2005 forward. It is undisputed that at the time of Schreur's application, she was not already a recipient of Medicaid disability benefits.

On June 10, 2005, the Department mailed Schreur notice that it had denied her application for Medicaid benefits because her disability was not “expected to last for at least 12 consecutive months” and would not prevent her from “working in any substantial gainful employment.” At the top of the form, there was a short statement to the applicant: “If you do not understand the information in this notice, please contact me immediately. If you wish, you may meet with my manager and me to discuss the action(s) taken on your application.” (Presumably, “me” referred to the specialist who signed and provided her contact information on the form.)

The notice also contained several “Manual Policy References.” On the line marked “PEM” (acronym for Program Eligibility Manual), was typed “400 500 166.” On the line marked “PAM” (acronym for Program Administrative Manual), was typed “110 115.” Below the Manual Policy References was the following statement: “If your application is being denied, you may apply for assistance if your circumstances changes [sic].”

The backside of the notice further provided, “Procedures For Requesting A Fair Hearing.” Specifically, the notice stated:

If you believe this action is illegal, you may request a hearing within 90 days of the date of this notice.... All ... requests for a hearing must be made IN WRITING and signed and dated by you.

* * *

Complete the “Request for Hearing” section below or any other written request. State that you want a hearing on the decision made by the Agency and briefly explain your reasons.

Immediately beneath this section was a form to fill out to request a hearing.

Schreur did not request a hearing within 90 days. Instead, she waited until June 13, 2006, to mail her request for review of the Department's decision to deny her application. The Department received the request on June 15, 2006. Therefore, Schreur filed her hearing request 368 days after the date of the notice and 278 days after expiration of the 90–day period for requesting a hearing.

On December 14, 2006, an administrative hearing was held regarding Schreur's substantive claim of disability and to determine whether Schreur's hearing request was timely. Schreur argued that her hearing request was timely because the Department's denial notice contained incorrect citations to the Department's administrative and eligibility manuals, which, she contended, made the notice inadequate and ineffective to start the 90–day period to request a hearing. More specifically, according to Schreur, the citations to the Department's policy manuals, PAM and PEM, were not relevant to the denial of Schreur's application for assistance because they did not pertain to disability determinations. Indeed, the Department concedes that manual item PEM 400 refers to assets, PEM 500 refers to income, PEM 166 refers to aged, blind, and disabled individuals, PAM 110 explains application filing and registration procedures, and PAM 115 explains application processing. Rather clearly, these manual items do not directly pertain to disability determinations.

The Department explained that the notice is “a Word document that workers often pre-fill ..., and they just use the same [form] over and over again.” The Department argued that the notice was adequate because it explained the reason for the denial of the application: that the impairment “ has not lasted nor is expected to last for at least 12 consecutive months and does not prevent working in any substantial gainful employment.” According to the Department, the notice informed Schreur of her right to a hearing and the 90 days she had to request a hearing. The Department argued that the incorrect manual citations should have prompted Schreur to request a hearing if she was confused about the reason for the denial of her application. In other words, according to the Department, the incorrect citations should have simply been an additional basis to request a hearing.

Citing Mich. Admin. Code, R. 400.902, R. 400.903, and R. 400.904, the hearing referee explained that “[a]ny hearing request which protests a denial, reduction, or termination of benefits must be filed within 90 days of the mailing of the negative action notice.” The referee rejected Schreur's argument that the Department's failure to cite the correct policy manual provisions underlying its decision to deny Schreur's Medicaid benefits application rendered the notice provided insufficient or defective. The referee reasoned that, although the Department was required to cite the specific provisions underlying its decision, the failure to do so merely constituted an additional ground on which to request a hearing to contest the Department's decision. The referee stated, “[T]he 90 day period to request a hearing applies to any issues connected with [the Department]'s actions of which the claimant has been notified of [sic], and that would include an omission of the specific manual item(s) on which the action is based on [sic].” The referee found that the notice explained the specific reason for the denial and informed Schreur of her right to request a hearing within 90 days. Accordingly, the hearing referee issued an order dismissing Schreur's request for a hearing as untimely.

Schreur then filed a petition for review in the Bay Circuit Court. Schreur argued that the policy manual citation errors in the notice made it inadequate and defective and “tolled” the period that she had in which to request a hearing. Schreur agreed with the circuit court's assessment of her position that, if the section for manual references had said “PEM 260,” it would have been a proper and adequate notice because PEM 260 covers Medicaid disability and sets forth the regulations regarding how a person is determined to be disabled under the Department's policy. Schreur readily acknowledged that she could have filed a request for a hearing within 90 days, but Schreur's counsel had decided to rely on the citation errors and waited a year to request a hearing in order to give her client an advantage. More specifically, Schreur's counsel explained:

Part of the elements in defining disability are that you have to have a severe impairment which has lasted or will continue to last for a year. The younger a person, the more chances are is, is that they are going to—are—they are going to heal from that; they are going to be able to go back to work; they are not going to be found disabled. It was in the best interests of our client for us to wait, to be able to make a determination of whether she was going to meet that period of duration.

The Department reiterated its prior arguments and also argued that Schreur had neither alleged nor established any prejudice. The Department urged the circuit court not to reward Schreur's gamesmanship.

The circuit court agreed with Schreur's position and held that Schreur's claim was timely. The circuit court held that the 90–day period “begins at the point when timely and adequate notice of denial has been provided to an applicant.” But the circuit court concluded that because the notice did not conform to the requirements of 42 CFR 431.210 and 42 CFR 431.221, the statutory 90–day period had not begun to run. The circuit court reasoned, “[I]f a person is going to lose their ability to have a review because they didn't respond within 90 days, it's a technical argument against them; then the technical aspect of the trigger not actually taking place appropriately, I think is—is equally viable.” The circuit court therefore vacated the hearing referee's order and reinstated Schreur's request for a hearing on the substantive issue whether she was disabled. The Department now appeals the circuit court's holding and asserts that the circuit court's interpretation of the applicable law was erroneous.

II. NOTICE REQUIREMENTS

A. STANDARD OF REVIEW

The Department argues that because 42 CFR 431.221(d) unambiguously restricts an applicant's right to request a hearing to 90 days, the circuit court erred when it held that Schreur timely filed a request for a hearing. According to the Department, Schreur received adequate notice that the Department denied her application for Medicaid disability benefits and a nonconforming notice does not permit an applicant to exceed the 90–day limitation to request a hearing, absent a showing of actual prejudice. The...