### T E X A S C O U R T O F A P P E A L S , T H I R D D I S T R I C T , A T A U S T I N

NO. 03-14-00069- CV

Harlingen Fam ily Dentistry, P .C.; and Trueblood Dental Associate s, P .A., Appellants

v. Texas Health and Human Servic es Com m ission and O ff ice of the Inspector G eneral, Appellees

F ROM TH E DISTRI CT COURT O F TRAVIS CO UNTY, 419 TH JUDICI AL DISTRICT NO. D-1 -GN-1 3-0 0240 2, H ONO RAB LE LO RA J. LI VINGSTO N, JUDGE P RESIDING

O P I N I O N

H a r li n g e n F a mi ly D e n ti s tr y , P. C. a n d T r u e b lo od Dental Associates, P. A

. ( c o ll e c ti v e ly , the Dental Gr o u p s ) fi led suit in Travis County district court challeng ing cer tain rules adopted by the Texas Hea lth and Human Service s Commi ssion (HHSC). See Tex. Gov’t Code § 2001.038 (per mitti ng challeng e to validity or applicability of ag ency rule). The challeng ed rules permit HHSC and its Offic e of I nspector Gene ral (OI G) to impose a pay ment hold ag ainst a Medica id provider in

cer tai n ci rc u m stance s. See 1 Tex. Admin. Code § 371.1709(a) (2), (3), (4) (2012) (Tex. Hea lth & Human Servs. Comm’n, Pay ment Hold). The Dental Groups also challeng ed a rule permitting the OIG t o re tain funds that wer e acc umulated during a pay ment hold even afte r the hold has been terminated and to use those funds to offse t any monies that may be deter mined to be owed as a result of an ong oing investigation of t h e provider. Id. § 371.1709(e) (2). After the trial court rende redjudgme n t t h at t he challeng ed rules wer e valid, the Dental Groups perf ecte d this appea l. We will

reve rse the tr ial court’s judg ment and re nder judg ment that the cha lleng ed rule s are not valid.

ANALYSIS I n their sole issue on appea l, the Dental Groups contend the trial court err ed in finding that the challeng ed administrative rules are a valid exercise of HHSC’s statutory rulemaking authority

. We presume that an ag ency rule is valid, and the party challeng ing the rule has the burden of demonstrating its invalidity

. See Texas Ass’n of Psychological Assocs. v. Texas State Bd. of Exam’rs of Psychologists , 439 S.W .3d 597, 603 (Tex. App.—Austin 2014, no pet.). To establish

a rule’s fac ial i n v al i dity , the challeng er must show that the rule (1) contravenes specific statutory lang uag e; (2) is counter to the statute ’s gen er al objectives; or (3) imposes additional burdens, conditions, or restric tions in excess of or inconsistent with the rele vant statutory p ro v i s i ons. See W are v. Texas Comm’n on Law Enf o r ce me nt Officer Standards & Educ. , No. 03-12-00740- CV, 2013 WL 2157244, at *2 (Tex. App.—Austin May 16, 2013, no pet.) (mem. op.); Office of Pub. Util. Counsel v. Public Util. Comm’n , 131 S.W .3d 314, 321 (Tex. App.—Austin 2004, pet. denied)

. An
ag ency ’s rules must comport with the ag ency ’s authorizing statute. See id. A state a dminist rative
ag ency has only the authority expressly provided by statute or nece ssarily implied in or der to c arr y out the express power s the leg islature has g iven it. See Public Util. Comm’n v. City Pub. Serv. Bd. , 53 S.W .3d 310, 315 (Tex. 2001); Public Util. Comm’n of Tex. v. GTE-Southwest, Inc. , 901 S.W .2d 401, 407 (Tex. 1995). An age ncy may not exercise what is effe ctively a new power on the t heory that such exercise is ex pedient for the ag ency ’s purposes. GTE Southwest , 901 S.W .2d at 407.

2The Dental Groups co n t end that HHSC exceede d its statutory authority

by promulg ating the challeng ed rules permitting cer tain pre- notice p ay

ment holds. The dispute, there fore , turns principally on the construction of a statute, a question of law that we revie w de novo. See First Am. Titl e Ins. Co. v. Combs , 258 S.W .3d 627, 632 (Tex. 2008). Our primary objective in construing statutes is to g ive eff ect to the leg islature’s intent. Ga l b r a i th Eng’g Consultant s, Inc.

v. Pochuc ha , 290 S.W .3d 863, 867 (Tex. 2009). The plain meaning of the text is the best expression of leg islative intent unless a di ff er en t m ea ning is supplied by leg islative definition or is appar ent from the context, or unless the plain meaning would lead to absurd or nonsensical results t h at the leg islature could n o t have intended. City of Rock wall v. Hughes , 246 S.W .3d 621, 625-26 (Tex. 2008); see Tex

. Go v ’t C o d e § 311.011 (“Words and phrase s shall be rea d in context and construed acc ording to the rules of g rammar an d co mmon usag e.”)

. We look to the entire act in deter mining the leg islature’s intent with respe ct to a specific p ro vision. Taylor v. Firemen’ s & Policeme n’s C ivil Serv. Comm’n , 616 S.W .2d 187, 190 (Tex. 1981); Northw est Austin Mun. Util. Dist. No. 1 v. City of Austin , 274 S.W .3d 820, 82 8 (T ex . App.—Austin 2008, pet. denied)

. The doctrine of unius est exclusio alterius has long been recognized in this state: “[I ]t is a settl ed rule
t h at the express mention or enumer ation of one person, thing, conseque nce or class is equi v al en t
to an express exclusion of all others.” Johnson v. S ec ond Injury Fund , 688 S.W .2d 107, 108-09 (Tex. 1985). Although the doctrine is not an absolute rule, it ca n b e h el p ful in deter mining leg islative intent. Mid-Century Ins. Co. v

. Kidd , 997 S.W .2d 265, 274 (Tex. 1999). We be lieve it is helpful in the prese nt case
.

3The Chall enged Rules The first set of challeng ed rules purports to g rant HHSC and the OI G authority to impose a pre- notice pay

ment hold on providers under cer tain circ umstances. The Dental Groups
argue that t he rules exceed the limit ed authority the leg islature g rante d HHSC to impose such
pay ment holds on a Medica id provider’ s reimburse ment claims for service s provided. Specifica lly , the Dental Groups maintain that bec ause the challeng ed rule s purport to permit a pay ment hold in instances that do not involve evidenc e of fra ud by the provider, th ey ex cee d HHSC’s statutory authority and there fore are invalid. The issue in this case, the n, reduc es to whethe r HHSC has the authority to adopt rules permitting the OI G to impose a pre- notice pay ment hold on a Medica id provider f or a pr og ram violation that does not involve evidenc e of or alleg ations of fra

ud. When the challeng ed rules wer e promulg ated in 2005, two statutes expressly authorized a pre- notice hold on pay ment to a Medica id provider. Gov er n m en t Code section 531.102(g )(2) provided:

I n addition to other instances a uthorized under state or

fede ral law , the [OI G] shall impose w i t h o u t prior notice a hold on payme nt of claims for reimburse ment submitt ed by a provider to compe l production of records or when requested by the state’s Medic aid fraud control unit , as applicabl e. The office must notify the provider of the hold on pay ment not later than the fifth working day afte r the date the pay ment hold is im posed.
Act of June 2, 2003, 78th L eg ., R.S., ch. 198, § 2.19(a) , 2003 Tex. Ge n. L aws 611, 652 (empha sis added) (ame nded 2005) (cur rent version at Tex. Gov’t Code § 531.102(g )(2) ). Section 531.102 also provided that, on timely

written re quest by

the provider , HHSC “shall file a r equest with the State

4Offic e of Administrative Hea ring s for an expedited administrative hear ing reg arding the hold.” Id. (cur rent ve rsion at Tex. Gov’t Code § 531.102(g )(3) ).

I n addition, Human Resourc es Code sec tion 32.0291(b) provided:

Notwithsta

n d in g a ny o th er law, [HHSC] may impose a postpayment hold on pay ment of future claims submitt ed by a provider if the department has reliable evide nce that the provider has committed fraud or wilf

ul misrepresentation regarding a claim for reimburse ment under the medical assistance prog ram. The depar tment must notify the provider of the postpay ment hold not later than the fi ft h working day afte r the date the hold is imposed.

Act of J une 2, 2003 , 7 8 t h L eg. , R .S., ch. 198, § 2.103, 2003 Tex. Gen. L aws 611, 690 (empha sis added) (ame nded 2013) (cur rent version at Tex. Hum. Res. Code § 32.0291(b))

. The plain lang uag e of thes e s t at u t es authorized HHSC to impose a pay ment hold if it had “re liable evidenc e that the provider has committed fra ud or wilful misrepre sentation” and requ i r ed the OI G to impose a pay ment hold “to compel production of rec ords or when reque sted by the state’s Medica id fra ud unit.” I t was withi n the context of the fore g oing statutory framework tha

t HHSC adopted rule 371.1703(b) , since a

mended, whic h provided in per tinent part:
§ 371.1703(b) Pay

ment Hold. A pay

ment h o l d o n pay

ments of future claims submitt ed for reimburse men t wi l l be imposed, without prior notice, afte r it is deter mined that prima fac ie evide n ce exis ts to support the pay ment hold.

. . . The instances in which a payme nt hold may be impose d without prior notice are: (1) to compel produc tion of rec ords; (2) when reque sted by the Attorney Gene ral’s Me dicaid F raud Control Unit, a s applicable ;

5(3) in the instance of fra ud or willful misrepre sentation; (4) when th e U. S

. He al t h an d Hu m an S er v i ces imposes a pay ment hold (suspension of pay

ments) ag ainst the provider for Medica re viol at i o n s and that provider or

person is also a pr ovider in the Medic aid prog ram; (5) for any r ea s o n specified in §§ 371.1609, 371.1617, 371.1621 of this subchapter, or any othe r provisions delineated in these rules; or (6) for any other reason spec ified by statute or regulation.

1 Tex. Admin. Code § 371.1703(b) (2005) (Tex. Hea lth & Human Servs. Comm’n, Pay ment Hold) (empha sis added) repeale d 37 Tex. Reg

. 7989-90 (2012) (propose d August 10, 2012). Subsecti o n s (5 ) and (6) of the rule clea rly expanded the circ umstances under which a pre- notice
pay ment hold could be imposed beyond those identified in Gover nment Code section 531.021(g )(2) and Human Resource s Code section 32.0291(b). For instance, subsection (5) of old r u le 371.1703(b) provided that a hold would be imposed, without prior notice, for the “program violations” listed in rule 371.1617, which set out a “non-e x clusive” list o f ac t s that constituted prog ram violations, including submit ting claims for non-reimbursable it ems, failing to proper ly maintain rec ords, and failing to comply with the terms of the Medica id prog ram contra ct or provider ag ree ment. 1 Subsection (6) of old rule 371.1703(b) stated that a pay ment hold would be imposed “for any other

Subsection (5) re fer ence d two other HH SC rules. Old rule 371.1609 s et forth the O I G’s 1 responsibilities in relation to Medica id and other provider fra ud and abuse, including investigating possible case s of fra

ud or abuse and i m p o sing administrative monetary penalties and damag es ag ainst providers. The ref ere nce to section 371.1621 appea rs to be an err or, as that rule was repe aled contempora

neously with adoption of the 2005 rules. Otherw ise, it may have been intended to ref er to old rule 371.1721, which set forth prog ram violations subject to assessme n t o f administrative damag es and penalties by the OI G, or to old rule 371. 1 6 2 9 , whi ch addre ssed the OI G’s use of administrative ac tions to i dentify prog ram violations.

6rea son specifie d by statute or regulation .” (Emphasis added.) This provision would permit HHSC

to adopt a rule authorizing a pay ment hold in any conce ivable circ umstance and justify the hold

on the basis that it was “spec ified by

. . . reg ulation.” We believe that neither Gover nment Code section 531.102(g )(2) nor Human Resource s Code section 32.0291(b), as they exis ted at the time the rules wer e adopted, provided authority for pre- notice pay ment holds under the broad circ umstances set forth in old rule 371.1703( b)(5) and (6)

.

I n 2011 the leg islature amende d Gover nment Code sectio n 5 3 1

. 1 0 2(g )(2) to add a third basis for the OI G to impose a pay ment hold, but the new basis was essentially identical to the

one fo r whi ch HHSC was alre ady authorized to impose a hold under section 32.0291(b) of the Human Resourc es Code:

I n addition to other instances a uthorized under state or

fede ral law, the [ OI G] shall impose without prior notice a hold o n p ay ment of claims for reimburse ment submitt ed by a p ro v ider to compel production of rec ords, when reque sted by the state’s Medica id fr au d co ntrol unit, or on rece ipt of reliable evide nce that the circumstance

s g i vi n g r ise to the hold on payme nt involve fraud or wilf ul misrepresentation under the state Medicaid prog ram in acc ordanc e with 42 C

. F. R. Section 422 .23, as applicable

. The office must notify the provider of the hold on pay ment in acc ordanc e with 42 C.F.R. Section 422.23(b).

Act of May 28, 2011, 82d L eg ., R.S., ch. 879, § 3.11, 2011 Tex. Gen. L aws 2228, 2234-35 (empha sis added) (fur

ther amende d 2013) (cur

rent version at Tex. Gov’t Code § 531.102(g )(2) ). The eff ect of this 2011 amendment was to require the OI G to impose a p ay m en t h o l d upon rec eipt of reliable evidenc e of fra

ud or wilful misrepre sentation as require d by 42 C.F.R. § 455.23, which provides that

a “State Medica id age n cy must suspend all Medica id pay ments to a provider afte r the ag ency deter mines there is a

cre dible alleg ation of fr aud . . . .” 42 C.F .R. § 455.23.
7There afte r, HHSC repla ced old rule 371.1703 with curr ent rule 371.1709. See 1 Tex.

Admin. Code § 371.1709. The cha lleng ed portions of this rule now pr ovide: 2
§ 371.1709 P aym ent Hold (a) OI G may impose a pay ment hold ag ainst any person if it deter mines that the person co m m i t t ed an act for which a person is subject to administrative actions or sa

nctions, including the following :

. . . (2) commits a prog ram violation; (3) is aff

iliated with a person who commits a program violation; or (4) for a

ny other re ason provided by statute or re g ulation.

. . . (e) Scope and e ffe ct of pa y ment hold.

. . . (2) After

a pay ment hold is ter

minated for any

rea son, OI G may reta in the funds acc umu l ated during the pay ment hold to offse t any overpa

y ment, criminal restitution, penalty or other assessment, or ag ree d-upon amount that may result from ong oing investigation of the person, including any pay ment amount acc epted by

the prosec uting authorities made in lieu of a prosecution to reimburse the Medica id or other HHS prog ram.

C h al leng ed old rule 371.1703(b)( 5) corr esponds to curr ent rule 371.1709(a) (2), and 2 challeng ed old rule 371.1703(b)( 6) corr esponds to curr ent rule 371.1709(a) (4). The curr ent rules are substantially simil ar to the old rules, and HHSC contends that the same statutory authority exis ts for both the old rules and the c urre nt rules. 81 Tex. Admin. Code § 371.1709 (2014) (Tex. Hea lth & Hu man Servs. Comm’n, Pay ment Hold). Subsection (b) of rule 371.1709, which the Dental Groups do not challeng e, ref lects the 2011 amendment to Gover

nment Cod e s ec tion 531.102(g )(2) and provides that the OI G m ust impose a pay ment hold ag ainst a person (1) to compel production of rec ords or documents; (2) when reque sted
to by the state’s Medica id Fr aud Unit; or (3) upon rec eipt of reliable evidenc e that verifie s a cre dible alleg ation of fra

ud. Id. § 3 7 1

. 1 7 09(b)( 1), (2), (3). By contra st, subsection (a) quoted above, the validity of which the Dental Groups do challeng e, authorizes the OI G to impose a pay ment hold if

a provider commits a “program violation,” “is aff iliated with a person who commits a prog ram violation,” or “for any other rea son provided by statute or regulat i o n .” See id. § 371.1709(a) (2), (3), (4). Ag ain, we ag ree with the Dental Groups that Gover nment Code section 531.102(g )(2) , as amende d in 2011, does not provide authority for pre- notice pay ment holds under the circ umstances set forth in rule 371.1709( a)( 2), (3) , or (4)

.

Finally , in 2013 the leg islature ag ain amende d both Govern m en t Code secti o n 5 3 1

. 1 0 2 ( g )(2) and Human Resource s Code section 32.0291. As amende d, Human Resource s Code section 32.0291(b) now provides that HHSC’s imposit ion of a pay ment hold is subj ect
t o Gover nment Code section 531.102. Delete d from that section is the languag e that specif i ca l l y authorized HHSC to impose a pre -notice pa y ment hold upon rec eipt of cr edible evide nce of fra ud

or willful misrepre sentation by the provider. As with the previo u s versions, the amendments to 3

The 2013 amendments to section 531.102(g )(2) added: (1) a require ment that the OI G 3 employ experts to revie w cer tain investigative finding s befor e imposing a pay ment h o ld without prior noti ce, and (2) additional require ments to the content of t he noti ce to be sent to the provider afte r a pay

ment hold has been imposed, specific ally , that the notice inform the provider of the basis for the hold and descr ibe the administrative and judicial due-pr ocess reme dies available t o t h e 9these statutes do not transfor m them into a leg islative g rant of authority for the imposit ion of a prenotice pay

ment hold under the circ umstances set forth in rule 371.170(a) (2), (3), or (4). Thus, such authority , if it e x ists, must be found elsewhe re in HHSC’s enablingleg islation, either expressly or by nece ssary

implication. As HHSC corr ectly states in its brief, the deter mining fac tor in deciding whether an administrative ag ency has exceede d its rule-making authority is whether the rules are “in harmony” with the g ener al objectives of the leg islation involved. Railroad Comm’n of Tex. v. Lone Star Gas Co ., 844 S.W .2d 6 7 9 , 6 8 5 (T ex . 1992); Gulf Coast Coal. of Citi es v. Public Util. Comm’n , 161 S.W .3d 706, 711 (Tex. App.—Austin 2005, no pet.). For an administrative rule to be “in harmony” with leg isl ati ve objectives, it must not impose additional burdens, conditions, or restric tions in excess of or inconsistent with rele vant statutory provisions. Gul f Co a s t Co a l. of Citi es , 161 S.W .3d at 712. This is a question of law deter mined throug h statutory construction. Id

. Her e, t h e Dental Groups argue that administrative rules permitting a pay ment hold without prior

n o t i ce u n der the broad circ umstances provided for in rule 371.1709(a) contravene the leg islative l an gu age and i ntent, as ex presse d in Gover nment Code section 531.102(g) (2), that such hol ds are to be imposed only

in the narr ow circ umstances identifie d in that statute. OI G is the arm of HHSC responsible for “the investigation of fra ud and abuse in the provision of health and human service s.” Tex. Gov’t Code § 531.102(a)

. The statutory provisions in the Gover

nment Code pertinent to the OI G, includ i n g s ec t i o n 531.102, relate to the OI G’s

provider, including the rig ht to seek an informal resolution and the rig ht to a formal administrative hear ing. SeeTex. Gov’t Code § 531.102(g )(2)

. 10statutorily define d function to detec t fra ud and proce ss cases of suspected fra ud, waste, or abuse. See id. § 531.103. Through t h e ch al leng ed rules, HHSC g rants the OI G authority , and assumes

au t h o ri t y for itself, to impose a pay ment hold whene ver it believes a provider has committed an y prog ram violation, no matter how minor and irrespe ctive of whether there is any indication of fra ud

or other intentional abuse. As noted above, the rules signific antly expand the circ umstances under which a pre- notice pay

ment hold can be impos ed b ey o n d t hose enumer ated in Gover nment Code section 531.021(g )(2)

. Thus, the challeng ed rules are inconsistent w ith the leg islature’s direc tives related to those pay

ment holds that it has ex pressly authorized. I n addition, we note that a provider s ubject to a pay ment hold imposed pursuant to the challeng ed rules is not expressly g iven the rig ht to the proce dural protec tions that the leg islature mandated be available when a pre- notice pay ment hold is imposed for the more serious circ umstances involvi ng Medica id fra ud or re fusal to produc e re quested doc uments or records. I f HHSC has the authority to impose a pay ment hold under any circ u msta nces, rathe r than being limit ed
to the circ umstances identified in section 531.102(g )(2) , the result would be that providers who wer e subject ed t o a m an datory pay ment hold based on alleg ations of fra ud are g iven more proce dural protec tions (such as a contested- case hear ing at the State Offic e of Administrative Appea ls (SOAH)) than a provider who committed a less serious “program violation.” As written, the rules permit the OI G to impose a pay

ment hold, without notice and in the absence of fra ud, and yet avoid the due

proce ss notice proce dures and expedited administrative revie w the leg islature require d in con n e c ti on with the pay

ment holds it expressly authorized. “Implied authority is not authority

to depar t from

11the i ntent of t he st atute.” Texas Dep’t of Human Servs. v. C hristian Car e C trs., Inc. , 826 S.W .2d 715, 721 (Tex. App.—Austin 1992, writ denied).

We hold that HHSC’s adoption of r ules that permit pre- notice pay ment holds to be imposed for any alleg ed violation of the Medica id prog ram, no m at ter how minor, is inconsistent with the intent of Gover

nment Code chapte r 531, subchapte r C, which is to addre ss a nd reme diate Medica id fra

ud and abuse and permit pay ment holds under circ umstances involving fra ud or abuse of the Medica id prog ram. See Tex. Gov’t Code § 531.102(a)

. The fac t that the challeng ed rules lack the due-pr ocess notice and hear ing require ments that are the hallmark of leg islation expr es s l y authorizing the imposition of pre- notice pay ment holds bolsters our conc lusion. W e are cog nizant that the leg islature g ave HHSC full rulemaking authority as

nece ssary for the proper and eff icient operation of the Medica id prog ram. See Tex. Hum. Res. Code § 32.021(c)

. A means of enfor cing the administrative rules can cer tainly be implied from the g rant of this authority

. See Christ ian Care Ctrs. , 826 S.W .2d at 720. In fac t, HHSC has adopted rules permitting it to impose a varie ty of sanctions for n o n -f raud- rela ted prog ram violations. I mplied statutory authority , howeve r, is limit ed to what is nece ssary and rea sonable. See Bullock v. HewlettPack ard Co. , 628 S.W .2d 754, 756 (Tex. 1982)

. The Gover nment Code expressly

g rants the OI G authority to assess administrative penalties on HHSC’s behalf

. See Tex. Gov’t Code § 531.102(h). I t is neither rea sonable nor nece ssary , howeve r, for HHSC to be permitted to impo s e a pre- notice
pay ment hold, without the opportunity for an administrative hear ing reg arding the hold, on a provider who commits a Medica id-prog ram violation mere ly to enfor ce its rules or ensure the

12proper and eff icient operation of the prog ram. In fac t, doing so could actua lly impair that mission, 4

as it could result in Medica id providers withdrawing from the program, decla ring bankruptc y , or otherwise being unable to continue providing service s for which they are n o t b ei n g p aid until the matter trigg ering the hol d has been resolved. We hold that the t rial court err ed in concluding that old rules 371.1703(b)( 5) and ( 6) and c urre nt rules 371.1709(a )(2) , (3), a nd (4) a re va lid. 5 We next consider t h e validity of challeng ed rule 371.1709(e) (2), which provides that when HHSC has imposed a pre- notice pay ment hold on Medica id reimbu r s e me nt f unds pursuant
to either section 371.170 9 (a ) o r 3 7 1

. 1 709(b), it may reta in seized funds even afte r that hold is terminated for any rea son. Be cause we have concluded that rules 371.1709(a)(2) , (3), and (4) are
not valid, we need o n l y consider the validity of rule 371.1709(e) (2) in the context of a pay ment hold imposed pursuant to ru l e 3 7 1

. 1 7 0 9(b), i.e., for any of the three g rounds set forth in

We also observe that if the leg isla t u re d i d i n fac t g rant HHSC the authority to impose 4 pay ment holds, without prior notice, for “program violations,” it likely would, and may be constitutionally require d to, mandate that the provider subject to the hold be entitled to an expedited administrative hea

ring at SOAH cha lleng ing the ag ency action. Our h o l d i n g ap p ears to be consistent with the finding s of the Sunset Advisory 5 Commi ssion Staff repor

t reg arding OI G pay

ment holds. In their repor t issued in October 2014, the Staff re commended a s follows: 11.3 Clarify OI G’s authority to place pay ment holds only in serious circ umstances This rec ommendation would clar ify that OI G’s pay ment hold authority applies only in circ umstances requiring a serious enfor ceme nt tool to mitigate ong oing financ ial risk to the state, such as a pattern of billing behavior s or prac tices that indicate fra ud.

. . . Pay ment holds would not be authorized for standard overpa y ment case s or nonfra udulent err ors. OI G woul d not be authorized to apply pay ment holds to aid in barg aining and settlement neg otiations. This rec ommendation wo u l d not aff ect OI G’s existi ngauthority

to pursue and r ecove r over pay ments. Sunset Advisory Commi ssion, Hea lth & Human Servs. Comm’n, Staff Report, at 159 (Oc t. 2014). 13Gover

nment Code section 531.102(g )(2)

. See Tex. Gov’t Code § 531.102(g )(2) (providing for
pay ment h o l d t o compel production of documents, when reque sted by state’s Medica id Fr aud Control Unit, or on rec eipt of cre dible evidenc e of fra ud). The duration of a pay ment hold imposed pursuant to section 531.102(g )(2) is not indefinite but depends i n i t i all y on the outcome of the expedited SOAH hear ing reg arding the h o ld. See Janek v. Harlingen Family Dentistry, P.C. , No. 03- 13-00625-CV; 20 1 4 W L 5653501, at *5 (Tex. App.—Austin Oct. 30, 2014, no pet. h.). When rule 371.1709(2) (e) was a dopted in 2012, Gover nment Code section 531.102(g )(2) require d that a hold placed by the OI G be imposed “in accorda nce with 42 C.F.R. 455.23, as applica ble.” Ac t of May 28, 2011, 82d L eg ., R.S., ch. 879, § 3 .11, 2011 Tex. Gen. L aws 2234-24 (ame nded 2013) (cur rent version at Tex. Gov’t Code § 531.102(g )(2) ). The ref ere nced section of the Code of Fe dera l Reg ulations provides:

• Notice of the hold must be sent to the provider and must state that the suspension is “for a temporar

y period” and “cite the circ umstances under which the suspension will be terminated.”

• Suspension of pay

ment actions will be temporar y and will not continue afte r (1) the ag ency or prosec uting authorities deter mine there is insufficient evidenc e of fra ud by the provider

or (2) leg al proc eeding s relate d to the alleg ed fr aud ar e complete d.

• I f a state Medica id ag ency ref err al and investiga

tion leads to a pay

ment suspension, t h e p ayment suspension may be continued until such time as the investiga tion and any enfor ceme nt proce eding s are completed.
42 C.F.R. § 455.23.

Thus , a p ayment hold imposed pursuant to Gover nment Code section 531.102(g ) is temporar

y and must end under the circ umstances outli n ed i n t h e applicable fede ral and state

14regulations. As we held in Janek v. Harlingen Family Dentistry , HHSC’s rig ht to possess funds

pursuant to a pay

ment hold for fraud depends sol ely on the exist ence of cr edible evide nce of such fra ud. I n the absence of such evide nce, “ the State’s rig ht to temporary possession of t he funds no longe r exist[ s].” Janek

, 2014 WL 5653501, at *5. Once the s tatutory basis for impos ing the hold

cea ses to exis t, HHSC no longe r has the authority to possess those funds. The same is true for funds

acc umu l at ed p ursuant to a hold imposed for the other reasons identified in section 531.102(g) (2). Acc ording ly , a rul e permitting the OI G to continue to possess a Medica id provider’ s funds when the justification for i m p o s i n g the temporar y pay ment hold has terminated is in excess of HHSC’s statutory authority

. For this rea son, we hold that curr ent rule 371.1709(e) (2) is invalid, and the trial cour

t erre d in concludingotherwise.

CONCLUSION Fo r t h e rea sons stated above, we sustain the Dental Groups’ sole appellate issu e and reverse the t rial court’s j u d gm en t. We rende r j udg ment that old rules 371.1703(b)(5) and (6) and cur rent rule s 371.1709(a) (2), ( 3), (4) and 371.1709(e )(2) are invalid.

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ J . Woodfin J ones, Chief Just ice Be fore Chief J ustice Jones, J ustices Rose and Goodw in Reverse d and Rende red Filed: Nove mber 25, 2014

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