Marquez v. State Department of Health Care Services

Filed 9/2/15
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FIVE
MARIA MARQUEZ et al.,
Plaintiffs and Appellants,
A140488
v.
DEPARTMENT OF HEALTH CARE (San Francisco County
SERVICES et al., Super. Ct. No. CPF09509847)
Defendants and Respondents.
Pursuant to federal law, California’s Medi-Cal program requires Medi-Cal
beneficiaries to utilize services available through any other health coverage (OHC) they
may have before accessing Medi-Cal benefits. To this end, respondent State Department
of Health Care Services (DHCS) maintains a database with codes that indicate whether a
Medi-Cal beneficiary has OHC and, to some extent, the type or scope of that coverage.
These codes are available to Medi-Cal providers when a beneficiary seeks services.
Medi-Cal beneficiaries Maria Marquez, Maricella Rivera, and Robert Planthold
(petitioners) sought a writ of mandate in the trial court under Code of Civil Procedure
section 1085 to require respondents’ compliance with their duties in administering this
and related aspects of the Medi-Cal program. Because DHCS allegedly permits
Medi-Cal providers to refuse nonemergency services to beneficiaries with OHC, and
because the codes related to OHC are not always correct and the information maintained
in the DHCS database is limited, petitioners argued that beneficiaries may be improperly
denied service and referred to other health care providers even when, in reality, there is
no OHC available for the requested service. As a result, petitioners urged, beneficiaries
1
experience delays in receiving nonemergency care and, in some circumstances, may be
subject to a higher copayment than permitted under Medi-Cal. Petitioners contended,
among other things, that the assignment of an OHC code should trigger notice and a
hearing. The trial court declined to issue a writ.
In this appeal, petitioners claim entitlement to a writ of mandate requiring
respondents to (1) comply with Welfare and Institutions Code section 10950 (section
10950) and California Code of Regulations, title 22, section 50951 (regulation 50951) by
providing notice and an opportunity for a hearing whenever DHCS assigns a new or
different OHC code to a beneficiary; (2) comply with the due process clauses of the
California Constitution by providing such notice and opportunity for a hearing; and
(3) comply with duties under state and federal law to provide medically necessary
services to Medi-Cal beneficiaries when those services are not actually available from
OHC, provide such services promptly and humanely, ensure that beneficiaries are not
required to pay copayments above those permitted by federal law, and follow “pay-and-
chase” procedures for prenatal or pediatric preventive care and for beneficiaries who have
medical support orders.
We conclude that neither section 10950 nor regulation 50951 nor the California
Constitution requires DHCS to provide a hearing or notice whenever it assigns a new or
different code with respect to OHC. We further conclude that petitioners have not
established any violation by respondents of a ministerial duty subject to enforcement by a
writ of mandate. We therefore affirm the judgment.
I. FACTS AND PROCEDURAL HISTORY
We begin with an overview of California’s Medi-Cal program for context, and
then discuss the parties’ factual and legal contentions in this litigation.
A. California’s Medi-Cal Program
Medi-Cal is California’s program under the joint federal-state program known as
Medicaid. (Welf. & Inst. Code, § 14000 et seq.) Medicaid provides federal financial
assistance to participating states to support the provision of health care services to certain
2
categories of low-income individuals and families, including the aged, blind, and
disabled, as well as pregnant women and others. (42 U.S.C. § 1396 et seq.)
Because California has opted to participate in the Medicaid program and receive
federal matching funds, it must comply with all federal Medicaid requirements. (Conlan
v. Bontá (2002) 102 Cal. App. 4th 745, 753 (Conlan).) Among other things, the state must
administer its Medicaid program through a plan that has been approved by the federal
Centers for Medicare and Medicaid Services (CMS). (See 42 U.S.C. § 1396a; 42 C.F.R.
§§ 430.10, 430.15(b) (2014); Welf. & Inst. Code, § 14100.1.)
By state statute, Medi-Cal is intended to provide, to the extent practicable,
medically necessary care to California residents “who lack sufficient annual income to
meet the costs of health care, and whose other assets are so limited that their application
toward the costs of such care would jeopardize the person or family’s future minimum
self-maintenance and security.” (Welf. & Inst. Code, § 14000.) Under Medi-Cal,
beneficiaries may receive a broad range of services, including physician and hospital
services, optometry, mental health care, and prescription medications. (Welf. & Inst.
Code, § 14132; Cal. Code Regs., tit. 22, §§ 51301, 51305, 51308–51317; see 42 U.S.C.
§ 1396d(a)(xvii).)
The Medi-Cal program does not directly provide services; instead, it reimburses
participating health care plans and providers for covered services provided to Medi-Cal
beneficiaries. (Cowan v. Myers (1986) 187 Cal. App. 3d 968, 990 (Cowan).) Medi-Cal
accomplishes this on a fee-for-service basis or a managed care basis. (See Welf. & Inst.
Code, § 14016.5, subd. (b).)
About a third of Medi-Cal beneficiaries receive services under the fee-for-service
system in which health care practitioners are reimbursed for each covered service they
provide. The beneficiary can obtain care from any provider that participates in Medi-Cal,
is willing to treat the beneficiary, and is willing to accept reimbursement from DHCS at a
set amount for the services provided. (Welf. & Inst. Code, § 14016.5, subd. (b)(1).)
About two-thirds of Medi-Cal beneficiaries receive services through a Medi-Cal
managed care plan. Under managed care, DHCS contracts with health maintenance
3
organizations (HMOs) and other managed care plans to provide health coverage to
Medi-Cal beneficiaries, and the plans are paid a predetermined amount for each
beneficiary per month, whether or not the beneficiary actually receives services. (Welf.
& Inst. Code, §§ 14204, 14301, subd. (a); see Cal. Code Regs., tit. 22, § 53800 et seq.)
The beneficiary then obtains medical services from a provider within the managed care
plan’s network. (Welf. & Inst. Code, § 14304.5.)
Medi-Cal is administered by respondent DHCS. (See Welf. & Inst. Code,
§ 14100.1; 42 U.S.C. § 1396a(a)(5).) Respondent Toby Douglas is DHCS’s current
director. Respondents acknowledge they “have a legal duty to adopt and implement
policies and procedures to ensure that Medi-Cal recipients are able to obtain necessary
Medi-Cal benefits and services.”
In the 2011–2012 fiscal year, Medi-Cal provided health coverage for
approximately 8.3 million beneficiaries at a cost of some $63 billion of combined federal
and state funds.
1. Medi-Cal Does Not Pay for Services Covered by Third Parties
Critical to this appeal is the fact that Congress intended Medicaid to be the “payer
of last resort.” (Arkansas Dept. of Health and Human Servs. v. Ahlborn (2006) 547 U.S.
268, 291.) Consistent with this principle, Medi-Cal statutes preclude coverage for health
care services available to the beneficiary through OHC, whether public or commercial. 1
(Welf. & Inst. Code, § 10020, subd. (a) [“No person having private health care coverage
shall be entitled to receive the same health care items or services furnished or paid for by
a publicly funded health care program”]; § 14000, subd. (b) [Medi-Cal benefits “shall
not duplicate those provided under other federal or state laws or under other contractual
or legal entitlements of the person or persons receiving them”]; § 14005, subd. (a)
1
DHCS identifies other health coverage as “benefits for health related services
or entitlements for which a Medi-Cal beneficiary is eligible under any private, group,
or indemnification insurance program, under any other State or federal medical care
program, or under other contractual or legal entitlement.” (See Cal. Code Regs., tit. 22,
§ 51005, subd. (a).)
4
[Medi-Cal benefits and services must be provided to eligible residents only “to the extent
that such services are neither provided under any other federal or state law nor provided
nor available under other contractual or legal entitlements of the person”].) Further,
DHCS regulations specify that a beneficiary with OHC is not entitled to receive Medi-
Cal benefits or services until available OHC has been exhausted or denied for lack of
service coverage. (Cal. Code Regs., tit. 22, § 50761; see Palumbo v. Myers (1983) 149
Cal. App. 3d 1020, 1027 [“Where the same service is otherwise available to an applicant,
it is not covered by Medi-Cal”].)
2. Determination of Beneficiaries’ OHC
To ensure that the state does not pay for services for which another party may be
responsible, Congress required that states determine the potential responsibility of third
parties (including health insurers, self-insured plans, group health plans, and managed
care organizations) for payment for services provided under the state’s program, and to
pursue claims against them. (42 U.S.C. § 1396a(a)(25).)
To this end, each state Medicaid agency must ensure that information is collected
from applicants and beneficiaries regarding potentially liable third parties when they
apply for benefits or are reviewed for continued eligibility, and must establish electronic
data exchanges regarding potential third party responsibility with other public agencies
and programs. (42 C.F.R. §§ 433.137, 433.138 (2014).)
California’s state Medicaid plan (State Plan) includes provisions implementing
these requirements, which have been approved by CMS. As part of its data exchange
system, DHCS has established a system for coding and maintaining OHC information in
its Medi-Cal Eligibility Database System (MEDS), which includes information regarding
the existence of OHC, the OHC carrier (e.g., Kaiser HMO), and the general scope of
coverage by category of services (e.g., vision care, dental, comprehensive).
5
3. Regulations Designed to Avoid Covering Services Subject to OHC
Medi-Cal applicants and beneficiaries, counties, DHCS, and providers each have
responsibilities in assuring that beneficiaries utilize available OHC for a service before
accessing Medi-Cal benefits.
a. Beneficiaries Report OHC to Counties
Medi-Cal applicants and beneficiaries must apply for and retain available OHC
when “no cost is involved.” (Cal. Code Regs., tit. 22, § 50763, subd. (a)(1).) They must
disclose any entitlement to OHC to the county when applying for benefits and upon any
benefit redetermination, and must report any changes in coverage. (Cal. Code Regs.,
tit. 22, § 50763, subd. (a)(2).) (DHCS specifically advises them: “If you are a Medi-Cal
beneficiary and have individual or group private health (or dental) insurance coverage,
you are required by federal and state law to report it.”) And beneficiaries must utilize
“available” OHC before utilizing Medi-Cal coverage. (Cal. Code Regs., tit. 22, § 50763,
subd. (a)(3).) A beneficiary’s failure to comply with these requirements may constitute a
misdemeanor. (Welf. & Inst. Code, § 14023.)
According to evidence submitted in connection with petitioners’ motion for a
writ of mandate, one DHCS representative indicated that approximately 500,000 of
7.1 million Medi-Cal beneficiaries had OHC, while another DHCS representative
estimated that approximately 700,000 of 8.3 million beneficiaries had OHC (other than
Medicare).2
b. Counties Code OHC
Counties are responsible for determining Medi-Cal eligibility, enrolling applicants,
and conducting eligibility redeterminations. (Welf. & Inst. Code, § 14100; see Cal. Code
Regs., tit. 22, § 50101.) As part of these processes, counties are responsible for
determining whether an applicant or beneficiary has OHC; coding the name, type, and
scope of OHC into the MEDS database, according to DHCS coding guidelines; reporting
2
A footnote in respondents’ brief asserts that Medi-Cal enrollment has since
increased to approximately 11 million beneficiaries, and the number of beneficiaries with
OHC has diminished to roughly 400,000.
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OHC information to DHCS as requested; and notifying DHCS of any lapse in, or change
to, a beneficiary’s OHC. (Cal. Code Regs., tit. 22, § 50765; see 42 C.F.R. § 433.138(a)
& (b) (2014).) DHCS does not require counties to report the amount or duration of OHC,
exclusions from coverage, or the copayment and out-of-pocket costs assessed by the
OHC.
c. DHCS Updates MEDS with Other OHC Information
In addition to receiving OHC information coded into MEDS by the counties,
DHCS compares data on beneficiaries in MEDS with millions of records from the major
commercial health insurance carriers in California. Specifically, as mandated by federal
and state law, DHCS obtains membership and coverage information through monthly
electronic exchanges with private insurers and health plans to help identify beneficiaries
who have commercial health insurance, as well as the carrier and scope of the coverage
and any changes in coverage status. (42 C.F.R. § 433.138(d) (2014); Welf. & Inst. Code,
§ 14124.90.) Each month, DHCS receives membership records from commercial health
carriers regarding approximately 30 million individuals. Based on this information,
DHCS may add OHC information into the system or delete OHC codes for a particular
beneficiary.
d. Provider Is Informed of Beneficiary’s OHC Status
When seeking Medi-Cal services from a provider, beneficiaries disclose their
personal Medi-Cal number (by inputting it online or by phone, or by swiping their
Benefits Identification Card (BIC) in a point-of-service device). This gives the provider
access to the beneficiary’s Medi-Cal information in the Automated Eligibility
Verification System, including whether DHCS has identified the beneficiary as having
OHC and, if so, the plan carrier and contact information and any codes identifying the
scope of coverage. The provider may contact the OHC to determine whether the OHC
information is accurate, the requested service is covered, and a copayment is required.
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e. Providers’ Options in Handling Beneficiaries with OHC
A provider may not refuse to provide services to a Medi-Cal beneficiary merely
because an OHC is potentially responsible for payment for the service. (42 U.S.C.
§ 1396a(a)(25)(D).) DHCS instructs providers of this obligation.
However, in light of the law barring Medi-Cal’s payment for services that a
beneficiary is entitled to receive through OHC, DHCS also instructs providers that if the
beneficiary’s OHC is a managed care plan (i.e., an HMO) or other network of which the
provider is not a member, the provider may (1) decline to provide nonemergency
treatment and refer the beneficiary to the OHC plan for the service; or (2) contact the
OHC carrier for authorization to provide the service and to first bill the OHC, rather than
DHCS, for the service. If the beneficiary needs emergency services, the provider must
provide it or refer the beneficiary to an appropriate emergency facility. (See Health &
Saf. Code, § 1317.)
f. Providers’ Reimbursement for Services
After providing nonemergency services to beneficiaries with OHC, Medi-Cal
providers generally must first bill the OHC; if the OHC denies coverage or fails to make
payment up to the Medi-Cal rate, the providers may seek reimbursement from Medi-Cal
for amounts not paid by the OHC up to the Medi-Cal rate. (Welf. & Inst. Code,
§ 14124.90; see Cal. Code Regs., tit. 22, § 50769.) Billing the OHC first is referred to as
“cost-avoidance” billing.
There are, however, exceptions to cost-avoidance billing, two of which are
relevant here. First, federal law effectively requires the state to “pay” providers directly
for prenatal and preventative pediatric care (without the provider having to bill any third
party responsible for payment), and then “chase” the third party to collect for the
Medicaid program. (42 U.S.C. § 1396a(a)(25)(E).) Second, a similar exception applies
as to individuals benefiting from a court order requiring a noncustodial parent to provide
health coverage. (See 42 U.S.C. § 1396a(a)(25)(F).) In this instance, the provider bills
the responsible third party first, but if the third party fails to reimburse the provider
8
within 30 days after the services were furnished, the provider may bill Medi-Cal, and
Medi-Cal must pay the provider and chase the third party.
B. This Litigation
Petitioners filed their petition for writ of mandate in September 2009. DHCS filed
a demurrer, and petitioners filed a first amended petition before the demurrer was heard.
DHCS filed another demurrer, which the court sustained in part, granting leave to amend.
Petitioners’ second amended petition for writ of mandate, filed in July 2010, is the
operative pleading in this appeal.
1. Petitioners’ Second Amended Petition
Petitioners assert two causes of action. The first alleges that respondents are
failing to comply with their legal duties under state and federal laws to ensure that Medi-
Cal beneficiaries receive Medi-Cal covered services when the OHC does not provide
such services, or the same amount and scope of such services, or imposes a charge not
allowed by the Medi-Cal program. Petitioners’ second cause of action alleges that
respondents are unlawfully denying Medi-Cal beneficiaries written notice and an
opportunity to be heard when the beneficiaries are denied Medi-Cal covered benefits on
the basis of the availability of OHC.3
2. Petitioners’ Motion for Peremptory Writ of Mandate
Petitioners filed a motion for a peremptory writ of mandate in January 2013.
Based in part on evidence obtained during depositions of DHCS officials, petitioners
argued that OHC codes are often erroneous or incomplete, DHCS nonetheless instructs
Medi-Cal providers to refer beneficiaries to OHC HMOs for treatment, DHCS provides
neither notice nor a hearing when OHC is assigned or services are denied due to OHC,
3
By the time of the trial court’s order in this case, petitioners’ request for a writ
requiring respondents to provide Medi-Cal beneficiaries with notice and an opportunity
to be heard when Medi-Cal denies coverage of Medi-Cal covered benefits or services due
to the beneficiary’s OHC had become a request that respondents be required to provide
notice and a hearing when DHCS assigns a new or different OHC-related code to a
beneficiary. The latter version is before us.
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and the process for correction or removal of erroneous information is inadequate.
Petitioners asserted that Medi-Cal beneficiaries therefore suffer delay and harm because
respondents are not complying with their legal duties. The following summarizes
petitioners’ evidence as relevant to this appeal.
a. Errors in OHC Coding
Errors in OHC codes arise from various sources. The primary source is the
counties’ entry of incorrect OHC information into the system.
Another source of error lies in OHC’s “data matching” between MEDS and
information DHCS obtains from private insurance. This process may mistakenly match a
Medi-Cal beneficiary without OHC with another individual who has OHC because of the
ways “people spell their names and dates of birth, and social security numbers and so
on.” One DHCS official testified that the “problem with inaccurate social security
numbers” was “rampant” in part because insureds often are not required to provide a
Social Security number to obtain health insurance and, as a result, “less than half of the
health insurance records have social security numbers on them.” Nevertheless, upon a
data match, the beneficiary’s electronic file is coded to indicate OHC, the scope of OHC,
and how OHC is delivered (e.g., through an HMO or a prepaid health plan).
Errors in OHC codes also occur in regard to children on Medi-Cal who have OHC
as the result of a support order. DHCS receives OHC codes from the Department of
Child Support Services for these children, and DHCS is required to input these codes into
the Medi-Cal files. A “significant” percentage of this OHC information is unreliable,
however, in part because it comes from noncustodial parents who have a legal obligation
to provide health insurance as part of child support (or a justification for not doing so; see
Cal. Code Regs., tit. 22, § 50185(a)(12)) but may be “less than honest” or “incorrect” in
claiming they obtained it.
In addition, there are errors in the OHC information even for beneficiaries who do
have OHC. DHCS’s “COV” codes are supposed to set forth the scope of coverage
available from the OHC. But when “information about a [Medi-Cal] recipient’s
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insurance [coverage] is not available,” DHCS assigns an OHC code of “Comprehensive,”
which signifies “coverage for all medical services except long term care and dental.” The
actual scope of benefits available from the OHC may be less. Thus, respondents admit
that the “OHC coding system does not determine or reflect the amount and scope of
medical services which are actually available to the Medi-Cal recipient through the
OHC.”
Petitioners also point out that OHC codes do not relate certain information that
may be important. The coverage codes do not reflect service restrictions, limitations, or
utilization caps for included benefits, so they do not indicate definitively whether a
requested service would be covered by the OHC. Nor do the codes indicate whether the
OHC requires copayments or other cost sharing such as deductibles, or, if so, in what
amount. As discussed post, federal law limits the copayments and other cost sharing that
beneficiaries may be charged. (See, e.g., 42 U.S.C. § 1396o(b).)
b. No Notice of OHC Codes or Service Denials
DHCS does not notify beneficiaries before assigning them an OHC code for the
first time or changing their OHC code. Petitioners alleged that many beneficiaries do not
discover that their Medi-Cal file includes an OHC code until they seek treatment and
their Medi-Cal provider checks their eligibility, sees the code, and declines to treat them.
c. Delays Due to OHC Coding Errors
An erroneous OHC code, combined with DHCS’s instructions to providers (i.e.,
allowing providers to refer a beneficiary to the OHC for service, without requiring them
to first confirm the beneficiary has OHC that would cover the service) may result in the
beneficiary being denied (at that juncture) services that would otherwise be received
through Medi-Cal. The primary problem, it was alleged, is “long delays in the correction
11
of Medi-Cal records to delete the incorrect OHC code for clients with urgent medical
needs, or sometimes even no correction after repeated requests.”4
In 2011, DHCS received approximately 100 to 150 requests per day to address
OHC problems, most of them relayed by counties. While DHCS’s “goal is to complete
an OHC request within 30 days of receipt” and 48 hours for “urgent” requests, processing
could “take up to 60 days.” Even urgent requests to remove OHC coding errors could
take days or weeks. Furthermore, after removal of erroneous codes, the errors might
reappear.
3. Respondents’ Opposition to the Motion for Writ of Mandate
Respondents opposed petitioners’ motion, asserting that DHCS procedures
adequately dealt with the issues and that, at any rate, petitioners had not established a
violation of law or any ministerial duty with which respondents did not comply.
In particular, respondents provided evidence of their measures to remedy coding
errors so that the errors would not, in fact, provide a barrier to Medi-Cal services. By
February 2011, DHCS had cleared all backlogged requests for removal of OHC codes
that DHCS had identified as urgent and “acting as a barrier to care,” and such requests
were handled “on a daily basis again.” As of February 2013, the “Other Coverage Unit”
at DHCS handled an average of 150 requests each day to modify or remove OHC
information, and these requests were normally handled within 24 hours. If OHC could
result in the beneficiary not receiving services, “DHCS always honors the request to
4
Petitioners recount that Marquez’s son J.O. was receiving therapy through
Medi-Cal until Medi-Cal refused to pay for it due to his Kaiser OHC. Kaiser did not
offer weekly individual psychotherapy to J.O, but offered primarily group counseling
with other children and family therapy, allegedly 70 to 90 minutes away from his home,
with copayments of $20 per visit and up to $150 or more for prescription medications.
J.O. thereafter had no individual therapy or mental health medications for several months
(and his condition appeared to worsen) until legal advocates obtained restoration of
services under Medi-Cal. However, this delay was not due to an incorrect OHC code,
Marquez did not inform Kaiser of J.O.’s Medi-Cal eligibility, and there is no indication
Marquez sought assistance from DHCS in resolving the matter before legal advocates
intervened.
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suppress the other health coverage so that the beneficiary can get timely medical
treatment from a Medi-Cal provider for a Medi-Cal service.” It is DHCS policy “to
immediately suppress any [OHC] identifier once DHCS is made aware that it is a
potential barrier to receiving needed services.” (Italics added.)
Beneficiaries, providers, county eligibility workers, and others may contact the
Other Coverage Unit at DHCS to obtain correction of OHC coding information. DHCS’s
publication “Medi-Cal: What It Means to You”—issued to all Medi-Cal applicants—
advises that any erroneous OHC information can be addressed by contacting a county
eligibility worker or DHCS. Indeed, counties may process an “immediate need
transaction” to override OHC information that is incorrect because “the coverage has
ended,” or for other reasons, where it presents a “barrier to care” for a beneficiary.
In addition, while petitioners noted the unreliability of information received from
the Department of Child Support Services regarding OHC for children under medical
support orders, by 2011 DHCS began to use more reliable data provided by commercial
carriers to identify and correct inaccuracies.
Furthermore, DHCS has taken steps to ensure that OHC information, once
identified as incorrect, will not improperly reappear for beneficiaries with the same name
as another individual with OHC. This is accomplished by placing those beneficiaries on
a “suppression list” and coding their records so they are excluded from OHC matching.5
4. Trial Court’s Denial of Petitioners’ Motion
At a hearing on March 29, 2013, the trial court asked the parties to submit further
briefing regarding petitioners’ standing and the impact of CMS’s approval of the State
Plan. The court also asked petitioners to submit a revised proposed writ specifying the
actions they believed DHCS should be ordered to take to comply with its alleged
ministerial duties. Petitioners’ revised proposed writ would have required respondents to
5
Respondents also noted that none of the three named petitioners had asserted they,
or their children, had been erroneously coded as having OHC. Once DHCS was advised
of petitioners’ difficulties in receiving a particular service, DHCS promptly remedied the
situations.
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(1) provide Medi-Cal beneficiaries a written “notice of action” and an opportunity to
have an administrative hearing whenever an OHC code is assigned or removed, and
whenever a beneficiary’s Medi-Cal benefits or services are denied, terminated,
suspended, reduced, or delayed as a result of OHC; (2) adopt and implement policies and
procedures to (a) require Medi-Cal providers who are outside an OHC’s HMO or
exclusive provider network not to decline services to a beneficiary due to OHC when
services are not actually available from the OHC; (b) ensure that whenever copayments
or other cost sharing is imposed by OHC on a beneficiary whose Medi-Cal provider is
not in the HMO or network, the beneficiary is relieved of cost sharing in excess of Medi-
Cal limits; (c) ensure that Medi-Cal is available to beneficiaries living in an urban ZIP
Code when the provider is over 60 miles or 60 minutes away; (d) use the pay-and-chase
methodology for prenatal and preventative pediatric care and the 30-day pay-and-chase
methodology for children with medical support orders when the provider does not belong
to the OHC’s HMO or provider network; and (e) ensure prompt access to medical
services when OHC is not actually available and the provider is not in the OHC or
provider network.
After this briefing and a second hearing on July 31, 2013, the court ruled that
petitioners had standing to seek mandamus relief under the “public right/public duty”
exception to the beneficial interest requirement. (See Green v. Obledo (1981) 29 Cal. 3d
126, 144 (Green).) However, the court held, petitioners failed to demonstrate that
respondents had violated any alleged ministerial duty, and the process by which
respondents determined whether there is OHC does not create a denial, termination, or
reduction of services mandating notice and a hearing under federal or state law.
Judgment was entered for respondents in October 2013, disposing of all issues
between the parties.
This appeal followed.
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II. DISCUSSION
To obtain a writ of mandate under Code of Civil Procedure section 1085, the
petitioner has the burden of proving a clear, present, and usually ministerial duty on the
part of the respondent, and a clear, present, and beneficial right in the petitioner for the
performance of that duty. (Armando D. v. State Dept. of Health Services (2004) 124
Cal. App. 4th 13, 21–22.)
On appeal from the denial of a motion for such a writ, we resolve questions of
law—including questions of statutory interpretation and the adequacy of the alleged
ministerial acts at issue in this appeal—by de novo review and the exercise of our
independent judgment. (County of San Diego v. State of California (1997) 15 Cal. 4th 68,
109 (County of San Diego).)
Applying these principles, we address each of petitioners’ contentions in turn.
A. Section 10950 and Regulation 50951 Do Not Require a Hearing
Petitioners contend that respondents have a duty under California statutory and
regulatory law to provide Medi-Cal beneficiaries with notice and the opportunity for a
hearing whenever DHCS assigns an OHC code, or a new or different OHC code,
including codes pertaining to the type or scope of coverage. For brevity, we will refer to
these incidents as a “coding event.”6
1. Law
With certain exceptions inapplicable here, the California Code of Regulations
provides the right to a state hearing to a Medi-Cal applicant or beneficiary dissatisfied
with any “action or inaction” of DHCS “relating to Medi-Cal eligibility or benefits.”
6
At oral argument in this appeal, petitioners stated that the coding itself is not an
action that triggers a hearing, but that a hearing is triggered when the code is posted and
made available to providers. This theory was not advanced in the trial court or in
petitioners’ appellate briefs, and the record does not indicate any distinction between the
assignment of a code and its availability to providers. Both concepts are included in our
phrase “coding event.”
15
(Cal. Code Regs., tit. 22, § 50951, subd. (a), italics added.)7 This right to a hearing is
“governed by the provisions of Sections 10950 through 10965, Welfare and Institutions
Code.” (Cal. Code Regs., tit. 22, § 50951, subd. (b).)
Section 10950 provides “an opportunity for a state hearing,” with some
exceptions, to “any applicant for or recipient of public social services [who] is
dissatisfied with any action of the county department [and, pursuant to regulation 50951,
DHCS] relating to his or her application for or receipt of public social services.” (Italics
added.) “Public social services” include programs, such as Medi-Cal, administered by
DHCS. (Welf. & Inst. Code, § 10051.)
The question, therefore, is whether a coding event constitutes a DHCS “action”
that triggers the right to a hearing under section 10950 and regulation 50951. In this
regard, our fundamental goal is to ascertain the Legislature’s intent, and effectuate the
statute’s purpose, by giving the statutory language a commonsense interpretation in light
of the statutory scheme. (Wallace v. McCubbin (2011) 196 Cal. App. 4th 1169, 1196;
In re David S. (2005) 133 Cal. App. 4th 1160, 1164.)8
Our Supreme Court has observed that, in light of the statutory scheme, the fair
hearing mechanism in section 10950 is intended to provide a “speedy” and “informal”
“ ‘means to challenge an administrative action which may reduce or terminate vitally
7
This regulation was ostensibly adopted in light of the federal mandate that state
plans provide “an opportunity for a fair hearing before the State agency to any individual
whose claim for medical assistance under the plan is denied or is not acted upon with
reasonable diligence.” (42 U.S.C. § 1396a(a)(3).) Federal Medicaid regulations define
an “action” as a “termination, suspension, or reduction of Medicaid eligibility or covered
services.” (42 C.F.R. § 431.201 (2014).) In this appeal, petitioners base their entitlement
to a hearing under state law, not federal law.
8
A slight clarification is in order. Section 10950, which grants a hearing right with
respect to actions by county departments (not DHCS), applies to this proceeding only to
the extent it is made applicable by regulation 50951. Therefore, the more precise
question may be what DHCS meant by “action or inaction” when enacting regulation
50951 (see 42 C.F.R. § 403.201 (2014)), and DHCS’s understanding of the scope of
section 10950, rather than the legislative intent behind section 10950. The parties equate
the two, however, and do not specifically address the intent behind regulation 50951; our
conclusion would be the same under either approach.
16
needed social service benefits.’ ” (Lentz v. McMahon (1989) 49 Cal. 3d 393, 402 (Lentz),
quoting People v. Sims (1982) 32 Cal. 3d 468, 493–494 (Kaus, J., dis.); see Knight v.
McMahon (1994) 26 Cal. App. 4th 747, 755, disapproved on other grounds in American
Federation of Labor v. Unemployment Ins. Appeals Bd. (1996) 13 Cal. 4th 1017, 1023.)
Thus, the right to a hearing under section 10950 typically arises when the county denies
an individual’s application to enroll in benefits or reduces or terminates the benefits (e.g.,
County of Madera v. Holcomb (1968) 259 Cal. App. 2d 226); it may also occur when
DHCS directly denies coverage for a specific requested service (Jeneski v. Myers (1984)
163 Cal. App. 3d 18, 32 (Jeneski)).
However, an “action” triggering fair hearing rights under section 10950 and
regulation 50951 does not include every event during the process of applying for and
receiving social services. As the Court of Appeal recognized in Madrid v. McMahon
(1986) 183 Cal. App. 3d 151 (Madrid ): “The term ‘action’ in section 10950 must be
given a commonsense construction in keeping with the legislative scheme of which it is a
part. [Citation.] The Legislature could not have intended that every event occurring
during the processing of an application and the delivery of benefits—no matter how
trivial or inconsequential—could be the subject of a demand for an administrative fair
hearing.” (Id. at p. 156.)
In Madrid, the court concluded that the test for whether an agency action is subject
to challenge in a hearing under section 10950 is “whether it has a significant effect on the
claimant’s application for or receipt of the aid or other service provided by the county
agency.” (Madrid, supra, 183 Cal.App.3d at p. 156.) There, the petitioner had contended
that she was entitled to a hearing based on an agency’s actions in computing an
overpayment of benefits, referring the matter to a fraud investigation department (SIU),
the SIU’s investigation, referring the case to the district attorney, and filing criminal
charges against her. (Id. at pp. 155–156.) But none of these events, the court held,
constituted an “action” entitling the petitioner to a hearing: the failure of the county to
demand return of the overpayment strongly suggested that it had not made a final
determination of overpayment; the referral of the case to the SIU, the investigation by the
17
SIU, and the referral to the district attorney were all internal actions with no immediate or
direct impact on plaintiff’s application for or receipt of benefits; and the fair hearing
process could not be used for the sole purpose of affecting a collateral criminal case. (Id.
at pp. 156–157.)
Although not directly on point factually, Madrid illustrates that state hearings are
reserved for agency actions that have an immediate, direct, and significant impact on the
ability of a beneficiary to obtain, in this case, medical services. With these precepts in
mind, we turn to the record.
2. Coding Events Are Not Actions That Trigger a Hearing
OHC coding events are an integral part of ensuring that Medi-Cal is a payor of last
resort. The aim of OHC coding is not to deprive a Medi-Cal beneficiary of any service,
but to help assure that the cost of that service is borne in the first instance by available
OHC. Coding events are therefore qualitatively distinct from a determination that a
beneficiary is ineligible for a benefit program overall or a direct denial of a specific
request for treatment: if a beneficiary is not coded with OHC, the beneficiary receives
the covered service; if the beneficiary is coded with OHC, the beneficiary may have to go
to another provider, but is still entitled to receive the service to the extent of available
coverage.
This distinguishing characteristic of OHC coding manifests itself in several
ways—discussed next—that ultimately compel the conclusion that OHC coding does not
affect a beneficiary’s receipt of services so significantly as to require a state hearing.
First, unlike most outright denials of benefit eligibility or specific requests for
treatment authorization, OHC coding events have no immediate impact. A coding event,
in itself, does not affect the beneficiary until he or she has the need to seek a service
covered by Medi-Cal from a Medi-Cal provider.
Second, unlike denials of eligibility or treatment authorizations for a specified
beneficiary, OHC coding events will eventually affect only a limited subset of
beneficiaries. Even when a beneficiary seeks a service from a Medi-Cal provider, there is
18
no substantial negative impact of an OHC code if the service is for an emergency, since
the provider is required to deliver necessary emergency services. And even when the
beneficiary seeks nonemergency services, an OHC code has no substantial negative
impact if it is accurate: the beneficiary would have actual or constructive knowledge of
the OHC, as well as the law that OHC must be exhausted before Medi-Cal. (Welf. &
Inst. Code, §§ 10020, subd. (a), 14005, subd. (a).) Only if the OHC code turns out to be
erroneous or misleading does the coding event potentially impact the delivery of services
otherwise covered by Medi-Cal.9
Third, even as to this subset of affected beneficiaries, DHCS coding does not
directly dictate whether a service will be provided by the first Medi-Cal provider the
beneficiary sees, let alone whether the service will ever be received. If the beneficiary
with an OHC code (even if erroneous) goes to a provider who is within the OHC provider
network, the provider will presumably render the service. If the provider is not within the
OHC network, DHCS suggests the provider may refer the beneficiary to the OHC, but
DHCS does not mandate that the provider do so. A provider may elect to (1) confirm
whether OHC exists to cover the service and whether there may be any obstacles
(including copayment) interfering with the availability of OHC, and treat or refer the
patient accordingly; (2) seek authorization from the OHC to treat the patient; (3) refer the
patient to the outside OHC network to receive the service; or (4) treat the patient at risk
9
Moreover, while it might be that any action wrongly affects a beneficiary only if it
turns out to be incorrect, the difference here is twofold. Unlike actions in which an
agency evaluates eligibility, denies coverage, or declines treatment authorization, DHCS
has little means of discerning whether the coding is incorrect when it assigns the code:
OHC codes are less a deliberative evaluation of information by DHCS and more a result
of data received from county agencies and private insurers. While DHCS knows that
some codes will turn out to be erroneous, it has no plain way of ascertaining which ones
at the time of coding. (And, as discussed post, DHCS has no ministerial duty to gather
more information at this juncture.) In addition, a coding event may become obsolete
before it ever comes into play with the beneficiary’s attempt to obtain services: the
record indicates that beneficiaries typically have seasonal employment and thus their
access to OHC is “fluid”; changes in OHC would be captured in the monthly updates
from private insurers.
19
of not obtaining reimbursement from the beneficiary’s OHC. This decision lies with the
private provider, not DHCS. (And it is therefore not state action subject to hearing rights
under section 10950 or regulation 50951; see Blum v. Yaretsky (1982) 457 U.S. 991,
1003–1005 [no state action for due process purposes].)
Fourth, and most importantly, OHC coding ultimately results in a delay, not a
denial or reduction, of services. OHC coding events do not preclude coverage or
treatment altogether. Even if the provider declines the service and refers the beneficiary
to his or her purported OHC, there is merely a delay in the time it takes the beneficiary to
obtain an appointment with the OHC; if the OHC coding is erroneous or inadequate,
there is additional delay—but only delay—while obtaining a correction or bypass of the
code. And while we do not trivialize the inconvenience and frustration caused by such
delays—or ignore their possible medical consequences—the point is that a coding event,
even if erroneous, does not deprive a beneficiary of the service.10 Accordingly, a coding
event is not an “action” requiring a state hearing. (See Lentz, supra, 49 Cal.3d at p. 402
[hearing for actions that may “reduce or terminate vitally needed social service
benefits”]; Madrid, supra, 183 Cal.App.3d at p. 156 [action must have “significant effect
on . . . application for or receipt of the aid or other service” (italics added)]; see also 42
C.F.R. § 431.201 (2014) [“action” means termination, suspension, or reduction of
eligibility or covered services]; 42 U.S.C. § 1396a(a)(3) [hearing for denials of claims for
medical assistance].)
Finally, as a public policy matter, OHC coding events are not the type of actions
for which a hearing would be necessary or appropriate. The purpose of the fair hearing
system is to provide a “speedy” and “informal” means of resolving a matter that may
10
Petitioners remind us of the regulation stating that a “beneficiary with other health
care coverage is not entitled to receive health care benefits and services under the Medi-
Cal schedule of benefits until the other health care coverage available has been exhausted
or denied for lack of service coverage.” (Cal. Code Regs., tit. 22, § 50761, italics added.)
But this does not mean that a beneficiary with OHC does not receive the services at all.
To the extent OHC codes potentially cause a delay in obtaining the service (due to
figuring out whether OHC actually covers the service, etc.) or a copayment above what
would be permissible under Medi-Cal, we consider the issues post.
20
reduce or terminate vitally needed benefits. (Lentz, supra, 49 Cal.3d at p. 402.) But in
the context of OHC coding, this goal is better met by existing DHCS procedures, which
allow beneficiaries to resolve urgent OHC problems through their county eligibility
worker or DHCS immediately or within 24 hours if posing a barrier to care (according to
DHCS), or perhaps weeks (according to petitioners); resolution of a matter by a state
hearing would take much longer. (See Welf. & Inst. Code, § 10952 [hearing to
commence within 30 working days after request filed]; § 10957 [continuance of up to 30
days]; § 10958 [proposed decision filed within 75 days after hearing]; § 10959 [director’s
decision within 30 days of receipt of proposed decision]; § 10960 [request for
rehearing].) Based on the record in this appeal, requiring notice and hearing rights for
OHC coding events would impose a more time-consuming and formal process at no
appreciable benefit to beneficiaries.
For all these reasons, an OHC coding event is not an “action” for which Medi-Cal
beneficiaries are entitled to a hearing under section 10950 or regulation 50951.
3. Petitioners’ Arguments Are Unavailing
Besides the arguments we have implicitly addressed in our discussion so far,
petitioners assert three additional arguments in favor of requiring a state hearing for
coding events. We find them unpersuasive.
a. Language of Section 10950 and Regulation 50951
Petitioners point out that section 10950 provides a right to a hearing for any
recipient “dissatisfied with any action . . . relating to his or her application for or receipt
of public social services,” and regulation 50951 states that a beneficiary “shall have the
right to a State hearing if dissatisfied with any action or inaction of . . . [DHCS] . . .
relating to Medi-Cal eligibility or benefits.” They urge that the words “any” and
“relating” should be viewed expansively and inclusively. (Citing Delaney v. Superior
Court (1990) 50 Cal. 3d 785, 798; People v. Dunbar (2012) 209 Cal. App. 4th 114, 117–
118; Barnick v. Longs Drug Stores, Inc. (1988) 203 Cal. App. 3d 377, 382.)
21
The question, however, is not the breadth generally communicated by the words
“any” or “relating,” but the commonsense meaning of the word “action” in light of the
particular statutory scheme now before us. That commonsense meaning of “action”—to
include only events that have a significant effect on the application for or receipt of aid or
service—was articulated nearly three decades ago in Madrid and is consistent with the
description of the language by our Supreme Court in Lentz. Despite the appearance of
the words “any” and “relating,” petitioners do not provide us with a single instance in
which a court required a state hearing under section 10950 or regulation 50951 merely
because an agency assigned a beneficiary with a status (e.g., OHC) that might in the
future affect a private service provider’s decision whether to deliver services or refer the
beneficiary to another provider.
b. Regulation 50179
Petitioners also point us to California Code of Regulations, title 22, section 50179
(regulation 50179), which governs when counties must send a beneficiary a “Notice of
Action.” (Cal. Code Regs., tit. 22, § 50179, subd. (a).) Under this regulation, a
beneficiary must be notified of their “Medi-Cal-only eligibility or ineligibility, and of any
changes made in their eligibility status or share of cost.” (Ibid.) “Eligibility” relates to
requirements concerning income, assets, and aid categories (aged, blind, disabled, etc.).
(See Welf. & Inst. Code, § 14005 et seq.; 42 U.S.C. § 1396a(a)(10)(A); Cal. Code Regs.,
tit. 22, § 50173.)
The Notice of Action must include information about the “approval, denial or
discontinuance of eligibility,” the rescission of a denial or discontinuance, or a change in
the share of cost. (Cal. Code Regs., tit. 22, § 50179, subds. (c)(1)–(3).) The notice also
must inform the beneficiary of the right to request a state hearing if he or she is
dissatisfied with county action affecting Medi-Cal eligibility or share of cost, and of any
DHCS action that “affects” the applicant’s or beneficiary’s Medi-Cal benefits. (Cal.
Code Regs., tit. 22, § 50179, subd. (c)(4).) Petitioners argue that this reference to a state
22
hearing regarding an action that merely “affects” benefits shows that the state hearing
process does not apply only to the termination of Medi-Cal eligibility or benefits.
If anything, regulation 50179 confirms that OHC coding events should not trigger
a hearing. After all, the requirement that the beneficiary be informed of a hearing right as
to DHCS action that “affects” Medi-Cal benefits only applies when a Notice of Action is
required. A Notice of Action is required only to inform the beneficiary of “Medi-Cal-
only eligibility or ineligibility, and of any changes made in their eligibility status or share
of cost.” (Cal. Code Regs., tit. 22, § 50179, subd. (a), italics added.) The regulation thus
suggests that a hearing is required if there is a change in the beneficiary’s Medi-Cal
eligibility (or changes in cost sharing); but there is no indication whatsoever that a
hearing would be required for merely changing a beneficiary’s code in a manner that
might in the future affect the type of provider through whom the beneficiary may obtain a
service.
c. Jeneski
Lastly, petitioners suggest that Jeneski, supra, 163 Cal. App. 3d 18 compels the
conclusion that DHCS is obligated to provide a hearing for every OHC coding event. In
Jeneski, Medi-Cal recipients sought to enjoin the Department of Health Services and state
officials from implementing laws that would delete certain drugs from those for which
Medi-Cal would provide reimbursement, and would place other drugs on a list requiring
prior authorization; prior authorization could be obtained by a provider submitting a
treatment authorization request (TAR) to Medi-Cal. (Jeneski, supra, 163 Cal.App.3d at
p. 22 & fn. 3; see Welf. & Inst. Code, § 14133.) The trial court initially issued an order
restraining defendants from implementing the laws pending a public hearing, but later
denied a requested extension and modification and ultimately dissolved the injunction.
(Jeneski, supra, 163 Cal.App.3d at pp. 22–23.) The Court of Appeal reversed,
concluding that the prior authorization procedures necessary for obtaining certain drugs
were invalid because, among other things, the system did not provide a hearing before the
denial of a TAR, and “the person seeking medical assistance should be entitled to a
23
hearing” under section 10950. (Id. at p. 32; see Cowan, supra, 187 Cal.App.3d at p. 986
[agreeing with Jeneski that, if the department intends to deny a TAR, it must afford the
Medi-Cal recipient the opportunity for a predenial hearing].)
Jeneski is inapposite. The rejection of a TAR is an action by Medi-Cal that
directly and categorically precludes Medi-Cal coverage for a particular individual for a
particular service or benefit, based on Medi-Cal’s assessment of its medical necessity or
propriety. If the beneficiary has no other coverage besides Medi-Cal (and cannot pay for
the service), the beneficiary will not receive the service. OHC coding, by contrast,
merely assigns a status that might, in the future, lead a private provider to delay the
beneficiary’s receipt of the service. If the beneficiary in fact has available OHC, he or
she will receive the service from the OHC; if the beneficiary does not actually have
available OHC, the problem can be remedied by an informal process DHCS has already
established, so that the beneficiary will still receive the service. Jeneski does not compel
the conclusion that an OHC coding event triggers a hearing under section 10950.
Petitioners fail to establish that DHCS has a ministerial duty under section 10950
or regulation 50951 to provide a hearing for OHC coding events.11
B. The California Constitution Does Not Require a Hearing
Petitioners next contend that respondents have a duty, under the due process
clauses of the California Constitution, to provide notice and hearing rights when DHCS
changes a Medi-Cal beneficiary’s status to OHC. (See Cal. Const., art. I, §§ 7(a), 15.)
“[A]pplication of the [due process] clauses [of the California Constitution] must
be determined in the context of the individual’s due process liberty interest in freedom
from arbitrary adjudicative procedures.” (People v. Ramirez (1979) 25 Cal. 3d 260, 263–
264 (Ramirez).) Thus, when a person is “deprived of a statutorily conferred benefit,”
11
To the extent petitioners contend they are entitled to contemporaneous notice of
DHCS coding under state statutory or regulatory law, their contention is amiss. Section
10950 and regulation 50951 refer to a hearing, not notice. Regulation 50179(a) requires
county departments to notify beneficiaries of their “Medi-Cal-only eligibility or
ineligibility, and of any changes made in their eligibility status or share of cost.” We
revisit the notice issue in the context of California due process guarantees, post.
24
there must be an “assessment of what procedural protections are constitutionally required
in light of the governmental and private interests at stake.” (Id. at p. 264.) “The required
procedural safeguards are those that will, without unduly burdening the government,
maximize the accuracy of the resulting decision and respect the dignity of the individual
subjected to the decisionmaking process.” (Oberholzer v. Commission on Judicial
Performance (1999) 20 Cal. 4th 371, 390 (Oberholzer).)
1. Statutorily Conferred Benefit or Interest
Respondents argue that petitioners have not satisfied the threshold requirement—
that they have been deprived of a “statutorily conferred benefit” or interest. (Ramirez,
supra, 25 Cal.3d at p. 264; Ryan v. California Interscholastic Federation–San Diego
Section (2001) 94 Cal. App. 4th 1048, 1071.) According to respondents, OHC coding and
DHCS guidelines allowing providers to refer beneficiaries to their OHC for services do
not themselves deprive the beneficiary of Medi-Cal services; furthermore, a provider’s
refusal of service or referral to other providers does not constitute state action to which
state due process protections may apply. (Citing Garfinkle v. Superior Court (1978) 21
Cal. 3d 268, 281–282.) Petitioners counter that Medi-Cal is a statutory benefit, and
erroneously coding a recipient as having OHC terminates or suspends enjoyment of that
benefit.
We question whether changing a Medi-Cal beneficiary’s status to “OHC” and
entering or maintaining other OHC-related codes constitutes an “adjudicative
procedure[]” (Ramirez, supra, 25 Cal.3d at pp. 263–264) targeted by our state’s due
process clause. We also question petitioners’ assertion that coding a beneficiary as
having OHC in itself terminates or suspends statutory entitlement to Medi-Cal services.
Nonetheless, OHC codes do affect the likelihood that some beneficiaries will promptly
obtain services otherwise mandated by the Medi-Cal statutes. We will therefore assume
the threshold requirement is met and proceed with a due process analysis.
25
2. The Ramirez Test
In determining what process is due, consideration must be given to “(1) the private
interest that will be affected by the official action, (2) the risk of an erroneous
deprivation of such interest through the procedures used, and the probable value, if any,
of additional or substitute procedural safeguards, (3) the dignitary interest in informing
individuals of the nature, grounds and consequences of the action and in enabling them to
present their side of the story before a responsible government official, and (4) the
governmental interest, including the function involved and the fiscal and administrative
burdens that the additional or substitute procedural requirement would entail.” (Ramirez,
supra, 25 Cal.3d at p. 269, italics added.)
a. Beneficiary’s Private Interest Affected by Coding
As discussed ante, a coding event, in itself, has no immediate effect on the
beneficiary until the beneficiary seeks a nonemergency service covered by Medi-Cal
from a Medi-Cal provider, the OHC codes turn out to be erroneous or misleading, and the
Medi-Cal provider opts not to provide the service and instead refers the beneficiary to
another provider, thus risking a delay in the beneficiary’s receipt of medical services.
Petitioners maintain that such a delay in treatment, however, can exacerbate medical
conditions. They insist that some recipients are denied urgently needed treatment for
weeks or months as they navigate DHCS or county procedures to obtain removal or
correction of OHC codes. They produce evidence that delays in service can result in
severe pain, a lack of affordable medication, sleeplessness, the need to pay out of pocket
for medications, and deteriorating health. And while DHCS counters that these delays
are not significant in light of procedures designed to correct errors within days (or
immediately if DHCS is advised that the OHC codes are posing a barrier to care), there is
at least a potential effect on the beneficiary’s interest in receiving prompt medical
services under Medi-Cal.
26
b. Risk of Violation; Value of Additional Safeguards
We next consider the risk that this private interest will be violated, and the
probable value of the additional procedural safeguards that petitioners propose.
Petitioners contend there is a high risk that OHC coding will violate the private
interests of beneficiaries because of a “rampant” problem with incorrect Social Security
numbers entered into computer records, faulty information from noncustodial parents
concerning medical support orders, and partial services covered by insurance companies
incorrectly labeled as “comprehensive.” Petitioners also note that, at one point in time,
DHCS was receiving approximately 100 to 150 requests per day to correct OHC
problems.
However, petitioners have included nothing in the record to actually quantify this
risk. They do not provide evidence indicating the percentage of coding events that are
erroneous, the number or percentage of Medi-Cal beneficiaries who are affected, or the
number or percentage who experience a delay due to incorrect OHC codes. (Indeed,
petitioners themselves do not allege that they suffered any coding error at all.) Even the
statistic of 100 to 150 daily requests to fix OHC coding problems would equate to fewer
than 40,000 requests a year out of 7 or 8 million beneficiaries, of whom 500,000 to
700,000 have OHC. In short, petitioners fail to show a high risk that the private interests
of a Medi-Cal beneficiary will be adversely affected by any particular coding event.
As to the second aspect of this element—the probable value of the proposed
additional procedural safeguards—petitioners do not point to any evidence in the record,
or even substantially argue, that the additional safeguard or procedure of a hearing for
every OHC coding event (or even for erroneous codes) would have any significant value
above the procedures DHCS already has.
Instead, petitioners turn their attention to DHCS providing contemporaneous
notice of a coding event, so a beneficiary can take steps to obtain correction of the error
before the beneficiary “makes a doctor’s appointment, is turned away at the office, and
then must wait weeks or months for care.”
27
It is true that immediate notice of OHC coding might enable beneficiaries who
know they do not actually have OHC to obtain correction of the error before seeking
medical services. The question, however, is whether petitioners have shown that this
potential benefit is so significantly advantageous over existing procedures as to compel
DHCS—who could not know which codes are incorrect at the time of coding—to notify
all beneficiaries of each and every coding event, even though a coding error may exist
only as to some subset of codes and beneficiaries. After all, there are millions of
Medi-Cal beneficiaries in the system, and hundreds of thousands who are coded with
OHC.
Based on the appellate record, we agree with respondents that the probable value
of providing contemporaneous notice of coding events is relatively low. As things stand
now, beneficiaries will discover any OHC coding error if they are turned down for
service by a provider (as occurred with petitioners Marquez and Rivera). At that point,
the beneficiary may assess whether the OHC information is incorrect and request
correction or suppression through the county or DHCS. The most recent evidence in the
record is that such requests are normally handled within 24 hours.12
Petitioners nevertheless complain that merely giving beneficiaries the ability to
contact the county or DHCS does not suffice for due process notice, and DHCS is
improperly shifting the burden of notice to beneficiaries. (Citing Vargas v. Trainor
(7th Cir. 1974) 508 F.2d 485, 489–490 (Vargas); Ortiz v. Eichler (D.Del. 1985) 616
F. Supp. 1046, 1062, on reargument (D.Del. 1985) 616 F. Supp. 1066, affd. (3d Cir. 1986)
794 F.2d 889 (Ortiz). In Vargas and Ortiz, however, it was undisputed that the recipients
were entitled to a hearing on the agency’s decision to reduce or terminate their benefits.
12
Petitioners state in their reply brief: “And indeed, those Petitioners and declarants
who were able to restore their Medi-Cal were only able to do so after they contacted legal
aid offices and other advocacy groups. [Record citations.] Poor people should not have
to retain lawyers to see their doctors.” The record citations do not support this assertion.
Petitioners did not experience erroneous OHC coding. There is no evidence petitioners
attempted to contact the county or DHCS to resolve their problems, and when DHCS was
finally advised, petitioners’ and declarants’ matters were promptly resolved.
28
The question before those courts, therefore, was not whether a beneficiary was entitled to
notice of an occurrence (such as a coding event), but whether the beneficiary was given
adequate notice of the agency’s decision so it could be challenged meaningfully at the
upcoming hearing. (Vargas, supra, 508 F.2d at pp. 487–490; Ortiz, supra, 616 F.Supp. at
pp. 1051–1053, 1061–1062.) Here, unlike the recipients in Vargas and Ortiz, the
beneficiaries do not have undisputed entitlement to a hearing for a coding event—indeed,
their entitlement to a hearing is an issue before us. Petitioners’ reliance on Vargas and
Ortiz thus puts the cart before the horse. Moreover, beneficiaries do have adequate
notice, for purposes of challenging an incorrect OHC code, when they are told by
providers that they are being referred due to their apparent OHC: with this information,
they can turn to the county or DHCS for relief, and there is nothing more that DHCS
could tell them.
c. Beneficiary’s Dignitary Interest
We next turn to the dignitary interest beneficiaries have in being informed of the
nature, grounds, and consequences of the DHCS action and in being able to present their
side of the story before a responsible government official. The point here is that, even if
participation in the decision-making process would not alter the outcome, the fact of
participation recognizes the dignity of the individual affected. (See Ramirez, supra, 25
Cal.3d at p. 268.)
Beneficiaries who believe there has been an error in OHC coding may be “heard”
informally through existing procedures, in which beneficiaries provide information
necessary to change or remove their OHC coding to their provider, county workers, or
DHCS. They are informed of the nature, grounds, and consequences of the DHCS action
and are able to present their side of the story before a government official.
Petitioners nonetheless argue that respondents’ existing procedures do not treat
beneficiaries with respect and dignity. They offer a situation when a mother arrives with
her child for a doctor’s appointment only to be unexpectedly turned away and told she
cannot get treatment for her child unless she makes a payment she cannot afford; or a
29
woman in pain and suspecting infection after having a Caesarean section resorts to
pulling out her surgical staples when unable to access medical care. But petitioners are
talking about what might happen as a result of an incorrect code, if it is not corrected.
The question here is whether a hearing or notice of a coding event is necessary for the
beneficiary to have dignity by way of input and participation in the process for deciding
whether the coding is correct. Petitioners cite no evidence in the record on this point.
Lastly, petitioners’ reliance on Barron v. Superior Court (2009) 173 Cal. App. 4th
293 (Barron) is unhelpful. There, a trial court ruling was reversed, in part because it was
based on a matter the court raised without warning at the hearing, and thus the proceeding
did not adequately comport with due process. (Id. at pp. 297–300.) Barron says nothing
about the adequacy of the DHCS procedures with respect to OHC coding.
d. Government Interests
The final part of the due process analysis is consideration of the “governmental
interest, including the function involved and the fiscal and administrative burdens that the
additional or substitute procedural requirement would entail.” (Ramirez, supra, 25
Cal.3d at p. 269.) The government’s interests in conserving scarce fiscal and
administrative resources and in not imposing further burdens on providers are substantial.
Although this governmental interest does not in itself outweigh the recipient’s interest in
obtaining services, it is a legitimate state concern. (Frank v. Kizer (1989) 213
Cal. App. 3d 919, 924–925.)
Here, it is undisputed, based on the evidence in the record, that hundreds of
thousands of Medi-Cal beneficiaries have OHC at any given time. Moreover, coverage
information is updated by DHCS monthly, and evidence in the record suggests that OHC
information changes frequently. It may fairly be inferred from the record that formal
30
notice and hearing procedures would necessarily impose fiscal and administrative
burdens on the state.13
e. Balancing the Interests
An OHC coding event has a potential effect on a beneficiary’s interest in receiving
nonemergency medical services under Medi-Cal without undue delay. However,
petitioners have not shown a high risk that any particular OHC code is erroneous or
would cause intolerable delay. Nor have they demonstrated that a hearing—or notice of a
coding event (or referral to an OHC provider)—would have significant value over
DHCS’s existing procedures, given the record of prompt resolution of coding errors.
Furthermore, the dignitary interest of beneficiaries is facilitated by existing procedures,
which allow beneficiaries to participate in the governmental process by which DHCS
codes are changed, removed, and maintained. In light of the size of the task DHCS
would face in providing notice and a hearing for every OHC-related coding event as to
hundreds of thousands of Medi-Cal beneficiaries who have OHC at any given time, with
monthly updates on OHC information, the marginal benefit of petitioners’ proposed
notice and hearing is outweighed by the substantial cost and burden on DHCS. (See
Duncan v. Department of Personnel Administration (2000) 77 Cal. App. 4th 1166, 1183;
Oberholzer, supra, 20 Cal.4th at pp. 390–391.) California due process does not compel
notice and a hearing for OHC coding events.14
13
Petitioners urge that, since DHCS did not present evidence on the projected cost
of providing notice, we should view with skepticism DHCS’s claim that the cost of
providing notice would be substantial. In the same paragraph, petitioners contend that
“DHCS has a multi-billion dollar budget” and it “can afford to provide advance notice to
recipients whose Medi-Cal benefits are threatened by possibly erroneous recoding to
OHC”—without any citation to evidence in the record.
14
This is not to say that we believe giving a beneficiary notice of his or her OHC
status is a bad idea. To the contrary, it may well be that DHCS or our Legislature can
devise an appropriate method of informing beneficiaries of their OHC status, whether by
mail, email, secure access to an online profile, or some other procedure. We hold only
that, based on the record in this appeal, petitioners have not established that the notice
and hearing they seek are compelled under California law.
31
Accordingly, petitioners fail to establish that respondents have violated a
ministerial duty in this regard.
C. Ministerial Duties Under State and Federal Law
Petitioners lastly contend that, by the manner in which DHCS handles OHC
coding and instructs Medi-Cal providers, respondents are violating a number of other
duties under state and federal law. We conclude they have not shown any violation of a
ministerial duty.15
1. Duty to Provide Medically Necessary Services
According to petitioners, DHCS violates a ministerial duty to provide medically
necessary services to Medi-Cal beneficiaries who are coded as having OHC when those
services are not actually available from OHC.
a. Welfare and Institutions Code Section 14005
Welfare and Institutions Code section 14005, subdivision (a) requires that Medi-
Cal’s “health care benefits and services” “shall be provided” to eligible state residents to
the extent those services and benefits are not “provided nor available under other
contractual or legal entitlements of the person.”
15
Respondents contend that CMS has approved California’s State Plan
implementing federal Medicaid requirements, including provisions relating to third party
liability, DHCS data match and OHC coding processes, and copayments, and CMS
approval is “entitled to deference unless ‘palpably erroneous.’ ” (Citing RCJ Medical
Services, Inc. v. Bontá (2001) 91 Cal. App. 4th 986, 1011; Managed Pharmacy Care v.
Sebelius (9th Cir. 2013) 716 F.3d 1235, 1247–1248; see Olszewski v. Scripps Health
(2003) 30 Cal. 4th 798, 810 (Olszewski) [“ ‘Congress intended that states be allowed
flexibility in developing procedures for administering their statutory obligations under the
Medicaid statute and their state plans’ ”].) Petitioners disagree, because their claims are
based on state law as well as federal law, and, in any event, CMS has not approved the
specific policies challenged here. (See Olszewski, supra, 30 Cal.4th at pp. 825–826.)
Furthermore, they claim, DHCS’s interpretation of state law is not conclusive, and its
interpretation of federal law, such as 42 U.S.C. §§ 1396a(a)(8) and (25), is not entitled to
deference at all. (Orthopaedic Hosp. v. Belshe (9th Cir. 1997) 103 F.3d 1491, 1495.) We
need not resolve this debate: even without deference to DHCS procedures approved by
CMS, we conclude petitioners fail to demonstrate a violation of a ministerial duty.
32
Petitioners argue that respondents violate section 14005 because, despite
knowledge of OHC coding errors, DHCS instructs Medi-Cal providers that they may
refuse to treat beneficiaries who have OHC codes when the providers do not belong to
the OHC network, and consequently beneficiaries whose OHC codes are erroneous—and
do not actually have available OHC—are deprived of Medi-Cal services and benefits.
Petitioners fail to establish any basis for a writ of mandate. In the first place, as
explained ante, DHCS’s referral authorization does not mean that the beneficiary is
denied a covered service; it merely means that the beneficiary will receive the service
from a Medi-Cal provider who is a member of the beneficiary’s OHC network. Indeed,
DHCS’s instruction that providers may refer beneficiaries to outside OHC networks is
consistent with section 14005 itself—which clearly indicates that Medi-Cal services
should not be provided if OHC is available—as well as other statutes to the same effect.
(Welf. & Inst. Code, §§ 10020, subd. (a), 14000, subd. (b).)
Furthermore, even if an OHC code is incorrect and OHC is not available, DHCS
does not preclude any medically necessary service; DHCS will suppress the code or
correct it so the services may be rendered under Medi-Cal.
Petitioners’ arguments, therefore, do not show that DHCS fails to comply with
section 14005, but merely debate how DHCS should comply. Petitioners suggest, for
example, that DHCS should affirmatively instruct providers not to refer Medi-Cal
beneficiaries with OHC codes to OHC for treatment unless providers first confirm that
the requested services are indeed covered by OHC. There is, however, no law requiring
DHCS to do so. Petitioners further complain that MEDS should provide more detailed
information regarding the services covered by the beneficiary’s OHC, as well as
coverage limitations and copayment or geographic information. Again, however,
petitioners do not point to any legal requirement that DHCS do this. And, as a practical
matter, the information that DHCS already makes available should enable the provider to
contact the OHC and obtain current and accurate information relevant to the beneficiary’s
specific requested service, which is a far more efficient procedure than forcing DHCS to
33
gather the information and update it on an ongoing basis with respect to all potential
coverage provisions and eventualities.
While a writ of mandate may issue to compel compliance with a ministerial
duty—an act the law specifically requires—it may not issue to compel an agency to
perform that legal duty in a particular manner, or control its exercise of discretion by
forcing it to meet its legal obligations in a specific way. (Code Civ. Proc., § 1085;
Common Cause v. Board of Supervisors (1989) 49 Cal. 3d 432, 442; Carrancho v.
California Air Resources Board (2003) 111 Cal. App. 4th 1255, 1267; California Assn. of
Sanitation Agencies v. State Water Resources Control Bd. (2012) 208 Cal. App. 4th 1438,
1462–1463.) Petitioners do not establish entitlement to a writ of mandate.
b. 42 United States Code Section 1396a(a)
Federal law requires a state plan to make assistance available to all eligible
beneficiaries. (42 U.S.C. § 1396a(a)(10)(A)(i).) In addition, the state plan must specify
that a Medi-Cal provider “may not refuse to furnish services to an individual (who is
entitled to have payment made under the plan for the services the person furnishes)
because of a third party’s potential liability for payment for the service.” (42 U.S.C.
§ 1396a(a)(25)(D); see 42 C.F.R. § 447.20(b) (2014) [“a third party’s potential liability
for the service(s)” is not a reason for a provider to refuse to furnish Medicaid services to
an eligible beneficiary].)
Petitioners contend DHCS violates these provisions because it tells providers they
can refuse to furnish services to a beneficiary because of a third party’s (OHC’s)
potential liability for the service. Petitioners are incorrect.
First, DHCS meets the duty imposed by these federal provisions by instructing
Medi-Cal providers—in the DHCS manual for providers (Provider Manual)—that they
“cannot deny services because . . . [t]he recipient has other health insurance coverage in
addition to Medi-Cal,” and by reminding providers that they “must not refuse to furnish
Medi-Cal covered services to eligible recipients because of a third party’s potential
liability.”
34
Second, DHCS’s advisement that providers may refer beneficiaries to their OHC
is not contrary to these provisions. The referral is not because the third party (OHC) is
potentially liable for payment, but because the OHC must furnish the services so that
OHC can be exhausted before Medi-Cal benefits are used. If a third party (even an OHC
carrier) were only responsible for payment for the service, the provider would be bound
by the nonrefusal requirement.
Looking at it another way, the nonrefusal requirement relates only to services for
which the beneficiary “is entitled to have payment made” by Medi-Cal. (42 U.S.C.
§ 1396a(a)(25)(D).) If a beneficiary has available OHC, the beneficiary is not entitled to
have payment made by Medi-Cal, and the nonrefusal requirement would not apply. In
any event, petitioners fail to show that respondents are violating federal law.16
2. Duty to Provide Services Promptly and Humanely
Under federal law, the state plan must provide that medical assistance from a
Medicaid program “shall be furnished with reasonable promptness to all eligible
individuals.” (42 U.S.C. § 1396a(a)(8); see 42 C.F.R. § 435.930(a) (2014) [the Medicaid
agency “must . . . [f]urnish Medicaid promptly to beneficiaries without any delay caused
by the agency’s administrative procedures”].)
Similarly, under California law, “aid shall be administered and services provided
promptly and humanely.” (Welf. & Inst. Code, § 10000.) This statute, however, sets
forth only a “general statement of policy.” (Board of Supervisors v. Superior Court
(Comer) (1989) 207 Cal. App. 3d 552, 564 (Comer); Watkins v. County of Alameda (2009)
177 Cal. App. 4th 320, 344 (Watkins).) It does not set forth any specific duty or course of
conduct an agency must take, but leaves to the agency’s discretion how to pursue the
policy goal.
16
In a footnote in their opening brief, petitioners argue that DHCS is violating the
comparability requirement of 42 U.S.C. § 1396a(a)(10)(B) by providing covered services
to Medi-Cal beneficiaries who do not have available OHC, but not to beneficiaries who
are coded to have available OHC but actually do not. Failing to provide substantial
argument on this issue, petitioners have abandoned it.
35
Petitioners argue that respondents violate these provisions by subjecting Medi-Cal
beneficiaries to unreasonable delays: because DHCS gives no notice to beneficiaries
when they are classified as having OHC, beneficiaries may schedule appointments and
seek care from Medi-Cal providers who will decline to treat them; beneficiaries then have
to wait for an appointment within the OHC’s network, and may learn that they do not
have available OHC after all or that the OHC does not provide the service; and efforts to
remove or correct erroneous OHC codes can take weeks or longer.
Based on the record in this appeal that OHC errors do not affect the provision of
emergency services, that correcting OHC errors may be accomplished within days or
weeks for nonemergency services, and that DHCS has taken steps to correct or suppress
any erroneous OHC codes, petitioners have not established a failure on the part of DHCS
to furnish medical assistance humanely and with reasonable promptness. The system is
not perfect, and there may be individuals who, unfortunately, suffer delays and increased
pain or complications. We do not minimize those difficulties. But DHCS cannot simply
adopt policies and procedures mandating that, for example, fee-for-service providers do
treat a Medi-Cal beneficiary even if his or her Medi-Cal record indicates the service is
available through an outside OHC network, in light of the more specific and controlling
statutory obligation to ensure that Medi-Cal is a payor of last resort. (Welf. & Inst. Code,
§§ 10020, subd. (a), 14005, subd. (b), 14023, subd. (c); see Watkins, supra, 177
Cal.App.4th at p. 344 [Legislature’s allowance of restrictions on eligibility for General
Assistance “necessarily supersedes the more general principles contained in [Welf. &
Inst. Code, §] 10000”]; Comer, supra, 207 Cal.App.3d at p. 564 [statute setting limits on
mental health services controlled over more general policy statement in Welf. & Inst.
Code, § 10000].) And even if there were other feasible procedures by which services
might be delivered more promptly or more humanely, DHCS’s methods accomplish the
minimum requirements of the statutes’ objectives, and the possibility of alternative
procedures is not at issue for purposes of mandamus.
Petitioners’ reliance on Cooke v. Superior Court (1989) 213 Cal. App. 3d 401,
disapproved on other grounds in County of San Diego, supra, 15 Cal.4th at p. 106, is
36
misplaced. There, a county medical services program violated “section 10000’s
command that relief be administered humanely” when it only offered emergency dental
care, and its refusal to offer nonemergency care forced indigent residents to “live with
untreated infection and chronic pain.” (Id. at pp. 404–405, 413–415.) Here, DHCS
procedures do provide for nonemergency care.
3. Duty Not to Allow Copayment Above Medicaid Limit
Federal law limits the amount and type of cost sharing—including copayments—a
state can require Medicaid beneficiaries to contribute to covered health care. Some
beneficiaries can generally be charged a “nominal” amount, while certain beneficiaries
under the age of 18 and pregnant women cannot be charged any copayment. (42 U.S.C.
§§ 1396o(a) & (b), 1396o-1(b)(3)(B); 42 C.F.R. §§ 447.51–447.57 (2014).)
In the context of OHC, federal guidance has further specified that “if the
applicant/recipient is required to pay a deductible or copayment for utilization of a
service under a [private prepaid health] plan, that plan service is not an available third
party resource unless the State agency or any other third party (i.e., other than the
recipient) pays the deductible or copayment on behalf of the individual, or the deductible
or copayment is waived by the plan.” (HCFA Program Issuance Transmittal Notice,
Region IV, MCD-32-86, Third Party Liability—Medicaid Eligible Enrollment in a Non-
Medicaid Prepaid Capitation Arangement, Aug. 6, 1986, italics added.) Thus a plan
would not constitute available OHC if the beneficiary must pay the copayment; and if
OHC is not available, DHCS cannot deny payment of services under Medi-Cal.
Petitioners complain that DHCS has no policy deeming OHC unavailable when
the OHC assesses copayments or other charges in excess of the amounts permitted by
Medi-Cal. Moreover, while DHCS has a policy of paying copayments on behalf of
beneficiaries with OHC if the beneficiary’s Medi-Cal provider is a member of the OHC’s
network (and can therefore bill the OHC for delivering care), DHCS does not cover the
payment if the provider does not belong to the OHC network, so the beneficiary’s OHC
will still be considered available even when copayments required by the OHC exceed
37
Medicaid limits. Petitioners seek a writ of mandate prohibiting DHCS from instructing
Medi-Cal providers to decline treatment and refer beneficiaries to their OHC when the
OHC charges copayments for covered services above those allowed by federal and state
law. Otherwise, they claim, beneficiaries with little or no income are forced to choose
between paying a copayment above what is allowed by Medicaid or forgoing needed
medical care. (Citing Nebraska Pharmacists v. Dept. of Social Services (D.Neb. 1994)
863 F. Supp. 1037, 1046 [“the difference between a one dollar or two dollar copayment
. . . is significant (and not nominal) to those who are poor and in need of prescription
services”].)
Petitioners are incorrect. DHCS instructs Medi-Cal providers that they may not
charge beneficiaries with copayments above what is established by Medi-Cal. The
Provider Manual identifies these amounts, consistent with law, as one dollar for
outpatient services and drug prescriptions and refills, and five dollars for nonemergency
services provided in an emergency room. Providers are also advised that “the collection
of the copayment by the provider [from the beneficiary] is optional” (although the
beneficiary remains liable to the provider for it), and “[a] provider of service cannot,
under law, deny care or services to an individual solely because of the person’s inability
to copay.” (See Welf. & Inst. Code, § 14134, subd. (a)(8).)
As a result, if a beneficiary has OHC and the Medi-Cal provider is not within the
OHC network, and is referred to a provider who is within the network and enrolled with
Medi-Cal (and the beneficiary presents his or her BIC, or discloses he or she has Medi-
Cal), the beneficiary will not be charged more than the nominal copayment amount
authorized under Medi-Cal.17 In short, the beneficiary need only go to a Medi-Cal
provider within the OHC network and the beneficiary will not have a copayment over
Medi-Cal limits.
There is, therefore, no need for petitioners’ proposed requirement that DHCS have
a policy requiring that OHC be deemed unavailable if the OHC carrier may assess a
17
Petitioner Marquez did not present J.O.’s BIC to Kaiser or otherwise advise Kaiser
that he had Medi-Cal coverage.
38
copayment in excess of the amount permitted under Medi-Cal. Moreover, DHCS is in
compliance with the law.
4. Duty to “Pay and Chase”
As discussed ante, in most instances a Medi-Cal provider must seek payment first
from a beneficiary’s OHC. For prenatal or preventive care services, however, the state
must pay providers (without the provider first billing the OHC) and then “chase” the
OHC for reimbursement. (42 U.S.C. § 1396a(a)(25)(E).) Similarly, for services
provided to minors who have OHC pursuant to a child support enforcement order, the
state must pay providers if the OHC has not made payment within 30 days after the
service, and then chase the OHC. Petitioners contend respondents violate their
ministerial duties by failing to apply these requirements.
a. Standing
These “pay-and-chase” provisions address only the process by which providers are
reimbursed for certain types of services rendered. They are certainly of interest to
providers, but respondents argue they do not give rise to any “public right” or “public
duty” sufficient to support “citizen” standing under the judicially created exception to the
beneficial interest requirement. (Green, supra, 29 Cal.3d at p. 144.) Nor, respondents
claim, can petitioners show a beneficial interest requisite for mandamus. (See Code Civ.
Proc., § 1086; Save the Plastic Bag Coalition v. City of Manhattan Beach (2011) 52
Cal. 4th 155, 165, 170.) Indeed, courts have held that certain provisions of 42 United
States Code section 1396a(a)(25) grant neither beneficiaries nor providers rights
enforceable under federal law. (Martes v. Chief Exec. Officer of South Broward (11th
Cir. 2012) 683 F.3d 1323, 1330 [“balance billing” provisions]; Wesley Health Care
Center, Inc. v. DeBuono (2d Cir. 2001) 244 F.3d 280, 283–285 [cost-avoidance
procedures].)
Petitioners, on the other hand, insist that pay-and-chase requirements protect
beneficiaries by ensuring services to those needing prenatal care and preventive pediatric
care or having OHC through a child support enforcement order. The provision of public
39
aid to the needy is of statewide concern and generally a proper subject for mandamus.
(See, e.g., Bd. of Soc. Welfare v. County of L.A. (1945) 27 Cal. 2d 98, 100; Green, supra,
29 Cal.3d at pp. 144–145; Conlan, supra, 102 Cal.App.4th at pp. 763–764; Brown v.
Crandall (2011) 198 Cal. App. 4th 1, 13–14.) We will assume petitioners have standing.
b. Prenatal or Preventive Pediatric Care
As mentioned, federal law requires the state plan to provide that, “in the case of
prenatal or preventive pediatric care” covered by the plan, the state shall make payment
“without regard to the liability of a third party for payment for such services” and then
“seek reimbursement from such third party.” (42 U.S.C. § 1396a(a)(25)(E); see 42
C.F.R. § 433.139(b)(3)(i) (2014) [“The agency must pay the full amount allowed under
the agency’s payment schedule for the claim and seek reimbursement from any liable
third party” if the “claim is prenatal care for pregnant women, or preventive pediatric
services”].) A provider may thus bill the state directly for these services without having
to seek recovery first from the beneficiary’s OHC (or other potentially liable third party).
DHCS’s Provider Manual states that Medi-Cal may not be billed directly for
pregnancy care and preventive pediatric services if the beneficiary has OHC through an
HMO, and that the “HMO benefits must be used first.” But this is consistent with the
obligation that OHC benefits be used before Medi-Cal. Moreover, the record also
indicates that DHCS has “established business rules with its fiscal intermediary, Xerox
Corporation, directing it to suppress any [OHC] and allow payment of Medi-Cal fee-for-
service provider claims for any prenatal and pediatric preventive service procedure
claims services.” (Italics added.)
Nonetheless, petitioners argue, the DHCS rules with Xerox do not expressly apply
where a Medi-Cal provider is not a fee-for-service provider and delivers the prenatal or
preventive pediatric care on a managed care basis to a Medi-Cal beneficiary who has
OHC through an HMO. Furthermore, petitioners contend, there is no indication that
DHCS tells providers to submit reimbursement claims to Xerox rather than the OHC.
40
As a result, petitioners speculate that providers will bill the OHC HMO, rather than
DHCS or Xerox.
The critical point, however, is that petitioners do not direct us to any record
evidence that respondents are actually failing to comply with the law. Petitioners do not
cite any instance in which DHCS failed to make payment for prenatal care or preventive
pediatric care in violation of a statutory mandate. In the absence of a violation of a legal
duty, petitioners fail to demonstrate any basis for mandamus.18
c. Minors with OHC Pursuant to Court Order
A state plan must provide that the state shall pay a provider, and later seek
reimbursement from a beneficiary’s OHC, for services provided to a beneficiary “on
whose behalf child support enforcement is being carried out by the State,” if “payment
has not been made by such third party within 30 days after such services are furnished.”
(42 U.S.C. § 1396a(a)(25)(F).) Petitioners contend that respondents have already
admitted their failure to comply with this requirement.
(1) DHCS’s Discovery Response
In a request for admission, petitioners asked respondents to admit: “For children
who have both Medi-Cal coverage and OHC and whose non-custodial parents have been
ordered by a court to provide ‘medical support’ (i.e. health insurance), Respondent
DHCS’ policies and procedures do not ensure that the Medi-Cal program pays health
care providers for providing service(s) to these children when the OHC has not [been]
paid for these service(s) within 30 days of provision of the service(s).” (Italics added.)
After objecting to the request as vague and ambiguous, especially as to the phrase “do not
18
Respondents add that, for services to be subject to pay-and-chase rules, the
services must be “covered under the State [Medi-Cal] plan.” (42 U.S.C.
§ 1396a(a)(25)(E), italics added.) Services that a beneficiary is entitled to receive
through his or her OHC must be exhausted before accessing Medi-Cal benefits and, in
respondents’ view, are not covered by the plan. (Welf. & Inst. Code, §§ 10020, subd. (a),
14000, subd. (b).) DHCS therefore asserts that it properly allows providers to refer
beneficiaries to their OHC network with a managed care plan where OHC information
indicates the services are available through that plan.
41
ensure,” respondents admitted the request “because if DHCS did otherwise, it would be
not complying with federal guidelines.”
Petitioners contend this is an admission of noncompliance with 42 United States
Code section 1396a(a)(25)(F), and that respondents are bound by the admission. (Code
Civ. Proc. § 2033.410, subd. (a); St. Mary v. Superior Court (2014) 223 Cal. App. 4th 762,
775.) Respondents counter that they objected to the request for admission, did not intend
to admit noncompliance with the law, and the State Plan and DHCS’s Medi-Cal
Eligibility Manual conclusively demonstrate that DHCS not only complies but goes
beyond the requirements of the section, allowing providers to bill Medi-Cal for services
provided to children who have court-ordered OHC without first billing the OHC carrier
and waiting for a failure by the carrier to respond.
DHCS’s discovery response was not an unqualified admission, and there is some
ambiguity as to what it meant in agreeing that its policies and procedures do not “ensure”
that Medi-Cal pays providers when the OHC has failed to pay within 30 days. In any
event, the trial court did not err, in the context of this mandamus action, in considering
the State Plan and the Medi-Cal Eligibility Manual to determine what, in fact,
respondents’ relevant procedures are. (See Fredericks v. Kontos Industries, Inc. (1987)
189 Cal. App. 3d 272, 277–278.)
(2) Merits
The State Plan provides that the “pay and chase method” will be used “for the
purpose of recovering Third Party Liability when services covered under the plan are
furnished to an individual on whose behalf child support enforcement is being carried out
by” the relevant state agency. In addition, the Medi-Cal Eligibility Manual indicates that
“pay and chase” applies to services to a Medi-Cal beneficiary with OHC resulting from a
child support or medical support order. Specifically, it states, “Under Federal Law (42
[United States Code section] 1396a[(a)](25)) health insurance belonging to a Medi-Cal
beneficiary in a child or medical support enforcement case is used by the following
method, also referred to as ‘pay and chase.’ ”
42
These policy statements reflect respondents’ compliance with the law. Indeed,
DHCS policy seems to exceed the requirements of 42 United States Code section
1396a(a)(25)(F) and require pay-and-chase billing for covered services provided to
children under medical support orders without regard to whether the OHC has first failed
to pay within 30 days.
Petitioners nevertheless argue that respondents have cited no provision in the
Provider Manual, or identified any instruction to DHCS’s fiscal intermediary, that shows
the state has a procedure for ensuring such payment to providers. But petitioners cite no
law expressly requiring such a procedure. Nor do they cite any evidence that the absence
of this instruction has caused a violation of the pay-and-chase rule.
Petitioners also note that the Eligibility Manual, in addition to stating that pay-
and-chase rules apply, further states, “When the other health insurance is a Prepaid
Health Plan (PHP) or a Health Maintenance Organization (HMO), however, the
dependent [child] must utilize the plan’s facilities for regular medical care.” (Italics
substituted for underscoring.) Thus, petitioners infer, the DHCS policy is that “pay and
chase” does not apply to children with medical support orders if their OHC is with
managed care.
Petitioners are incorrect. The cited language merely reiterates the fact that a
beneficiary, including one under a child support order, who has OHC for the services at
issue, is required to utilize the OHC for those services. Accordingly, petitioners do not
establish that DHCS is in violation of any ministerial duty with respect to pay and chase.
In the final analysis, petitioners fail to demonstrate entitlement to their requested
writ of mandate.19
19
Respondents filed a request on October 9, 2014, seeking judicial notice of a letter
from DHCS to counties that updated DHCS instructions regarding the reporting and
correction of OHC information, along with an updated version of DHCS OHC reporting
and correction procedures from the DHCS Web site, which advises beneficiaries that they
may update OHC information and provides a means of doing so. Petitioners opposed the
request on the grounds that the material was not presented to the trial court and the truth
of the matters asserted in official acts of state agencies is not subject to judicial notice.
43
III. DISPOSITION
The judgment is affirmed.
NEEDHAM, J.
We concur.
SIMONS, Acting P.J.
BRUINIERS, J.
We deferred ruling until our decision on the merits. We now grant the request, but only
for purposes of general background. We do not rely on the material in reaching our
conclusions in this appeal; we rely only on the evidence before the trial court.
44
San Francisco County Superior Court Case No. CPF09509847, Richard A. Kramer,
Judge.
Western Center on Law and Poverty, Robert D. Newman and Richard A. Rothschild;
Bay Area Legal Aid, Michael Keys; Youth Law Center, Alice Bussiere and Maria
Ramiu; Multiforum Advocacy Solutions, Lucy Quacinella for Plaintiffs and Appellants.
Neighborhood Legal Services of Los Angeles County, Catherine S. Murphy for Plaintiff
and Appellant Maricella Rivera.
Abigail K. Coursolle, Kimberly Lewis and Shyaam Subramanian for National Health
Law Program as Amicus Curiae on behalf of Appellants.
Kamala D. Harris, Attorney General, Julie Weng-Gutierrez, Assistant Attorney General,
Susan M. Carson, Joshua N. Sondheimer and Cheryl L. Feiner, Deputy Attorneys
General, for Defendants and Respondents.
45