DocketNumber: Docket No. 285792
Citation Numbers: 289 Mich. App. 1
Judges: Borrello, Kelly, Whitbeck
Filed Date: 6/22/2010
Status: Precedential
Modified Date: 10/18/2024
Respondent, the Department of Human Services (the Department) appeals by leave granted a circuit court order that held that the Department failed to provide proper notice to petitioner, Amanda Schreur, of her right to request a hearing regarding a denial of her application for Medicaid benefits. This Court also granted the Department’s motion for a stay of the benefit payments.
I. BASIC FACTS AND PROCEDURAL HISTORY
On April 29, 2005, Schreur filed an application for Medicaid disability benefits. Schreur, then 24 years old, had undergone back surgery in January 2005 to remove a tumor from her spine. She claimed that she was physically unable to work because she suffered from low back pain and weakness. Schreur could not stand or walk for more than a half-hour before her back got sore,
On June 10, 2005, the Department mailed Schreur notice that it had denied her application for Medicaid benefits because her disability was not “expected to last for at least 12 consecutive months” and would not prevent her from “working in any substantial gainful employment.” At the top of the form, there was a short statement to the applicant: “If you do not understand the information in this notice, please contact me immediately. If you wish, you may meet with my manager and me to discuss the action(s) taken on your application.” (Presumably, “me” referred to the specialist who signed and provided her contact information on the form.)
The notice also contained several “Manual Policy References.” On the line marked “PEM” (acronym for Program Eligibility Manual), was typed “400 500 166.” On the line marked “PAM” (acronym for Program Administrative Manual), was typed “110 115.” Below the Manual Policy References was the following statement: “If your application is being denied, you may apply for assistance if your circumstances changes [sic].”
The backside of the notice further provided, “Procedures For Requesting A Fair Hearing.” Specifically, the notice stated:
If you believe this action is illegal, you may request a hearing within 90 days of the date of this notice.... All... requests for a hearing must be made IN WRITING and signed and dated by you.
***
*5 Complete the “Request for Hearing” section below or any other written request. State that you want a hearing on the decision made by the Agency and briefly explain your reasons.
Immediately beneath this section was a form to fill out to request a hearing.
Schreur did not request a hearing within 90 days. Instead, she waited until June 13, 2006, to mail her request for review of the Department’s decision to deny her application. The Department received the request on June 15, 2006. Therefore, Schreur filed her hearing request 368 days after the date of the notice and 278 days after expiration of the 90-day period for requesting a hearing.
On December 14, 2006, an administrative hearing was held regarding Schreur’s substantive claim of disability and to determine whether Schreur’s hearing request was timely. Schreur argued that her hearing request was timely because the Department’s denial notice contained incorrect citations to the Department’s administrative and eligibility manuals, which, she contended, made the notice inadequate and ineffective to start the 90-day period to request a hearing. More specifically, according to Schreur, the citations to the Department’s policy manuals, PAM and PEM, were not relevant to the denial of Schreur’s application for assistance because they did not pertain to disability determinations. Indeed, the Department concedes that manual item PEM 400 refers to assets, PEM 500 refers to income, PEM 166 refers to aged, blind, and disabled individuals, PAM 110 explains application filing and registration procedures, and PAM 115 explains application processing. Rather clearly, these manual items do not directly pertain to disability determinations.
Citing Mich Admin Code, R 400.902, R 400.903, and R 400.904, the hearing referee explained that “[a]ny hearing request which protests a denial, reduction, or termination of benefits must be filed within 90 days of the mailing of the negative action notice.” The referee rejected Schreur’s argument that the Department’s failure to cite the correct policy manual provisions underlying its decision to deny Schreur’s Medicaid benefits application rendered the notice provided insufficient or defective. The referee reasoned that, although the Department was required to cite the specific provisions underlying its decision, the failure to do so merely constituted an additional ground on which to request a hearing to contest the Department’s decision. The referee stated, “[T]he 90 day period to request a hearing applies to any issues connected with [the Department]^ actions of which the claimant has been notified of [sic], and that would include an omission of the
Schreur then filed a petition for review in the Bay Circuit Court. Schreur argued that the policy manual citation errors in the notice made it inadequate and defective and “tolled” the period that she had in which to request a hearing. Schreur agreed with the circuit court’s assessment of her position that, if the section for manual references had said “PEM 260,” it would have been a proper and adequate notice because PEM 260 covers Medicaid disability and sets forth the regulations regarding how a person is determined to be disabled under the Department’s policy. Schreur readily acknowledged that she could have filed a request for a hearing within 90 days, but Schreur’s counsel had decided to rely on the citation errors and waited a year to request a hearing in order to give her client an advantage. More specifically, Schreur’s counsel explained:
Part of the elements in defining disability are that you have to have a severe impairment which has lasted or will continue to last for a year. The younger a person, the more chances are is, is that they are going to — are—they are going to heal from that; they are going to be able to go back to work; they are not going to be found disabled. It was in the best interests of our client for us to wait, to be able to make a determination of whether she was going to meet that period of duration.
The Department reiterated its prior arguments and also argued that Schreur had neither alleged nor established any prejudice. The Department urged the circuit court not to reward Schreur’s gamesmanship.
II. NOTICE REQUIREMENTS
A. STANDARD OF REVIEW
The Department argues that because 42 CFR 431.221(d) unambiguously restricts an applicant’s right to request a hearing to 90 days, the circuit court erred when it held that Schreur timely filed a request for a hearing. According to the Department, Schreur received adequate notice that the Department denied her application for Medicaid disability benefits and a nonconforming notice does not permit an applicant to exceed the 90-day limitation to request a hearing, absent a showing of actual prejudice. The Department adds that Schreur did not suffer any actual prejudice from its failure to cite the precise departmental policies underlying its denial; Schreur knew precisely why the
We review a circuit court’s review of an agency’s decision for clear error,
B. PRINCIPLES OF STATUTORY INTERPRETATION
The goal of statutory interpretation is to give effect to the intent of the Legislature.
C. MEDICAID DENIAL AND RIGHT TO A HEARING
Schreur does not contest that the Department informed her of the reasons for the denial of Medicaid benefits and that the Department informed her of her right to a hearing for review of that decision. Schreur contends, rather, that the 90-day hearing-request period did not bind her because the Department did not properly cite the “specific provisions” Supporting the denial. On the surface, therefore, the salient question here would appear to be whether the Department’s failure to cite the correct, specific provisions supporting its denial consequently failed to start the running of a hearing-request period. But the underlying and more basic question relates to Schreur’s status under both federal and state law. We conclude that, because Schreur was an applicant for benefits, not a recipient of benefits, the Department was
1. FEDERAL LAW
a. OVERVIEW
Medicaid is a cooperative program of the federal and state governments that assists participating states in providing medical services to the needy.
The federal Medicaid rules provide:
(a) The State agency must grant an opportunity for a hearing to the following:
(1) Any applicant who requests it because his claim for services is denied or is not acted upon with reasonable promptness.
(2) Any recipient who requests it because he or she believes the agency has taken an action erroneously.[19]
Thus, both applicants and recipients are, under the delineated circumstances, entitled to a hearing. With respect to the timing of a requested hearing, pursuant to 42 CFR 431.221(d), “[t]he agency must allow the applicant or recipient a reasonable time, not to exceed 90 days from the date that notice of action is mailed, to request a hearing.” At first glance, this provision might seem to indicate that both applicants and recipients are entitled to a reasonable time, not to exceed 90 days, to request a hearing. However, a closer review of the plain language of 42 CFR 431.221(d) reflects that there is a triggering event to the applicability of the 90-day period: an agency must first mail a “notice of action.”
The regulations provide definitions for the terms “notice” and “action.” The regulations define “notice” as “a written statement that meets the requirements of [42 CFR] 431.210.”
*13 A notice required under § 431.206(c)(2), (c)(3), or (c)(4) of this subpart must contain—
(a) A statement of what action the State ... intends to take;
(b) The reasons for the intended action;
(c) The specific regulations that support, or the change in Federal or State law that requires, the action;
(d) An explanation of—
(1) The individual’s right to request an evidentiary hearing if one is available, or a State agency hearing; or
(2) In cases of an action based on a change in law, the circumstances under which a hearing will be granted; and
(e) An explanation of the circumstances under which Medicaid is continued if a hearing is requested.
And 42 CFR 431.206, titled “[i]nforming applicants and recipients,” provides, in pertinent part:
(b) The agency must, at the time specified in paragraph (c) of this section, inform every applicant or recipient in writing—
(1) Of his right to a hearing;
(2) Of the method by which he may obtain a hearing; and
(3) That he may represent himself or use legal counsel, a relative, a friend, or other spokesman.
(c) The agency must provide the information required in paragraph (b) of this section—
(1) At the time that the individual applies for Medicaid;
(2) At the time of any action affecting his or her claim;
(3) At the time a skilled nursing facility or a nursing facility notifies a resident in accordance with §483.12 of this chapter that he or she is to be transferred or discharged; and
*14 (4) At the time an individual receives an adverse determination by the State with regard to the preadmission screening and annual resident review requirements of section 1919(e)(7) of the Act.
Reading all these definitions and provisions together, it becomes evident that, unlike a recipient, an applicant for benefits will never receive a 42 CFR 431.210 notice of action. That is, because an applicant has not yet established a right to services, he or she can never be subjected to an “action” in the form of “a termination, suspension, or reduction of Medicaid eligibility or covered services.”
It is important to understand that these provisions distinguish between those persons who are applicants and those who are recipients and have already established a right to services. The regulations make a distinction between applicants and recipients in terms of providing those individuals notice of agency decisions. Applicants, because they by definition cannot receive a 42 CFR 431.210 notice of action, are entitled to a hearing with no particularized requirement regarding the timing of that hearing. Recipients, by contrast, are entitled to “a reasonable time, not to exceed 90 days from the date that notice of action is mailed, to request
c. RIGHTS AND RESPONSIBILITIES REGARDING RECIPIENTS
Whenever a state agency terminates, suspends, or reduces a recipient’s Medicaid eligibility or covered services,
(a) A statement of what action the State . .. intends to take;
(b) The reasons for the intended action-,
(c) The specific regulations that support, or the change in Federal or State law that requires, the action-,
(d) An explanation of—
(1) The individual’s right to request an evidentiary hearing if one is available, or a State agency hearing; or
(2) In cases of an action based on a change in law, the circumstances under which a hearing will be granted; and
(e) An explanation of the circumstances under which Medicaid is continued if a hearing is requested.[27]
d. RIGHTS AND RESPONSIBILITIES REGARDING APPLICANTS
Whenever a state agency denies an applicant’s request for services or does not act upon the request with reasonable promptness, the state agency must grant that applicant an opportunity for a hearing.
Notably, we repeat that, unlike the notice of action that is sent to a recipient, the information provided to an applicant need not adhere to the 42 CFR 431.210 notice-of-action requirements. By its plain terms, 42 CFR 431.206(c)(1) only applies to applicants and, significantly, 42 CFR 431.210 does not cross-reference that subsection.
e. RIGHTS AND RESPONSIBILITIES REGARDING SCHREUR
i. SCHREUR’S STATUS AS AN APPLICANT
It is undisputed that before Schreur applied for Medicaid disability benefits, she was not already a recipient of Medicaid benefits. Accordingly, by definition, when the Department denied Schreur’s application for Medicaid benefits, it did not perform an “action.” That is, a denial is not “a termination, suspension, or reduction of Medicaid eligibility or covered services.”
ii. TIMING OF SCHREUR’S REQUEST FOR A HEARING
As an applicant, Schreur was not expressly bound by the 90-day hearing-request limitation in 42 CFR
Although the 90-day hearing-request limitation of 42 CFR 431.221(d) only expressly governs a recipient’s opportunity to request a hearing, we nevertheless find it a useful guide to gauge what constitutes a reasonable time for an applicant to request a hearing. And in using that 90-day period as a guide, we conclude that there can be no legitimate argument that 368 days — more than a year — after the date of the denial decision was a reasonable time. Indeed, there can be no dispute that 368 days after the denial decision was clearly an unreasonable time.
Moreover, we also reach this conclusion in light of the fact that the Department, in keeping with its responsibility to notify applicants “[o]f the method by which [they] may obtain a hearing,”
We also find it significant that at no time has Schreur ever argued that the 90-day time limitation was unreasonable or that she was unable to comply with it.
In sum, the information that the Department provided to Schreur regarding her application for benefits was sufficient under the regulations and she was provided with a reasonable amount of time to request a hearing. Thus, under the circumstances, the necessary conclusion is that Schreur’s request for a hearing was untimely. Accordingly, we conclude that the circuit court erred by ruling that the Department was required to cite the specific regulations in support of its decision and by ruling that Schreur timely filed her request for a hearing.
2. MICHIGAN LAW
Consistently with the federal regulations, Michigan also provides an applicant whose Medicaid claim has been denied a right to a hearing.
Rule 400.901, titled “Notice of right to hearing,” states as follows:
An applicant, recipient, or licensee shall be informed in writing at the time of application and at the time of any action affecting his claim:
(a) Of his right to a hearing, as provided in R 400.903.
(b) Of the method by which he may obtain a hearing, as provided in R 400.903.
*20 (c) That he may be represented by an authorized representative, such as legal counsel, relative, friend, or other spokesman or he may represent himself.
Moreover, Rule 400.903, titled “Right to hearing,” specifically addresses denials of applicants’ claims and provides, in relevant part:
(1) An opportunity for a hearing shall be granted to an applicant who requests a hearing because his claim for assistance is denied or is not acted upon with reasonable promptness, and to any recipient who is aggrieved by an agency action resulting in suspension, reduction, discontinuance, or termination of assistance.[38]
Thus, under the Michigan Administrative Code, applicants are entitled to a hearing. However, as with the federal regulations, the question then becomes how long applicants have to request such a hearing.
Only one section of the Michigan Administrative Code provides any guidance on this question. Mich Admin Code, R 400.904(4), titled, “Request for hearing; timeliness,” provides: “A claimant shall be provided 90 days from the mailing of the notice in R 400.902 to request a hearing.” And Mich Admin Code, R 400.902(1) states:
In cases of proposed action to discontinue, terminate, suspend, or reduce public assistance or services, the department shall mail a timely notice before a proposed change would be effective. Timely means that the notice is mailed at least 10 days before the action would become effective. A notice shall include the following:
(a) A statement of what action the department intends to take.
(b) The reasons for the intended action.
(c) The specific regulations supporting the action.
*21 (d) An explanation of the individual’s right to request a hearing.
(e) The circumstances under which assistance or service is continued if a hearing is requested.
When read together, the plain language of Rule 400.904(4) and Rule 400.902(1) clearly states that the 90-day limitation on the ability to request a hearing starts from the mailing of a notice of negative action “to discontinue, terminate, suspend, or reduce public assistance or services .... ”
Again, it is undisputed that when Schreur applied for Medicaid disability benefits, she was not already a recipient of such benefits. Thus, the Department’s decision to deny Schreur’s application for Medicaid disability benefits would not “discontinue, terminate, suspend, or reduce public assistance or services .. . .” Accordingly, the Department’s decision would not constitute a “[n]otice of negative action” as Rule 400.902 defines such an action and would not trigger the running of a 90-day hearing-request period. Therefore, under Michigan law, we conclude that the Department was not required to cite the specific provisions supporting its denial. And its failure to do so did not affect the validity of the denial letter that it sent or the timing for a request for a hearing.
And, as we concluded under the federal provisions, in the absence of express guidance on how long applicants have to request a hearing following a denial of benefits, we give deference to the Department’s determination
3. THE DEPARTMENT’S POLICIES
The parties also cite several provisions of the Department’s internal policies to support their respective positions. However, a rule not enacted pursuant to the procedures outlined in the Administrative Procedures Act
III. DUE PROCESS
Because Schreur was only an applicant and not a Medicaid recipient, the procedural due process issues outlined in Goldberg v Kelly
We reverse.
Schreur v Dep’t of Human Servs, unpublished order of the Court of Appeals, entered November 10, 2008 (Docket No. 285792).
Glennon v State Employees’ Retirement Bd, 259 Mich App 476, 478; 674 NW2d 728 (2003).
Detroit v Ambassador Bridge Co, 481 Mich 29, 35; 748 NW2d 221 (2008); United Parcel Serv, Inc v Bureau of Safety & Regulation, 277 Mich App 192, 202; 745 NW2d 125 (2007).
In re Complaint of Rovas Against SBC Mich, 482 Mich 90, 103; 754 NW2d 259 (2008), quoting Boyer-Campbell Co v Fry, 271 Mich 282, 296; 260 NW 165 (1935) (citation and quotation marks omitted).
In re Rovas Complaint, 482 Mich at 103.
Id.
Neal v Wilkes, 470 Mich 661, 665; 685 NW2d 648 (2004).
Halloran v Bhan, 470 Mich 572, 577; 683 NW2d 129 (2004).
Nastal v Henderson & Assoc Investigations, Inc, 471 Mich 712, 720; 691 NW2d 1 (2005).
Rowland v Washtenaw Co Rd Comm, 477 Mich 197, 219; 731 NW2d 41 (2007).
Fluor Enterprises, Inc v Dep’t of Treasury, 477 Mich 170, 174; 730 NW2d 722 (2007).
Lansing Mayor v Pub Serv Comm, 470 Mich 154, 157; 680 NW2d 840 (2004).
Greater Bethesda Healing Springs Ministry v Evangel Builders & Constr Mgrs, LLC, 282 Mich App 410, 414; 766 NW2d 874 (2009).
42 USC 1396.
42 USC 1396 et seq.
42 CFR 430.0.
Id.
42 USC 1396a(a)(3); see also 42 CFR 431.200.
19 42 CFR 431.220 (emphasis added); see also 42 CFR 431.200.
42 CFR 431.201.
Id.
See 42 CFR 431.201 (defining “action”) (emphasis added); see also 42 CFR 431.200(b).
Emphasis added.
42 CFR 431.221(d).
42 CFR 431.201 (defining “action”); see also 42 CFR 431.206(c)(2), (3), and (4).
42 CFR 431.206(b).
27 42 CFR 431.210 (emphasis added).
42 CFR 431.221(d) (emphasis added). See Grossi v Delaware Dep’t of Health & Social Servs, Div of Social Servs, 1995 Del Super LEXIS 388, *4 (Del Super, August 8, 1995, No. 94A-08-016) (“[Blefore the 90 period [sic] begins to run notice that adequately informs the medicaid recipient of the agency’s decision must be mailed.”).
42 CFR 431.220(a)(1); see also 42 CFR 431.200.
42 CFR 431.206(b); 42 CFR 431.206(c)(1).
42 CFR 431.206(c)(1) states: “The agency must provide the information required in paragraph (b) of this section ... [a]t the time that the individual applies for Medicaid[.]”
42 CFR 431.210(c).
42 CFR 431.201 (defining “action”).
42 CFR 431.221(d).
42 CFR 431.206(b)(2).
See In re Rovas Complaint, 482 Mich at 103; Boyer-Campbell, 271 Mich at 296-297.
See Detroit Base Coalition for the Human Rights of the Handicapped v Dep’t of Social Servs, 431 Mich 172, 177; 428 NW2d 335 (1988).
38 Emphasis added.
Mich Admin Code, R 400.902(1) (emphasis added).
Mich Admin Code, R 400.902(1)(c).
See In re Rovas Complaint, 482 Mich at 103; Boyer-Campbell, 271 Mich at 296-297.
MCL 24.201 et seq.
Faircloth v Family Independence Agency, 232 Mich App 391, 402; 591 NW2d 314 (1998).
Goldberg v Kelly, 397 US 254, 260; 90 S Ct 1011; 25 L Ed 2d 287 (1970) (stating that “the constitutional issue to be decided” in that case was “the narrow one whether the Due Process Clause requires that the recipient be afforded an evidentiary hearing before the termination of benefits”).
Mathews v Eldridge, 424 US 319, 335; 96 S Ct 893; 47 L Ed 2d 18 (1976).