Colwell v. Managed Care of North America

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
05/28/2021 12:08 AM CDT
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Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
COLWELL v. MANAGED CARE OF NORTH AMERICA
Cite as 308 Neb. 597Robert F. Colwell, Jr., D.D.S., and Robert
F. Colwell Jr., DDS, P.C., appellants, v.
Managed Care of North America,
Inc., et al., appellees.
___ N.W.2d ___
Filed March 12, 2021. Nos. S-20-336, S-20-338.
1. Jurisdiction: Appeal and Error. A jurisdictional question which does
not involve a factual dispute is determined by an appellate court as a
matter of law.
2. Administrative Law: Judgments: Statutes: Appeal and Error. The
meaning and interpretation of statutes and regulations present questions
of law which an appellate court decides independently of the decision
made by the court below.
3. Administrative Law: Judgments: Time: Appeal and Error. Generally,
when a request for an appeal before an administrative agency is not
timely pursuant to rules and regulations properly adopted by that
agency, the agency does not have subject matter jurisdiction to hear
the appeal.
4. Administrative Law: Judgments: Appeal and Error. When an admin-
istrative agency lacks subject matter jurisdiction over a claim, courts
also lack subject matter jurisdiction on appeal.
5. Administrative Law: Statutes. For purposes of construction, a rule or
regulation of an administrative agency is generally treated like a statute,
because properly adopted and filed regulations have the effect of statu-
tory law.
6. Administrative Law. Absent a statutory or regulatory indication to the
contrary, language contained in a rule or regulation is to be given its
plain and ordinary meaning.
7. ____. A rule or regulation is open for construction only when the lan-
guage used requires interpretation or may reasonably be considered
ambiguous.
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COLWELL v. MANAGED CARE OF NORTH AMERICA
Cite as 308 Neb. 5978. ____. A court will construe regulations relating to the same subject mat-
ter together to maintain a consistent and sensible scheme.
9. Administrative Law: Notice: Time: Appeal and Error. When the
adverse action is termination, “the date of the action” for purposes of
appeal under 471 Neb. Admin. Code, ch. 2, § 003.01A(3) (2015), is the
date notice of the termination is issued, regardless of the termination’s
effective date.
Appeals from the District Court for Lancaster County: Jodi
L. Nelson, Judge. Affirmed.
John A. Svoboda and Eric J. Sutton, of Gross & Welch, P.C.,
L.L.O., for appellants.
Rodney C. Dahlquist, Jr., of Dornan, Troia, Howard,
Breitkreutz & Conway, P.C., L.L.O., for appellee Managed
Care of North America, Inc.
Douglas J. Peterson, Attorney General, and James A.
Campbell, Solicitor General, for appellees Nebraska Department
of Health and Human Services et al.
Heavican, C.J., Cassel, Stacy, Funke, Papik, and
Freudenberg, JJ.
Stacy, J.
In these consolidated appeals, a Medicaid dental provider
assigns error to the district court’s dismissal of separate actions
challenging the denial of an administrative appeal hearing
before the Nebraska Department of Health and Human Services
(DHHS). Because we agree with the district court that the hear-
ing request was not timely submitted to DHHS under the gov-
erning regulation, we affirm the dismissals.
BACKGROUND
Robert F. Colwell Jr., DDS, P.C., is a Nebraska corpora-
tion through which Robert F. Colwell, Jr., D.D.S. (collec-
tively Colwell), provides dental services. Managed Care of
North America (MCNA) is a Florida company that provides
managed care services to the State of Nebraska’s Medicaid
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Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
COLWELL v. MANAGED CARE OF NORTH AMERICA
Cite as 308 Neb. 597program. 1 In 2016, Colwell entered into a “Master Dental
Provider Agreement” with MCNA, whereby Colwell agreed
to provide dental services to children and adults enrolled in
Nebraska Medicaid, and MCNA agreed to compensate Colwell
for providing the services. The agreement was for an initial
term of 1 year and had an automatic renewal provision for
additional 1-year terms. Article X of the agreement stated that
either party could terminate the agreement on 90 days’ writ-
ten notice.
On April 5, 2019, Colwell filed a lawsuit against MCNA
in the district court for Douglas County. That action alleged,
among other things, that MCNA had failed to pay Colwell
for covered services provided to Nebraska Medicaid patients.
Colwell’s Douglas County suit is not part of the instant appeal,
but we reference it because it forms the basis for one of the
assignments of error.
On April 24, 2019, MCNA sent a certified letter to Colwell
stating that, pursuant to article X of the provider agreement,
MCNA was “providing notice of non-renewal” and terminat-
ing the Medicaid provider agreement with Colwell. The letter
advised Colwell, “Your participation with MCNA will end at
midnight on August 22, 2019, as a participating provider for
MCNA’s Nebraska plan.” The letter also advised that until the
“Termination Effective Date,” which the letter described as
August 23, Colwell was to continue providing dental services
to Medicaid enrollees under the terms of the agreement.
After receiving the termination letter, Colwell filed a motion
for preliminary injunction in the Douglas County action, seek-
ing to enjoin MCNA from terminating the provider agreement,
and also amended the complaint to challenge MCNA’s termina-
tion decision. Our record indicates the preliminary injunction
was denied in an order entered August 19.
On August 21, 2019, Colwell filed a “Request for Fair
Hearing” with DHHS, seeking to appeal “MCNA’s letter of
1
See 482 Neb. Admin. Code, ch. 1, § 001.01 (2013).
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COLWELL v. MANAGED CARE OF NORTH AMERICA
Cite as 308 Neb. 5974/24/19 terminating [the] Master Dental Provider Agreement.”
On September 6, DHHS acknowledged the hearing request
but informed Colwell via letter that the “appeal involve[d] an
action by MCNA that [was] not appealable” to DHHS. Then,
on September 17, DHHS issued an order formally dismissing
Colwell’s hearing request.
On September 20, 2019, Colwell filed an action under the
Administrative Procedure Act 2 (APA appeal) in the district
court for Lancaster County, challenging the September 17
DHHS order of dismissal. Then, on October 7, Colwell filed
a petition in error 3 in the district court for Lancaster County,
challenging the same DHHS dismissal order. Both the APA
appeal and the petition in error named as defendants MCNA,
DHHS, and various State officials, and both alleged that DHHS
had erroneously dismissed Colwell’s request for a hearing on
MCNA’s decision to terminate the provider agreement.
The district court for Lancaster County consolidated the two
matters, after which MCNA moved to dismiss both, asserting
that Colwell’s request for a hearing before DHHS had not been
timely filed. Alternatively, MCNA argued that dismissal was
appropriate under the doctrine of jurisdictional priority because
Colwell’s previously filed lawsuit against MCNA was still
pending in Douglas County and that lawsuit also challenged
the termination.
At the hearing on MCNA’s motions to dismiss, counsel for
all parties appeared, and the court received a certified copy of
the official record and proceedings before DHHS. Additionally,
MCNA offered certified copies of filings in Colwell’s Douglas
County action against MCNA, which the court received over
Colwell’s objection. On the record, counsel for DHHS and
the other State appellees informed the court that they agreed
with the arguments raised in MCNA’s motions to dismiss and
that they stood by their position that Colwell had no right to
2
Neb. Rev. Stat. §§ 84-901 to 84-920 and 84-933 to 84-948 (Reissue 2014
& Cum. Supp. 2018).
3
Neb. Rev. Stat. § 25-1901 (Reissue 2016).
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COLWELL v. MANAGED CARE OF NORTH AMERICA
Cite as 308 Neb. 597a DHHS hearing on MCNA’s decision to terminate the pro-
vider agreement.
In an order entered April 20, 2020, the district court dis-
missed both the APA appeal and the error proceeding for lack
of subject matter jurisdiction. The court found that DHHS
had no authority to hold a hearing because Colwell’s request
was untimely under 471 Neb. Admin. Code, ch. 2, § 003.01A
(2015), which allows Medicaid providers to appeal adverse
actions, but requires the written hearing request to be filed
within 90 days of “the date of the action.” The district court
found that the 90-day appeal period began running on April 24,
2019 (the date of MCNA’s letter notifying Colwell of the ter-
mination decision), and that Colwell’s written hearing request
was submitted on August 21, well outside the appeal period.
The district court rejected Colwell’s contention that the “‘date
of the action’” was August 23 (the termination effective date),
reasoning that such a construction was contrary to the plain
language of the regulation. The district court did not address
MCNA’s jurisdictional priority argument, or any of the other
arguments presented, generally reasoning that its resolution of
the timeliness issue was both jurisdictional and dispositive.
A few days after the orders of dismissal were entered,
Colwell filed a notice of appeal in both cases. Colwell also
filed, and the district court overruled, motions to set super­
sedeas bonds in both cases. The appeals were consolidated, and
we granted the appellees’ petition to bypass.
ASSIGNMENTS OF ERROR
Colwell assigns, restated, that the district court erred by (1)
receiving new evidence outside the administrative record; (2)
dismissing the APA appeal and the error proceeding for lack
of jurisdiction; (3) finding Colwell failed to timely file the
request for an administrative hearing; (4) failing to find that
Colwell’s hearing request to DHHS presented an appealable
issue; (5) dismissing the APA appeal and the error proceed-
ing without considering the merits of either, thus violating
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308 Nebraska Reports
COLWELL v. MANAGED CARE OF NORTH AMERICA
Cite as 308 Neb. 597Colwell’s due process rights; and (6) overruling Colwell’s
motion to set a supersedeas bond.
STANDARD OF REVIEW
[1] A jurisdictional question which does not involve a fac-
tual dispute is determined by an appellate court as a matter
of law. 4
[2] The meaning and interpretation of statutes and regula-
tions present questions of law which an appellate court decides
independently of the decision made by the court below. 5
ANALYSIS
[3,4] Generally, when a request for an appeal before an
administrative agency is not timely pursuant to rules and regu-
lations properly adopted by that agency, the agency does not
have subject matter jurisdiction to hear the appeal. 6 And when
an administrative agency lacks subject matter jurisdiction over
a claim, courts also lack subject matter jurisdiction on appeal. 7
Because the threshold jurisdictional issue in these consolidated
appeals turns on whether Colwell’s written request for a hear-
ing before DHHS was timely, we begin our analysis with the
governing administrative regulations.
All parties agree that if Colwell had a right to an admin-
istrative appeal hearing before DHHS on these facts, it was
governed by 471 Neb. Admin. Code, ch. 2, § 003 (2015). That
regulation applies to Medicaid providers 8 and states in rel-
evant part:
4
Omaha Expo. & Racing v. Nebraska State Racing Comm., 307 Neb. 172,
949 N.W.2d 183 (2020).
5
See McManus Enters. v. Nebraska Liquor Control Comm., 303 Neb. 56,
926 N.W.2d 660 (2019).
6
See Creighton St. Joseph Hosp. v. Tax Eq. & Rev. Comm., 260 Neb. 905,
620 N.W.2d 90 (2000) (superseded by statute as stated in In re App. No.
C-4973 of Skrdlant, 305 Neb. 635, 942 N.W.2d 196 (2020)).
7
Id.8
See 471 Neb. Admin. Code, ch. 2, § 001.01 (2015).
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Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
COLWELL v. MANAGED CARE OF NORTH AMERICA
Cite as 308 Neb. 5972-003 Appeal Rights: Any adverse action under this
Title may be appealed to the Medicaid Director by the
person or entity against whom the action was taken.
2-003.01 Hearing Request Procedure: The person or
entity appealing an adverse action must submit a written
hearing request to the Department.
2-003.01A Deadlines:
1. Administrative sanctions must be appealed within 30
days of the date of the action.
2. Refund requests must be appealed within 30 days
of the date of the action indicated either on the Refund
Report or the notice of action letter.
3. All other actions must be appealed within 90 days of
the date of the action.
2-003.01B Appealing before effective date: A per-
son or entity may appeal a termination or exclusion
before the effective date of the proposed termination or
exclusion. A termination or exclusion appealed before
its effective date will not take effect until the appeal
has been decided, unless the termination or exclusion is
being imposed pursuant to 42 C.F.R. 455.416(c) or has
an immediate effective date because of a threat to client
health and safety.
2-003.02 Hearings: Appeal and hearing procedures are
governed by Title 465, Chapter 6. 9
We pause to note that title 471 was amended in 2020, after the
relevant events in these appeals. As a result of those amend-
ments, the provisions previously found in § 003 are now in 471
Neb. Admin. Code, ch. 2, § 007 (2020). This opinion refers
to the regulations in effect at the time Colwell filed the hear-
ing request.
Section 003.01A contains different appeal deadlines depend-
ing on the nature of the adverse action being appealed to
DHHS. Colwell’s written hearing request sought to appeal
9
Id., § 003.
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308 Nebraska Reports
COLWELL v. MANAGED CARE OF NORTH AMERICA
Cite as 308 Neb. 597“MCNA’s letter of 4/24/19,” which notified Colwell of
MCNA’s decision not to renew the provider agreement. For
purposes of determining the timeliness of Colwell’s hearing
request to DHHS, the parties generally equate MCNA’s non­
renewal decision with a termination, and we accept that char-
acterization. In fact, Colwell’s briefing plainly states that “[t]he
adverse action being challenged is MCNA’s termination (with-
out cause) of the [provider agreement].” 10 No party suggests
the termination involved either a sanction or a refund request; 11
consequently, the deadline for Colwell to appeal MCNA’s ter-
mination, assuming without deciding that such a right existed,
was governed by § 003.01A(3), which applies to “[a]ll other”
adverse actions. Under § 003-01A(3), Colwell was required to
submit the written hearing request to DHHS “within 90 days of
the date of the action.”
The phrase “date of the action” is not defined in the subject
regulation, and the parties urge different interpretations. For
purposes of calculating the 90-day appeal period, the appel-
lees contend the “date of the action” was April 24, 2019—the
date on which MCNA issued notice of the termination deci-
sion. Colwell, on the other hand, contends the “date of the
action” was August 23—the effective date of the termination.
Under the appellees’ construction, Colwell’s August 21 hearing
request was submitted well after the 90-day appeal period and
was untimely. But under Colwell’s construction, the hearing
request was submitted 2 days before the 90-day appeal period
started, which Colwell argues is permissible under the regula-
tory scheme.
Given the parties’ contentions, the specific question to be
resolved is this: When the adverse action is a termination noti-
fication with a future effective date, is the “date of the action”
under § 003.01A(3) the date the termination notice is issued
or the date the termination becomes effective? To answer this
question, we apply settled rules of construction.
10
Brief for appellants at 15.
11
§ 003.01A(1) and (2).
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COLWELL v. MANAGED CARE OF NORTH AMERICA
Cite as 308 Neb. 597[5-8] For purposes of construction, a rule or regulation of
an administrative agency is generally treated like a statute, 12
because properly adopted and filed regulations have the effect
of statutory law. 13 Absent a statutory or regulatory indication
to the contrary, language contained in a rule or regulation
is to be given its plain and ordinary meaning. 14 A rule or
regulation is open for construction only when the language
used requires interpretation or may reasonably be considered
ambiguous. 15 A court will construe regulations relating to the
same subject matter together to maintain a consistent and sen-
sible scheme. 16
Colwell generally argues the phrase “date of the action” is
not ambiguous, and we agree. Our construction is therefore
controlled by the plain and ordinary meaning of the phrase. We
focus first on the key word in this regulatory phrase—“action.”
Under the Nebraska Administrative Code, § 003 affords
Medicaid providers the right to appeal “[a]ny adverse action”
and § 003.01A(3) states that “actions must be appealed within
90 days of the date of the action.” Given this regulatory frame-
work, the “action” to which § 003.01A(3) refers is plainly the
“adverse action” the provider intends to appeal.
Colwell admits “[t]he adverse action being challenged is
MCNA’s termination,” 17 and it is undisputed that MCNA noti-
fied Colwell of that adverse action in the April 24, 2019, let-
ter. Affording the regulatory language its plain meaning, we
conclude “the date of the action” for purposes of § 003.01A(3)
was April 24.
12
J.S. v. Nebraska Dept. of Health & Human Servs., 306 Neb. 20, 944
N.W.2d 266 (2020).
13
Id.14
Id.15
See McManus Enters., supra note 5.
16
Id.
17
Brief for appellants at 15.
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COLWELL v. MANAGED CARE OF NORTH AMERICA
Cite as 308 Neb. 597In resisting this construction, Colwell argues instead that
August 23, 2019 (the effective date of the termination),
should be considered the “date of the action” for purposes of
§ 003.01A(3). We reject this construction as unsound, for sev-
eral reasons.
First, Colwell’s construction is imprecise; it conflates a detail
of the adverse action with the action itself. When Colwell sub-
mitted the hearing request on August 21, 2019, Colwell chal-
lenged the April 24 termination notification, not the termina-
tion’s effective date. For Colwell’s proposed interpretation to
make sense, the regulatory phrase “the date of the action” must
be read to mean “the effective date of the action.” But that was
not the language used by the drafters, and it is not within the
province of the courts to read a meaning into a regulation that
is not there. 18
Moreover, we cannot reconcile Colwell’s proposed con-
struction with the plain text of the related tolling provisions in
§ 003.01B. Section 003.01B expressly provides that when the
adverse action is “termination,” the action may be appealed
“before the effective date of the proposed termination,” and
in that event, the termination “will not take effect until the
appeal has been decided.” Expressly excluded from the toll-
ing provision are terminations with “an immediate effective
date.” 19 Because §§ 003.01A(3) and 003.01B relate to the
same subject matter, we must construe them in a way that
maintains a consistent and sensible scheme. 20 Reading these
sections together, it is apparent that when the adverse action
is termination, “the date of the action” and “the effective
date of the proposed termination” have different meanings
under the regulatory scheme and are not, as Colwell suggests,
synonymous concepts. Instead, the provisions of § 003.01B
address the reality that, to comply with the 90-day appeal
18
Utelcom, Inc. v. Egr, 264 Neb. 1004, 653 N.W.2d 846 (2002). Accord
Houser v. American Paving Asphalt, 299 Neb. 1, 907 N.W.2d 16 (2018).
19
§ 003.01B.
20
See McManus, supra note 5.
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COLWELL v. MANAGED CARE OF NORTH AMERICA
Cite as 308 Neb. 597deadline in § 003.01A(3), it may be necessary to appeal a
termination before it becomes effective. And the provisions
incentivize prompt appeal requests and maintain the status
quo by tolling the effective date of the termination until the
appeal has been decided.
But Colwell argues that § 003.01B should instead be con-
strued to provide a more “comprehensive scheme” 21 that gives
Medicaid providers the right to appeal terminations “at any
time prior to the effective date of the termination” 22 and also
gives them the right to appeal the termination for “90 days
after” 23 the termination’s effective date. Colwell’s proposed
construction, in addition to being contrary to the plain text of
the regulation, also results in a regulatory scheme which is nei-
ther sensible nor consistent. 24
Allowing terminations to be appealed at any point before
the effective date and for 90 days after the effective date would
result in widely varying appeal windows. Under Colwell’s
construction, a Medicaid provider who is notified of an imme-
diate termination would have a 90-day appeal window and a
Medicaid provider who is notified of a termination that takes
effect in 6 months would have a 270-day appeal window. In
contrast, the construction applied by the district court and
advocated by the appellees would require all Medicaid provid-
ers to appeal within 90 days of the termination notice, regard-
less of whether the termination becomes effective immediately
or sometime in the future. This gives the regulatory scheme
a consistent and sensible meaning that encourages prompt
appeals from adverse actions and applies the same 90-day
appeal window to every Medicaid provider.
21
Brief for appellants at 20.
22
Id. at 19 (emphasis omitted).
23
Id. (emphasis in original).
24
See McManus, supra note 5 (holding court will construe regulations
relating to same subject matter together to maintain consistent and sen­
sible scheme).
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COLWELL v. MANAGED CARE OF NORTH AMERICA
Cite as 308 Neb. 597For the sake of completeness, we note that Colwell’s brief-
ing also attempts to support the alternative construction by
citing to other regulatory provisions and definitions within the
Code of Federal Regulations and elsewhere in the Nebraska
Administrative Code. We have carefully reviewed and consid-
ered each of the state and federal regulatory provisions cited
by Colwell, and find all are inapposite. Little would be gained
by an exhaustive comparison of the unrelated regulatory lan-
guage, because none of the cited federal or state regulatory
schemes address the same subject matter before us in these
consolidated appeals. Our task is to determine the meaning
of the phrase “date of the action” as used in the regulatory
scheme governing a Medicaid provider’s right to appeal from
an adverse action. Colwell’s reference to definitions in unre-
lated federal and state regulations does not inform our work or
change the plain meaning of the phrase “the date of the action”
in § 003.01A(3).
[9] In summary, we reject Colwell’s proposed construc-
tion because it would require that we read language into the
plain text of the regulation, it cannot be reconciled with other
provisions in the same regulation, and it would result in a
regulatory scheme which is neither sensible nor consistent. We
instead hold that when the adverse action is termination, “the
date of the action” for purposes of appeal under § 003.01A(3)
is the date notice of the termination is issued, regardless of
the termination’s effective date. And to be timely, a writ-
ten hearing request must be submitted to DHHS within 90
days thereafter.
MCNA notified Colwell of the termination decision in
the certified letter of April 24, 2019, and Colwell had 90
days thereafter, or until July 23, to submit the written hear-
ing request under § 003.01A(3). Because Colwell’s hearing
request was not submitted until August 21, it was untimely,
and DHHS therefore lacked subject matter jurisdiction over
the appeal. 25 When an administrative agency lacks subject
25
See Creighton St. Joseph Hosp., supra note 6.
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COLWELL v. MANAGED CARE OF NORTH AMERICA
Cite as 308 Neb. 597­ atter jurisdiction, the courts also lack subject matter jurisdic-
m
tion on appeal, 26 and the district court correctly dismissed both
the APA appeal and the error proceeding for lack of subject
matter jurisdiction.
Because we affirm the district court’s dismissal for lack
of subject matter jurisdiction, we do not address Colwell’s
remaining assignments of error, and we express no opinion on
Colwell’s use of both an APA appeal and a petition in error to
challenge DHHS’ order of dismissal.
CONCLUSION
Because Colwell’s request for a hearing before DHHS was
not timely filed within 90 days of “the date of the action”
under § 003.01A(3), we affirm the district court’s dismissal for
lack of subject matter jurisdiction.
Affirmed.
Miller-Lerman, J., not participating.
26
Id.