Opinion
NO. 2015-CA-000243-MR
03-24-2017
CAROLYN HELMS APPELLANT v. COMMONWEALTH OF KENTUCKY, CABINET FOR HEALTH AND FAMILY SERVICES, AND WELLCARE OF KENTUCKY, INC. APPELLEE
BRIEF FOR APPELLANT: Susan C. Lawson Pineville, Kentucky REPLY BRIEF FOR APPELLANT: Whitney True Lawson Frankfort, Kentucky BRIEFS FOR APPELLEE: Joyce A. Merritt Samantha T. Nance James Womack Lexington, Kentucky Catherine York Frankfort, Kentucky
NOT TO BE PUBLISHED APPEAL FROM BELL CIRCUIT COURT
HONORABLE ROBERT COSTANZO, JUDGE
ACTION NO. 14-CI-00052 OPINION
AFFIRMING
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BEFORE: ACREE, J. LAMBERT AND THOMPSON, JUDGES. ACREE, JUDGE: Carolyn Helms appeals the order of the Bell Circuit Court affirming a final order by the Secretary of the Cabinet for Health and Family Services denying Helms Medicaid coverage through WellCare of Kentucky, Inc., a managed care organization, for two days of inpatient psychiatric services at Harlan Appalachian Regional Hospital. Helms argues that the circuit court and the Secretary erred in finding the denial notice of her coverage compliant with regulations. She also argues the denial of two days of her inpatient treatment was not supported by substantial evidence and, therefore, violated her due process protections. After careful review of the record, we affirm.
I. Factual and Procedural Background
Carolyn Helms presented to the emergency room of Harlan Appalachian Regional Hospital (ARH) on August 7, 2012. Upon examination, Helms reported hallucinations. Helms' family members reported she was heavily abusing Xanax and alcohol. She also suffered from other medical conditions, including coronary artery disease and recent knee surgery. Helms was admitted to the inpatient psychiatric unit of ARH for "psychotic disorder" and placed on a 72-hour hold.
ARH sought Medicaid approval for inpatient psychiatric services for Helms from WellCare, a managed care organization (MCO) under contract with the State to provide its product and administer managed care services to Kentucky Medicaid recipients. Helms was an enrollee of WellCare in August 2012. Physicians review provider's requests to ensure enrollees meet the medical criteria for treatment. Helms' admission to ARH for treatment was initially approved. However, on August 14, 2012, WellCare determined that Helms did not meet the criteria for "continued care" as an admitted patient under the Medicaid program. That same day, WellCare issued a letter of denial for subsequent inpatient care. The letter further informed Helms of her right to appeal the denial with the Appeals Department of WellCare within 30 days of the date of the letter. The letter also advised Helms of her right to request a fair hearing with the Department of Medicaid Services. The letter stated she did not have to exhaust WellCare's internal appeals process prior to requesting a hearing by the state agency. Helms was discharged from ARH on August 17, 2012.
ARH requested an appeal with WellCare on Helms' behalf. The matter was reconsidered by a different reviewing physician in accordance with InterQual criteria which are the standards used in the Medicaid program to determine whether certain treatments are clinically appropriate and eligible for coverage. On October 3, 2012, WellCare issued a letter upholding the denial and stated the reasons for its decision. The letter also included information advising Helms again of her right to request a hearing before the state agency.
Phyllis Wilson, an employee of ARH, obtained the written authorization from Helms to file an appeal of the denial on Helms' behalf and request a state hearing.
Prior to the hearing, Helms filed a motion for summary judgment on the grounds that the letters of denial issued by WellCare provided deficient notice violative of due process. WellCare filed a response as well as a motion to dismiss arguing that Wilson, as an ARH employee, lacked standing to bring the appeal. Helms filed a response.
A hearing was held before the Cabinet for Health and Family Services on November 30, 2012. Shelia Hensley, a registered nurse and nurse manager in the psychiatric unit of ARH involved in Helms' care, testified that Helms required inpatient care until she was discharged on August 17, 2012. Wilson, who filed the appeal as Helms' representative testified that Helms met the required InterQual criteria adopted by Kentucky's Medicaid Program. Dr. Kensicki, a board certified psychiatrist and Director of Behavioral Health for WellCare, provided expert testimony that Helms did not meet the InterQual criteria for "continued stay" inpatient psychiatric care. Dr. Kensicki opined that Helms could have received effective treatment from her local comprehensive care center after August 13, 2012.
The hearing officer denied Helms' motion for summary judgment finding that both the August 14, 2012 and October 3, 2012 denial letters sent by WellCare were compliant with KRS 13B.050(3)(d) and (e), the notice requirements for an administrative hearing, and provided Helms' sufficient notice as to where and how to file her appeals. The hearing officer also denied WellCare's motion to dismiss concluding that Wilson, as an employee of ARH, obtained proper written authorization from Helms to file the appeal as her representative and was therefore compliant with 907 KAR 1:563, Section 12, Special Procedures Relating to A Managed Care Participant. Finally, the hearing officer concluded that Helms did not meet her burden of establishing by a preponderance of the evidence that the denial of inpatient psychiatric services to her by WellCare on August 14, 2012 was contrary to Kentucky Medicaid requirements. Therefore, WellCare's denial of the services was sustained.
Kentucky Revised Statutes.
Kentucky Administrative Regulations.
Helms filed exceptions to the hearing officer's recommended order on November 4, 2013, but the Secretary of the Cabinet issued a final order adopting the recommended order in its entirety on December 26, 2013. Helms then filed a complaint and petition for review pursuant to KRS 13B.140 with the Bell Circuit Court on February 10, 2014.
The circuit court determined that Helms was not denied due process in the administrative hearing procedures provided, she was not deprived of any due process right in WellCare's denial of reimbursement for services, and the notices Helms received were compliant with regulations imposed upon MCOs. The circuit court further found the conclusion of the hearing officer that Helms' inpatient stay beyond August 13, 2012, was neither medically necessary nor clinically appropriate to be supported by the totality of the evidence, including medical records as well as the testimony of Dr. Kensicki. The circuit court affirmed the Secretary's final order. This appeal followed.
II. Standard of Review
KRS 13B.150(2) governs this Court's review of a circuit court's prior review of an administrative agency's final order. Our review of an administrative action is generally focused on the question of arbitrariness. Kaelin v. City of Louisville, 643 S.W.2d 590-91 (Ky. 1982).
In determining whether an agency's action was arbitrary, the reviewing court should look at three primary factors. The court should first determine whether the agency acted within the constraints of its statutory powers or whether it exceeded them . . . . Second, the court should examine the agency's procedures to see if a party to be affected by an administrative order was afforded his procedural due process. The individual must have been given an opportunity to be heard. Finally, the reviewing court must determine whether the agency's action is supported by substantial evidence . . . . If any of these three tests are failed, the reviewing court may find that the agency's action was arbitrary.Bowling v. Natural Resources and Environmental Protection Cabinet, 891 S.W.2d 406, 409 (Ky. App. 1994) (internal quotation marks and citations omitted).
Our review, however, is altered when the agency denies relief to the party saddled with the burden of proof. Bourbon County Bd. of Adjustment v. Currans, 873 S.W.2d 836, 838 (Ky. App. 1994). In such a case, "the failure to grant administrative relief to one carrying the burden is arbitrary [only] if the record compels a contrary decision in light of substantial evidence therein." Id.
Not infrequently, contestants appear at the judicial level arguing that the administrative decision is not supported by substantial evidence when the board has offered no
relief in the first instance. In other words, the board has ruled that the one having the burden of proof—usually the applicant—has failed. In such cases, attention should be directed to the administrative record in search of compelling evidence demonstrating that the denial of the relief sought was arbitrary. The argument should be that the record compels relief. The argument that there is no substantial evidence to support nonrelief is an anomaly.Id. Evidence is compelling if it is so overwhelming that no reasonable person could fail to reach the same conclusion. Greene v. Paschall Truck Lines, 239 S.W.3d 94, 108 (Ky. App. 2007) (citation omitted).
Additionally, in reviewing the substantiality of the evidence supporting the agency's decision, this Court may not reconsider or "pass upon the credibility of witnesses, and the weight of the evidence" for these functions are within the "exclusive province of the administrative trier of fact." Bowling, 891 S.W.2d at 409-10. An administrative agency's conclusions of law, however, are subject to de novo review. Mill Street Church of Christ v. Hogan, 785 S.W.2d 263, 266 (Ky. App. 1990).
III. Analysis
Helms first argues that the notice of action she was provided by WellCare in its August 14, 2012 and October 3, 2012 denial letters was defective. Subpart E of Part 431 of Chapter IV under Title 42 of the Code of Federal Regulations (C.F.R.) prescribes the procedures for an opportunity for a hearing if a state agency or MCO takes action under subpart F of Part 438 of the chapter. 42 C.F.R. § 431.206 (b) and (c) and 42 C.F.R. § 431.210 detail when and how the agency must inform the enrollee of action affecting their claim and the content of what the notice must include. First, the agency must inform the enrollee (1) of their right to a hearing; (2) the method by which they may obtain a hearing; and (3) that they may represent themselves or use legal counsel, a relative, a friend or other spokesperson. 42 C.F.R. § 431.206(b). The notice required under 42 C.F.R. § 431.206(b) and (c) must also contain the content provided in 42 C.F.R. § 431.210, including "the specific regulations that support, or [...] requires, the action[.]" 42 C.F.R. § 431.210(c). Kentucky has incorporated these federal requirements into 907 KAR 1:563, Section 2.
Helms specifically contends that WellCare's notice letters (1) did not advise her of the right to use legal counsel, a friend, or other spokesperson during her appeal and (2) did not identify the statutes and regulations under which it was denying payment, and these omissions violate 42 C.F.R. § 431.206(b) and (c) and 42 C.F.R. § 431.210. Helms further asserts that because WellCare did not provide her the notice required by law, the Secretary should have automatically granted her appeal pursuant to 907 KAR 17:005E Section 5(24)(a).
The Cabinet for Health and Family Services promulgated emergency regulations to establish managed care policies for the Kentucky Medicaid Program. Subsequently, the Cabinet replaced the emergency relations with ordinary administrative regulations.
The hearing officer concluded that WellCare had provided sufficient notice to Helms. The hearing officer found that the August 14, 2012 notice letter clearly stated that Helms had the option to file another appeal with WellCare or to request a fair hearing. Further, the October 3, 2012 letter provided Helms with the factual basis for the denial in sufficient detail to give her a reasonable opportunity to prepare evidence and argument; a reference to the InterQual criteria relied upon, which was adopted in 907 KAR 3:130, Section 1; and notice as to where and how to file her appeal. The hearing officer denied Helms' motion for summary judgment on the grounds that the content of WellCare's notices complied with 907 KAR 17:010, Section 4(20) and KRS 13B.050 (3)(d) and (e). This explanation and conclusion was adopted by the Secretary's final order.
907 KAR 17:010, Section 4(20) states "If an MCO takes adverse action at the conclusion of an internal appeal process the MCO shall issue an adverse action letter to the enrollee that complies with KRS 13B.050(3)(d) and (e)[.]"
KRS 13B.050 (3)(d) and (e) provide "The notice required by this section shall be in plain language and shall include: . . . (d) A statement of the factual basis for the agency action along with a statement of issues involved, in sufficient detail to give the parties reasonable opportunity to prepare evidence and argument; (e) A reference to the specific statutes and administrative regulations which relate to the issues involved and the procedure to be followed in the hearing."
The circuit court agreed that the Secretary did not err in failing to grant Helms' motion for summary judgment on the basis that WellCare was noncompliant with all applicable notice requirements, but provided more elaborate justification than that of the hearing officer. The language used in administrative decisions is subject to interpretation by a reviewing court, which must enforce such orders according to existing law. Reis v. Campbell County Bd. of Educ., 938 S.W.2d 880, 885-86 (Ky. 1996), as amended (Dec. 20, 1996) (citing W.T. Sistrunk & Co. v. Kells, 706 S.W.2d 417, 418-19 (Ky. App. 1986)). The circuit court concluded that the content of the notice provided by WellCare as a managed care organization was governed by 42 C.F.R. § 438.404(b) adopted in 907 KAR 17:005, Section 45(4), and that WellCare's notice to Helms met all of the requirements set forth therein.
Content of notice. The notice must explain the following: (1) The action the MCO ... has taken or intends to take. (2) The reasons for the action. (3) The enrollee's or the provider's right to file an MCO ... appeal. (4) If the State does not require the enrollee to exhaust the MCO ... level appeal procedures, the enrollee's right to request a State fair hearing. (5) The procedures for exercising the rights specified in this paragraph. (6) The circumstances under which expedited resolution is available and how to request it. (7) The enrollee's right to have benefits continue pending resolution of the appeal, how to request that benefits be continued, and the circumstances under which the enrollee may be required to pay the costs of these services. 42 C.F.R. § 438.404(b). --------
The circuit court further noted that 42 C.F.R. § 431.206(b) and (c), 42 C.F.R. § 431.210, and 907 KAR 1:563, Section 2 do not govern notices issued by managed care organizations. 42 C.F.R. § 431.206 and 42 C.F.R. § 431.210 relate to actions taken by the state or a nursing facility. WellCare is a managed care organization under contract with the Commonwealth of Kentucky to administer Medicaid product. Therefore, WellCare's notice letters are not subject to the requirements set forth in 42 C.F.R. § 431.206 and 42 C.F.R. § 431.210. Moreover, the circuit court also noted 907 KAR 1:563, Section 12 recognizes special procedures for managed care participants, and therefore, the Section 2 notice requirements were not applicable to WellCare as an MCO. Based on this interpretation of the regulations, the circuit court determined that WellCare complied with all applicable notice requirements and the Secretary did not err in failing to automatically grant Helms' appeal.
Helms' argument and the circuit court's interpretation of these specific regulations are not unfamiliar to this Court. In Hill v. Commonwealth, 2014-CA-001130-MR, 2015 WL 9264643, at *3 (Ky. App. Dec. 18, 2015), a panel of this Court accepted the same interpretation then proferred by the Secretary now utilized by the circuit court in response to the very same argument Helms now asserts. We agree with that reasoning and find no basis to alter the current interpretation of these regulations. Additionally, "[a] reviewing court is not free to substitute its judgment as to the proper interpretation of the agency's regulations as long as that interpretation is compatible and consistent with the statute under which it was promulgated and is not otherwise defective as arbitrary or capricious." Commonwealth, Cabinet for Health Services v. Family Home Health Care, Inc., 98 S.W.3d 524, 527 (Ky. App. 2003) (citing City of Louisville by Kuster v. Milligan, 798 S.W.2d 454, 458 (Ky. 1990)). Consequently, we agree with the circuit court that the Secretary was not obligated to automatically grant Helms' appeal.
Helms next argues the conclusion that two days of inpatient care were neither medically necessary nor clinically appropriate was not supported either by Helms' treating psychiatrist's opinion or substantial evidence of record. She further asserts that the hearing officer incorrectly applied the InterQual criteria.
Services provided for inpatient psychiatric care are authorized by WellCare for its enrollees if the services are "medically necessary" and "clinically appropriate" as defined in 907 KAR 3:130. Helms argues that the hearing officer, Secretary, and circuit court ignored Helms' medical records that demonstrate she still had delusions, depression, anxiety, and withdrawal symptoms through August 16, 2012. However, as the circuit court noted, "[e]vidence regarding Petitioner's course of treatment in the form of medical records does not demonstrate medical opinion as to the medical necessity or clinical appropriateness of the treatment rendered." (R. 190). Additionally, the medical records Helms relies on constitute hearsay. Under KRS 13B.090(1), hearsay evidence may be admissible in administrative actions, if it is the type of evidence that reasonable and prudent persons would rely upon in their daily affairs, but it shall not be sufficient in and of itself to support an agency's findings of fact unless it would be admissible over objections in a civil action. KRS 13B.090(1). The circuit court stated that Helms' medical records would not be admissible over objections in a civil action because they were not properly authenticated pursuant to KRS 422.300, nor was any foundation testimony elicited from any witness to allow the records to be admitted under the hearsay exception. As a result, the circuit court concluded that the medical records alone would not be sufficient to support the hearing officer's findings of fact in this case.
In addition to Helms' medical records, the hearing officer heard testimony from a nurse manager involved in Helms' care during her hospital stay, a registered nurse employed by ARH to handle Medicaid denials, and expert testimony on behalf of WellCare by Dr. Kensicki as to whether Helms met the criteria for a "continued stay" in inpatient psychiatric care. "In weighing the substantiality of the evidence supporting an agency's decision, a reviewing court must hold fast to the guiding principle that the trier of facts is afforded great latitude in its evaluation of the evidence heard and the credibility of witnesses appearing before it." Bowling, 891 S.W.2d at 409-10. After considering all of the evidence, the hearing officer was ultimately persuaded by Dr. Kensicki's opinion developed through review of Helms' medical records and the applicable InterQual criteria. In Helms' argument to this Court, she has not identified compelling evidence demonstrating that the denial of services for the two disputed inpatient days of psychiatric care was arbitrary.
We also disagree with Helms' assertion that the hearing officer incorrectly applied the InterQual criteria. InterQual is the nationally-recognized clinical criteria to be utilized in the Medicaid medical review process for determinations of clinical appropriateness. See 907 KAR 3:130 Section 1(1); 907 KAR 3:130 Section 3 (1) and (2). The determination is guided by conditions that must be met under two categories, "Symptoms and Behaviors" and "Services."
Helms essentially argues that the hearing officer misapplied the InterQual criteria because the hearing officer was not convinced by Wilson's testimony, as Helms' representative, that Helms met the requirements. There was conflicting testimony among Wilson and Dr. Kensicki regarding whether Helms met certain conditions under each InterQual category. As we have previously observed, "the trier of facts in an administrative agency may consider all of the evidence and choose the evidence that he believes." Bowling, 891 S.W.2d at 410. The hearing officer chose to believe Dr. Kensicki. Helms attacks Dr. Kensicki's opinion based on the fact that he was not Helms' treating psychiatrist. However, the testimony on which Helms primarily relies is that of Wilson, who also did not take part in Helms' treatment. The evidence at the hearing was more than enough to induce conviction in the mind of a reasonable person that Helms' inpatient services after August 13, 2012 were not clinically appropriate. Because we find that the hearing officer's findings of fact are supported by substantial evidence, those findings are binding upon the circuit court and this Court.
Additionally, the order of the hearing officer also refers to specific InterQual criteria which Helms did not meet and stated facts supporting its conclusion. Thus, the record demonstrates the hearing officer properly applied the required InterQual criteria. "If the court finds the correct rule of law was applied to facts supported by substantial evidence, the final order of the agency must be affirmed." Bowling, 891 S.W.2d at 410 (quoting Commonwealth, Department of Education v. Commonwealth, 798 S.W.2d 464, 467 (Ky. App. 1990)).
In all, Helms has not identified evidence of record that is so compelling as to warrant a different result in her favor.
Lastly, Helms argues that she was denied an independent review of her appeal because the circuit court adopted WellCare's proposed findings, conclusions, and order. However, once the circuit court enters its findings of fact and conclusions of law, it becomes the judgment of the court and is no longer the product of either party. See Brunson v. Brunson, 569 S.W.2d 173, 175 (Ky. App. 1978). Such judgments will stand if supported by substantial evidence. We find no error by the circuit court in its adoption of WellCare's proposed order as we are satisfied the circuit court conducted its review in accordance with KRS 13B.150 and examined the record and the substance of the parties' claims in reaching its decision.
Accordingly, the Bell Circuit Court's order upholding the Secretary's final order is affirmed.
ALL CONCUR BRIEF FOR APPELLANT: Susan C. Lawson
Pineville, Kentucky REPLY BRIEF FOR APPELLANT: Whitney True Lawson
Frankfort, Kentucky BRIEFS FOR APPELLEE: Joyce A. Merritt
Samantha T. Nance
James Womack
Lexington, Kentucky Catherine York
Frankfort, Kentucky