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United Cerebral Palsy of Georgia, Inc. v. Georgia Department of Behavioral Health and Developmental Disabilities

Court of Appeals of Georgia, First Division

January 7, 2020

UNITED CEREBRAL PALSY OF GEORGIA, INC. et al.
v.
GEORGIA DEPARTMENT OF BEHAVIORAL HEALTH AND DEVELOPMENTAL DISABILITIES et al.

          BARNES, P. J., MERCIER and BROWN, JJ.

          BARNES, PRESIDING JUDGE.

         Following the grant of their application for discretionary review, United Cerebral Palsy of Georgia, Inc., Coastal Center for Developmental Services, Inc. DBA Employability, Hope Haven of Northeast Georgia, Inc., and Creative Community Services, Inc. appeal the superior court's order affirming the final administrative decision reached by the Commissioner of the Georgia Department of Community Health ("DCH") in this dispute over Medicaid reimbursements to service providers.[1] In the same order, the superior court dismissed the plaintiffs' related putative class action brought against the DCH, the Georgia Department of Behavioral Health and Developmental Disabilities ("DBHDD"), and the commissioners of those two agencies in their official capacities on the ground that the plaintiffs failed to exhaust their administrative remedies, and the plaintiffs also challenge that ruling on appeal. For the reasons discussed more fully below, we vacate the superior court's order in so far as it affirmed the DCH Commissioner's final agency decision, and we remand with direction that the superior court vacate the final agency decision and remand the case to the Commissioner for further action consistent with this opinion. We affirm the superior court's order in so far as it dismissed the plaintiffs' putative class action.

         Overview of the Medicaid Program. Medicaid is a joint federal-state program in which the federal government subsidizes the states to provide medical assistance to certain individuals in need. See UCP II, 298 Ga. at 780 (1) (a); Cook v. Glover, 295 Ga. 495, 496 (761 S.E.2d 267) (2014). State participation in the Medicaid program is voluntary, but once a state chooses to join, it must comply with federal statutory and regulatory requirements. See Wilder v. Va. Hosp. Assn., 496 U.S. 498, 502 (I) (A) (110 S.Ct. 2510, 110 L.Ed.2d 455) (1990); UCP II, 298 Ga. at 780 (1) (a). Georgia has elected to participate in the Medicaid program, and the DCH is the state agency responsible for administering the state's Medicaid plan. See OCGA § 49-4-142 (a); Cook, 295 Ga. at 496.

         With federal approval, states can obtain waivers that exempt them from certain federal mandates that otherwise would attach to the provision of Medicaid funds. See 42 USC § 1396n (b); UCP II, 298 Ga. at 780 (1) (a). At issue in this case are two Medicaid waiver programs instituted in Georgia that were approved by the federal government in 2007, the New Options Waiver Program ("NOW") and the Comprehensive Supports Waiver Program ("COMP"). See UCP II, 298 Ga. at 780 (1) (a). The two waiver programs permit Medicaid funds to be used for providing services to Medicaid recipients with intellectual and developmental disabilities in home or community-based settings rather than in institutions. See UCP II, 298 Ga. at 780 (1) (a). The requirements of the two waiver programs are incorporated into the contracts, known as statements of participation, entered between the DBHDD[2] and the providers of Medicaid services to individuals with intellectual and developmental disabilities. Id. Under the provisions of the waiver programs, the statements of participation, and the DCH's Medicaid policy manuals, Medicaid providers are entitled to certain reimbursement rates for their services.

         Administrative Review and Administrative Hearings. When there is a dispute over reimbursements to Medicaid service providers, "[t]he General Assembly has recognized the need for a robust formal administrative review process to address [the providers'] complaints." UCP II, 298 Ga. 781 (1) (b). In this regard, OCGA § 49-4-153 (b) (2) (A) and (B)[3] provide that any Medicaid provider aggrieved by "a decision of the [DCH] with respect to a denial or nonpayment of or the determination of the amount of reimbursement paid or payable to such provider on a certain item of medical or remedial care of service rendered by such provider" may obtain a hearing before an administrative law judge ("ALJ") from the Office of State Administrative Hearings ("OSAH") by filing a proper written request with the DCH. See UCP II, 298 Ga. at 781-782 (1) (b). The ALJ's decision may be appealed by the losing party to the DCH Commissioner (or his or her designated representative) for a final agency decision, see OCGA § 49-4-153 (b) (2) (D), [4] and a provider aggrieved by the final agency decision then may petition for review in the appropriate superior court. See OCGA §§ 49-4-153 (c);[5] UCP II, 298 Ga. at 783-785 (1) (b).

         The DCH is authorized to establish regulations regarding the manner in which the administrative review process is conducted under OCGA § 49-4-153 (b), see OCGA § 49-4-153 (a), and the DCH has established such regulations. See Ga. Comp. R. and Regs. r. 350-4-.01 to 350-4-.30 (the "Rules" or "Rule").[6] The DCH also has issued a Medicaid manual that sets out the deadlines and procedures for administrative proceedings. See DCH, Division of Medicaid, Part I, Policies and Procedures for Medicaid/PeachCare for Kids (the "Medicaid Procedures Manual").

         The DCH Rules and Medicaid Procedures Manual establish more than one path that a service provider can pursue to obtain an administrative remedy. For example, Rule 350-4-.04[7] states that when the DCH proposes to take an "adverse action" against a provider, the DCH first "shall offer" the provider an opportunity for administrative review "prior to implementation of the proposed action." An "adverse action" includes circumstances where the DCH "denies or reduces the amount of reimbursement claimed by a provider" or "sets or changes a provider's reimbursement rate." Medicaid Procedures Manual, p. 9 (¶4). If the provider is aggrieved by the result of that administrative review, the provider then can seek an administrative hearing before an ALJ. Rule 350-4-.04; 350-4-.05 (1) (b) (2). The deadlines and procedures for obtaining administrative review of a proposed adverse action followed by an administrative hearing before an ALJ are set out in Sections 505-506 of the Medicaid Procedures Manual.

         Separate from the administrative review process under Rule 350-4-.04 for proposed adverse actions by the DCH, a provider can request an administrative hearing before an ALJ to challenge the "denial of, or the determination of the amount" of payment to the provider "on a certain item of medical or remedial care or service rendered by such provider." Rule 350-4-.01 (1) (a). To obtain a hearing before an ALJ where the provider wishes to contest the denial of a specific payment, the provider first must request an "initial review" of the claim through the DCH's web portal, the Georgia Medicaid Management Information System (the "GAMMIS Web Portal"), within 30 days of the denial of the requested claim payment. See Medicaid Procedures Manual §§ 207, 502. Each request for an initial review of a denied payment must be submitted on a separate form through the GAMMIS Web Portal. See id. § 502. If the DCH's initial review finds against the provider on the payment claim, the provider may request an administrative review by the DCH, and if unsatisfied with the administrative review determination, can then pursue an administrative hearing before an ALJ. See id. §§ 502, 505-506.

         The Prior Lawsuit. The plaintiffs in this case are nonprofit corporations that provide services to Georgia Medicaid patients with intellectual and developmental disabilities under the COMP and/or NOW waiver programs. In August 2013, the plaintiffs filed in the Superior Court of Fulton County a putative class action against the DCH, the DBHDD, and those two agencies' commissioners in their official capacities.[8] Among other things, the complaint alleged that since 2008, the defendants have used "various unapproved and secretive methods," including the use of an undisclosed algorithm, to reduce the reimbursements rates paid to providers and to limit the amount of services that Medicaid recipients can receive. According to the complaint, the defendants made these reductions in reimbursements and services without public notice and comment as required by federal and state law and without giving providers advanced notice of the changes as required by the statements of participation, federal and state law, and constitutional due process. The complaint sought declaratory and injunctive relief, damages, and attorney fees and expenses for alleged breach of contract, violations of the plaintiffs' rights to administrative remedies, and violations of their constitutional rights. The plaintiffs did not pursue the DCH's administrative review process before filing their lawsuit in superior court. See UCP II, 298 Ga. at 786 (1) (c).

         The superior court dismissed the plaintiffs' complaint for failure to exhaust administrative remedies before the DCH. This Court reversed the superior court, concluding that the defendants' failure to give the plaintiffs written notice of their proposed adverse action of denying or reducing service providers' reimbursements as required by Medicaid Procedures Manual § 505 and the applicable Rules excused the plaintiffs from their failure to exhaust administrative remedies. See UCP I, 331 Ga.App. at 621-622 (3). However, our Supreme Court granted certiorari and reversed the decision of this Court, determining that the plaintiffs first had to pursue their claim of defective notice and their substantive claims through the DCH's administrative review process established by OCGA § 49-4-153 and the Rules. See UCP II, 298 Ga. at 790-791 (2) (c). In so ruling, the Supreme Court explained:

The plaintiffs devote much of their briefs to arguing the merits of whether they got proper notice of the allegedly invalid agency actions and decisions, asserting that until they did, they could not start the administrative review process established by OCGA § 49-4-153. But the plaintiffs clearly had actual notice of the actions and decisions they dispute by the time they filed their complaint disputing these matters in August 2013. The question is whether at that point they could file their complaint in court and bypass the administrative review process. Allowing them to do so would require courts to decide both the notice issues and the underlying substantive issues in the first instance. Administrative law commits both sets of issues to the administrative process in the first instance.

Id. at 790 (2) (c). The Supreme Court pointed to "three basic possible outcomes (which might vary with regard to particular claims and claimants)" once the issue of defective notice and the plaintiffs' substantive claims were properly presented to the DCH with a demand for hearing before an ALJ:

(1) a ruling that no notice of adverse action was required, because there was no change in the rates of reimbursement or amount of services allowed; (2) a ruling that notice was properly given earlier and a consequent dismissal of the underlying substantive claims as untimely; or (3) a ruling that notice was not properly given and a corresponding ruling about whether the untimeliness of the substantive claims can and should be excused (or proper notice ordered to be given now) as a matter of contractual, regulatory, statutory, or constitutional law. If the ALJ reached the plaintiffs' substantive claims and found them to be meritorious, the ALJ could craft appropriate remedies based on the judge's expertise with the Medicaid statutes and rules.

Id. at 790 (2) (c). The Supreme Court further noted that if the plaintiffs were unsatisfied with the ALJ's ruling, they could seek review by the DCH Commissioner, and then, if still unsatisfied, they could pursue judicial review. Id. at 790-791 (2) (c).

         The Administrative Proceedings. In January 2017, the Superior Court entered a judgment on remittitur dismissing the plaintiffs' lawsuit. A few days later, each of the plaintiffs served the DCH with a written request for an administrative review and hearing that included the allegations of defective notice and the substantive legal claims raised in the prior lawsuit against the defendants. Among other things, the plaintiffs asserted that because the defendants failed to provide the required written notification of their proposed adverse action of denying or reducing the amount of service providers' reimbursements, "any deadlines for Administrative Review or Administrative Hearing have not begun and/or are tolled." The plaintiffs also requested that the defendants be ordered to correct the defective notice by now providing proper written notification of their adverse action to the plaintiffs, and they attached a proposed order to that effect.

         In addition to delivering their written request for administrative review and hearing by hand delivery and certified mail, each plaintiff also inputted an individual disputed payment claim through the GAMMIS Web Portal. Those four payment claims had originally been paid by DCH on October 25, 2010, February 21, 2011, February 28, 2011, and December 17, 2012, respectively. Each plaintiff wrote in the "Comments" field on the GAMMIS Web Portal that the individual claim that it had electronically inputted was intended to be representative and that the full breadth of the plaintiffs' claims against the defendants were set out in their written request for an administrative review and hearing that had been delivered to the DCH.

         The DCH denied the plaintiffs' requests for administrative review, after which each plaintiff submitted a petition for administrative hearing before an ALJ. The DCH subsequently referred the matter to the OSAH, and the ALJ assigned to the matter consolidated the plaintiffs' petitions. See Rule 350-4.22 (1).[9] The plaintiffs then filed a consolidated petition for administrative hearing that reiterated their claims of defective notice and their substantive claims against the defendants.

         The defendants filed an answer in which they admitted that they used an algorithm to determine individual budget allocations to Medicaid service providers but otherwise denied the plaintiffs' claims. The defendants thereafter filed a motion for summary determination, asserting that the issues for determination could be resolved as a matter of law by the ALJ without need of an administrative hearing. See Rule 350-4-.26.[10] In their statement of "Undisputed Material Facts Related to the Four Claims," the defendants asserted that the four individual disputed claims that the plaintiffs inputted on the GAMMIS Web Portal had been "paid in full" as originally submitted by the plaintiffs for payment in 2010-2012 based on the standard rates set forth in the relevant Medicaid manual for COMP payments. In the legal argument section of their motion, the defendants then asserted that summary determination was appropriate on two grounds. First, the defendants asserted that the only claims properly before the ALJ were the four individual disputed payment claims because those were the only claims inputted by the plaintiffs on the GAMMIS Web Portal in accordance with Medical Procedures Manual § 502. Second, the defendants asserted that any challenge to the four individual payments was time-barred because the Georgia Supreme Court's decision in UCP II, 298 Ga. at 790 (2) (c), reflected as a matter of law ...


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