Burgess v. W. Va. Dep't of Hum. Servs.

903 S.E.2d 609

Samantha BURGESS, Alyssa Skeens, George Grover, Jessica Halstead, and Sunshine Holstein, Petitioners Below, Petitioners,

v.WEST VIRGINIA DEPARTMENT OF HUMAN SERVICES, Bureau for Medical Services, Respondent Below, Respondent.

Holistic, Inc., Petitioner Below, Petitioner,

v.West Virginia Department of Human Services, Bureau for Medical Services, Defendant Below, Respondent.

No. 23-ICA-11, No. 23-ICA-39

West Virginia Intermediate Court of Appeals.

Submitted: February 7, 2024

Filed: June 12, 2024

Appeal from the West Virginia Department of Human Services, Bureau for Medical Services

William D. Wilmoth, Esq., Justin M. Wilson, Esq., Steptoe & Johnson, PLLC, Wheeling,

West Virginia, Counsel for Individual Petitioners

J. Zak Ritchie, Esq., Isaac R. Forman, Esq., Skyler A. Matthews, Esq., Hissam Forman Donovan Ritchie PLLC, Charleston, West Virginia, Counsel for Petitioner, Holistic

Patrick Morrisey, Esq., Attorney General, Brent Wolfinbarger, Esq., Senior Deputy Attorney General, Gary L. Michels, Esq., Assistant Attorney General, Michael R. Williams, Esq., Principal Deputy Solicitor General, Spencer J. Davenport, Esq., Assistant Solicitor General, Charleston, West Virginia, Counsel for Respondent

GREEAR, JUDGE:

Petitioners Samantha Burgess, Alyssa Skeens, George Grover, Jessica Halstead, Sunshine Holstein, ("Individual Petitioners") and Holistic, Inc. ("Holistic")¹ (collectively referred to as "Petitioners") appeal the December 7, 2022, decision of the West Virginia Department of Human Services² ("DHS"), Bureau for Medical Services ("BMS") denying Petitioners' request to rescind or suspend, in whole or in part, the suspension of all Medicaid payments to Holistic and the Individual Petitioners pending completion of a fraud investigation by the Medicaid Fraud Control Unit ("MFCU"). On appeal, Petitioners argue that BMS’ decision to suspend Medicaid payments was arbitrary and capricious in that BMS did not consider whether good cause existed, under 42 C.F.R. § 455.23(e), to not suspend said payments, in whole or in part. Further, Petitioners allege that BMS acted arbitrarily and capriciously in failing to provide "adequate specific detail of the allegations in its pre-suspension notices" to Petitioners.

After our review of the record and consideration of the oral and written arguments of counsel, we find no merit in Petitioners’ claims. Here, Petitioners received adequate notice of the suspension of their Medicaid payments, as required under 42 C.F.R. § 455.23(b). We also find no error in BMS’ discretionary determination that good cause did not exist for the lifting of the suspension of Petitioners’ Medicaid payments, in whole or in part, except as to Individual Petitioner Sunshine Holstein. As expressly noted by BMS in its Supplemental Brief to this Court, "MFCU’s investigation [of Holistic and the Individual Petitioners] did not yield sufficient evidence to warrant pursuing civil remedies against Sunshine Holstein." BMS therein noted its plan to restore Ms. Holstein’s "ability to bill Medicaid." To the extent that such action has not already been taken by BMS, we hereby direct BMS to lift its suspension of Ms. Holstein’s Medicaid payments forthwith. Accordingly, we affirm BMS’ December 7, 2022, decision, and remand this matter for further proceedings only as it pertains to the lifting of the suspension of Medicaid payments of Sunshine Holstein.

I. FACTUAL AND PROCEDURAL BACKGROUND

We begin our factual recitation with a brief discussion of the Medicaid program in West Virginia and the general processes in that program for identifying, investigating, and, if necessary, prosecuting Medicaid fraud or abuse. Authorized under Title XIX of the Social Security Act, Medicaid is an entitlement program financed by the state and federal governments and administered indi- vidually by each state. See 42 U.S.C. § 1396-1. In Forloine v. Persily, No. CV 3:23-0450, 2024 WL 1316237, at *1 (S.D.W. Va. Mar. 27, 2024) (memorandum decision), the United States District Court for the Southern District of West Virginia described Medicaid as a "cooperative federal-state program." See Douglas v. Indep. Living Ctr. of S. Cal., Inc., 565 U.S. 606, 610, 132 S.Ct. 1204, 182 L.Ed.2d 101 (2012). Thus, in exchange for federal funds, states agree to follow "congressionally imposed conditions" in the Medicaid program. See Armstrong v. Exceptional Child Ctr., Inc., 575 U.S. 320, 323, 135 S.Ct. 1378, 191 L.Ed.2d 471 (2015).

In West Virginia, BMS is the agency responsible for administering the Medicaid program. See Your Guide to Medicaid 2023, effective April 1, 2023, at page 2.³ It is the mission statement of BMS to, in part, administer the Medicaid program, "while maintaining accountability for the use of resources, in a way that assures access to appropriate, medically necessary, and quality health care services for all members." Id.

Within BMS is the Office of Program Integrity ("OPI"). The OPI was formed in July of 1995, as a result of funding by the West Virginia Legislature, to monitor the utilization of Medicaid services in West Virginia to ensure compliance with federal Medicaid requirements. In that regal’d, OPI conducts post-payment reviews and is responsible for identifying potential fraud, waste, and abuse cases. OPI uses a combination of processes to identify potential fraud cases, including referrals, data analysis, and data mining (which uses algorithms that sort Medicaid claims data for further review and identifies program outliers).

OPI’s functions also include oversight of the Medicaid Managed Care Special Investigation Unit ("SIU"), which is tasked with managing policies and procedures for Medicaid Managed Care Organizations ("MCO") to detect and deter fraud, waste, and abuse in the Medicaid program. The SIU must notify OPI of all incidents of fraud, waste, and abuse it discovers, and must work with BMS and MFCU to administer effective prevention, detection, and resolution of fraud, waste, and abuse.

For the purpose of investigating and further controlling fraud and abuse in medical programs in West Virginia, the West Virginia Legislature created the MFCU (previously established within the West Virginia DHS, but now part of the West Virginia Office of the Attorney General). As to the necessity for MFCU, in West Virginia Code § 9-7-1 (2019), the Legislature expressly stated the following:

It is the finding of the Legislature that substantial sums of money have been lost to the state and federal government in the operation of the medical programs of the state due to the overpayment of moneys to medical providers. Such overpayments have been the result of both the abuse of and fraud in the reimbursement process.

West Virginia’s MFCU has the responsibility for the investigation and referral for prosecution of all violations of applicable state and federal laws pertaining to the provision of goods or services under the medical programs of the state, including the Medicaid program. MFCU receives referrals from BMS.

We now turn our attention to the specific facts relevant to our analysis of the instant case. In 2018, Holistic, a company that provided primary medical care, counseling services (including substance abuse counseling), and medically assisted treatment for substance use disorder, operated two facilities in Kanawha County, West Virginia.⁴ As part of its services, Holistic had an in-house laboratory where it processed urine drug tests and pregnancy tests. In July of 2018, Holistic entered into a contract with UniCare (a West Virginia Medicaid MCO) to accept payments for medical services provided to West Virginia Medicaid recipients.

In 2018-2019, as a result of data mining, Holistic was identified by the SIU as an outlier for Medicaid billing and was found to have "aberrant billing practices that appeared to be unjustifiable based upon normal business practices." These practices include "high" billing of several current procedural terminology ("CPT") codes.⁵ As part of SIU’s investigation,

[e]ight, (8) medical records [of Holistic patients] with eight hundred and sixty two, (862) dates of services were reviewed. The results of the review found a potential overutilization, and/or unbundling of CPT codes 80307, 81025, 82075, 99212, 99213, 99214, 99401, 99402, 99406 and 99407.⁶ The data show[ed] a consistent trend of billing patients [for] a drug screen test, ([CPT] 80307)[;] alcohol breath screen test, ([CPT] 82075)[;] E & M [established medical patient office visits] ([CPT] 99213, 99214)[;] preventive medicine counseling ([CPT] 99401, 99402)[;] and tobacco cessation counseling ([CPT] 99406, 99407). The codes [were] repeated weekly for these eight patients. In addition, there appears to be a trend of high daily volume for time-based codes and potential for impossible day billing. The data show[ed] a consistent pattern of billing timed preventative medicine counseling codes, with tobacco use cessation codes and obesity screening/weight loss counseling. These codes represent a unit of time and must be documented showing that time. In all of the [eight] records reviewed with the dates of service for these specific codes, there is no time documented[,] and the provider lists the dates on a common template sheet.

In September of 2019, an SIU investigator conducted a telephone interview with Holistic’s president, Shawn Blankenship.⁷ During this interview, Mr. Blankenship was asked questions regarding Holistic’s counseling staff, billing of CPT codes 81025 and 82075 for urine drug screens and pregnancy tests (including billing for pregnancy tests for several women who had no possibility of pregnancy), medical record keeping (specific to CPT codes 99401, 99402, 99406, and 99407), and Holistic’s relationship with Dr. Ghali Ibrahim-Bacha.⁸ The SIU investigator’s findings were contained in a Report of Investigation Case Summary that identified several instances of fraud and/or abuse committed by Petitioners, which were reported to BMS...