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IN THE COURT OF APPEALS OF THE STATE OF IDAHO

Docket No. 42184

CHARLES DRAKE CAZIER,

Petitioner-Appellant,

v.

IDAHO DEPARTMENT OF HEALTH & 

WELFARE,

Respondent.

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2015 Unpublished Opinion No. 455

Filed: April 6, 2015

Stephen W. Kenyon, Clerk

THIS IS AN UNPUBLISHED

OPINION AND SHALL NOT

BE CITED AS AUTHORITY

Appeal from the District Court of the First Judicial District, State of Idaho, 

Kootenai County. Hon. Jay P. Gaskill, District Judge. 

Order denying motion to reconsider, affirmed.

Charles Drake Cazier, Athol, pro se appellant.

Hon. Lawrence G. Wasden, Attorney General; Denise L. Rosen, Deputy Attorney 

General, Boise, for respondent. 

________________________________________________

GUTIERREZ, Judge

Charles Drake Cazier appeals from the decision of the district court denying his motion to 

reconsider a district court order. The district court’s order affirmed the Idaho Department of 

Health and Welfare’s final order relating to a Medicaid premium assistance program 

determination. For the reasons that follow, we affirm.

I.

FACTS AND PROCEDURE

This appeal involves Idaho’s now-discontinued Medicaid premium assistance program, 

known as the Health Insurance Premium Payment program (the Program).1

 Costs for providing 

 1 According to a letter sent to participants in the Program dated July 15, 2014, the 

Program ended on September 30, 2014. Letter from Lisa Hettinger, Administrator of the 

Division of Medicaid, to Premium Assistance Participants (July 15, 2014), available at
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medical services to Medicaid recipients are typically borne by the state and the state is later 

compensated in part by the federal government.2

 Under the Program, however, Medicaideligible individuals for whom it would have been cost-effective to enroll in a group health plan 

rather than have their medical costs paid by the state, enrolled in the group health plan and had 

the plan premiums paid by the state. The premiums were paid directly to the group health 

provider or were reimbursed.

Cazier and his family were participating in the Program and, it appears, were reimbursed 

for Cazier’s wife’s purchase of a family group health plan through her employer. As of March 

2012, two of Cazier’s children were no longer eligible for Medicaid, leaving only one member of 

Cazier’s household eligible--Cazier’s son. Based on emails in the record, the Idaho Department 

of Health and Welfare (the Department), which operated the Program, contacted Cazier in July 

2012. The Department, after noting the change in Medicaid-eligible members of Cazier’s 

family, requested information regarding the group health plans available through Cazier’s wife’s 

employer, explaining that it needed to verify whether it would be cost-effective to enroll Cazier’s 

son in a group health plan.

After Cazier submitted the insurance information, the Department informed Cazier by 

email in September that it had determined that it would be cost-effective to reimburse Cazier for 

his wife’s purchase of an employee-plus-one-child group health plan, effective October 2012. 

This meant that other members of the family would no longer be covered. Cazier replied by 

email and explained that he wished to appeal. Because the Department had never handled an 

appeal under the Program, it informed Cazier that it needed to investigate the proper procedure. 

Subsequently, the Department mailed a letter dated December 10, 2012, explaining its costeffective determination and remarking that the change was effective October 2012. The letter 

also advised Cazier of his right to appeal, which Cazier exercised.

At a hearing before a hearing officer, a Department employee with the division of 

Medicaid, who also represented the Department, explained the Program and discussed the cost-

 

http://healthandwelfare.idaho.gov/Portals/0/Medical/MedicaidCHIP/Notice1ParticipantLetter071

514.pdf. 

2 The Idaho Supreme Court previously summarized the Medicaid program in Morgan v. 

Dep’t of Health & Welfare, 120 Idaho 6, 9, 813 P.2d 345, 348 (1991).
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effective determination. Cazier cross-examined the employee and advanced his arguments 

before the hearing officer. The primary argument from Cazier was that it would be cost-effective 

for his son to be enrolled under the family group health plan and that the Department was 

obligated to cover the entire family.3 Cazier also contended that the Department should have 

continued reimbursing him for the cost of the family group health plan, which it had been paying 

prior to October, pending the outcome of the hearing, citing 42 C.F.R. § 431.230 (2012). The 

hearing officer issued a preliminary order and found that the Department’s cost-effective 

determination was consistent with the federal statutes. The hearing officer also found that 

42 C.F.R. § 431.230 applied and that the Department should have continued services pending the 

outcome of the appeal, but found the issue moot because the regulation also permitted the agency 

to recover payments made during the pendency of the appeal if the agency later prevailed. 

Cazier appealed the hearing officer’s preliminary order to the director of the Department. 

The director’s designee, the administrator of the division of Medicaid, issued a final order. The 

administrator affirmed the hearing officer’s finding that the Department’s cost-effective 

determination was consistent with the federal statutes, but the administrator determined that 

42 C.F.R. § 431.230 did not apply, relying on guidance from the Centers for Medicare and 

Medicaid Services, a federal agency. Cazier then sought judicial review in the Kootenai County 

District Court. In an amended memorandum opinion,4 the district court affirmed the 

administrator’s decision. Cazier filed a motion to reconsider, which the district court denied, and 

Cazier appeals.

II.

STANDARD OF REVIEW

The Idaho Department of Health and Welfare is an agency under the Idaho 

Administrative Procedures Act (IDAPA). Idaho Code § 67-5201(2). A final order issued by an 

 3 Cazier further asserted that because his son was his wife’s stepson, she could not cover 

him under the employee-plus-child plan. This prompted a continuance of the hearing from 

which the Department returned and informed the hearing officer that the group health plan 

provider would cover the son under the employee-plus-child plan. 

4 The district court amended its original decision after it learned that Cazier’s appellate 

brief, which the court apparently did not have or consider in its original decision, had been 

misfiled by the district court clerk’s office. 
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agency arising out of a contested case proceeding constitutes agency action. I.C. § 67-5201(3). 

Judicial review of agency action is governed by the IDAPA. I.C. § 67-5270(1). In an appeal 

from the decision of the district court, which exercised its judicial review authority under the 

IDAPA, this Court reviews the agency record independently of the district court’s decision. 

Stafford v. Idaho Dep’t of Health & Welfare, 145 Idaho 530, 533, 181 P.3d 456, 459 (2008). 

However, as a matter of procedure, we affirm or reverse the district court’s decision. Williams v. 

Idaho State Bd. of Real Estate Appraisers, 157 Idaho 496, 502, 337 P.3d 655, 661 (2014).

A party challenging the agency action must show that its substantial rights have been 

prejudiced, I.C. § 67-5279(4), and demonstrate that the agency’s findings, inferences, 

conclusions, or decisions: (a) violate statutory or constitutional provisions; (b) exceed the 

agency’s statutory authority; (c) are made upon unlawful procedure; (d) are not supported by 

substantial evidence in the record; or (e) are arbitrary, capricious, or an abuse of discretion, I.C. 

§ 67-5279(3). See Kaseburg v. State, Bd. of Land Comm’rs, 154 Idaho 570, 577, 300 P.3d 1058, 

1065 (2013). If the agency action is not affirmed on appeal, it will be set aside and remanded for 

further proceedings as necessary. I.C. § 67-5279(3). 

An agency’s findings of fact will not be set aside on appeal unless they are not supported 

by substantial evidence in the record, even if the evidence is conflicting.5

 Williams, 157 Idaho at 

502, 337 P.3d at 661. This Court reviews discretionary issues to determine whether the agency 

perceived the issue as discretionary, acted within the outer limits of its discretion and consistent 

with the applicable legal standards, and reached its decision through an exercise of reason. Id. 

Over questions of law, this Court exercises free review. Id.

 5 According to the Idaho Supreme Court:

Substantial and competent evidence is less than a preponderance of evidence, but 

more than a mere scintilla. Substantial and competent evidence need not be 

uncontradicted, nor does it need to necessarily lead to a certain conclusion; it need 

only be of such sufficient quantity and probative value that reasonable minds 

could reach the same conclusion as the fact finder.

Cowan v. Bd. of Comm’rs of Fremont Cnty., 143 Idaho 501, 517, 148 P.3d 1247, 1263 (2006) 

(citations omitted).
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III.

ANALYSIS

On appeal, Cazier argues that the administrator erred by affirming the Department’s costeffective determination. Cazier also contends that the administrator incorrectly reversed a 

decision of the hearing officer relating to whether Cazier was entitled to a hearing before the 

cost-effective determination went into effect. We address these in turn.

A. The Cost-Effective Determination

Cazier argues that the administrator erred by affirming the Department’s cost-effective 

determination. Specifically, Cazier contends that the administrator’s decision is not supported by 

substantial evidence; violated statutory provisions; exceeded statutory authority; and was 

arbitrary, capricious, and an abuse of discretion. The Department asserts that the administrator 

and hearing officer correctly affirmed the Department’s cost-effective determination. 

States participating in Medicaid may identify cases in which it would be “cost-effective” 

for an individual who would be entitled to Medicaid to enroll in a group health plan in which the 

Medicaid-eligible individual might be enrolled.6

 See 42 U.S.C. § 1396e(a)(1) (2012). For those 

cases where it is cost effective, the state may require “that the individual (or in the case of a 

child, the child’s parent) apply for enrollment in the group health plan.” 42 U.S.C. 

§ 1396e(a)(2). Generally, a group health plan is “cost-effective” if the purchase of the group 

health plan would cost less than the medical expenditures that would otherwise be paid by the 

state. See 42 U.S.C. § 1396e(e)(2) (referring to 42 U.S.C. § 1397ee(c)(3)(A)). 

The analysis of whether a group health plan is cost-effective involves consideration of the 

Medicaid-eligible individual’s premiums, deductibles, and other cost-sharing obligations. See

 6 The guidelines used by a state to identify those cases in which it would be cost-effective 

to pay for the group health plan premium are to be placed in the state plan. See 42 U.S.C. 

§ 1396e(a). The state plan “is an agreement between a state and the Federal government 

describing how that state administers its Medicaid [program].” Medicaid State Plan 

Amendments, CENTERS FOR MEDICARE & MEDICAID SERVICES, http://www.medicaid.gov/StateResource-Center/Medicaid-State-Plan-Amendments/Medicaid-State-Plan-Amendments.html

(last visited March 11, 2015); see also 42 U.S.C. § 1396a (2012) (discussing state plans in 

detail).

The state plan between Idaho and the federal government was not introduced in the 

record below, although the Department produced as an exhibit before the hearing officer what it 

proffered to be an excerpt of section 3.2 of the state plan relating to group health insurance. 

Because both parties rely on 42 U.S.C. § 1396e in making their arguments before this Court and 

do not argue that the state plan contains different guidelines, we rely on 42 U.S.C. § 1396e. 
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42 U.S.C. § 1396e(c)(1)(A). But if (a) not all members of a family are eligible for Medicaid and

(b) the enrollment of the Medicaid-eligible member in the applicable group health plan requires 

the enrollment of the non-Medicaid-eligible member or members, then a separate analysis 

applies to determine whether the group health plan is cost-effective. See 42 U.S.C. 

§ 1396e(c)(1)(B).7

 Under this separate analysis, the cost-effective determination accounts for the 

premiums paid for the non-Medicaid-eligible member or members required to enroll the 

Medicaid-eligible individual, in addition to whatever premiums and cost-sharing obligations the 

Medicaid-eligible individual would pay. See id. 

Here, when Cazier’s son became the only Medicaid-eligible individual in Cazier’s 

family, the Department sought to determine whether it would be cost-effective for the son, but 

not the other children or Cazier, to be covered by Cazier’s wife’s group health plan. Based on 

the information submitted by Cazier, Cazier’s wife could purchase, among other choices, a group 

health plan for herself, herself and a child, or for the family, each with differing premiums. The 

plan selected by the Department, the employee-plus-child plan, is consistent with 42 U.S.C. 

§ 1396e(c)(1)(B) because it enrolls Cazier’s wife and son--who would not be eligible for the 

group health plan but for Cazier’s wife’s enrollment. The determination that this plan was costeffective is supported by substantial evidence, as there is no dispute that the son’s medical care 

would have cost more to the state than the cost of the employee-plus-child group health plan. 

 7 The expenditures that Medicaid pays for the Medicaid-eligible individual participating in 

a group health plan are set forth in 42 U.S.C. § 1396e(a)(3), but another subsection details what

expenses are considered as payments for medical assistance (and thus enter into the costeffective determination) when the enrollment of the Medicaid-eligible individual also requires 

enrollment of non-Medicaid-eligible family members:

If all members of a family are not eligible for [Medicaid] and enrollment 

of the members so eligible in a group health plan is not possible without also 

enrolling members not so eligible--

(i) payment of premiums for enrollment of such other members 

shall be treated as payments for medical assistance for eligible individuals, 

if it would be cost-effective (taking into account payment of all such 

premiums), but

(ii) payment of deductibles, coinsurance, and other cost-sharing 

obligations for such other members shall not be treated as payments for 

medical assistance for eligible individuals. 

42 U.S.C. § 1396e(c)(1)(B).
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Cazier, however, contends that it would be “cost-effective” to purchase a family plan. He 

further asserts that because his wife chose to purchase a family plan (to cover Cazier as well), the 

Department is violating and exceeding the authority of 42 U.S.C. § 1396e(c) by only providing a 

“partial reimbursement.” Cazier may be correct that the family plan is “cost-effective” as 

defined under 42 U.S.C. § 1397ee(c)(3)(A) (2012).8

 But that is not the complete inquiry. Cazier 

does not account for the fact that the Department is tasked with identifying (and therefore 

determining) if it would be cost-effective for his son to be under a group health plan; hence, it is 

up to the Department to choose a plan that satisfies the applicable criteria. See 42 U.S.C. 

§ 1396e(a)(1) (explaining that each state “may . . . identify those cases in which enrollment of an 

individual [entitled to Medicaid] in a group health plan (in which the individual is otherwise 

eligible to be enrolled) is cost effective”).

The fact that Cazier’s wife chose to not buy the employee-plus-child plan and chose to 

purchase the family plan does not obligate the Department to pay for her choice to buy a more 

expensive plan with coverage for additional non-Medicaid-eligible family members. The plain 

text of the statute reveals that the Program is concerned with covering the Medicaid-eligible 

individual, and the Department is tasked with making a cost-effective determination consistent 

with the relevant statutory provisions. See generally 42 U.S.C. § 1396e. By permitting a 

reimbursement of the amount of the group health plan that the Department determines is costeffective, rather than paying the group health plan directly, the Department is allowing the party 

purchasing the coverage flexibility. This flexibility is needed where, as here, the party 

purchasing the coverage may also need coverage for non-Medicaid-eligible family members. 

Thus, contrary to Cazier’s argument, the Department provided a full reimbursement for the 

employee-plus-child plan--the plan that it determined to be cost-effective--even if Cazier’s wife 

 8 Cazier points this Court to a statement in the administrator’s final order that Cazier 

contends is not supported by substantial evidence. Specifically, the administrator wrote that 

because “it was not cost effective for the state to include the Medicaid ineligible family members, 

the hearing officer appropriately ruled that the cost of any additional insurance coverage of the 

other family members was not relevant to the [Program] determination.” (Emphasis added.) 

Whether the family plan is cost-effective under 42 U.S.C. § 1397ee(c)(3)(A) is irrelevant to our 

consideration of whether the Department acted consistently with the applicable statutes in 

determining that the employee-plus-child plan was cost effective.
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purchased a plan that covered other family members whose enrollment was not required in order 

to enroll Cazier’s son. 

In sum, the administrator’s decision affirming the Department’s cost-effective 

determination is supported by substantial evidence. The decision is consistent with the 

applicable federal statutes and does not violate or exceed the statutory authority of the 

Department. Finally, the decision is not arbitrary, capricious, or an abuse of discretion. The 

cost-effective determination affirmed by the administrator was made after Cazier’s son became 

the only Medicaid-eligible individual in Cazier’s household and follows the applicable statutes.

B. Hearing

Cazier contends that the administrator incorrectly reversed a decision of the hearing 

officer relating to whether Cazier was entitled to a hearing before the cost-effective 

determination went into effect. Specifically, Cazier argues that the Department violated statutory 

procedure and proceeded upon unlawful procedure by failing to comply with 42 C.F.R. 

§ 431.230. The Department reiterates the reasoning of the administrator. 

The Medicaid program requires that a state “provide for granting an opportunity for a fair 

hearing before the State agency to any individual whose claim for medical assistance under the 

plan is denied or is not acted upon with reasonable promptness.” 42 U.S.C. § 1396a(a)(3). 

Consistent with this statutory directive, federal regulations instruct that when a state agency takes 

any “action” affecting an individual’s Medicaid claim, it must provide notice to the individual of 

the action, in accord with 42 C.F.R. § 431.210 (2012). See also 42 C.F.R. § 431.206 (2012) 

(discussing information that the agency is required to provide and when it is required to provide 

it). An “action” is the “termination, suspension, or reduction of Medicaid eligibility or covered 

services.” 42 C.F.R. § 431.201 (2012). When the state agency is required to provide notice 

regarding an action, it must provide the notice at least ten days before the date of the action, 

unless advance notice is not required, 42 C.F.R. § 431.213 (2012) (exceptions from advance 

notice), or advance notice is only required five days before the date of the action, 42 C.F.R. 

§ 431.214 (2012) (fraud). 42 C.F.R. § 431.211 (2012). The state agency must also grant an 

opportunity for a hearing to “[a]ny beneficiary who requests it because he or she believes the 

agency has taken an action erroneously.” 42 C.F.R. § 431.220(a)(2) (2012). If the agency mails 

the notice required under 42 C.F.R. §§ 431.211 or 214, and “the beneficiary requests a hearing 
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before the date of action, the agency may not terminate or reduce services until a decision is 

rendered after the hearing unless [two conditions are met.]” 42 C.F.R. § 431.230.

Here, the Department did not terminate or suspend the son’s Medicaid eligibility or 

covered services. Nor did the Department reduce the son’s Medicaid eligibility or covered 

services. Accordingly, the Department did not take an “action” that would require notice under 

42 C.F.R. §§ 431.211 or .214; therefore, the Department was not required to continue 

reimbursing Cazier at the family rate pending the outcome of the hearing. Although Cazier 

complains that “when a notice was finally mailed in December it had an effective date of 

September [sic],” Cazier was informed of the cost-effective determination by email prior to the 

effective date of the change. Cazier does not argue that the Department was required to provide 

a different type of notice prior to the effective date of the cost-effective determination, to the 

extent that the Department was required to provide any notice.

IV.

CONCLUSION

The administrator’s final order affirming the cost-effective determination made by the 

Department is supported by substantial evidence, does not violate the applicable federal statutes, 

and does not exceed the statutory authority of the agency. Nor is the decision arbitrary, 

capricious, or an abuse of discretion. Furthermore, the administrator correctly determined that 

Cazier was not entitled to a hearing before the cost-effective determination went into effect. 

Accordingly, the district court’s order denying the motion to reconsider is affirmed. Costs on 

appeal are awarded to the Department because it is the prevailing party. Idaho Appellate 

Rule 40(a).

Judge LANSING and Judge GRATTON CONCUR.