Colwell v. Managed Care of N. Am., Inc.

308 Neb. 597

955 N.W.2d 744

Robert F. COLWELL, Jr., D.D.S., and Robert F. Colwell Jr., DDS, P.C., appellants,

v.MANAGED CARE OF NORTH AMERICA, INC., et al., appellees.

Nos. S-20-336

S-20-338.

Supreme Court of Nebraska.

Filed March 12, 2021

John A. Svoboda, Omaha, and Eric J. Sutton, of Gross & Welch, P.C., L.L.O., for appellants.

Rodney C. Dahlquist, Jr., of Dornan, Troia, Howard, Breitkreutz & Conway, P.C., L.L.O., Omaha, for appellee Managed Care of North America, Inc.

Douglas J. Peterson, Attorney General, and James A. Campbell, Solicitor General, for appellees Nebraska Department of Health and Human Services et al.

Heavican, C.J., Cassel, Stacy, Funke, Papik, and Freudenberg, JJ.

Stacy, J.

In these consolidated appeals, a Medicaid dental provider assigns error to the district court's dismissal of separate actions challenging the denial of an administrative appeal hearing before the Nebraska Department of Health and Human Services (DHHS). Because we agree with the district court that the hearing request was not timely submitted to DHHS under the governing regulation, we affirm the dismissals.

BACKGROUND

Robert F. Colwell Jr., DDS, P.C., is a Nebraska corporation through which Robert F. Colwell, Jr., D.D.S. (collectively Colwell), provides dental services. Managed Care of North America (MCNA) is a Florida company that provides managed care services to the State of Nebraska's Medicaid program.¹ In 2016, Colwell entered into a "Master Dental Provider Agreement" with MCNA, whereby Colwell agreed to provide dental services to children and adults enrolled in Nebraska Medicaid, and MCNA agreed to compensate Colwell for providing the services. The agreement was for an initial term of 1 year and had an automatic renewal provision for additional 1-year terms. Article X of the agreement stated that either party could terminate the agreement on 90 days’ written notice.

On April 5, 2019, Colwell filed a lawsuit against MCNA in the district court for Douglas County. That action alleged, among other things, that MCNA had failed to pay Colwell for covered services provided to Nebraska Medicaid patients. Colwell's Douglas County suit is not part of the instant appeal, but we reference it because it forms the basis for one of the assignments of error.

On April 24, 2019, MCNA sent a certified letter to Colwell stating that, pursuant to article X of the provider agreement, MCNA was "providing notice of non-renewal" and terminating the Medicaid provider agreement with Colwell. The letter advised Colwell, "Your participation with MCNA will end at midnight on August 22, 2019, as a participating provider for MCNA's Nebraska plan." The letter also advised that until the "Termination Effective Date," which the letter described as August 23, Colwell was to continue providing dental services to Medicaid enrollees under the terms of the agreement.

After receiving the termination letter, Colwell filed a motion for preliminary injunction in the Douglas County action, seeking to enjoin MCNA from terminating the provider agreement, and also amended the complaint to challenge MCNA's termination decision. Our record indicates the preliminary injunction was denied in an order entered August 19.

On August 21, 2019, Colwell filed a "Request for Fair Hearing" with DHHS, seeking to appeal "MCNA's letter of 4/24/19 terminating [the] Master Dental Provider Agreement." On September 6, DHHS acknowledged the hearing request but informed Colwell via letter that the "appeal involve[d] an action by MCNA that [was] not appealable" to DHHS. Then, on September 17, DHHS issued an order formally dismissing Colwell's hearing request.

On September 20, 2019, Colwell filed an action under the Administrative Procedure Act² (APA appeal) in the district court for Lancaster County, challenging the September 17 DHHS order of dismissal. Then, on October 7, Colwell filed a petition in error³ in the district court for Lancaster County, challenging the same DHHS dismissal order. Both the APA appeal and the petition in error named as defendants MCNA, DHHS, and various State officials, and both alleged that DHHS had erroneously dismissed Colwell's request for a hearing on MCNA's decision to terminate the provider agreement.

The district court for Lancaster County consolidated the two matters, after which MCNA moved to dismiss both, asserting that Colwell's request for a hearing before DHHS had not been timely filed. Alternatively, MCNA argued that dismissal was appropriate under the doctrine of jurisdictional priority because Colwell's previously filed lawsuit against MCNA was still pending in Douglas County and that lawsuit also challenged the termination.

At the hearing on MCNA's motions to dismiss, counsel for all parties appeared, and the court received a certified copy of the official record and proceedings before DHHS. Additionally, MCNA offered certified copies of filings in Colwell's Douglas County action against MCNA, which the court received over Colwell's objection. On the record, counsel for DHHS and the other State appellees informed the court that they agreed with the arguments raised in MCNA's motions to dismiss and that they stood by their position that Colwell had no right to a DHHS hearing on MCNA's decision to terminate the provider agreement.

In an order entered April 20, 2020, the district court dismissed both the APA appeal and the error proceeding for lack of subject matter jurisdiction. The court found that DHHS had no authority to hold a hearing because Colwell's request was untimely under 471 Neb. Admin. Code, ch. 2, § 003.01A (2015), which allows Medicaid providers to appeal adverse actions, but requires the written hearing request to be filed within 90 days of "the date of the action." The district court found that the 90-day appeal period began running on April 24, 2019 (the date of MCNA's letter notifying Colwell of the termination decision), and that Colwell's written hearing request was submitted on August 21, well outside the appeal period. The district court rejected Colwell's contention that the " ‘date of the action’ " was August 23 (the termination effective date), reasoning that such a construction was contrary to the plain language of the regulation. The district court did not address MCNA's jurisdictional priority argument, or any of the other arguments presented, generally reasoning that its resolution of the timeliness issue was both jurisdictional and dispositive.

A few days after the orders of dismissal were entered, Colwell filed a notice of appeal in both cases. Colwell also filed, and the district court overruled, motions to set supersedeas bonds in both cases. The appeals were consolidated, and we granted the appellees’ petition to bypass.

ASSIGNMENTS OF ERROR

Colwell assigns, restated, that the district court erred by (1) receiving new evidence outside the administrative record; (2) dismissing the APA appeal and the error proceeding for lack of jurisdiction; (3) finding Colwell failed to timely file the request for an administrative hearing; (4) failing to find that Colwell's hearing request to DHHS presented an appealable issue; (5) dismissing the APA appeal and the error proceeding without considering the merits of either, thus violating Colwell's due process rights; and (6) overruling Colwell's motion to set a supersedeas bond.

STANDARD OF REVIEW

A jurisdictional question which does not involve a factual dispute is determined by an appellate court as a matter of law.⁴

The meaning and interpretation of statutes and regulations present questions of law which an appellate court decides independently of the decision made by the court below.⁵

ANALYSIS

Generally, when a request for an appeal before an administrative agency is not timely pursuant to rules and regulations properly adopted by that agency, the agency does not have subject matter jurisdiction to hear the appeal.⁶ And when an administrative agency lacks subject matter jurisdiction over a claim, courts also lack subject matter jurisdiction on appeal.⁷ Because the threshold jurisdictional issue in these consolidated appeals turns on whether Colwell's written request for a hearing before DHHS was timely, we begin our analysis with the governing administrative regulations.

All parties agree that if Colwell had a right to an administrative appeal hearing before DHHS on these facts, it was governed by 471 Neb. Admin. Code, ch. 2, § 003 (2015). That regulation applies to Medicaid providers⁸ and states in relevant part:

2-003 Appeal Rights: Any adverse action under this Title may be appealed to the Medicaid Director by the person or entity against whom the action was taken.

2-003.01 Hearing Request Procedure: The person or entity appealing an adverse action must submit a written hearing request to the Department.

2-003.01A Deadlines:

1. Administrative sanctions must be appealed within 30 days of the date of the action.

2. Refund requests must be appealed within 30 days of the date of the action indicated either on the Refund Report or the notice of action letter.

3. All other actions must be appealed within 90 days of the date of the action.

2-003.01B Appealing before effective date: A person or entity may appeal a termination or exclusion before the effective date of the proposed termination or exclusion. A termination or exclusion appealed before its effective date will not take effect until the appeal has been decided, unless the termination or exclusion is being imposed pursuant to 42 C.F.R. 455.416(c) or has an immediate effective date because of a threat to client health and safety.

2-003.02 Hearings: Appeal and hearing procedures are governed by Title 465, Chapter 6.⁹

We pause to note that title 471 was amended in 2020, after the relevant events in these appeals. As a result of those amendments, the provisions previously found in § 003 are now in 471 Neb. Admin. Code, ch. 2, § 007 (2020). This opinion refers to the regulations in effect at the time Colwell filed the hearing request.

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