Diversicare of Winfield, LLC, by and through its business office manager, Carrie Sullins, as authorized representative for Paulette Steele v. Alabama Medicaid Agency ( 2023 )

REL: April 14, 2023
Notice: This opinion is subject to formal revision before publication in the advance sheets of Southern Reporter.
Readers are requested to notify the Reporter of Decisions, Alabama Appellate Courts, 300 Dexter Avenue,
Montgomery, Alabama 36104-3741 ((334) 229-0650), of any typographical or other errors, in order that corrections
may be made before the opinion is published in Southern Reporter.
ALABAMA COURT OF CIVIL APPEALS
OCTOBER TERM, 2022-2023
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_________________________
Diversicare of Winfield, LLC, by and through its business office
manager, Carrie Sullins, as authorized representative for
Paulette Steele
v.
Alabama Medicaid Agency
Appeal from Montgomery Circuit Court
(CV-21-900173)
EDWARDS, Judge.
Diversicare of Winfield, LLC ("Diversicare"), purportedly by and
through its business office manager, Carrie Sullins, as authorized
representative of Paulette Steele, see discussion, infra, appeals from a
judgment entered by the Montgomery Circuit Court ("the circuit court")
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dismissing Diversicare's appeal as having been untimely filed;
Diversicare's appeal was from a final order entered by the Alabama
Medicaid Agency ("the Agency") regarding the terms of Steele's eligibility
for Medicaid benefits under the State Medicaid Plan adopted pursuant to
42 U.S.C. § 1396 et seq.
Steele was admitted to Diversicare's skilled-nursing facility in
Winfield in July 2019. In conjunction with her admission, Steele
executed an Alabama Medicaid Agency Form 202, titled "Appointment of
Representative" ("the authorized-representative form"). See Ala. Admin.
Code (Alabama Medicaid Agency), r. 560-X-28-.01(9) (including
"Appointment of Representative -- Alabama Medicaid Agency Form 202"
among the official forms for the Agency). The authorized-representative
form appointed Sullins as Steele's "legal representative … to apply,
reapply and make claim for Medicaid benefits … from the [Agency]" and
"to fully act in [Steele's] stead in connection with all Medicaid matters
involving [her], including, but not limited to, making applications,
reapplications and claims of all kinds, accepting and giving notice in
connection with eligibility determinations and Fair Hearings, requesting
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information, and presenting and eliciting evidence." Sullins executed the
"Acceptance of Appointment" included on the authorized-representative
form, which stated that her "relationship to [Steele] is nursing home rep.
(Attorney, relative, etc.)." See Ala. Admin. Code (Alabama Medicaid
Agency), r. 560-X-26-.01 (discussing the appointment of an authorized
representative, which may include "[o]fficers or employees of a provider"
that participates in the Medicaid program).
In January 2020, Sullins submitted Steele's application for
Medicaid benefits to the Agency.1 The Agency denied the January 2020
application based on a lack of certain documentation that the Agency had
requested. In March 2020, Sullins submitted Steele's reapplication for
1Steele was the applicant.
"Applicant means an individual whose written application for
Medicaid has been submitted to the agency determining
Medicaid eligibility, but has not received final action. This
includes an individual (who need not be alive at the time of
application) whose application is submitted through a
representative or a person acting responsibly for the
individual."
42 C.F.R. § 400.203; see also 42 C.F.R. § 435.4 (also defining "applicant").
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Medicaid benefits to the Agency. On May 19, 2020, the Agency issued a
notice to Sullins approving Steele's reapplication for Medicaid benefits,
subject to a transfer-penalty period because she had excess resources.
Specifically, the Agency concluded that Steele was subject to a transfer
penalty based on certain credit-card payments that Steele had made for
unverified property or services and based on her husband's transfer on
October 7, 2015, for less than fair-market value, of two parcels of real
property to the husband's son by a previous relationship. See Ala.
Admin. Code (Alabama Medicaid Agency), r. 560-X-25-.09 (describing the
60-month look-back period as to transfers by an applicant or the spouse
of an applicant and the transfer-penalty provisions). We note that
Steele's husband died in June 2017. According to the Agency, as a result
of the application of the transfer penalty, Steele would not be eligible to
receive Medicaid benefits until November 2020.
On May 21, 2020, Sullins, in her capacity as the business-office
manager for Diversicare, sent the Agency a letter in which she noted that
Diversicare was assisting Steele with her application for Medicaid
benefits; she included with the letter the authorized-representative form
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by which Steele had appointed Sullins as her authorized representative.
Sullins's letter also stated that she was appealing the Agency's decision
imposing a transfer-penalty period to Steele's receipt of Medicaid benefits
and requested a "fair hearing" and a prehearing conference regarding
that penalty. See Ala. Admin. Code (Alabama Medicaid Agency), r. 560-
X-3-.02(1) (defining a "fair hearing" as a "face-to-face hearing by an
impartial State Hearing Officer … attended by the complainant or his
authorized representatives who may call witnesses or examine witnesses
called by others); Ala. Admin. Code (Alabama Medicaid Agency), r. 560-
X-3-.01(1) through r. 560-X-3-.07 (discussing fair-hearing requirements
and procedures); see also 42 C.F.R. § 431.200 and § 431.220. During the
prehearing process, Sullins also requested a waiver of the transfer-
penalty period on the ground of undue hardship. The Agency denied the
waiver request based, in part, on the ground that no evidence established
that Steele had been denied admission to or had been discharged from an
institutional facility such that she was "in danger of being deprived of
medical treatment, food, shelter, and other necessities of life." See Ala.
Admin. Code (Alabama Medicaid Agency), r. 560-X-25-.09(8) (discussing
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the "extreme cases" in which the Agency will consider a request for an
undue-hardship waiver). Sullins requested a fair hearing as to the denial
of Steele's waiver request.
A fair hearing was held before an administrative law judge ("the
ALJ") on September 24, 2020. During that hearing, the ALJ received
testimony and documentary evidence regarding whether the Agency had
erred by imposing the transfer-penalty period for purposes of Steele's
Medicaid benefits and by denying the request for a waiver of the transfer-
penalty period based on undue hardship. On October 6, 2020, the ALJ,
based on the evidence presented at the fair hearing and on applicable
law, issued a recommendation stating that the Agency had acted properly
by imposing the transfer-penalty period and by denying the request for a
waiver based on undue hardship. On October 29, 2020, Stephanie McGee
Azar, the Commissioner of the Agency ("the Commissioner"), entered a
final order adopting the ALJ's recommendation. The October 2020 final
order also advised Sullins that Steele could request a rehearing or seek
judicial review of the Agency's decision pursuant to the Alabama
Administrative Procedure Act ("the AAPA"), Ala. Code 1975, § 41-22-1 et
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seq. See Ala. Code 1975, § 41-22-17 (discussing the rehearing procedure);
Ala. Admin. Code (Alabama Medicaid Agency), r. 560-X-3-.06(3) (stating
that, following the fair hearing, "[a]dverse decisions approved by the
Commissioner, as the hearing authority, shall contain a statement that
rehearing and/or judicial review of this decision is available pursuant to
the provisions of the [AAPA]" and that the Commissioner "shall notify
the requestor, in writing regarding the hearing decision").
On November 13, 2020, Sullins filed an application for a rehearing
with the Agency. Based on Ala. Code 1975, § 41-22-17(e), the application
for a rehearing was denied by operation of law on December 13, 2020,
although Diversicare argues on appeal that an application for a rehearing
may not be denied by operation of law as to claims for Medicaid benefits.
See discussion, infra; see also Davis v. Alabama Medicaid Agency, 519
So. 2d 538, 539 (Ala. Civ. App. 1987) (holding that Medicaid claimant's
application for a rehearing had been denied by operation of law pursuant
to § 41-22-17(e), that the period for filing a notice of appeal ran from the
date of such denial, and that a subsequent untimely-filed appeal must be
dismissed). Nevertheless, the Commissioner also sent Sullins a letter
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dated December 16, 2020, that stated that she had reviewed the
administrative record, that a rehearing could be granted only under
limited circumstances, that those circumstances were inapplicable based
on the Commissioner's review, and that the "request for a rehearing is
denied."2 The December 2020 letter also informed Sullins that she could
"seek judicial review of this denial pursuant to the provisions of the
[AAPA]."
Steele died on January 8, 2021. On January 15, 2021, Sullins filed
with the Agency a notice of appeal of the October 2020 final order and
the Commissioner's December 2020 letter denying the application for a
rehearing. 3 On February 12, 2021, Diversicare, by and through Sullins
2At the hearing on the Agency's motion to dismiss Diversicare's
appeal, see discussion, infra, counsel for the Agency stated that "a clerical
error was made during the process, and [the Commissioner's] letter for
the State law request for rehearing was sent out two days late." The
agency argued, however, that that mistake "doesn't change what the law
says," that the Commissioner's late ruling as to the application for a
rehearing was void, and that the period for filing the notice of appeal
began when the application for a rehearing was denied by operation of
law.
3In its appellate brief, Diversicare concedes that the date of filing of
the notice of appeal was January 15, 2021. On January 14, 2021, Sullins
had telefaxed and e-mailed to the Agency a notice of appeal that was
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as Steele's authorized representative, filed a petition for judicial review
in the circuit court.
The Agency filed in the circuit court a motion to dismiss the appeal
on the grounds that it was untimely filed and that, according to the
Agency, no person with proper authority had filed the notice of appeal or
the petition for judicial review. According to the Agency, only the
personal representative of Steele's estate could seek judicial review
following Steele's death. On May 21, 2021, the Agency filed an amended
motion to dismiss, arguing only that the notice of appeal was untimely
filed.
dated January 8, 2021. The telefax and e-mail also were received by the
Agency on January 14, 2021. However, that was not sufficient to
constitute filing of the notice of appeal. See, e.g., Sullivan v. Alabama
Dep't of Hum. Res., [Ms. 2210229, Sept. 30, 2022] ___ So. 3d ___, ___ n.5
(Ala. Civ. App. 2022); L.C. v. Shelby Cnty. Dep't of Hum. Res., 293 So. 3d
912, 915 (Ala. Civ. App. 2019). According to the Agency, on January 15,
2021, it received the notice of appeal by mail, along with a cashier's check
for the cost bond. The cashier's check was dated January 14, 2021. We
note that the notice of appeal states that it was mailed to the
Commissioner by certified mail, return receipt requested, but any
application of the mailbox rule in Ala. Code 1975, § 41-22-20(d), would be
unavailing unless the notice of appeal had been mailed by certified mail
on or before January 12, 2021. Diversicare made no such factual showing
or claim in the circuit court, however.
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Diversicare filed a response to the Agency's amended motion to
dismiss, arguing that Ala. Code 1975, § 41-22-17(e), "must be interpreted
in conjunction with" Ala. Code 1975, § 41-22-20(d), which states that " 'if
a rehearing is requested under Section 41-22-17,' " the notice of appeal
shall be filed " 'within 30 days after the receipt of the notice of or other
service of the decision of the agency thereon.' " According to Diversicare,
"a rehearing was requested by [Diversicare], and within 30
days of 'receipt of … other service of the agency decision
thereon' (i.e., within 30 days of the notice received pursuant
to the letter from … [the Commissioner] denying the request
for a rehearing) the [n]otice of [a]ppeal was timely and
correctly filed pursuant to … § 41-22-20(d) …." 4
4We note that this argument is contrary to this court's decision in
Davis v. Alabama Medicaid Agency, 519 So. 2d 538 (Ala. Civ. App. 1987),
regarding the referenced Code sections. Likewise, in Krawczyk v. State
Department of Public Safety, 7 So. 3d 1035, 1037 (Ala. Civ. App. 2008),
this court stated that when an agency has entered an otherwise final
order and an application for a rehearing is thereafter filed and denied by
operation of law pursuant to § 41-22-17(e), the notice of appeal must be
filed within 30 days after the denial by operation of law of the rehearing
application. In Noland Health Services, Inc. v. State Health Planning &
Development Agency, 44 So. 3d 1074, 1079-81 (Ala. 2010), the supreme
court discussed Krawczyk at length and agreed with this court's
understanding of § 41-22-20(d), namely, that a notice of appeal must be
filed "within 30 days of when the decision of [a state agency] became final
by operation of law." 44 So. 3d at 1081. Even if we were to conclude that
this had court erred in Davis and Krawczyk, we would nevertheless be
bound to follow Noland Health Services, Inc. as to the meaning and
application of § 41-22-20(d) in relation to § 41-22-17(e). See Ala. Code
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Diversicare also argued that the Commissioner's December 2020
letter had "explicitly invited … Sullins to seek judicial review pursuant
to the AAPA." Diversicare argued further:
"10. Even if the [n]otice of [a]ppeal was untimely filed,
it would be a miscarriage of justice, and a failure of the broad
equitable powers of the [court], for the [c]ourt to no[t] exercise
its jurisdictional authority over this matter given that … § 41-
22-20(d) … explicitly contemplates the situation where the 30-
day timeline to file a notice of appeal does not begin to run
until 'receipt of the notice of or other service of the decision of
the agency thereon.' Here, such a written notice as
contemplated by the statute was received and served on
[Diversicare] by [the Agency], and [Diversicare] then timely
filed the [n]otice of [a]ppeal in accordance with same.
"11. It was fair and reasonable for [Diversicare] to base
the calculation of the deadline to file the [n]otice of [a]ppeal
on the written correspondence from [the Commissioner],
which correspondence was dated December 16, 2020.
Further, allowing an agency the leeway to issue an untimely
response to a request for rehearing, and then later allowing it
to make arguments in a motion to dismiss regarding a
petitioner's purported untimeliness, when the petitioner
reasonably relied on the written correspondence of the
agency, is patently unfair."5
1975, § 12-3-16 ("The decisions of the Supreme Court shall govern the
holdings and decisions of the courts of appeals ....").
5To the extent that Diversicare argued in the circuit court that,
based on the Commissioner's December 2020 letter, the Agency should
have been equitably estopped from relying on the denial of the
application for a rehearing by operation of law, see, e.g., Ex parte Four
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Further, Diversicare argued that 42 C.F.R. § 431.245 required the
Agency to notify it of " 'the agency decision' " in writing and that,
"pursuant to federal Medicaid regulations, there can be no State
Medicaid agency decision made by operation of law." According to
Diversicare,
"[p]ursuant to the federal Medicaid regulations, and
[Diversicare's] due process rights, the only mechanism by
which the 30-day deadline to file a notice of appeal was
triggered pursuant to … § 41-22-20(d) … was when [the
Commissioner] issued her December 16, 2020 letter, giving
[written] notice of the Agency action and of the right to seek
judicial review of the decision."
In an amended response to the amended motion to dismiss, Diversicare
further contended that Davis had not addressed the pertinent federal law
and thus had been wrongly decided.
On June 15, 2021, the circuit court held a hearing on the Agency's
amended motion to dismiss, after which it received posthearing briefs
from the Agency and Diversicare. On January 5, 2022, the circuit court
Seasons, Ltd., 450 So. 2d 110, 111 (Ala. 1984), that argument has not
been raised on appeal and is therefore waived. See, e.g., Muhammad v.
Ford, 986 So. 2d 1158, 1165 (Ala. 2007).
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entered an order granting the Agency's amended motion to dismiss
"because the [notice of appeal] was not timely filed with [the Agency]."
Diversicare timely filed a postjudgment motion, arguing that
federal law required that § 431.245 be applied to a decision on a rehearing
application when State law authorized an opportunity for a rehearing
and that § 41-22-17(e) was preempted to the extent that it conflicted with
the written-decision requirement of § 431.245. Diversicare's
postjudgment motion was denied by operation of law. See Rule 59.1, Ala.
R. Civ. P. Diversicare timely filed a notice of appeal to this court,
pursuant to § 12-3-10, Ala. Code 1975.
On appeal, Diversicare contends that the circuit court erred by
dismissing its appeal on the ground that the notice of appeal was
untimely filed. The underlying facts for purposes of this appeal are
undisputed and, thus, we apply a de novo standard of review. See
Sullivan v. Alabama Dep't of Hum. Res., [Ms. 2210229, Sept. 30, 2022]
___ So. 3d ___, ___ (Ala. Civ. App. 2022); Hawkins v. Ivey, [Ms. 1200847,
Mar. 18, 2022] ___ So. 3d ___, ___ n.1 (Ala. 2022).
Section 41-22-17(e) states that,
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"[w]ithin 30 days from the filing of an application the agency
may in its discretion enter an order:
"(1) Setting a hearing on the application for
a rehearing which shall be heard as soon as
practicable; or
"(2) With reference to the application without
a hearing; or
"(3) Granting or denying the application.
"If the agency enters no order whatsoever regarding the
application within the 30-day period, the application shall be
deemed to have been denied as of the expiration of the 30-day
period."
Section 41-22-20(d) states that
"[t]he notice of appeal or review shall be filed within 30 days
after the receipt of the notice of or other service of the final
decision of the agency upon the petitioner or, if a rehearing is
requested under Section 41-22-17, within 30 days after the
receipt of the notice of or other service of the decision of the
agency thereon."
A timely filing of a notice of appeal with the Agency pursuant to § 41-
22-20(d) is jurisdictional and the failure to timely file a notice of appeal
deprives the circuit court of subject-matter jurisdiction to consider the
petition for judicial review under that section. See Ex parte Alabama
Medicaid Agency, 298 So. 3d 522, 524-25 (Ala. Civ. App. 2020); see also
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Noland Health Servs., Inc. v. State Health Planning & Dev. Agency, 44
So. 3d 1074, 1080 (Ala. 2010); Sullivan, supra; Davis, supra.In Davis, this court stated:
"[O]n January 16, 1987, the applicant [Flora L. Davis] was
notified that she was disqualified from receiving medicaid
benefits for a period of three months. The applicant then filed
an application for rehearing on January 27, 1987. By letter
dated March 10, 1987, the applicant was advised of the denial
of her rehearing and notified that judicial review could be had
under the act. On April 15, 1987, the agency received
applicant's notice of appeal by letter dated April 9, 1987.
"The applicant contends that the period of time within
which she had to file her notice of appeal ran from March 10,
1987, the date the agency sent the letter notifying applicant
of their decision. The agency, however, contends that the time
to file the notice of appeal ran from the date the application
for rehearing was deemed denied by [operation of] law,
February 26, 1987."
519 So. 2d at 539. After quoting § 41-22-17(e) and § 41-22-20(d), this
court stated:
"It is clear from the above provision that if the agency
does not enter an order within thirty days of the filing of the
application for rehearing, the application is deemed denied by
operation of law at the expiration of the thirty-day period.
Ala. Code 1975, § 41-22-17(e). Further, the statute is clear
that the applicant is required to file the notice of appeal
within thirty days after the decision on the application for
rehearing. Ala. Code 1975, § 41-22-20(d).
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"Here, the application for rehearing was filed on
January 27, 1987, and by operation of law was deemed denied
on February 26, 1987. Therefore, pursuant to the act, the
notice of appeal should have been filed within thirty days from
February 26, 1987. As this was not done, the trial court did
not err in dismissing the appeal.
"Additionally, we agree with the trial court's apt and
concise analogy, which follows:
" 'Appeals from agency decisions are purely
statutory, and the time constrictions must be
satisfied. Although this result may seem harsh at
first blush, our Rules of Civil Procedure have a
similar mechanism embodied in Rule 59.1, A[la].
R. Civ. P. A motion for new trial, et cetera, is
deemed denied if not ruled on within 90 days. The
fact that a court may enter an order after the 90
day period [for] ruling on the motion has no effect
in determining the date that the notice of appeal
must be filed. The order is a mere nullity. Olson
vs. Olson, 367 So. 2d 504 (Ala. Civ. App. 1979).' "
519 So. 2d at 539-40. 6
As in Davis, the issue in the present case is whether the circuit
court erred by applying that portion of § 41-22-17(e) that provides for the
6Rule 59.1, Ala. R. Civ. P., has been amended to provide that "[a]
failure by the trial court to render an order disposing of any pending
postjudgment motion within [90 days], or any extension thereof, shall
constitute a denial of such motion as of the date of the expiration of the
period."
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denial of an application for a rehearing by operation of law. Diversicare
disagrees with this court's holding in Davis and makes three arguments
on appeal, all hinging on its conclusion that federal law, specifically §
431.245, "requires that any [Agency] decision involving the rights of an
applicant [must] be noticed in writing …." Thus, according to
Diversicare, an application for a rehearing cannot be denied by operation
of law and applying Davis, which did not discuss § 431.245, and that
portion of § 41-22-17(e) providing for the denial of an application for a
rehearing by operation of law would contradict controlling federal law.
See Benton v. Alabama Bd. of Med. Exam'rs, 467 So. 2d 234, 236 (Ala.
1985) ("Nothing in the [AAPA] … relieves agencies of the duty to comply
with additional procedural requirements otherwise established by law.").
Diversicare's conclusion as to § 431.245 is incorrect, however, and its
arguments must therefore be rejected.
It is undisputed that a state's Medicaid plan must "provide for
granting an opportunity for a fair hearing before the State agency to any
individual whose claim for medical assistance under the plan is denied."
42 U.S.C. § 1396a(a)(3). Pursuant to that Congressional directive, the
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regulations at 42 C.F.R. § 431.200 et seq. were promulgated to address
the fair-hearing system that a state agency must provide to an applicant
in regard to the denial, termination, or suspension of Medicaid benefits.
See, e.g., 42 C.F.R. § 431.200 ("This subpart -- (a) Implements section
[1396a(a)(3)], which requires that a State plan provide an opportunity for
a fair hearing to any person whose claim for assistance is denied or not
acted upon promptly."); 42 C.F.R. § 431.244(a) ("Hearing
recommendations or decisions must be based exclusively on evidence
introduced at the hearing."). The fair-hearing system for the Agency is
found in Ala. Admin. Code (Alabama Medicaid Agency), r. 560-X-3-.01 et
seq.
42 C.F.R. § 431.220 states, in pertinent part, that
"[t]he State agency must grant an opportunity for a hearing
to the following:
"(1) Any individual who requests it because
he or she believes the agency has taken an action
erroneously,[7] denied his or her claim for
7Pursuant to 42 C.F.R. § 431.201:
"Action means a termination, suspension of, or reduction in
covered benefits or services, or a termination, suspension of,
or reduction in Medicaid eligibility or an increase in
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eligibility or for covered benefits or services, or
issued a determination of an individual's liability,
or has not acted upon the claim with reasonable
promptness including, if applicable --
"(i) An initial or subsequent
decision regarding eligibility;
"(ii) A determination of the
amount of medical expenses that an
individual must incur in order to
establish eligibility in accordance with
§ 435.121(e)(4) or § 435.831 of this
chapter; or
"(iii) A determination of the
amount of premiums and cost sharing
charges under subpart A of part 447 of
this chapter;
"(iv) A change in the amount or
type of benefits or services; or
beneficiary liability, including a determination that a
beneficiary must incur a greater amount of medical expenses
in order to establish income eligibility in accordance with §
435.121(e)(4) or § 435.831 of this chapter or is subject to an
increase in premiums or cost-sharing charges under subpart
A of part 447 of this chapter. It also means a determination
by a skilled nursing facility or nursing facility to transfer or
discharge a resident and an adverse determination by a State
with regard to the preadmission screening and resident
review requirements of section 1919(e)(7) of the Act."
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"(v) A request for exemption from
mandatory enrollment in an
Alternative Benefit Plan."
In other words, the hearing requirements apply to determinations
addressing the merits of a claim for Medicaid benefits.
Section 431.245 is part of the regulatory scheme applicable to fair
hearings and states:
"The agency must notify the applicant or beneficiary in
writing of --
"(a) The decision; and
"(b) His right to request a State agency
hearing or seek judicial review, to the extent that
either is available to him."
See also Ala. Admin. Code (Alabama Medicaid Agency), r. 560-X-3-.06(3)
("Adverse decisions approved by the Commissioner, as the hearing
authority, shall contain a statement that rehearing and/or judicial review
of this decision is available pursuant to the provisions of the Alabama
Administrative Procedure Act. The Commissioner shall notify the
requestor, in writing regarding the hearing decision.").
"The decision" referenced in § 431.245 is the Agency's decision on
the merits of the application for Medicaid benefits, and r. 560-X-3-.06(3)
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is consistent with § 431.245. The October 2021 order was "the decision"
of the Agency as to Steele's claim for Medicaid benefits, and that decision
was communicated to her in writing. By contrast, the denial of the
application for a rehearing was not a decision following a hearing or a
decision on the merits of Steele's claim for Medicaid benefits, which had
already been adjudicated on the merits. Indeed, the filing of an
application for a rehearing does not "extend, modify, suspend or delay the
effective date" of the Agency's final order "unless and until said
application shall be granted or until said order shall be superseded,
modified, or set aside in a manner provided by law." Ala. Code 1975, §
41-22-17(b).8
8The legislature's provision for the denial of an application for a
rehearing by operation of law serves the purpose preventing an agency
from unnecessarily delaying judicial review by not making a timely,
express decision on the application for a rehearing. See Commentary to
§ 41-22-17 ("[I]n meting out justice, speed is of the essence and this is
particularly true under this section where the application for rehearing
does not stay the action of the order from which relief is being sought.").
While we are mindful that federal law could preempt such a provision,
the federal law relied upon by Diversicare does not address rehearing
procedure.
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Diversicare admitted in its postjudgment motion that "[f]ederal law
does not contemplate rehearings and neither allows nor disallows them."
Diversicare likewise admits on appeal that "[r]ehearing is an optional tier
of review not required by federal Medicaid law." Nevertheless,
Diversicare contends that, because Alabama law provides a procedure for
filing an application for a rehearing, that procedure must necessarily
comply with the law regarding hearings as to Medicaid benefits.
Diversicare cites no legal authority that supports that conclusion,
however, and Diversicare's reliance on authority discussing the
requirements for the conduct of fair hearings and the decision on the
merits as to Medicaid benefits, including Shifflett v. Kozlowski, 843 F.
Supp. 133, 134 (W.D. Va. 1994), is inapposite. Shifflett involved a state
administrative agency's failure to follow federal law governing the
hearing-and-final-decision requirements as to the merits of claims for
Medicaid benefits. See id. at 136 ("[W]here a claimant raises only a
question of law and [the Medical Assistance Appeals Panel ('MAAP')
reviews the case, it is apparent that the agency's final decision will not
be rendered until MAAP review is completed. Consequently, a consistent
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interpretation of the federal and state regulations would require that
MAAP also render its decision" in compliance with the federal law timing
requirements applicable to final decisions on the merits.). In the present
case, the Agency purported to take final action, i.e., to resolve all
questions as to the merits of Steele's claim for Medicaid benefits, in the
October 2022 order, and Diversicare has made no claim that the October
2022 order was not properly or timely entered. As noted above, a party's
decision to exercise his or her state-law right to apply for a rehearing as
to such an otherwise final order of the Agency does not itself alter the
nature of the final order as such. Indeed, § 41-22-17 applies only when
the Agency has entered a final order. See § 41-22-17(a).
In short, § 431.245 addresses merits-based decisions and contains
no provision regarding how the denial of an application for a rehearing
must be communicated. More specifically, that section contains no
prohibition on the denial of such an application by operation of law under
§ 41-22-17(e). See Moseley v. Department of Pub. Welfare, 142 Pa.
Cmwlth. 9, 16, 598 A.2d 317, 321 (1991) (providing that "42 C.F.R. §
431.245 only requires that a recipient receive notice of a right to
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reconsideration if such review is 'available' " and that "Section 431.245
contains no requirements as to reconsideration procedure"). Those
procedural matters are governed by state law, which need only to satisfy
the requirements of due process, and Diversicare cites no legal authority
supporting the proposition that due process prohibits the denial of an
application for a rehearing by operation of law. 9
9Diversicare correctly notes that the Agency's " 'hearing system
must meet the due process standards set forth in Goldberg v. Kelly, 397
U.S. 254 (1970), and any additional standards specified in this subpart.'
42 C.F.R. § 431.205(d)." However, as noted, the latter standards address
the Agency's decision regarding the merits of an applicant's claim for
Medicaid benefits, not a decision on an application for a rehearing made
after the full evidentiary hearing on the merits and the entry of the
Agency's decision as to the applicant's claim for benefits. Likewise, in
Goldberg, "[t]he constitutional issue to be decided … [was] the narrow
one whether the Due Process Clause requires that the recipient be
afforded an evidentiary hearing before the termination of benefits,"
under the Aid-to-Families-with-Dependent-Children program, again a
decision as to the merits of the claim to benefits. Id. at 260. In other
words, Goldberg involved the failure to provide " '[t]he fundamental
requisite of … the opportunity to be heard' " before a deprivation of
benefits occurred. 397 U.S. at 267 (quoting Grannis v. Ordean, 234 U.S.
385, 394, (1914)). Goldberg did not address whether due process
precluded the denial of a motion by operation of law, particularly as to an
application for a rehearing filed after a full evidentiary hearing and
decision on the merits. Indeed, the United States Supreme Court
acknowledged "the importance of not imposing upon the States or the
Federal Government in this developing field of law any procedural
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CL-2022-0714
Based on the foregoing, we reject Diversicare's argument that §
431.245 precluded the Agency's denial of the application for a rehearing
by operation of law pursuant to § 41-22-17(e). Accordingly, the circuit
court's dismissal of Diversicare's appeal because it had been untimely
filed is due to be affirmed. In light of our affirmance on the ground relied
upon by the circuit court, we pretermit any discussion of the alternative
grounds for affirmance argued by the Agency.
AFFIRMED.
Thompson, P.J., and Moore, Hanson, and Fridy, JJ., concur.
requirements beyond those demanded by rudimentary due process." 397
U.S. at 267.
25