Nitta v. Dep't of Human Servs.

152 Hawai‘i 43

520 P.3d 241

Frederick NITTA, M.D., Respondent/Appellant-Appellant,

v. DEPARTMENT OF HUMAN SERVICES, State of Hawai‘i, Petitioner/Appellee-Appellee,andCathy Betts, Director, Respondent/Appellee-Appellee.

SCWC-17-0000432

Supreme Court of Hawai‘i.

November 4, 2022

Erin N. Lau, for petitioner

Eric A. Seitz, Honolulu, for respondent, Frederick Nitta, M.D.

RECKTENWALD, C.J., McKENNA, WILSON, AND EDDINS JJ., AND CIRCUIT JUDGE KAWAMURA, IN PLACE OF NAKAYAMA, J., RECUSED

OPINION OF THE COURT BY McKENNA, J.

I. Introduction

This case arises out of the State of Hawai‘i Department of Human Services’ ("DHS") attempt to recover payments made to Frederick Nitta, M.D. ("Dr. Nitta") from its Medicaid Primary Care Physician Program ("the Program"). The Program was established by a federal statute within the Affordable Care Act ("ACA"), specifically 42 U.S.C. § 1396a(a)(13)(C) ("the Statute"). The Statute enabled physicians "with a primary specialty designation of family medicine, general internal medicine, or pediatric medicine" to temporarily receive increased payments for primary care services provided to Medicaid patients in 2013 and 2014. DHS, through its Med-QUEST division, administers the Program in the State of Hawai‘i.

Dr. Nitta, who has been board-certified in obstetrics and gynecology ("OB/GYN") since the early 1990's, but who has been serving as a primary care physician ("PCP") to Medicare and Medicaid patients in East Hawai‘i for many years, became a participant in the Program when a staff member signed him up on-line at the suggestion of an AlohaCare representative. In 2015, however, DHS told Dr. Nitta he was ineligible because he did not meet specialty requirements for Program participants as set forth in a federal administrative rule, 42 C.F.R. § 447.400 ("the Rule"). DHS then demanded repayment of more than $200,000 in enhanced payments received by Dr. Nitta through the Program.

Dr. Nitta requested an administrative hearing and an administrative appeal at DHS. He later filed for a judicial appeal by the Circuit Court of the Third Circuit ("circuit court"). All deemed Dr. Nitta ineligible. Dr. Nitta then brought a secondary appeal to the Intermediate Court of Appeals ("ICA").

While the ICA appeal was pending, the Court of Appeals for the Sixth Circuit issued an opinion invalidating the Rule. Averett v. United States Dep't of Health & Hum. Servs., 943 F.3d 313, 319 (6th Cir. 2019). In a published opinion, the ICA adopted the Sixth Circuit's analysis in Averett. Nitta v. Dep't of Hum. Servs., 151 Hawai‘i 123, 128, 508 P.3d 1209, 1214 (App. 2022). Because DHS and the circuit court had relied on the invalidated Rule to order repayment by Dr. Nitta, the ICA ordered a remand to DHS for further proceedings as may be necessary. Nitta, 151 Hawai‘i at 129, 508 P.3d at 1215.

On certiorari, DHS does not contest the Sixth Circuit and ICA's invalidation of the Rule. Instead, DHS argues the ICA erred because (1) Dr. Nitta was still ineligible for the Program under the Statute; (2) the circuit court had also relied on the Statute in deeming Dr. Nitta ineligible; and (3) DHS is required to recoup the overpayment because there was never money appropriated to pay Dr. Nitta.

With respect to the first issue, the ICA did not address whether Dr. Nitta would in any event be precluded from enhanced payments based on the Statute. In Averett, the Sixth Circuit held the Statute's phrase, "physician with a primary specialty designation," to mean "a physician who has himself designated, as his primary specialty, one of the specialties recited in [the Statute]." Averett, 943 F.3d at 319. The ICA adopted this holding, Nitta, 151 Hawai‘i at 128, 508 P.3d at 1214, but did not address whether Dr. Nitta qualified.

We agree with DHS that Dr. Nitta's eligibility for the Program under the Statute can and should be addressed. We also agree with the Sixth Circuit and the ICA that the Rule is invalid as it contravenes the Statute. Contrary to DHS's position, however, we hold Dr. Nitta was entitled to enhanced payments under the Statute based on the reasoning below.

This holding resolves DHS's second issue on certiorari, that the circuit court had also relied on the Statute to hold Dr. Nitta ineligible. If the circuit court had so held, it would have been wrong. But, in any event, the circuit court (and DHS) relied solely on the invalidated Rule in deeming Dr. Nitta ineligible and did not rely on the Statute.

Finally, we also reject DHS's third issue on certiorari, that DHS is required to recoup the overpayment because there was never money appropriated to pay Dr. Nitta. This is a new argument never raised below and is therefore waived.

Hence, we vacate the ICA's March 23, 2022 judgment on appeal to the extent it remanded the case "to the DHS Administrative Appeals Office for further proceedings as may be necessary." We otherwise affirm the ICA's judgment on appeal.

II. Background

A. Factual Background

1. The Program

As explained by the ICA, Medicaid provides medical assistance to qualifying individuals and families, and is jointly funded and administered by the federal and state governments. Nitta, 151 Hawai‘i at 124, 508 P.3d at 1210. In 2010, Congress enacted the ACA and also temporarily increased payments in 2013 and 2014 to certain physicians who provided primary-care services to Medicaid patients. Id. Specifically, the Statute, 42 U.S.C. § 1396a(a)(13)(C), allowed for such increased payments provided "by a physician with a primary specialty designation of family medicine, general internal medicine, or pediatric medicine." The Statute provides:

(a) A State plan for medical assistance must—

....

(13) provide—

....

(C) payment for primary care services (as defined in subsection (jj)) furnished in 2013 and 2014 by a physician with a primary specialty designation of family medicine, general internal medicine, or pediatric medicine at a rate not less than 100 percent of the payment rate that applies to such services and physician under part B of subchapter XVIII (or, if greater, the payment rate that would be applicable under such part if the conversion factor under section 1395w-4(d) of this title for the year involved were the conversion factor under such section for 2009)[.]¹

As further explained by the ICA, the Centers for Medicare and Medicaid Services ("CMS") administers Medicaid, and promulgated the Rule, 42 C.F.R. § 447.400, further delineating physician eligibility for the Program. Nitta, 151 Hawai‘i at 125, 508 P.3d at 1211. The Rule set out a board certification or a sixty-percent billing threshold requirement, requiring that:

(a) [s]tates pay for services furnished by a physician as defined in § 440.50 of this chapter, or under the personal supervision of a physician who self-attests to a specialty designation of family medicine, general internal medicine or pediatric medicine or a subspecialty recognized by the American Board of Medical Specialties (ABMS), the American Board of Physician Specialties (ABPS) or the American Osteopathic Association (AOA). Such physician then attests that [they]:

(1) [Are] Board Certified with such a specialty or subspecialty and/or

(2) Has furnished evaluation and management services and vaccine administration services under codes described in paragraph (b) of this section that equal at least 60 percent of the Medicaid codes he or she has billed during the most recently completed CY or, for newly eligible physicians, the prior month.

42 C.F.R. § 447.400(a). Nitta, 151 Hawai‘i at 125, 508 P. 3d at 1211.

Thus, the Statute allowed for enhanced payments to "a physician with a primary specialty designation of family medicine, general internal medicine, or pediatric medicine." The Rule, however, further required physicians to self-attest to a specialty designation of family medicine, general internal medicine or pediatric medicine and then also attest that they are board-certified in one of those designations (or a recognized subspecialty² ) or show that at least sixty percent of their billings were for the provision of PCP services.

In Hawai‘i, pursuant to the Rule, DHS required physicians seeking enhanced payments to complete a form on its website self-attesting to those requirements ("self-attestation form"). The form tracked Rule requirements and also said it could not be completed by anyone on the provider's behalf. Nitta, 151 Hawai‘i at 125, 508 P.3d at 1211.

2. Dr. Nitta's involvement with the Program

Dr. Nitta was board-certified as an OB/GYN in the early 1990's and has practiced medicine in Hilo, Hawai‘i for many years. When Dr. Nitta began practicing in 1993, he submitted an application to DHS to participate as a Medicaid provider, listing OB/GYN as his specialty. In 2006, Dr. Nitta received his National Provider Identifier, which also indicated a specialty of OB/GYN.³

More than ninety percent of Dr. Nitta's patients, however, are eligible for Medicaid or Medicare and do not have other doctors. Thus, although he is a board-certified OB/GYN physician, Dr. Nitta provides PCP services for his patients, is recognized in the community as a PCP, and provides a broad range of services to his patients.

Hence, in 2013, at the suggestion of an AlohaCare representative, a staff member from Dr. Nitta's office enrolled him in the Program via the DHS website. The parties do not dispute that Dr. Nitta was attested to have a specialty designation of family medicine, general internal medicine, or pediatric medicine.

It appears Dr. Nitta first learned he was participating in the Program when he received a letter from DHS dated July 7, 2015 telling him he was ineligible because he did not satisfy Rule requirements. Then, in a letter dated November 6, 2015, DHS demanded repayment of $205,940.13 in payments made to him via the Program.

B. Procedural background

1. At DHS

a. DHS administrative hearing decision

On December 4, 2015, Dr. Nitta submitted an administrative hearing request with DHS contesting the repayment demand. On March 18, 2016, ...