Halikierra Cmty. Serv. v. N. C. Dep't of Health & Hum. Serv.

901 S.E.2d 919

HALIKIERRA COMMUNITY SERVICES, LLC, Petitioner,

v.N. C. DEPARTMENT OF HEALTH AND HUMAN SERVICES, Division of Medical Assistance, Division of Health Benefits, Respondent.

No. COA23-897

Court of Appeals of North Carolina.

Filed June 18, 2024

Appeal by Petitioner from Order entered 25 April 2023 by Judge William W. Bland in Wayne County Superior Court. Heard in the Court of Appeals 1 May 2024. Wayne County, No. 21 CVS 1422

Ralph Bryant Law Firm, Greenville, by Ralph T. Bryant, Jr., for Petitioner-Appellant.

Attorney General Joshua H. Stein, by Assistant Attorney General Adrian W. Dellinger, for the State.

HAMPSON, Judge.

Factual and Procedural Background

Halikierra Community Services LLC (Petitioner) appeals from an Order denying Petitioner’s Petition for Judicial Review of a Final Decision issued by an Administrative Law Judge and affirming the Final Decision. The Record before us tends to reflect the following:

Respondent, the North Carolina Department of Health and Human Services (DHHS), is the executive agency responsible for overseeing the provision of certain services, including Medicaid, in North Carolina. The Division of Health Benefits is a subagency within DHHS responsible for the direct administration of North Carolina’s Medicaid program. N.C. Gen. Stat. § 108A-54 (2021). During the time periods relevant to this case, Petitioner was a licensed home care agency enrolled with the North Carolina Medicaid Program to provide personal care services to Medicaid beneficiaries.

The requirements for providers to render personal care sendees to Medicaid beneficiaries are laid out in Medicaid Clinical Coverage Policy 3L. To participate in the Medicaid program, providers are required to enter into a provider agreement with DHHS, 42 CFR § 431.107(b) (2021), and bill DHHS for reimbursement. N.C. Gen. Stat. § 108C-2(10) (2021); 10A N.C.A.C. 22F .0104 (2018). North Carolina’s Medicaid Provider Participation Agreement requires providers to abide by all state and federal laws and regulations; DHHS’s medical coverage policies; and guidelines, policies, provider manuals, implementation updates, and bulletins published by DHHS or its sub-agencies.

On 24 June 2018, Petitioner was placed on prepayment review pursuant to N.C. Gen. Stat. § 108C-7. Notice of this placement was sent to Petitioner by the Carolina Centers for Medical Excellence (CCME), a DHHS contractor. This notice described the prepayment review process and explained the requirements for a provider to be removed from prepayment review.

Medicaid providers submit claims for reimbursement of services through an electronic system called NCTracks. When a provider is on prepayment review, the claims submitted to NCTracks are sent to CCME and CCME requests any records required to support each claim. For each claim at issue here, CCME sent Petitioner an "Original Records Request" letter, which listed the specific documents Petitioner needed to submit for the claim to be processed and approved. All of the records requested were documents Petitioner was already required to maintain by law or under the Medicaid Clinical Coverage Policy. If the documents Petitioner submit ted were insufficient, CCME sent a second request letter listing the missing documents and providing time for Petitioner to submit those documents. If Petitioner failed to submit the required documents or if the submitted documents showed non-compliance with the relevant clinical policies, CCME processed and denied the claim. In total, CCME denied $982,789.50 of claims submitted by Petitioner while it was on prepayment review.

On 6 August 2018, DHHS sent Petitioner a letter alleging it had "credible allegations of fraud" against Petitioner and notified Petitioner of the immediate suspension of all payments to it as a result, retroactive to 1 August 2018. On 14 December 2018, Petitioner appealed this action by filing a contested case petition with the Office of Administrative Hearings (OAH). On 3 January 2019, DHHS notified Petitioner it had rescinded the August 2018 action.

On 2 October 2018, DHHS sent Petitioner a notice of termination of its participation in the Medicaid provider network due to alleged non-compliance with certain requirements. On 14 December 2018, Petitioner appealed this action by filing a contested case petition with the OAH. On 15 March 2019, DHHS issued another notice of a decision to terminate Petitioner from the North Carolina Medicaid program. This notice stated Petitioner’s termination was due to its failure to meet the minimum claims accuracy rate required during the prepayment review period. On 9 May 2019, Petitioner appealed by filing a contested case hearing with OAH. On 5 July 2019, OAH consolidated the cases regarding the October 2018 and March 2019 actions for hearing. On 17 September 2020, DHHS rescinded both the 2 October 2018 and 15 March 2019 administrative actions. Thus, as of 17 September 2020, all of DHHS’s administrative actions initiated against Petitioner had been rescinded.

This matter, including DHHS’s denial of payment for the $982,789.50 in claims submitted by Petitioner, came on for hearing before an Administrative Law Judge (ALJ) on 8 December 2020. On 14 July 2021, the ALJ entered a Final Decision, which concluded Petitioner had failed to meet its burden of proving it had provided all of the required documentation for its claims when it submitted the claims and that its claims should not have been denied. Based on its Findings and Conclusions, the ALJ’s Final Decision upheld DHHS’s decision to deny payment for Petitioner’s outstanding claims.

On 10 August 2021, Petitioner filed a Petition for Judicial Review, appealing the Final Decision. The trial court held a hearing on this Petition on 31 January 2023. On 25 April 2023, the trial court entered an Order denying Petitioner’s Petition for Judicial Review and affirming the ALJ’s Final Decision. On 23 May 2023, Petitioner timely filed Notice of Appeal to this Court.

Issues

The issue on appeal is whether the trial court erred by denying Petitioner’s Petition for Judicial Review and affirming the Final Decision entered by the ALJ.

Analysis

I. Mootness

[1] As an initial matter, during the underlying judicial review, Petitioner contended OAH lost jurisdiction to hear the underlying case when DHHS rescinded the Notices of Termination. Whether Petitioner is entitled to stay in the Medicaid program, however, is merely tangential to the matter at hand in this case—whether Petitioner is entitled to payment for its denied claims.

[2] Indeed, when Petitioner made this argument below, the trial court correctly noted the North Carolina Administrative Code gives providers 18 months to refile denied claims. After that time period elapses, claim denials become final. 10A N.C.A.C. 22B .0104(b) (2018). Here, at the time of the underlying judicial review, the 18-month refile period for the $982,789.50 of Petitioner’s denied claims had passed. Therefore, the claim denials were final. The finalization of those claim denials thus became a final agency action, which is appealable under the Administrative Procedure Act. See N.C. Gen. Stat. § 150B-43 (2021) ("Any party or person aggrieved by the final decision in a contested case, and who has exhausted all administrative remedies made available to the party or person aggrieved by statute or agency rule, is entitled to judicial review of the decision under this Article[.]").

II. Denial of Payment

"The North Carolina Administrative Procedure Act (APA), codified at Chapter 150B of the General Statutes, governs trial and appellate court review of administrative agency decisions." Amanini v. N.C. Dep’t of Hum. Res., 114 N.C. App. 668, 673, 443 S.E.2d 114, 117 (1994). The APA provides a party aggrieved by a final decision of an ALJ in a contested case a right to judicial review by the superior court. N.C. Gen. Stat. § 150B-43 (2021). "A party to a review proceeding in a superior court may appeal to the appellate division from the final judgment of the superior court[,]" N.C. Gen. Stat. § 150B-52 (2021). The APA sets forth the scope and standard of review for each court.

The APA limits the scope of the superior court’s judicial review as follows:

(b) The court reviewing a final decision may affirm the decision or remand the case for further proceedings. It may also reverse or modify the decision if the substantial rights of the petitioners may have been prejudiced because the findings, inferences, conclusions, or decisions are:

(1) In violation of constitutional provisions;

(2) In excess of the statutory authority or jurisdiction of the agency or administrative law judge;

(3) Made upon unlawful procedure;

(4) Affected by other error of law;

(5) Unsupported by substantial evidence admissible under G.S. 150B-29(a), 150B-30, or 150B-31 in view of the entire record as submitted; or

(6) Arbitrary, capricious, or an abuse of discretion.

N.C. Gen. Stat. § 150B-51(b) (2021). The APA also sets forth the standard of review to be applied by the superior court as follows:

In reviewing a final decision in a contested case, the court shall determine whether the petitioner is entitled to the relief sought in the petition based upon its review of the final decision and the official record. With regard to asserted errors pursuant to subdivisions (1) through (4) of subsection (b) of this section, the court shall conduct its review of the final decision using the de novo standard of review. With regard to asserted errors pursuant to subdivisions (5) and (6) of subsection (b) of this section, the court shall conduct its review of the final decision using the whole record standard of review.

N.C. Gen. Stat. § 150B-51(c) (2021).

Although the standards of review superior courts are to apply are clearly articulated in our statutes, nowhere in its briefing to this Court does Petitioner clearly articulate the standard of review it believes we should apply. Indeed, at the outset of its argument, Petit...