Georgia Department of Behavioral Health & Developmental Disabilities v. United Cerebral Palsy of Georgia, Inc.

In the Supreme Court of Georgia
Decided: March 25, 2016
S15G1183. GEORGIA DEPARTMENT OF BEHAVIORAL HEALTH
AND DEVELOPMENTAL DISABILITIES et al. v. UNITED CEREBRAL
PALSY OF GEORGIA, INC. et al.
NAHMIAS, Justice.
The plaintiffs in this case are providers and recipients of Medicaid
services for individuals with intellectual and developmental disabilities who
claim that the defendant administrative agencies and their commissioners failed
to follow the required procedures before reducing the reimbursement rates paid
to the providers and limiting the services available to the recipients. The
plaintiffs did not submit their claims to the agencies for administrative review,
instead filing this lawsuit in the trial court. The trial court granted the
defendants’ motion to dismiss the case for failure to exhaust administrative
remedies, but the Court of Appeals reversed that ruling. See United Cerebral
Palsy of Ga., Inc. v. Georgia Dept. of Behavioral Health & Developmental
Disabilities, 331 Ga. App. 616 (771 SE2d 251) (2015). We granted certiorari
to decide whether the Court of Appeals erred in holding that the defendants’
alleged failure to give the plaintiffs proper notice of adverse agency decisions
excused the plaintiffs from the exhaustion requirement. As explained below, the
plaintiffs were required to raise their defective notice claims in the
administrative review process in the first instance. Accordingly, we reverse the
judgment of the Court of Appeals.
1. (a) Congress created the Medicaid program in 1965 through
amendments to the Social Security Act. See Pharmaceutical Researchers &
Mfrs. of Am. v. Walsh, 538 U.S. 644, 650 (123 SCt 1855, 155 LE2d 889)
(2003). The program provides subsidies to the states to furnish medical
assistance to “families with dependent children and of aged, blind, or disabled
individuals, whose income and resources are insufficient to meet the costs of
necessary medical services.” 42 USC § 1396-1. Although a state’s participation
in the Medicaid program is voluntary, a state that elects to join must administer
a state Medicaid plan that meets federal requirements. See Frew ex rel. Frew v.
Hawkins, 540 U.S. 431, 433 (124 SCt 899, 157 LE2d 855) (2004). Georgia
participates in the general Medicaid program, and the Department of
Community Health (“DCH”) is the state agency charged with developing and
2
administering Georgia’s Medicaid plan. See OCGA § 49-4-142.
A state Medicaid plan must establish a scheme for reimbursing health care
providers for services provided to program beneficiaries. See 42 USC § 1396a
(a); Wilder v. Virginia Hosp. Assn., 496 U.S. 498, 502 (110 SCt 2510, 110
LE2d 455) (1990). Since 1981, Congress has authorized states to obtain a
waiver allowing the use of Medicaid funds for home and community based care
provided to individuals with intellectual and developmental disabilities who
otherwise would require institutionalization, including habilitation services,
respite care, and case management. See 42 USC § 1396n (c); Olmstead v. L.C.
ex rel. Zimring, 527 U.S. 581, 601 (119 SCt 2176, 144 LE2d 540) (1999). This
case involves two Georgia waiver programs that the federal government
approved in 2007 – the Comprehensive Supports Waiver Program, or “COMP,”
and the New Options Waiver Program, or “NOW.” The requirements of these
waiver programs were incorporated into contracts, known as statements of
participation, that the provider plaintiffs entered into with the Georgia
Department of Behavioral Health and Developmental Disabilities (“DBHDD”).
(b) The General Assembly has recognized the need for a robust
formal administrative review process to address complaints – which the statute
3
refers to as “appeals” – by providers and recipients of Medicaid services,
including disputes concerning reimbursement rates and service limitations. See
OCGA § 49-4-153.1 Pursuant to § 49-4-153 (b), any Medicaid provider
1
OCGA § 49-4-153 says in relevant part:
(a) The Board of Community Health is authorized to establish regulations
regarding the manner in which the appeals set forth in subsection (b) of this
Code section shall be conducted.
(b) (1) Any applicant for medical assistance whose application is denied or
is not acted upon with reasonable promptness and any recipient of medical
assistance aggrieved by the action or inaction of the Department of
Community Health as to any medical or remedial care or service which such
recipient alleges should be reimbursed under the terms of the state plan which
was in effect on the date on which such care or service was rendered or is
sought to be rendered shall be entitled to a hearing upon his or her request for
such in writing and in accordance with the applicable rules and regulations
of the department and the Office of State Administrative Hearings. As a
result of the written request for hearing, a written recommendation shall be
rendered in writing by the administrative law judge assigned to hear the
matter. Should a decision be adverse to a party and should a party desire to
appeal that decision, the party must file a request in writing to the
commissioner or the commissioner’s designated representative within 30
days of his or her receipt of the hearing decision. The commissioner, or the
commissioner’s designated representative, has 30 days from the receipt of the
request for appeal to affirm, modify, or reverse the decision appealed from.
A final decision or order adverse to a party, other than the agency, in a
contested case shall be in writing or stated in the record. A final decision
shall include findings of fact and conclusions of law, separately stated, and
the effective date of the decision or order. Findings of fact shall be
accompanied by a concise and explicit statement of the underlying facts
supporting the findings. Each agency shall maintain a properly indexed file
of all decisions in contested cases, which file shall be open for public
inspection except those expressly made confidential or privileged by statute.
If the commissioner fails to issue a decision, the initial recommended
decision shall become the final administrative decision of the commissioner.
(2) (A) A provider of medical assistance may request a hearing on a
decision of the Department of Community Health with respect to a
denial or nonpayment of or the determination of the amount of
4
reimbursement paid or payable to such provider on a certain item of
medical or remedial care of service rendered by such provider by
filing a written request for a hearing in accordance with Code
Sections 50-13-13 and 50-13-15 with the Department of Community
Health. The Department of Community Health shall, within 15
business days of receiving the request for hearing from the provider,
transmit a copy of the provider’s request for hearing to the Office of
State Administrative Hearings. The provider’s request for hearing
shall identify the issues under appeal and specify the relief requested
by the provider. The request for hearing shall be filed no later than
15 business days after the provider of medical assistance receives the
decision of the Department of Community Health which is the basis
for the appeal.
(B) The Office of State Administrative Hearings shall assign
an administrative law judge to hear the dispute within 15 days after
receiving the request. The hearing is required to commence no later
than 90 days after the assignment of the case to an administrative law
judge, and the administrative law judge shall issue a written decision
on the matter no later than 30 days after the close of the record except
when it is determined that the complexity of the issues and the length
of the record require an extension of these periods and an order is
issued by an administrative law judge so providing, but no longer
than 30 days. Such time requirements can be extended by written
consent of all the parties. Failure of the administrative law judge to
comply with the above time deadlines shall not render the case moot.
(C) A request for hearing by a nursing home provider shall
stay any recovery or recoupment action.
(D) Should the decision of the administrative law judge be
adverse to a party and should a party desire to appeal that decision,
the party must file a request therefor, in writing, with the
commissioner within ten days of his or her receipt of the hearing
decision. Such a request must enumerate all factual and legal errors
alleged by the party. The commissioner, or the commissioner’s
designated representative, may affirm, modify, or reverse the decision
appealed from.
(3) A person or institution who either has been refused enrollment as
a provider in the state plan or has been terminated as a provider by the
Department of Community Health shall be entitled to a hearing; provided,
however, that no entitlement to a hearing before the department shall lie for
refusals or terminations based on the want of any license, permit, certificate,
approval, registration, charter, or other form of permission issued by an entity
5
other than the Department of Community Health, which form of permission
is required by law either to render care or to receive medical assistance in
which federal financial participation is available. The final determination
(subject to judicial review, if any) of such an entity denying issuance of such
a form of permission shall be binding on and unreviewable by the
Department of Community Health. In cases where an entitlement to a
hearing before the Department of Community Health, pursuant to this
paragraph, lies, the Department of Community Health shall give written
notice of either the denial of enrollment or termination from enrollment to the
affected person or institution; and such notice shall include the reasons of the
Department of Community Health for denial or termination. Should such a
person or institution desire to contest the initial decision of the Department
of Community Health, he or she must give written notice of his or her appeal
to the commissioner of community health within ten days after the date on
which the notice of denial or notice of termination was transmitted to him or
her. A hearing shall be scheduled and commenced within 20 days after the
date on which the commissioner receives the notice of appeal; and the
commissioner or his or her designee or designees shall render a final
administrative decision as soon as practicable thereafter.
(c) If any aggrieved party exhausts all the administrative remedies provided
in this Code section, judicial review of the final decision of the commissioner may
be obtained by filing a petition within 30 days after the service of the final decision
of the commissioner or, if a rehearing is requested, within 30 days after the decision
thereon. The petition may be filed in the Superior Court of Fulton County or in the
superior court of the county of residence of the petitioner. When the petitioner is a
corporation, the action may be brought in the Superior Court of Fulton County or in
the superior court of the county where the petitioner maintains its principal place of
doing business in this state. Copies of the petition shall be served upon the
commissioner and all parties of record. The petition shall state the nature of the
petitioner’s interest, the facts showing that the petitioner is aggrieved by the decision,
and any grounds upon which the petitioner contends that the decision should be
reversed or modified. Judicial review of the commissioner’s decision may be
obtained in the same manner and under the same standards as are applicable to those
contested cases which are reviewable pursuant to Code Section 50-13-19; provided,
however, that no other provision of Chapter 13 of Title 50 shall be applicable to the
department with the exception of Code Sections 50-13-13 and 50-13-15.
Notwithstanding any other provision of law, a stay of the commissioner’s final
decision may be granted by a reviewing court to a provider of medical assistance only
on condition that such provider posts bond with the commissioner in favor of the
state, with good and sufficient surety thereon by a surety company licensed to do
business in this state, in an amount determined by the commissioner to be sufficient
6
dissatisfied with “a decision of [DCH] with respect to a denial or nonpayment
of or the determination of the amount of reimbursement paid or payable to such
provider,” and any Medicaid recipient “aggrieved by the action or inaction of
[DCH] as to any medical or remedial care or service which such recipient
alleges should be reimbursed,” may obtain a hearing before an administrative
law judge (“ALJ”) from the Office of State Administrative Hearings (“OSAH”)
by filing a proper written request with DCH. The ALJ’s decision on the dispute
may be appealed by the losing party to the DCH Commissioner for a final
agency decision. See OCGA § 49-4-153 (b).
The statute sets forth various deadlines and other procedural requirements
governing this administrative review process, and OCGA § 49-4-153 (a) also
authorizes DCH to “establish regulations regarding the manner in which the
[administrative review] set forth in subsection (b) shall be conducted.” DCH
has promulgated such regulations. See Ga. Comp. R. & Regs. 350-4-.01 to 350-
4-.30 (“DCH Rules”). For example, DCH Rule 350-4-.04 says:
to recompense the state for all medical assistance which otherwise would not be paid
to the provider but for the granting of such a stay. A stay may be granted and
renewed for time intervals up to three months, so long as bond is posted for every
interval of time in which the stay is in effect. . . .
7
The Department shall offer the opportunity for Administrative
Review to any provider against whom it proposes to take an adverse
action unless the Department is otherwise authorized by law to take
such action without opportunity for appeal by the provider prior to
the action’s implementation. The procedures and deadlines for
obtaining such Administrative Review and the deadlines for
decisions thereon shall be published in the Policies and Procedures
Manual for each service category to which they apply.
Administrative Review shall be completed, if not waived by the
provider, prior to implementation of the proposed action.
Whenever the opportunity for Administrative Review is available
to the provider, such Administrative Review must be timely
obtained and completed for the provider to be entitled to a hearing.
See also DCH Division of Medicaid, Policies and Procedures for
Medicaid/Peachcare for Kids § 505 (Jan. 1, 2016) (explaining that DCH “offers
the opportunity for Administrative Review to any provider against whom it
proposes to take an adverse action”); DCH Division of Medicaid, Policies and
Procedures for Comprehensive Supports Waiver Program (COMP) and New
Options Waiver Program (NOW) General Manual § 709.1 (Jan. 1, 2016)
(requiring DCH to provide “written notice of the rights to appeal any reduction
of COMP/NOW services” to recipients).2
How and when this administrative review process is initiated is discussed
2
There are also federal Medicaid regulations regarding notice to beneficiaries of adverse
actions by state agencies and requests for hearings. See, e.g., 42 CFR §§ 431.210 to 431.223.
8
in DCH Rule 350-4-.05.3 DCH Rule 350-4-.06 (g) authorizes the ALJ to
3
DCH Rule 350-4-.05 says:
(1) A request for a hearing must be in writing and received by the
Department:
(a) within ten (10) days after the date on which a notice of denial of
a request for enrollment or notice of suspension or termination was
transmitted to the provider; or
(b) concerning any other action or inaction by the Department which
aggrieves the provider, within ten (10) days after the date of the later of:
1. the Department’s action for which the hearing is sought, if
no opportunity for Administrative Review was available, or
2. notice of the final decision of the entity to which request for
Administrative Review has been addressed.
In determining the timeliness of a request, the Department will compute the
number of days in accordance with Rule 350-1-.01 (24), if the date of the
provider’s receipt of notice of the adverse action being appealed is known to
the Department; if the date of receipt by the provider is not known, the
Department shall add five (5) days from the date of transmission of the notice
to allow for delivery. Nothing herein shall bar proof of actual date of receipt
by the provider or its agent, subject to the provisions of subsection 19.
(2) The request for a hearing must include all of the following:
(a) a clear expression by the provider or an authorized representative
that the provider wishes to present a case to an Administrative Law Judge;
(b) identification of the adverse administrative review decision or
other Department action being appealed and, if only part of such decision or
action aggrieves the provider, the specific part which the provider will
address at the hearing;
(c) a specific statement of why the provider believes the
administrative review decision or other Department action is wrong; and
(d) a statement of the relief sought.
(3) If any of the requirements listed in Paragraph (2) have not been met, the
Department shall so notify the provider. Thereafter, the Department must receive a
corrected request within ten (10) days of the provider’s receipt of the deficiency
notice or the request shall be deemed untimely.
(4) Requests for hearings shall be denied if the Department determines that:
(a) the request was not timely filed;
(b) the action or inaction appealed by the provider is solely the result
of a change in state or federal law;
(c) the issues raised by the provider fall outside the jurisdiction of the
administrative hearing process; or
9
determine whether a hearing request by which a provider or recipient seeks to
initiate the administrative review process should be dismissed because “the
requesting party has not met the prerequisites for obtaining a hearing.”
The statute also provides the opportunity for judicial review of Medicaid
disputes. Under OCGA § 49-4-153 (c), an aggrieved provider or recipient
dissatisfied with the Commissioner’s final decision may petition for review in
the appropriate superior court – but only if the aggrieved party first “exhausts
all the administrative remedies provided in [§ 49-4-153].” See also OCGA § 50-
13-194; Perkins v. Dept. of Med. Assistance, 252 Ga. App. 35, 37 (555 SE2d
500) (2001) (“Under the Georgia Administrative Procedure Act, [judicial]
(d) the requesting party has not been aggrieved.
If there is a bona fide question of fact concerning any of the items described in this
Subsection 4, and the provider establishes such question of fact by sworn affidavit
within a reasonable time set by the Office of Special Services and made known in
writing to the provider, the Department shall grant a hearing and defer these
questions for final determination by the Administrative Law Judge.
4
OCGA § 49-4-153 (c) expressly invokes OCGA § 50-13-19, a provision of the Georgia
Administrative Procedure Act that says the following about exhaustion of administrative remedies
as a prerequisite to judicial review of an agency’s decisions:
Any person who has exhausted all administrative remedies available within the
agency and who is aggrieved by a final decision in a contested case is entitled to
judicial review under this chapter. This Code section does not limit utilization of or
the scope of judicial review available under other means of review, redress, relief, or
trial de novo provided by law. A preliminary, procedural, or intermediate agency
action or ruling is immediately reviewable if review of the final agency decision
would not provide an adequate remedy.
10
appeal from decisions of [DCH] regarding a denial, nonpayment, or
determination of the amount of reimbursement paid or payable requires an
administrative appeal filed with [DCH].”).
(c) On August 8, 2013, United Cerebral Palsy of Georgia, Inc.
and three other Georgia nonprofit corporations that provide services to Medicaid
patients with intellectual and developmental disabilities under the COMP and
NOW waiver programs, along with four individuals who receive those services
(collectively, “plaintiffs”), filed a putative class action complaint against DCH,
DBHDD, and their commissioners (collectively, “defendants”) in the Superior
Court of Fulton County (“trial court”). The complaint alleged that since 2008,
the defendants have used various unapproved and secretive methods to avoid
paying providers the approved reimbursement rates and to limit the amount of
services that recipients can receive, sometimes to below the amount that is
medically necessary. According to the plaintiffs, the defendants made these
reductions without public notice and comment as required by federal and state
law and without giving the plaintiffs proper advance notice as required by the
terms of the statements of participation, federal and state law, and constitutional
due process. The complaint sought declaratory and injunctive relief, damages,
11
and attorney fees and expenses for alleged breach of contract, as-applied
violations of federal constitutional rights, violations of the Social Security Act,
and violations of rights to administrative remedies under OCGA § 49-4-153 (b)
(1). It is undisputed that the plaintiffs had not sought any sort of formal
administrative review of their claims; they took their case directly to the trial
court.
On September 9, 2013, the defendants filed an answer and a motion to
dismiss, arguing among other things that the plaintiffs filed their lawsuit
prematurely without first exhausting their available administrative remedies. On
November 21, 2013, the trial court entered an order dismissing the complaint for
failure to exhaust administrative remedies.
The plaintiffs appealed, and the Court of Appeals reversed, with one judge
concurring in the judgment only. See United Cerebral Palsy, 331 Ga. App. at
622. The Court of Appeals acknowledged that parties aggrieved by an agency
decision generally must exhaust available administrative remedies before
seeking relief by judicial review. See id. at 618. However, the court analyzed
the provisions of OCGA § 49-4-153, the DCH Rules, and the Medicaid
manuals; decided that the defendants had failed to give the plaintiffs prior
12
written notice of adverse agency decisions as required; and concluded that the
lack of proper notice excused the plaintiffs from having to seek administrative
review of their claims regarding alleged reductions in reimbursement rates and
covered services. See id. at 618-621. This Court granted certiorari to review
that conclusion.
2. (a) Under long-standing Georgia law, the failure of plaintiffs to
exhaust their available administrative remedies ordinarily precludes judicial
relief. See Georgia Dept. of Community Health v. Georgia Soc. of Ambulatory
Surgery Centers, 290 Ga. 628, 629 (724 SE2d 386) (2012). See also Perkins,
252 Ga. App. at 37 (“[T]imely judicial review of a final agency decision after
an administrative appeal can be made to the superior court only if the condition
precedent of exhaustion of an administrative appeal has first been completed.
OCGA§§ 49-4-153 (c); 50-13-19.”). As the United States Supreme Court has
explained:
The doctrine of exhaustion of administrative remedies is well
established in the jurisprudence of administrative law. The doctrine
provides that no one is entitled to judicial relief for a supposed or
threatened injury until the prescribed administrative remedy has
been exhausted. Exhaustion of administrative remedies serves two
main purposes. First, exhaustion protects administrative agency
authority. Exhaustion gives an agency an opportunity to correct its
13
own mistakes with respect to the programs it administers before it
is haled into . . . court, and it discourages disregard of [the
agency’s] procedures. Second, exhaustion promotes efficiency.
Claims generally can be resolved much more quickly and
economically in proceedings before an agency than in litigation
. . . . In some cases, claims are settled at the administrative level,
and in others, the proceedings before the agency convince the losing
party not to pursue the matter in . . . court. And even where a
controversy survives administrative review, exhaustion of the
administrative procedure may produce a useful record for
subsequent judicial consideration.
Woodford v. Ngo, 548 U.S. 81, 88-89 (126 SCt 2378, 165 LE2d 368) (2006)
(citations and punctuation omitted).
This Court has similarly observed that
“[t]he rationale for requiring exhaustion of administrative remedies
is that resort to the administrative process will permit the agency to
apply its expertise, protect the agency’s autonomy, allow a more
efficient resolution, and result in the uniform application of matters
within the agency’s jurisdiction.”
Ambulatory Surgery Centers, 290 Ga. at 629 (quoting Cerulean Cos. v. Tiller,
271 Ga. 65, 66 (516 SE2d 522) (1999)). We have also emphasized that “‘[o]nly
in rare instances will the requirement of exhaustion be relaxed.’” Id. (quoting
Moss v. Central State Hosp., 255 Ga. 403, 404 (339 SE2d 226) (1986)).
Plaintiffs may bring their claims directly to court where there is no adequate
administrative procedure available for challenging the type of administrative
14
decision in question. See, e.g., Feminist Women’s Health Ctr. v. Burgess, 282
Ga. 433, 436 (651 SE2d 36) (2007) (holding that exhaustion was not required
where the plaintiffs challenged the constitutionality of the state Medicaid plan
itself and no statute or rule authorized an administrative procedure for reviewing
such facial challenges); Aldridge v. Georgia Hospitality & Travel Assoc., 251
Ga. 234, 237 (304 SE2d 708) (1983) (same where the plaintiff challenged the
assessment of county inspection fees and no county ordinance or state law
provided a means to challenge the imposition of such fees).
In addition, this Court has recognized a “futility” exception to the
exhaustion requirement, defined narrowly as a situation where further
administrative review would result in another decision on the same issue by the
same body. Elbert County v. Sweet City Landfill, LLC, 297 Ga. 429, 433 (774
SE2d 658) (2015). See, e.g., Powell v. City of Snellville, 266 Ga. 315, 316 (467
SE2d 540) (1996) (holding that the plaintiff was not required to file an
application for rezoning before going to court where the city government had
already voted twice to rezone her property over her objection). Administrative
review is not ordinarily deemed futile, however, because the aggrieved parties
are pessimistic about obtaining a favorable outcome, see Elbert County, 297 Ga.
15at 433, even where plaintiffs seek to justify their pessimism based on positions
taken by the administrative decision-maker outside of and prior to the normal
administrative process, such as positions taken in defending a lawsuit brought
without exhausting administrative remedies, see Ambulatory Surgery Centers,
290 Ga. at 629-630.
(b) This Court has never recognized a wholesale exception to the
exhaustion doctrine for alleged procedural errors by an administrative agency.
To the contrary, we recently explained that an agency’s “‘failure to perfectly
comply with all of the intricacies of the administrative process [does not]
necessarily constitute extra-jurisdictional action by [the] agency’” that could
excuse a failure to exhaust administrative remedies; thus, aggrieved parties
cannot justify going straight to court merely by alleging that the agency “‘failed
to meet certain statutory procedural requirements.’” Id. at 630 (citation
omitted). “Long-standing Georgia law requires that a party aggrieved by a state
agency’s decision must raise all issues before that agency and exhaust available
administrative remedies before seeking any judicial review of the agency’s
decision.” Tiller, 271 Ga. at 66 (emphasis added). See also We, the Taxpayers
v. Board of Tax Assessors of Effingham County, 292 Ga. 31, 33 (734 SE2d 373)
16
(2012) (reiterating in the context of tax disputes that “‘constitutional and
procedural issues,’” as well as substantive tax issues, must normally be
addressed to the administrative review process (citation omitted)); OCGA § 50-
13-19 (a) (providing for immediate (i.e., interlocutory) judicial review of an
agency “procedural . . . ruling” where review of the final agency decision would
not provide an adequate remedy). Thus, generally speaking, procedural issues
are subject to the exhaustion requirement just like substantive issues.
The exhaustion requirement is particularly important in this case, given
that the plaintiffs question the methods by which the defendants determined and
applied the service allotments for potentially thousands of Medicaid recipients
and the reimbursement amounts for their providers. Resolving these issues
inherently involves the defendants’ expertise in the contours of the Medicaid
program, applicable federal and state statutes and regulations, and the policies
and procedures set forth in the Georgia Medicaid manuals.5 The plaintiffs
5
See Wos v. E.M.A., 568 U.S. ___, ___ (133 SCt 1391, 1404-1405, 185 LE2d 471) (2013)
(Roberts, C.J., dissenting) (observing in a Medicaid case that “[t]he books are thick with federal
regulations that States must interpret and reconcile. By my count, at least 39 federal-court opinions,
including one of our own, have reiterated Judge Friendly’s observation that Medicaid law is ‘almost
unintelligible to the uninitiated,’” and repeating a federal district court’s description of Medicaid law
as “‘an aggravated assault on the English language, resistant to attempts to understand it’”) (citations
omitted)).
17
acknowledge the difficult and specialized issues that would face a trial court or
jury in resolving their claims; their brief discusses the “complexity of health
care reimbursement methodology.” Such complex administrative decisions are
clearly within the purview of administrative review, and executive agencies are
entitled to apply their expertise to obtain uniformity of results by deciding such
questions in the first instance. See, e.g., Bentley v. Chastain, 242 Ga. 348, 350-
351 (249 SE2d 38) (1978).6
The concept is straightforward: If a party believes an administrative
agency made a procedural mistake regarding notice of an adverse decision, the
aggrieved party should ordinarily give the agency the opportunity to correct the
mistake (if indeed it was a mistake) through the established administrative
review process, instead of asking a court to decide the notice dispute – much
6
The defendants have suggested that the plaintiffs made a strategic decision to forgo
administrative review in order to pursue their claims in court on a class-action basis under the Civil
Practice Act. See OCGA § 9-11-23. However, enforcing the exhaustion requirement would not
necessarily prevent providers or recipients from pursing relief in court on a class-action basis once
the administrative review process is complete. See Barnes v. City of Atlanta, 281 Ga. 256, 258 (637
SE2d 4) (2006) (noting the general principle that class representatives may act on behalf of the entire
class and explaining that “‘[w]here . . . exhaustion of administrative remedies is a precondition for
suit, the satisfaction of this requirement by the class plaintiff normally will avoid the necessity for
each class member to satisfy this requirement individually’” (citation omitted)).
18
less the underlying substantive dispute – in the first instance.7
(c) The plaintiffs devote much of their briefs to arguing the merits
of whether they got proper notice of the allegedly invalid agency actions and
decisions, asserting that until they did, they could not start the administrative
review process established by OCGA § 49-4-153. But the plaintiffs clearly had
actual notice of the actions and decisions they dispute by the time they filed their
complaint disputing these matters in August 2013. The question is whether at
that point they could file their complaint in court and bypass the administrative
review process. Allowing them to do so would require courts to decide both the
notice issues and the underlying substantive issues in the first instance.
Administrative law commits both sets of issues to the administrative process in
the first instance.
7
This concept is not unique to administrative law. Indeed, a similar exhaustion requirement
is imposed, albeit not by that name, in everyday litigation, when a party claims on appeal that it did
not receive the statutorily required notice of a trial court order and thus was unable to file a timely
appeal. The appellate court will not decide the notice issue in the first instance, and indeed will
dismiss the untimely appeal for lack of jurisdiction. The proper process is for the party to file a
motion in the trial court to set aside the order (or to allow an out-of-time direct appeal in a criminal
case), which allows the trial court to make findings in the first instance as to whether the required
notice was properly provided and to take (or not take) remedial action as appropriate based on those
findings; that ruling may then be appealed, with the appellate court having the benefit of the trial
court’s decision. See Veasley v. State, 272 Ga. 837, 838-839 (537 SE2d 42) (2000). See also
Wright v. Young, 297 Ga. 683, 683-684 (777 SE2d 475) (2015).
19
This is not a situation where the agency plainly has no administrative
review process available to consider the types of matters in dispute. OCGA §
49-4-153 establishes a process that appears amenable to review of the plaintiffs’
notice and substantive claims, and the defendants have not taken the position
that DCH’s administrative review process is closed to consideration of either the
notice or the substantive claims (although the defendants have offered
arguments against the merits of both sets of claims). If presented to DCH with
a demand for a hearing by an OSAH ALJ, it appears that there would be three
basic possible outcomes (which might vary with regard to particular claims and
claimants): (1) a ruling that no notice of adverse action was required, because
there was no change in the rates of reimbursement or amount of services
allowed; (2) a ruling that notice was properly given earlier and a consequent
dismissal of the underlying substantive claims as untimely; or (3) a ruling that
notice was not properly given and a corresponding ruling about whether the
untimeliness of the substantive claims can and should be excused (or proper
notice ordered to be given now) as a matter of contractual, regulatory, statutory,
or constitutional law. If the ALJ reached the plaintiffs’ substantive claims and
found them to be meritorious, the ALJ could craft appropriate remedies based
20
on the judge’s expertise with the Medicaid statutes and rules.
If the plaintiffs were unsatisfied with the ALJ’s rulings, they could seek
review by the DCH commissioner. If still unsatisfied, they could properly seek
judicial review. If the case got that far, the trial court could rule on whatever
issues had been raised in the administrative process, but those issues likely
would have been narrowed, and the court would have the benefit of the
administrative record and the decision of administrative experts. See Woodford,
548 U.S. at 88-89; Ambulatory Surgery Centers, 290 Ga. at 629. We express
no opinion on the merits of the plaintiffs’ notice or substantive claims at this
time, because the plaintiffs have not yet exhausted their administrative remedies
as to those claims.
(d) The Court of Appeals cited two Georgia cases to support its
conclusion that the plaintiffs were entitled to bypass DCH’s administrative
review process entirely and proceed directly to court to obtain a ruling on the
merits of their notice and substantive claims. See Chatham County Bd. of Tax
Assessors v. Emmoth, 278 Ga. 144 (598 SE2d 495) (2004); Fulton-DeKalb
Hosp. Auth. v. Metzger, 203 Ga. App. 595 (417 SE2d 163) (1992). Emmoth
and Metzger, however, involved aggrieved parties who sought administrative
21
review of their claims, at least initially, before filing a lawsuit. See Emmoth,
278 Ga. at 145; Metzger, 203 Ga. App. at 597. Indeed, in Metzger, the hospital
authority’s agent advised the plaintiff that no further administrative review was
available. See 203 Ga. App. at 597. By contrast, the plaintiffs here did not
submit any of the claims alleged in their complaint to the formal DCH
administrative review process, and there is no allegation that the defendants told
them that such claims could not be considered in that process.
In addition, in Emmoth, unlike in this case, there is no indication that the
agency disputed that it had failed to give proper notice; moreover, the remedy
in Emmoth was not to allow the trial court to decide the ultimate merits of the
taxpayer’s preferential assessment claim, but rather to send that matter back to
the Board of Tax Assessors to determine in the first instance. See id. at 146. To
the extent that Emmoth may be read to suggest that a plaintiff need not exhaust
administrative remedies whenever an administrative body has given her a notice
of its decision without including statutorily required language regarding how to
seek further administrative review of that decision, it is hereby disapproved.8
8
In support of its exhaustion holding, Emmoth cited only Ledbetter Trucks, Inc. v. Floyd
County Bd. of Tax Assessors, 240 Ga. 791 (242 SE2d 596) (1978). But Ledbetter involved a notice
of the right to further administrative appeal that was misleading, not just inadequate, and more
22
(e) For all of these reasons, we conclude, contrary to the Court of
Appeals, that the plaintiffs were required to present their claims regarding
improper notice of rate reductions and service limitations to DCH for
administrative review before filing this lawsuit.
Judgment reversed. All the Justices concur.
importantly, the opinion in Ledbetter did not discuss exhaustion of administrative remedies. See id.
at 791-792. To the contrary, this Court explained that regardless of whether the taxpayers had
properly appealed to the Board of Equalization after receiving the misleading notice, the Board had
decided their appeal, waiving any objection to the form of the appeal and allowing the subsequent
judicial review of the case. See id.23