Kirchner v. State, Department of Public Health & Human Services ( 2005 )

No. 04-579
IN THE SUPREME COURT OF THE STATE OF MONTANA
2005 MT 202MARSHA KIRCHNER,
Petitioner and Appellant,
v.
STATE OF MONTANA, DEPARTMENT OF
PUBLIC HEALTH AND HUMAN SERVICES,
DIVISION OF QUALITY ASSURANCE,
Respondent and Respondent.
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis and Clark, Cause No. DV 2003-482
The Honorable Thomas C. Honzel, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Christopher Daly, Attorney at Law, Missoula, Montana
For Respondent:
Kimberly A. Kradolfer, Special Assistant Attorney General, DPHHS, Helena,
Montana
Submitted on Briefs: May 31, 2005
Decided: August 16, 2005
Filed:
__________________________________________
Clerk
Justice Patricia O. Cotter delivered the Opinion of the Court.
¶1 Marsha Kirchner (Kirchner) appeals the First Judicial District Court’s decision
upholding the Decision of the Board of Public Assistance and the Fair Hearings Decision.
We affirm.
ISSUE
¶2 The restated issue on appeal is whether the District Court erred in upholding a final
administrative decision which concluded that the Montana Department of Public Health and
Human Services (DPHHS or Department) was entitled to repayment of $4,593.96 in fees that
had been paid to Kirchner by the Montana Medicaid Program (Medicaid).
FACTUAL AND PROCEDURAL BACKGROUND
¶3 Kirchner is a licensed professional counselor who has been providing services for
Medicaid clients since 1992. After providing such services, Kirchner seeks payment from
the Montana Medicaid Program which is administered by the DPHHS. Medicaid providers
must follow specific billing procedures when submitting claims to the Department for
payment. Kirchner does not dispute that she is required to bill for her services in accordance
with the specific billing procedures.
¶4 One element of the billing process requires providers to identify each medical
procedure they perform for each patient by assigning a pre-determined “code” number to the
procedure. For example, for the type of work Kirchner performs, there is a specific code
number for individual therapy and a different code number for group therapy. Prior to July
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1, 1999, Medicaid providers were required to bill using “local codes.” Local codes were
billed in 15-minute increments, meaning a provider could bill multiple units to a single
patient in a given day depending upon the amount of time spent with the patient.
¶5 On July 1, 1999, new DPHHS rules were implemented. These rules required
Medicaid providers seeking payment for services to begin using a national coding system.
These national codes describing different kinds of medical procedures were published in a
manual entitled Current Procedure Terminology, or CPT. All Medicaid providers were
supplied with a Medicaid Provider Handbook that explained how to process a claim.
Significantly, the new CPT codes relevant to Kirchner’s practice were designated as “per
visit” as opposed to per 15-minute intervals, as before. Thus the new codes categorized
billing by the specific procedure performed, and not the amount of time spent performing it.
The Department therefore maintains that under the new codes, only one unit of service could
be billed per patient per day, regardless of the amount of time the provider spent with the
patient.
¶6 Kirchner asserts that when the system changed, she did not understand how to bill
under the CPT codes for sessions that ran more than one hour. She states that she called
Consultec (later renamed ACS), the fiscal agent for DPHHS to whom she submitted her
claims, and requested assistance. Kirchner maintains that a representative of Consultec
instructed her to bill one unit for an hour-long session, and bill a second unit if the session
lasted more than an hour, even if it did not run a full two hours. Subsequently, Kirchner
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billed the Medicaid Program in accordance with Consultec’s instructions. At times she billed
two units of service for the codes in questions, and at other times, as many as four and five
units of service per patient per day, based on the amount of time she spent with the patient.
In January 2001, Kirchner stopped billing for more than one unit of service per patient per
day because she learned that the Department considered such multiple unit billing to be
improper.
¶7 During the relevant time period, Kirchner submitted her claims and was paid by
DPHHS. DPHHS typically pays claims on an “as submitted” basis and later audits those
payments for correctness. See Juro’s United Drug v. Public Health, 2004 MT 117, ¶ 20, 321
Mont. 167, ¶ 20, 90 P.3d 388, ¶ 20. Subsequently, during the Department’s audit of
Medicaid provider claims submitted between July 1, 1999, through June 30, 2002, the
Department discovered Kirchner’s improperly billed claims and notified her that she had
erroneously overbilled the Montana Medicaid Program in the amount of $4,593.96.
¶8 Kirchner did not contest the Department’s calculations, but rather disputed the
DPHHS’s position that her billing was wrong. She requested an Administrative Review
which was held by telephone in mid-January 2003. The subsequent Administrative
Determination upheld the DPHHS’s demand for repayment. In accordance with applicable
regulations, Kirchner then sought a Fair Hearing which was held on March 18, 2003. At the
conclusion of the hearing and after reviewing the parties’ proposed Findings of Fact and
Conclusions of Law, the Hearings Officer upheld the Department’s determination that
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Kirchner had overbilled the Medicaid Program. In his Decision, the Hearings Officer failed
to make certain factual findings requested by Kirchner, leading Kirchner to request review
with the Montana Board of Public Assistance (BPA). In August 2003, the BPA adopted the
Hearings Officer’s May 5, 2003, Decision. Kirchner then sought review of the decision by
the District Court. On May 5, 2004, the District Court affirmed the BPA’s Decision.
Kirchner filed a timely notice of appeal.
STANDARD OF REVIEW
¶9 The relevant portion of the applicable standard of review is set forth in the Montana
Administrative Procedure Act (MAPA) at § 2-4-704, MCA:
(2) The court may not substitute its judgment for that of the agency as to the
weight of the evidence on questions of fact. The court may affirm the decision
of the agency or remand the case for further proceedings. The court may
reverse or modify the decision if substantial rights of the appellant have been
prejudiced because:
(a) the administrative findings, inferences, conclusions, or decisions are:
...
(iv) affected by other error of law;
(v) clearly erroneous in view of the reliable, probative, and substantial
evidence on the whole record;
...
(b) findings of fact, upon issues essential to the decision, were not made
although requested.
¶10 This Court will review a state agency’s conclusions of law to determine whether the
agency’s interpretation of law is correct. Seven Up Pete Venture v. Mont., 2005 MT 146,
¶ 58, ___ Mont. ___, ¶ 58, ___ P.3d ___, ¶ 58 (internal citations omitted). Likewise, we
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review a district court’s conclusions of law for correctness. State v. Tichenor, 2002 MT 311,
¶ 18, 313 Mont. 95, ¶ 18, 60 P.3d 454, ¶ 18.
¶11 Kirchner argues, pursuant to § 2-4-704(2)(b), MCA, that the District Court erred by
not overturning the Hearings Officer’s Decision for his failure to adopt certain of Kirchner’s
proposed findings. Additionally, she maintains that the District Court misapplied the holding
in State v. Vainio, 2001 MT 220, 306 Mont. 439, 35 P.3d 948. Lastly, Kirchner avers that
the District Court erred in upholding the Hearings Officer’s admission of Consultec’s
telephone logs.
DISCUSSION
¶12 The crux of Kirchner’s argument is that she should not be responsible for the
overbilling because: 1) there was nothing in writing from the DPHHS or Consultec notifying
her that billing more than one hour under the codes was not permitted; and 2) the Department
should be estopped from seeking repayment because an employee of Consultec orally advised
her she could bill more than one hour per patient per day and she received a letter from
Randy Poulsen, Chief of the Department’s Mental Health Services Bureau, stating that
nothing expressly prohibited a therapist from spending more than one hour with a patient
under the CPT codes.
¶13 At her Fair Hearing, Kirchner cross-examined three of the State’s witnesses: one
DPHHS employee and two Consultec employees. She elicited testimony that during the
period in question, there was nothing in writing from the Department or its agent, Consultec,
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to state that billing more than one hour under these codes was impermissible. As a result of
this testimony, Kirchner proposed the following Findings of Fact, among others, to the
Hearings Officer:
¶14 5. On cross-examination, Ms. Higgins [Compliance Specialist
for DPHHS], testified that for the period in question from July,
1999 through January, 2001, there was nothing in writing from
the State or its agent, Consultec, to state that billing more than
one hour under these codes was impermissible.
¶15 7. On cross-examination, Ms. Brandt [Registered Health
Information Administrator for ACS] testified that for the period
in question July, 1999 through January, 2001, there was nothing
in writing from the State or its agent, Consultec, to state that
billing more than one hour under these codes was impermissible.
¶16 12. On cross-examination, Ms. Hance [Deputy Accounts
Manager for Consultec/ACS] testified that for the period in
question July, 1999 through January, 2001, there was nothing in
writing from the State or its agent, Consultec, to state that billing
more than one hour under these circumstances was
impermissible.
¶17 Kirchner maintains that because there was no evidence in the record to contradict the
above-recited testimony of witnesses Higgins, Brandt and Hance, the Hearings Officer
should have adopted these findings and failure to do so was reversible error.
¶18 The Hearings Officer, however, determined that the more relevant testimony presented
by the Department’s expert, Ms. Brandt, was the Department’s interpretation of the relevant
CPT codes. Brandt explained that, with the exception of one unrelated code, the relevant
codes were “per visit” codes and could only be properly billed for one unit of service per
patient per day. In his Decision, the Hearings Officer noted that Brandt’s interpretation was
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supported by an article in the Summer 1992 issue of “CPT Assistant,” a guide published by
the American Medical Association, that discussed and clarified coding issues and answered
provider questions regarding proper use of CPT codes. Observing that Kirchner had
provided no expert testimony to refute this interpretation, the Officer concluded that the
Department’s interpretation was a “reasonable” one. As a result, he sustained the
Department’s ruling in accordance with State Personnel v. Investigators, 2002 MT 46, 308
Mont. 365, 43 P.3d 305. In State Personnel, we held that an agency’s interpretation of its
rule is afforded great weight, and the court should defer to that interpretation unless it is
“plainly inconsistent” with the spirit of the rule. The agency’s interpretation of the rule will
be sustained so long as it lies within the range of reasonable interpretation permitted by the
wording.
¶19 Kirchner argued to the District Court that the Department should have put its agency
interpretation in writing. She relied for this argument upon our decision in Vainio. However,
Vainio is inapposite. At issue in that case were certain informal Medicaid “policies” that the
defendant had been criminally convicted of violating. Vainio successfully argued on appeal
that a criminal conviction could not be based upon the violation of these “policies” because
they had never been formally promulgated pursuant to MAPA. Here, by contrast, the
national DPHHS billing rules under which Kirchner was assessed for reimbursement have
not been challenged. Thus, the rules themselves are presumptively valid. The question
Kirchner presents, and which the District Court rejected, is whether the Department’s
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interpretation of the CPT codes should have been in writing and adopted pursuant to MAPA.
This issue was not before us in Vainio.
¶20 As to Kirchner’s assertion that a Departmental interpretation must be in writing, the
State notes that under § 2-4-102(13)(b), MCA, an agency may adopt an interpretive rule
under MAPA but is not required to do so. Additionally, the State counters that the absence
of written instructions expressly informing Kirchner that she could not be reimbursed for
billing more than one unit of service under a particular code for a given client on a given day
is irrelevant. This is so, the State argues, because the Department is statutorily entitled to
recover overpayments “regardless of whether the incorrect payment was the result of
Department or provider error or other cause.” Section 53-6-111(2)(a)(i), MCA; Rule
37.85.406(10)(a), ARM.
¶21 Section 53-6-111(2)(a)(i), MCA, unequivocally states:
(2) (a) The department is entitled to collect from a provider, and a provider is
liable to the department for:
(i) the amount of a payment under this part to which the provider was not
entitled, regardless of whether the incorrect payment was the result of
department or provider error or other cause; . . .
¶22 Montana Administrative Rule 37.85.406(10)(a) further provides:
The department is entitled to recover . . . any payment to which the provider
was not entitled, regardless of whether the payment was the result of
department or provider error, or other cause, and without proving that the
provider submitted an improper or erroneous claim knowingly, intentionally,
or with intent to defraud.
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See also Juro’s United Drug, ¶ 21, quoting verbatim § 53-6-111(2)(a)(i), MCA, and holding
that Juro’s must reimburse the Department for overpaid “delivery fees.”
¶23 In Juro’s, as in the case at bar, after paying Juro’s submitted claims, the Department
subsequently conducted an audit and determined that Juro’s had improperly billed the
Program and was erroneously paid under the relevant Medicaid code. The DPHHS sought
repayment of approximately $10,000.00. The Department’s conclusion was based on
regulatory language the meaning of which was a matter of dispute between Juro’s and the
Department. The District Court affirmed the decision of the Hearings Officer and the BPA,
concluding that the Department’s interpretation of the rule was “reasonable and not
inconsistent with” the applicable rule. We affirmed the District Court.
¶24 Kirchner argues that Juro’s is inapplicable because it stands for the proposition that
an individual cannot profit from a payment to which he or she is not entitled. She maintains
that the State has not argued that she did not do the work for which she was paid, but only
that she billed incorrectly for the work performed; therefore she is “entitled” to payment.
¶25 Section 53-6-111(2)(a)(i), MCA, Rule 37.85.406(10)(a), ARM, and Juro’s all
expressly indicate that the Department may seek reimbursement from a provider who “was
not entitled” to a Medicaid payment. Therefore, Kirchner’s argument against the
applicability of Juro’s likewise would apply to the applicability of the statute and the
regulation. “Entitled” simply means “to furnish with a right or claim to.” American Heritage
Dictionary, Fourth Edition, 2000. Under the Department’s interpretation of its rule,
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providers are authorized to bill the Medicaid Program under the medical codes relevant to
Kirchner’s claim for only one unit of service per patient per day. Therefore, such providers
are “entitled” to payment from the DPHHS for only one unit of service per patient per day.
Kirchner accurately states that there is nothing in writing to prohibit her from spending more
than one hour with a patient per day. She is, of course, free to do so. However, under the
Department’s interpretation of its rules, she may be paid by the Medicaid program for only
the amount of time considered to be “one unit” of service per patient per day. As stated
above, the District Court concluded that the DPHHS’s interpretation of the CPT codes was
“reasonable and not inconsistent.”
¶26 This Court has long held that an “agency’s interpretation of its rule is afforded great
weight, and the court should defer to that interpretation unless it is ‘plainly inconsistent’ with
the spirit of the rule. The agency’s interpretation of the rule will be sustained so long as it
lies within the range of reasonable interpretation permitted by the wording.” Easy v. Dept.
of Natural Res. & Conserv. (1988), 231 Mont. 306, 309, 752 P.2d 746, 748 (internal citations
omitted). In the case at bar, both the Hearings Officer and the District Court concluded that
the Department’s interpretation of its rule was “reasonable and not inconsistent with” the
applicable rule. Kirchner has presented nothing to convince us that a contrary conclusion
should be reached. Because the Department’s interpretation of the CPT codes was
reasonable, Kirchner is not entitled to payment for the overbilled services under § 53-6-
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111(2)(a)(i), MCA, and Rule 37.85.406(10)(a), ARM, and is liable to the Department for
reimbursement of the overpayment.
¶27 Under these circumstances we conclude that the factual findings proposed by Kirchner
were irrelevant in light of the applicable law, and the Hearings Officer’s failure to adopt
them was not error. From the record provided us, we further conclude that the factual
findings that were adopted by the Hearings Officer were adequately supported by the
evidence, and were not clearly erroneous.
¶28 Finally, Kirchner maintains in the alternative that the Department should be estopped
from seeking reimbursement from her because she justifiably relied upon an oral instruction
from a Consultec employee that she could bill more than one unit per patient per day. In this
connection, she asserts that the Hearings Officer improperly admitted and considered
evidence, and improperly shifted the burden of proof.
¶29 At Kirchner’s Fair Hearing, the Hearings Officer analyzed the merits of Kirchner’s
estoppel claim. In doing so, the Officer admitted over Kirchner’s objection the telephone
logs of Consultec, which had been offered to refute Kirchner’s claim that a Consultec
representative had authorized her by phone to bill in the manner she did. Kirchner argues on
appeal that the admission of the telephone logs was error, as was the Hearings Officer’s and
the ensuing District Court’s conclusion that the doctrine of equitable estoppel did not apply.
We decline to disturb these conclusions because ultimately they were unnecessary to the
District Court’s determination.
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¶30 At the core of Kirchner’s estoppel claim is her contention that the Department’s
Consultec agent gave her false information, upon which she relied to her detriment.
However, the fact remains that § 53-6-111(2)(a)(i), MCA, and Rule 37.85.406(10)(a), ARM,
expressly authorize the Department to collect from a provider an unentitled payment,
regardless of whether the incorrect payment was the result of department or provider error,
or other cause. See ¶¶ 21-22 above. Even if Kirchner could establish that the information
given to her was incorrect, this amounts at best to Department error, and Department error
is not a bar to a claim for reimbursement. Because Kirchner would be unable to avoid either
the plain meaning or the consequences of the statute and administrative rule even if she
succeeded in proving she was given bad information, it was unnecessary for the Hearings
Officer or the court to reach the merits of the estoppel argument, and it is likewise
unnecessary for us to review those merits here.
CONCLUSION
¶31 For the foregoing reasons, we affirm the District Court.
/S/ PATRICIA O. COTTER
We Concur:
/S/ KARLA M. GRAY
/S/ JOHN WARNER
/S/ JIM RICE
/S/ BRIAN MORRIS
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