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303 Nebraska Reports

TRAN v. STATE

Cite as 303 Neb. 1

Ann Tran, appellant, v. State of Nebraska

and Nebraska Department of Health and

Human Services, Division of Medicaid

and Long-Term Care, appellees.

___ N.W.2d ___

Filed May 3, 2019. No. S-17-1303.

1. Administrative Law: Judgments: Appeal and Error. A judgment or 

final order rendered by a district court in a judicial review pursuant to 

the Administrative Procedure Act may be reversed, vacated, or modified 

by an appellate court for errors appearing on the record.

2. ____: ____: ____. When reviewing an order of a district court under 

the Administrative Procedure Act for errors appearing on the record, the 

inquiry is whether the decision conforms to the law, is supported by competent evidence, and is neither arbitrary, capricious, nor unreasonable.

3. Judgments: Appeal and Error. An appellate court, in reviewing a district court’s judgment for errors appearing on the record, will not substitute its factual findings for those of the district court where competent 

evidence supports those findings.

4. Administrative Law: Statutes. Agency regulations properly adopted 

and filed with the Secretary of State of Nebraska have the effect of 

statutory law.

5. Statutes: Appeal and Error. Statutory language is to be given its plain 

and ordinary meaning, and an appellate court will not resort to interpretation to ascertain the meaning of statutory words which are plain, 

direct, and unambiguous.

6. Administrative Law: Presumptions: Proof. When challenging the 

decision of an administrative agency, the presumption under Nebraska 

law is that the agency’s decision was correct, with the burden of proof 

upon the party challenging the agency’s actions.

7. Administrative Law: Medical Assistance. The Department of Health 

and Human Services may impose sanctions against a Medicaid service 

provider for (1) presenting any false claim for services for payment, 

Nebraska Supreme Court Online Library

www.nebraska.gov/apps-courts-epub/

05/17/2019 09:07 AM CDT
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(2) failing to make available to the department records of services provided to Medicaid clients when requested, and (3) breaching the terms 

of the Medicaid provider agreement.

8. ____: ____. Sanctions available to the Department of Health and Human 

Services for a Medicaid service provider violation include termination 

from the Medicaid program, suspension or withholding of payments, 

recoupment from future payments, or provider education.

9. ____: ____. The decision of the sanction to be imposed for a Medicaid 

service provider violation is left to the discretion of the director of the 

Department of Health and Human Services.

10. ____: ____. The director of the Department of Health and Human 

Services considers the following factors in determining an appropriate 

sanction for a Medicaid service provider violation: (1) seriousness of the 

offenses, (2) extent of violations, (3) history of prior violations, (4) prior 

imposition of sanctions, (5) prior provision of provider education, (6) 

provider willingness to comply with program rules, (7) whether a lesser 

sanction will be sufficient to remedy the problem, and (8) actions taken 

or recommended by peer review groups and licensing boards.

11. Administrative Law: Courts: Appeal and Error. In a de novo review 

by a district court of the decision of an administrative agency, the level 

of discipline imposed by the agency is subject to the district court’s 

power to affirm, reverse, or modify the decision of the agency or to 

remand the case for further proceedings.

Appeal from the District Court for Lancaster County: John

A. Colborn, Judge. Affirmed.

Julie A. Jorgensen, of Morrow, Willnauer & Church, L.L.C., 

for appellant.

Douglas J. Peterson, Attorney General, and Ryan C. Gilbride 

for appellees.

Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, 

Papik, and Freudenberg, JJ.

Funke, J.

Ann Tran appeals the order of the district court for Lancaster 

County affirming the decision of the Nebraska Department of 

Health and Human Services (DHHS) to terminate her status as 

a Medicaid service provider. We affirm.
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BACKGROUND

Tran immigrated to the United States from Vietnam in 2002. 

In 2015 and 2016, Tran provided personal assistance services 

(PAS) to Nebraska Medicaid clients. Tran fulfilled a need for 

service providers for elderly Vietnamese individuals, especially 

due to her ability to speak Vietnamese.

On October 7, 2016, DHHS issued a letter to Tran indicating that DHHS was conducting a review of Tran’s claims for 

payment due to overlapping services and that her payments 

under the Nebraska Medical Assistance Program, also known 

as Medicaid, had been suspended pending the outcome of the 

review. The letter stated that the review would be performed 

“to ensure that funds are only spent on medically necessary and 

appropriate services.” As part of the review, DHHS asked Tran 

to submit documents, including service needs assessments and 

authorizations for each client, monthly or weekly work logs, 

and required billing forms. DHHS advised Tran to conduct a 

self-audit on all services she provided from May 2015 through 

October 7, 2016.

At the conclusion of its investigation, DHHS determined 

that Tran had overlapped services between clients and had 

failed to provide DHHS documentation of her services. Based 

on these failures to adhere to the standards for participation 

in Medicaid, DHHS terminated Tran’s provider agreements 

for good cause. On November 23, 2016, DHHS issued a letter to Tran informing her of her permanent exclusion from the 

Medicaid program, effective immediately.

Tran timely appealed to DHHS. In her appeal request, Tran 

admitted she may have overlapped services because of emergency situations. She indicated that her work schedule required 

flexibility in order to accommodate the special needs of her 

clientele. Tran further admitted that she did not retain copies of 

her weekly timesheets. Tran apologized and said that the audit 

was a learning experience for her.

An administrative hearing was held on March 15, 2017, 

after which the DHHS director of the Division of Medicaid 
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and Long-Term Care (Director) issued a written order affirming DHHS’ action. The Director found that Tran “billed for 

overlapping services and when requested to present documents 

to support billing admitted that she does not keep documentation.” The Director found that Tran’s actions were contrary to 

the Medicaid regulations and that DHHS’ action was proper. 

Tran timely filed a petition for review in district court pursuant to the Administrative Procedure Act (APA), Neb. Rev. Stat. 

§§ 84-901 to 84-920 (Reissue 2014 & Cum. Supp. 2016).

On November 28, 2017, the district court entered an order 

affirming DHHS’ decision to terminate Tran as a Medicaid 

service provider. The court found that DHHS’ decision was 

supported by the evidence and applicable authority. The court 

rejected Tran’s argument that she was never informed that she 

was required to retain records of the services she provided. 

The court found that Tran’s (1) presentment of false claims for 

payment, (2) failure to make available to DHHS her records 

of services, and (3) breach of the terms of her provider agreements each constituted grounds for sanctions, and that the 

sanction imposed of permanent exclusion from the Medicaid 

program was within the Director’s discretion. Tran timely 

appealed from the adverse decision of the district court. We 

moved the appeal to our docket pursuant to our statutory 

authority to regulate the caseloads of the appellate courts of 

this State.1

ASSIGNMENTS OF ERROR

Tran assigns, restated and consolidated, that the district 

court erred in (1) finding that Tran billed for overlapping services and (2) affirming DHHS’ excessive sanction of permanent 

exclusion from the Medicaid program.

STANDARD OF REVIEW

[1-3] A judgment or final order rendered by a district court 

in a judicial review pursuant to the APA may be reversed, 

1 See Neb. Rev. Stat. § 24-1106 (Cum. Supp. 2018).
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vacated, or modified by an appellate court for errors appearing on the record.2

 When reviewing an order of a district court 

under the APA for errors appearing on the record, the inquiry 

is whether the decision conforms to the law, is supported 

by competent evidence, and is neither arbitrary, capricious, 

nor unreasonable.3 An appellate court, in reviewing a district 

court’s judgment for errors appearing on the record, will not 

substitute its factual findings for those of the district court 

where competent evidence supports those findings.4

ANALYSIS

Tran argues on appeal that (1) the court’s finding that Tran 

billed for overlapping services is not based on competent evidence and (2) DHHS’ sanction to permanently exclude Tran 

from the Medicaid program is arbitrary and capricious.

[4,5] Agency regulations properly adopted and filed with 

the Secretary of State of Nebraska have the effect of statutory 

law.5 Statutory language is to be given its plain and ordinary 

meaning, and we will not resort to interpretation to ascertain 

the meaning of statutory words which are plain, direct, and 

unambiguous.6

Medicaid is administered by DHHS.7 DHHS is required 

by state and federal law to review activities related to the 

kind, amount, and frequency of Medicaid services billed to 

ensure that funds are spent only for medically necessary and 

2 Leon V. v. Nebraska Dept. of Health & Human Servs., 302 Neb. 81, 921 

N.W.2d 584 (2019); J.S. v. Grand Island Public Schools, 297 Neb. 347, 

899 N.W.2d 893 (2017).

3 Leon V., supra note 2.

4 Id.; Lingenfelter v. Lower Elkhorn NRD, 294 Neb. 46, 881 N.W.2d 892 

(2016).

5 See, Leon V., supra note 2; Merie B. on behalf of Brayden O. v. State, 290 

Neb. 919, 863 N.W.2d 171 (2015).

6 Id.

7 Neb. Rev. Stat. § 68-908(1) (Reissue 2018); 471 Neb. Admin. Code, ch. 1, 

§ 001.01 (2009).
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appropriate services.8 Medicaid covers PAS under the program 

guidelines and limitations.9 Medicaid PAS are typically provided in a client’s home.10 These services include, for example, 

providing assistance with hygiene, toileting, mobility, nutrition, 

and medications.11

To be eligible to participate in Medicaid, each provider 

must have an approved service provider agreement (SPA) with 

DHHS.12 Each PAS provider must adhere to the provider standards listed in the SPA.13 DHHS may terminate a provider’s 

SPA for failing to meet the conditions of the agreement.14 By 

signing the SPA, a provider agrees to:

1. Fully meet standards established by the federal 

Department of Health and Human Services, and any 

applicable state and federal laws governing the provision 

of their services;

2. Provide services according to the regulations and 

procedures of [DHHS].

. . . .

6. Submit claims which are true, accurate, and complete; [and]

7. Maintain records for all services provided for which 

a claim has been made, and furnish, on request, the 

records to [DHHS].15

On July 8, 2015, Tran signed an SPA with DHHS. In doing 

so, Tran agreed to comply with applicable DHHS regulations, policies, and procedures. Tran assured that she would 

8 471 Neb. Admin. Code, ch. 1, § 004.03 (2003).

9 471 Neb. Admin. Code, ch. 1, § 002 (2009).

10 See, 42 C.F.R. 440.167(a)(3) (2018); 471 Neb. Admin. Code, ch. 15, 

§ 001.02 (2004).

11 471 Neb. Admin. Code, ch. 15, § 003.01 (2004).

12 471 Neb. Admin. Code, ch. 2, § 001.03 (2015).

13 471 Neb. Admin. Code, ch. 15, § 006.01 (2013).

14 471 Neb. Admin. Code, ch. 2, § 001.03.

15 Id.
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document and retain records “to fully disclose the extent of 

the services provided to support and document all claims, for 

a minimum period of six years,” and allow “[state] offices 

responsible for program administration or audit to review services records.” Tran executed an addendum to the agreement in 

which she agreed to provide PAS for Medicaid recipients and 

assured that she would “bill only for services which are authorized and actually provided.” On July 17, 2016, Tran electronically signed and submitted a new SPA, in which she agreed to 

adhere to all conditions of the Nebraska Medicaid regulations 

and acknowledged that she may be terminated from the program if any of the conditions were violated. From May 2015 

through October 2016, Tran provided PAS to Medicaid clients 

pursuant to the DHHS-approved agreements and submitted certified timesheets in support of claims for payment.

Competent Evidence of

Overlapping Services

Tran argues the court’s determination that she billed for 

overlapping services is not supported by the record. She claims 

that she provided her clients services for the full number of 

hours that were authorized. She argues that DHHS initiated the 

audit based on inaccurate information and that DHHS failed to 

account for its “mistaken belief” prior to terminating Tran as a 

Medicaid service provider.16

The administrative record established that DHHS’ investigation of Tran began based on a concern that Tran had overlapped her Medicaid service hours with other employment. 

Tran worked as a substitute teacher at Lincoln Public Schools 

(LPS) on an on-call basis. On September 30, 2016, DHHS’ 

program integrity unit received a fraud referral concerning 

Tran’s billing practices. The record showed that, for example, 

Tran submitted claims to DHHS for providing PAS to Medicaid 

clients on September 24, 2015, from 8 a.m. to noon and 12:30 

16 Brief for appellant at 11.
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to 3:30 p.m. Yet, Tran’s payroll information at LPS showed 

that she worked on September 24 from 8:15 a.m. to 3:45 p.m. 

DHHS submitted audit documents into the record which identified 41 instances, from September 2015 through September 

2016, in which Tran overlapped Medicaid service hours with 

hours worked at LPS.

Upon learning of DHHS’ investigation, Tran contacted 

DHHS’ program integrity investigator to inform her that LPS’ 

payroll information did not accurately reflect the hours that 

Tran had actually worked at LPS. Prior to the hearing, a human 

resources official for LPS submitted an affidavit informing 

DHHS of LPS’ payroll practices. The official explained that 

“[w]hen a substitute works 3.75 hours or more it is reflected 

as a full day on payroll. The time entries displayed on the 

payroll summaries for our substitutes are therefore not necessarily accurate as to the employee’s actual hourly schedule.” 

In addition, a substitute at LPS receives a full day of payment 

even if the need for the substitute is canceled, and the payroll 

system would not reflect that a payment had been made for a 

canceled assignment. On cross-examination, the investigator 

admitted this meant that portions of DHHS’ audit documents 

which reflected the hours that Tran worked at LPS were 

not accurate.

Separate from Tran’s employment with LPS, DHHS identified several other instances in which Tran had billed for services which overlapped between Medicaid clients. For example, 

DHHS’ audit documents showed that in September 2015, Tran 

overlapped services between clients M.D. and X.C. for a period 

of at least 4 hours once a week for 4 consecutive weeks. Tran 

similarly overlapped services between clients for periods of 

between 2 and 4 hours on a weekly basis in October 2015. 

Although less frequent and for shorter periods of time, the 

record shows instances that Tran overlapped services between 

clients in November and December 2015 and in January, 

February, May, and September 2016. These instances were 

unrelated to Tran’s employment with LPS.
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Tran testified that she had a practice of completing her 

service provider timesheets approximately 1 week prior to 

actually providing services to clients. She admitted that after 

she provided the services, she did not correct the billing documents prior to submitting them. As a result, the timesheets 

Tran submitted to DHHS were not an accurate reflection of 

the time periods she actually provided services to Medicaid 

clients. Tran testified that the timesheets accurately stated the 

total number of hours that she worked, but were based on an 

estimated schedule.

In evaluating Tran’s appeal, both DHHS and the district 

court declined to consider the billing time that overlapped 

between Tran’s Medicaid and LPS work. DHHS’ decision to 

exclude Tran from participating as a Medicaid service provider was instead based, in part, on “overlapping services 

between clients.” The district court affirmed and stated that 

irrespective of Tran’s employment at LPS, “there were several 

other instances where [Tran] overlapped services for Medicaid 

clients.”

[6] When challenging the decision of an administrative 

agency, the presumption under Nebraska law is that the agency’s decision was correct, with the burden of proof upon the 

party challenging the agency’s actions.17 Tran disputed that 

there was any factual overlap in services provided. She testified that she provided all of the hours that were authorized to 

each of her clients, provided additional hours free of charge, 

and even after the audit continued to provide services to her 

clients without pay. Each of her four Medicaid clients submitted affidavits stating that “[Tran] always completed the 

allotted number of hours for me even if the actual times the 

services were provided were slightly different than what was 

scheduled.” Although this evidence supports Tran’s position, 

Tran has not proved that the district court failed to base its 

17 Gridiron Mgmt. Group v. Travelers Indemnity Co., 286 Neb. 901, 839 

N.W.2d 324 (2013).
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decision on competent evidence. The court articulated in its 

order that it considered Tran’s evidence and determined that 

her evidence was “outweighed by the evidence of overlapping services and inaccurate service provider timesheets in 

the record.”

Tran’s explanations as to why her billing timesheets showed 

that she overlapped services do not withstand scrutiny. Her 

testimony was that she filled out her timesheets in advance 

based on an estimated schedule. Accepting Tran’s testimony 

as true, the timesheets should not have shown any overlapping 

of services. The impact of Tran’s overlapped billing is that she 

billed for work that was not performed, because she could not 

have provided services to two clients in different locations at 

the same time. Tran argued that her clients were elderly and 

that servicing two clients within the same timeframe was necessary in emergency situations. However, the PAS regulations 

indicate the correct response to an emergency is to locate temporary coverage when unable to provide services as scheduled, 

not to submit bills for both clients.18

In short, Tran agreed to comply with DHHS’ billing standards and practices, Tran did not comply with these conditions, 

and Tran admitted in her testimony and briefs that she did not 

comply with these conditions. As a result, we must conclude 

that the district court’s factual findings that Tran submitted 

bills which overlapped services between Medicaid clients is 

supported by competent evidence in the record. Moreover, the 

record contains independent grounds for terminating Tran’s 

SPA’s based on her complete failure to maintain required 

records and submit those records to DHHS upon request, 

which Tran does not challenge on appeal. Tran’s first assignment of error is without merit.

Evidence Supported Sanction

[7-10] DHHS may impose sanctions against a provider for 

(1) presenting any false claim for services for payment, (2) 

18 See 471 Neb. Admin. Code, ch. 15, § 006.05 (2005).
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failing to make available to DHHS records of services provided to Medicaid clients when requested, and (3) breaching 

the terms of the Medicaid provider agreement.19 The sanctions 

available to DHHS include termination from the Medicaid 

program, suspension or withholding of payments, recoupment 

from future payments, or provider education.20 The decision 

of the sanction to be imposed is left to the discretion of the 

Director.21 The Director considers the following factors in 

determining an appropriate sanction: (1) seriousness of the 

offenses, (2) extent of violations, (3) history of prior violations, (4) prior imposition of sanctions, (5) prior provision of 

provider education, (6) provider willingness to comply with 

program rules, (7) whether a lesser sanction will be sufficient 

to remedy the problem, and (8) actions taken or recommended 

by peer review groups and licensing boards.22

DHHS must notify the provider at least 30 days before the 

effective date of the sanction, unless extenuating circumstances 

exist, and shall give the provider an opportunity to submit 

additional information or to appeal the sanction.23 The provider 

must file the appeal within 30 days of the date of the notice of 

the sanction.24 When a sanction is imposed, DHHS shall give 

general notice to the public of the restriction, its basis, and 

its duration.25

Tran argues that DHHS abused its discretion in permanently 

excluding Tran from the Medicaid program. Tran contends that 

there was no intent to deceive DHHS and that she fully cooperated with the audit and wanted to bring her billing records into 

compliance. She argues that under the circumstances, DHHS 

19 471 Neb. Admin. Code, ch. 2, § 002.03 (2015).

20 471 Neb. Admin. Code, ch. 2, § 002.04A (2015).

21 471 Neb. Admin. Code, ch. 2, § 002.05 (2015).

22 Id.

23 Id.

24 Id.

25 Id.
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should have considered lesser sanctions such as requiring provider education.

As indicated, on an appeal from an order of the district 

court under the APA, we review the court’s decision for errors 

appearing on the record. Our inquiry is whether the court’s 

decision is supported by competent evidence and the law, and 

is neither arbitrary, capricious, nor unreasonable. Here, the district court concluded that permanently excluding Tran from the 

Medicaid program was an appropriate sanction based on the 

applicable law and facts in evidence.

[11] We agree that the sanction imposed against Tran was 

harsh, and that under the circumstances, we may have imposed 

a different sanction. However, it is not for this court to fashion 

the sanction in the first instance and we recognize that reasonable people may disagree regarding the appropriate sanction 

to impose. As we addressed in Prokop v. Lower Loup NRD,

26

a district court’s de novo review extends to the entirety of 

an administrative order, and a district court in reviewing an 

administrative order is required to make independent factual 

determinations and reach independent conclusions with respect 

to the matters at issue. In a de novo review by a district court 

of the decision of an administrative agency, the level of discipline imposed by the agency is subject to the district court’s 

power to affirm, reverse, or modify the decision of the agency 

or to remand the case for further proceedings.27 Accordingly, 

pursuant to its de novo review, the district court had the ability to modify the sanction imposed, but concluded the sanction 

imposed was supported by the evidence.

However, our review is limited to reviewing an order of 

a district court under the APA for errors appearing on the 

record; the inquiry is whether the decision conforms to the 

law, is supported by competent evidence, and is neither arbitrary, capricious, nor unreasonable; and we will not substitute 

26 Prokop v. Lower Loup NRD, 302 Neb. 10, 921 N.W.2d 375 (2019).

27 See Rainbolt v. State, 250 Neb. 567, 550 N.W.2d 341 (1996).
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our factual findings for those of the district court where 

competent evidence supports those findings.28 Therefore, we 

find that the district court reasonably concluded the sanction 

was supported by the evidence and that the sanction was not 

so disproportionate to rise to the level of arbitrary or capricious action.

Tran is correct that DHHS chose to implement one of the 

most serious sanctions within its authority by terminating her 

participation in Medicaid. Though DHHS did not discuss the 

factors that it considered in determining the sanction, based 

on the record, it is evident that DHHS gave significant consideration to the extent of Tran’s violations. It is undisputed that 

Tran failed to properly record the times she worked for specific 

clients which resulted in overlapping billings. Tran admitted 

that she received nearly $880 in overpayments. Further, Tran 

failed to maintain proper billing records that were generated 

throughout her time as a service provider. As a result, Tran was 

unable to provide DHHS copies of the records when requested. 

The lack of recordkeeping made it impossible for Tran to conduct the self-audit required by DHHS as part of its review. It 

was not unreasonable for DHHS to consider these failures to 

adhere to the requirements under the SPA and DHHS regulations as grounds for expulsion from the program.29

While Tran indicated a willingness to comply with program 

rules, the evidence is clear that Tran did not comply. Tran 

argued throughout this process that she was unaware of the 

billing requirements and that she knew of other service providers who did not follow the requirements. However, the SPA 

and DHHS regulations clearly set forth Tran’s duty to comply 

and the record shows that Tran was aware that breaching the 

terms of her agreements could result in her termination. It 

28 Leon V., supra note 2.

29 See, e.g., Siddiqui v. Com’r, N.Y. State DSS, 170 A.D.2d 922, 566 N.Y.S.2d 

970 (1991); Matter of Camperlengo v. Perales, 120 A.D.2d 883, 502 

N.Y.S.2d 310 (1986).
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would not be unreasonable for DHHS to evaluate the evidence 

of Tran’s billing practices and recordkeeping and conclude that 

it would be best if Tran no longer participated in the program. 

Even though Tran is correct that DHHS could have imposed 

education requirements on Tran rather than terminate her services, the regulations do not mandate that any particular form 

of sanction be imposed against a service provider who fails to 

comply with program standards.

We emphasize the highly deferential standard of review 

applicable to the Director’s decision of the appropriate sanction. As explained, we do not find the district court’s affirmance of the sanction imposed by DHHS to be arbitrary, capricious, or unreasonable. We will not require DHHS to continue 

to contract with service providers who have failed to comply 

with the requirements of the Medicaid program. This assignment of error is without merit.

CONCLUSION

We affirm the decision of the district court.

Affirmed.