Family Redirection Institute, Inc. v. Commonwealth of Virginia, etc. ( 2013 )

COURT OF APPEALS OF VIRGINIA
Present: Judges Frank, Humphreys and Kelsey
PUBLISHED
Argued at Richmond, Virginia
FAMILY REDIRECTION INSTITUTE, INC.
OPINION BY
v. Record No. 1274-12-2 JUDGE D. ARTHUR KELSEY
APRIL 16, 2013
COMMONWEALTH OF VIRGINIA DEPARTMENT
OF MEDICAL ASSISTANCE SERVICES
FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND
Walter W. Stout, III, Judge
Belinda D. Jones (Jonathan M. Joseph; Christian & Barton,
L.L.P., on briefs), for appellant.
Usha Koduru, Assistant Attorney General (Kenneth T.
Cuccinelli, II, Attorney General; Rita W. Beale, Deputy Attorney
General; Kim F. Piner, Senior Assistant Attorney General, on
brief), for appellee.
The Virginia Department of Medical Assistance Services (DMAS) ordered Family
Redirection Institute, Inc. (FRI) to reimburse the Commonwealth for payments made to FRI.
Contesting this reimbursement order, FRI appealed to the circuit court under the Virginia
Administrative Process Act (VAPA), Code §§ 2.2-4000 through -4033, claiming DMAS’s
request was arbitrary and capricious. The circuit court rejected FRI’s arguments, as do we.
I.
DMAS administers the federal and state funded Medicaid Program. See Code
§§ 32.1-323 through -331.17. DMAS entered into an agreement with FRI to provide intensive
in-home care services to Medicaid-eligible individuals in Virginia. These services include,
among other things, crisis interventions in the homes of at-risk youths with mental, medical, or
behavioral health problems. See 12 Va. Admin. Code § 30-50-130(B)(5)(a). Due to the
specialized needs of the patients receiving these services, DMAS regulations mandate that a
professional participating in the program must be either “an LMHP or a QMHP,” 12 Va. Admin.
Code § 30-60-61(A)(9), defined as a “Licensed Mental Health Professional” or a “Qualified
Mental Health Professional.” 12 Va. Admin. Code § 30-50-226(A).
The qualification pertinent to this case is the QMHP, which DMAS regulations define as
“a clinician in the human services field who is trained and experienced in providing psychiatric
or mental health services to individuals who have a psychiatric diagnosis.” Id. A QMHP must
be a physician, a psychiatrist, a psychologist, a qualified social worker, a registered nurse, or a
“[m]ental health worker” who meets particular criteria listed in the regulation. 12 Va. Admin.
Code § 30-50-226(A)(1) to (6). Except for certain registered or certified workers, all mental
health workers must have varying levels of “clinical experience,” 12 Va. Admin. Code
§ 30-50-226(A)(6)(a) to (f), ranging from one to four years.
According to the DMAS regulation, “clinical experience” is “practical experience in
providing direct services to individuals with mental illness or mental retardation or the provision
of direct geriatric services or special education services. Experience may include supervised
internships, practicums, and field experience.” 12 Va. Admin. Code § 30-50-226(A).
In 2000, and again in 2007, DMAS and FRI entered into agreements authorizing FRI to
participate in the DMAS program. The agreements stated that DMAS would pay FRI for its
services on the conditions that FRI “keep such records as [the Virginia Medical Assistance
Program (VMAP)] determines necessary . . . regarding payments claimed for providing services
under the State Plan” and “comply with all applicable state and federal laws, as well as
administrative policies and procedures of VMAP as from time to time amended.” App. at 655-
56. DMAS also provided FRI with a Community Mental Health Rehabilitative Services Manual,
which stated: “Providers will be required to refund payments made by Medicaid if they are
found to have billed Medicaid contrary to law or regulation, failed to maintain any record or
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adequate documentation to support their claims, or billed for medically unnecessary services.”
DMAS Community Mental Health Rehabilitative Services Manual ch. VI, at 2 (rev. June 6,
2003).
Following a utilization review by a DMAS auditor, DMAS requested reimbursement for
services provided by four FRI employees who lacked sufficient periods of clinical experience at
the time of the services billed and were thus unqualified mental health workers. As the enabling
statute requires, DMAS placed the burden of proof on FRI to demonstrate the qualifications of its
workers. See Code § 32.1-325.1(C). After considering the evidence in the administrative
record, DMAS concluded in the final agency decision that FRI did not prove by a preponderance
of the evidence that its employees were properly qualified as QMHPs.1
FRI appealed the final agency decision to the circuit court. The court entered an order
affirming DMAS’s decision to obtain reimbursement for all four FRI employees. The court’s
order stated that DMAS’s interpretation of 12 Va. Admin. Code § 30-50-226 “cannot require
providers to satisfy an unwritten standard.” App. at 305. The court apparently believed,
however, that DMAS’s interpretation did not violate this principle — for the very next sentence
of the order upheld DMAS’s decision finding all four FRI employees unqualified.2
1
The audit, informal factfinding conference, and formal review by the administrative
hearing officer preceded the final agency decision issued by the Acting Director of DMAS. See
generally Beverly Health & Rehab. v. Metcalf, 24 Va. App. 584, 588-89, 484 S.E.2d 156, 158-59
(1997) (describing DMAS’s administrative appeal process). In this case, the Acting Director of
DMAS accepted some of the hearing officer’s recommended conclusions and rejected others.
Under settled principles, “the recommendation of a hearing officer is just that — a
recommendation, and the DMAS director may reexamine all of the hearing officer’s
conclusions.” Id. at 591, 484 S.E.2d at 160. Under VAPA, courts review only the final agency
decision. See Code § 2.2-4027; see also Avante at Roanoke v. Finnerty, 56 Va. App. 190, 197,
692 S.E.2d 277, 280 (2010).
2
Over DMAS’s objection, the court later signed a “Written Statement in Lieu of
Transcript” drafted primarily by FRI. App. at 318-19. The written statement said the court
“agreed” with FRI’s assertion that “DMAS’ failure to accept ‘on the job’ clinical experience as
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II.
On appeal, FRI argues the circuit court should have found DMAS’s decision “arbitrary
and capricious” because DMAS imposed unwritten “documentation requirements” upon FRI to
prove the clinical experience of its four employees. Appellant’s Br. at 2. FRI adds that the
circuit court’s final order (which includes a statement that DMAS cannot enforce unwritten
standards) demonstrates why its holding (which finds DMAS properly requested reimbursement
for the four unqualified FRI workers) was plainly wrong. Id. On several levels, we disagree.
A. VAPA & THE LIMITED NATURE OF JUDICIAL REVIEW
Under the VAPA, the circuit court reviews an agency’s action in a manner “equivalent to
an appellate court’s role in an appeal from a trial court.” Mattaponi Indian Tribe v.
Commonwealth, 43 Va. App. 690, 707, 601 S.E.2d 667, 676 (2004) (citations omitted), aff’d in
relevant part sub nom. Alliance to Save the Mattaponi v. Commonwealth, 270 Va. 423, 621
S.E.2d 78 (2005). “In this sense, the General Assembly has provided that a circuit court acts as
‘clinical experience’ toward reaching qualification as a QMHP is inappropriate because it
enforces an unwritten standard for which the provider had no notice.” Id. at 319. Inexplicably,
the written statement goes on to say: “The Court did not rule, but necessarily following the
Court’s holding that DMAS could not enforce ‘unwritten rules’ denying ‘on the job’ experience
as satisfying the requisite ‘clinical experience’ criteria, DMAS cannot demand recoupment for
those services provided by clinicians that satisfied the criteria for QMHP(s) during the audit
period beginning on the date that the QMHP criteria was [sic] satisfied.” Id. Two of the four
workers, the statement concluded, “satisfied the criteria of a QMHP during the audit period.” Id.For reasons expressed later in our opinion, see infra at 7, we look solely to the court’s
final order as the best evidence of its ruling. See McMillion v. Dryvit Sys., Inc., 262 Va. 463,
469, 552 S.E.2d 364, 368 (2001) (“[T]rial courts speak only through their written orders and . . .
such orders are presumed to reflect accurately what transpired.”); Stamper v. Commonwealth,
220 Va. 260, 280-81, 257 S.E.2d 808, 822 (1979) (“[W]e presume that the order, as the final
pronouncement on the subject, rather than a transcript that may be flawed by omissions,
accurately reflects what transpired.”); Anderson v. Commonwealth, 13 Va. App. 506, 508, 413
S.E.2d 75, 77 (1992) (stating that “[t]ranscripts and statements of facts serve the identical
purpose on appeal,” and thus “[f]airness and common sense dictate that policies regarding
transcripts and statements of facts be reasonably analogous.”).
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an appellate tribunal.” Laurels of Bon Air, LLC v. Med. Facilities of Am. LIV Ltd. P’ship, 51
Va. App. 583, 591, 659 S.E.2d 561, 565 (2008) (quoting Gordon v. Allen, 24 Va. App. 272, 277,
482 S.E.2d 66, 68 (1997)).
The circuit court has no authority under VAPA to reweigh the facts in the agency’s
evidentiary record. VAPA authorizes the court to “reject the agency’s findings of fact only if,
considering the record as a whole, a reasonable mind would necessarily come to a different
conclusion.” Mattaponi Indian Tribe, 43 Va. App. at 706, 601 S.E.2d at 675 (emphasis in
original) (citation and internal quotation marks omitted). “Nor can the court substitute its own
judgment for the agency’s on matters committed by statute to the agency’s discretion.” Boone v.
Harrison, 52 Va. App. 53, 62, 660 S.E.2d 704, 708 (2008).
Instead, “when the appellant challenges a judgment call on a topic on which ‘the agency
has been entrusted with wide discretion by the General Assembly,’ we will overturn the decision
only if it can be fairly characterized as ‘arbitrary or capricious’ and thus a ‘clear abuse of
delegated discretion.’” Citland, Ltd. v. Commonwealth ex rel. Kilgore, 45 Va. App. 268, 275,
610 S.E.2d 321, 324 (2005) (citation omitted). “This standard recognizes the larger premise that,
before any legal question can be answered, an a priori question must first be asked — who has
the authority to decide. It is the one question that precedes all others.” Boone, 52 Va. App. at
62, 660 S.E.2d at 708.
We generally review legal questions de novo. That is certainly the case when we
interpret statutes.3 But we take a very different approach to interpreting administrative
3
See Va. Emp’t Comm’n v. Cmty. Alts., 57 Va. App. 700, 708, 705 S.E.2d 530, 534
(2011) (“Pure statutory construction, a matter within the ‘core competency of the judiciary,’
requires de novo review.” (citation omitted)); Finnerty v. Thornton Hall, Inc., 42 Va. App. 628,
634, 593 S.E.2d 568, 571 (2004) (“[P]ure statutory interpretation is the prerogative of the
judiciary.” (citation and internal quotation marks omitted)).
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regulations. When authorized by the General Assembly to issue regulations, an agency acts
securely within its delegable authority to interpret those regulations if it does so reasonably and
in a manner consistent with the legislative directive. We thus afford DMAS “great deference” in
its administrative “‘interpretation and application of its own regulations.’” Finnerty v. Thornton
Hall, Inc., 42 Va. App. 628, 634 n.2, 593 S.E.2d 568, 571 n.2 (2004) (quoting Dep’t of Med.
Assistance Servs. v. Beverly Healthcare, 41 Va. App. 468, 481, 585 S.E.2d 858, 865 (2003)); cf.
Bd. of Supervisors v. State Bldg. Code Tech. Review Bd., 52 Va. App. 460, 466, 663 S.E.2d
571, 574 (2008) (noting limits to such deference).
B. THE CIRCUIT COURT’S FINAL ORDER
With these principles framing our review, we next turn to the language of the circuit
court’s final order. FRI reads in it a fatal inconsistency. According to FRI, the order endorses
FRI’s main argument that DMAS was enforcing “documentation requirements” not clearly stated
in its regulations. Despite this purported endorsement, the order rules in DMAS’s favor on the
merits with respect to all four FRI employees. FRI argues we should affirm the circuit court’s
reasoning and reverse its holding. We think just the opposite is true. It seems to us the better
approach is to affirm the court’s holding and ignore its allegedly inconsistent reasoning.
To begin with, we are not at all confident of FRI’s reading of the court’s statement that
DMAS’s interpretation of 12 Va. Admin. Code § 30-50-226 “cannot require providers to satisfy
an unwritten standard.” App. at 305. FRI reads the statement to mean that DMAS improperly
held FRI to an unwritten standard. The next sentence of the order, however, upholds DMAS’s
decision in full. Perhaps the court meant only to voice its agreement with FRI’s theory in the
abstract, while disagreeing that it applied to this case. Viewed through this contextual lens, the
court simply said: “Yes, as a general principle, DMAS cannot apply an unwritten standard to
FRI; but the court does not believe DMAS did so in this case.”
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We acknowledge the conceptual gap between what the court said and what it did seems
rather wide, particularly considering the statement of facts adopted by the court. See supra n.2.
Mitigating that concern, however, is the basic tenet that an appellate court “reviews judgments,
not statements in opinions.” California v. Rooney, 483 U.S. 307, 311 (1987) (per curiam)
(citation omitted); see also Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837,
842 n.8 (1984). When the issue on appeal involves a matter of law reviewed de novo, the
“question before an appellate Court is, was the judgment correct, not the ground on which the
judgment professes to proceed.” McClung v. Silliman, 19 U.S. (6 Wheat.) 598, 603 (1821).
In this case, the question before us is exactly the same as the one before the circuit court:
Did DMAS interpret or apply its regulations in a manner that arbitrarily and capriciously
required FRI to reimburse DMAS for prior Medicaid payments for the four unqualified
employees? We can answer this legal question without attempting to tease out of the circuit
court’s statements various enigmatic meanings allegedly favorable or disfavorable to its holding.
C. DMAS REGULATIONS & FINAL AGENCY DECISION
DMAS regulations define a QMHP as “a clinician in the human services field who is
trained and experienced in providing psychiatric or mental health services to individuals who
have a psychiatric diagnosis.” 12 Va. Admin. Code § 30-50-226(A) (emphasis added). The
syntax of this definition leaves no doubt as to its meaning: The requisite training and experience
must be gained prior to the employee’s services being billed to DMAS. DMAS interprets this
regulation to permit on-the-job training so long as it involves true clinical experience as defined
in 12 Va. Admin Code § 30-50-226(A).4
4
FRI points to the testimony of the DMAS auditor who apparently failed to credit any
on-the-job training of the four workers while in FRI’s employment, even prior to the time FRI
billed the workers as QMHPs. See App. at 518-19. As FRI concedes on appeal, however, the
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DMAS applied these definitions to the four disputed FRI employees and found that each
lacked the required amount of clinical experience to be qualified as a QMHP at the time the
services were rendered. This decision should not stand, FRI contends, because underlying it are
unwritten “documentation requirements” nowhere spelled out in the regulations. Appellant’s Br.
at 9. We disagree.
To us, the record shows nothing more than DMAS looking for contemporaneous written
evidence to support FRI’s claim that its employees had bona fide clinical experience before
being billed as QMHPs. It is understandable DMAS would do so. FRI provided DMAS with
multiple, inconsistent versions of the employees’ resumes and copies of their diplomas and
first-aid certifications. To the extent any supervised on-the-job training occurred, none of it was
adequately documented. We can hardly fault DMAS for considering the presence or absence of
documentary evidence relevant to its decision.
Perhaps not, FRI argues in the alternative, but FRI should have been given prior notice of
DMAS’s need for documentary proof of the employees’ training and qualifications. We question
the factual assumption behind this assertion.5 At the formal hearing, FRI’s executive program
director acknowledged that DMAS requested “some records from these employees,” App. at
hearing officer reviewed each worker’s employment record while at FRI for any evidence of
bona fide clinical experience. See Oral Argument Audio at 10:24 to 10:34. Except for
disagreeing with the hearing officer’s conclusion with respect to one of the four workers,
DMAS’s final agency decision adopted the hearing officer’s view that on-the-job training, if
proven, could satisfy the clinical experience requirement. At oral argument on appeal, DMAS’s
counsel reaffirmed that “DMAS’s position is not that on-the-job training won’t count towards
clinical experience; it will count so long as it meets the requirements in the regulation.” Oral
Argument Audio at 19:03 to 19:11; see also id. at 16:45 to 16:55; 17:21 to 17:26. We agree that
this position is reflected in DMAS’s final agency decision in this case.
5
At oral argument, FRI conceded it received notice during the informal factfinding
conference of the need to present documentary evidence to support its claim that all four
employees were qualified as QMHPs. See Oral Argument Audio at 11:26 to 11:42. The record
supports this concession. See App. at 3, 36, 53, 364, 424, 456, 792-816, 818-19, 827-37.
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423, and suggested FRI actually had more documentation available: “We could have — we were
willing to drive a truck up, if needed, and bring the whole shebang, but we weren’t told to,
unfortunately.” Id. at 424.
At any rate, it strikes us as common sense that a decisionmaker would want to examine
available documents that might affirm or disaffirm a claimant’s position. DMAS’s alleged
failure to make this obvious point clear to FRI did not violate due process principles. See
generally Program Suppliers v. Librarian of Cong., 409 F.3d 395, 402 (D.C. Cir. 2005) (noting
that “[w]hile due process may require that parties receive notice and an opportunity to introduce
relevant evidence,” there is no case “holding that due process requires agencies to give advance
notice of what evidence they intend to credit”); accord ICO Global Commc’ns (Holdings) Ltd. v.
FCC, 428 F.3d 264, 268 (D.C. Cir. 2005) (“[T]here is no due process violation if a regulated
party acting in good faith is able to identify, with ascertainable certainty, the standards with
which the agency expects parties to conform.” (citation and internal quotation marks omitted)).
We also find no basis for FRI’s complaint that DMAS’s alleged “documentation
requirements,” Appellant’s Br. at 9, produced insupportable factual conclusions. DMAS found
that one employee held a Bachelor’s degree in Criminal Justice and had prior work experience at
QVC, Pizza Hut, and the YMCA before joining FRI. The employee claimed to have been a
youth counselor while in high school. DMAS reviewed this work background and concluded:
“There is no job description or employment history that would establish [three] years of clinical
experience. There is no record of clinical supervision.” App. at 162. Moreover, DMAS found
FRI’s “file documentation was self-serving and non-verifiable,” and thus FRI “failed to carry the
burden of proving that [this employee] satisfied the qualifications of a QMHP.” Id.The other three employees fared no better. For one, FRI relied upon his prior work as a
volunteer at a church and community center, but no evidence (written or unwritten) suggested he
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provided any direct services to individuals with mental retardation or illness. For another
employee, FRI cited his prior experience as a high school English teacher and a dorm resident
assistant in college, but no evidence proved either position involved counseling students with
mental health diagnoses. FRI’s final employee had a Bachelor’s degree in Sociology, a term of
service with the United States Army Reserves, and leadership experience in a cadet organization.
But, as with the other employees, no evidence proved her background met the definition of
“clinical experience” sufficient to be deemed a QMHP.
FRI had the burden of proving the qualifications of each employee. Given the paucity of
evidence presented by FRI, we cannot hold the record as a whole compels a “reasonable mind”
to “necessarily come to a different conclusion.’” Boone, 52 Va. App. at 62, 660 S.E.2d at 708(emphasis in original) (citation omitted). As we have said before, “DMAS possesses the
requisite experience and competence necessary to determine the reimbursement due qualified
providers for their reasonable costs incurred while delivering health care services.” Fralin v.
Kozlowski, 18 Va. App. 697, 701, 447 S.E.2d 238, 241 (1994). None of DMAS’s findings in
this case shake our confidence in this principle of factfinding deference.
III.
In short, DMAS did not enforce unwritten documentation requirements by simply noting
the presence or absence of written evidence offered in support of FRI’s claim that all four
employees were qualified as QMHPs. Nor did DMAS act irrationally by determining that FRI
did not establish their qualifications by a preponderance of the evidence. We thus affirm the
circuit court’s judgment upholding DMAS’s final agency decision.
Affirmed.
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