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IN THE SUPREME COURT OF THE STATE OF HAWAIʻI

---o0o---

________________________________________________________________

FREDERICK NITTA, M.D., 

Respondent/Appellant-Appellant,

vs.

DEPARTMENT OF HUMAN SERVICES, STATE OF HAWAI‘I,

Petitioner/Appellee-Appellee,

and

CATHY BETTS, DIRECTOR,

Respondent/Appellee-Appellee.

________________________________________________________________

SCWC-17-0000432

CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS

(CAAP-17-0000432; CIVIL NO. 3CC16-1-0000297)

NOVEMBER 4, 2022

RECKTENWALD, C.J., McKENNA, WILSON, AND EDDINS JJ., AND

CIRCUIT JUDGE KAWAMURA, IN PLACE OF NAKAYAMA, J., RECUSED

OPINION OF THE COURT BY McKENNA, J.

Electronically Filed

Supreme Court

SCWC-17-0000432

04-NOV-2022

08:06 AM

Dkt. 22 OP
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I. Introduction

This case arises out of the State of Hawai‘i Department of 

Human Services’ (“DHS”) attempt to recover payments made to 

Frederick Nitta, M.D. (“Dr. Nitta”) from its Medicaid Primary 

Care Physician Program (“the Program”). The Program was 

established by a federal statute within the Affordable Care Act 

(“ACA”), specifically 42 U.S.C. § 1396a(a)(13)(C)(“the 

Statute”). The Statute enabled physicians “with a primary 

specialty designation of family medicine, general internal 

medicine, or pediatric medicine” to temporarily receive 

increased payments for primary care services provided to 

Medicaid patients in 2013 and 2014. DHS, through its Med-QUEST 

division, administers the Program in the State of Hawai‘i.

Dr. Nitta, who has been board-certified in obstetrics and 

gynecology (“OB/GYN”) since the early 1990’s, but who has been 

serving as a primary care physician (“PCP”) to Medicare and 

Medicaid patients in East Hawaiʻi for many years, became a 

participant in the Program when a staff member signed him up online at the suggestion of an AlohaCare representative. In 2015, 

however, DHS told Dr. Nitta he was ineligible because he did not 

meet specialty requirements for Program participants as set 

forth in a federal administrative rule, 42 C.F.R. § 447.400 
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(“the Rule”). DHS then demanded repayment of more than $200,000 

in enhanced payments received by Dr. Nitta through the Program. 

Dr. Nitta requested an administrative hearing and an 

administrative appeal at DHS. He later filed for a judicial 

appeal by the Circuit Court of the Third Circuit (“circuit 

court”). All deemed Dr. Nitta ineligible. Dr. Nitta then 

brought a secondary appeal to the Intermediate Court of Appeals 

(“ICA”).

While the ICA appeal was pending, the Court of Appeals for 

the Sixth Circuit issued an opinion invalidating the Rule. 

Averett v. United States Dep’t of Health & Hum. Servs., 943 F.3d 

313, 319 (6th Cir. 2019). In a published opinion, the ICA 

adopted the Sixth Circuit’s analysis in Averett. Nitta v. Dep’t 

of Hum. Servs., 151 Hawaiʻi 123, 128, 508 P.3d 1209, 1214 (App. 

2022). Because DHS and the circuit court had relied on the 

invalidated Rule to order repayment by Dr. Nitta, the ICA 

ordered a remand to DHS for further proceedings as may be 

necessary. Nitta, 151 Hawaiʻi at 129, 508 P.3d at 1215.

On certiorari, DHS does not contest the Sixth Circuit and 

ICA’s invalidation of the Rule. Instead, DHS argues the ICA 

erred because (1) Dr. Nitta was still ineligible for the Program 

under the Statute; (2) the circuit court had also relied on the 

Statute in deeming Dr. Nitta ineligible; and (3) DHS is required 
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to recoup the overpayment because there was never money 

appropriated to pay Dr. Nitta. 

With respect to the first issue, the ICA did not address 

whether Dr. Nitta would in any event be precluded from enhanced 

payments based on the Statute. In Averett, the Sixth Circuit 

held the Statute’s phrase, “physician with a primary specialty 

designation,” to mean “a physician who has himself designated, 

as his primary specialty, one of the specialties recited in [the 

Statute].” Averett, 943 F.3d at 319. The ICA adopted this 

holding, Nitta, 151 Hawaiʻi at 128, 508 P.3d at 1214, but did not 

address whether Dr. Nitta qualified. 

We agree with DHS that Dr. Nitta’s eligibility for the 

Program under the Statute can and should be addressed. We also 

agree with the Sixth Circuit and the ICA that the Rule is

invalid as it contravenes the Statute. Contrary to DHS’s 

position, however, we hold Dr. Nitta was entitled to enhanced 

payments under the Statute based on the reasoning below. 

This holding resolves DHS’s second issue on certiorari, 

that the circuit court had also relied on the Statute to hold 

Dr. Nitta ineligible. If the circuit court had so held, it 

would have been wrong. But, in any event, the circuit court 

(and DHS) relied solely on the invalidated Rule in deeming Dr. 

Nitta ineligible and did not rely on the Statute. 
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Finally, we also reject DHS’s third issue on certiorari, 

that DHS is required to recoup the overpayment because there was 

never money appropriated to pay Dr. Nitta. This is a new 

argument never raised below and is therefore waived. 

Hence, we vacate the ICA’s March 23, 2022 judgment on 

appeal to the extent it remanded the case “to the DHS 

Administrative Appeals Office for further proceedings as may be 

necessary.” We otherwise affirm the ICA’s judgment on appeal.

II. Background

A. Factual Background

1. The Program

As explained by the ICA, Medicaid provides medical 

assistance to qualifying individuals and families, and is 

jointly funded and administered by the federal and state 

governments. Nitta, 151 Hawaiʻi at 124, 508 P.3d at 1210. In 

2010, Congress enacted the ACA and also temporarily increased 

payments in 2013 and 2014 to certain physicians who provided 

primary-care services to Medicaid patients. Id. Specifically, 

the Statute, 42 U.S.C. § 1396a(a)(13)(C), allowed for such 

increased payments provided “by a physician with a primary 

specialty designation of family medicine, general internal 

medicine, or pediatric medicine.” The Statute provides:

(a) A State plan for medical assistance must—

. . . .
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(13) provide—

. . . .

(C) payment for primary care services (as 

defined in subsection (jj)) furnished in 2013 

and 2014 by a physician with a primary 

specialty designation of family medicine, 

general internal medicine, or pediatric 

medicine at a rate not less than 100 percent of 

the payment rate that applies to such services 

and physician under part B of subchapter XVIII 

(or, if greater, the payment rate that would be 

applicable under such part if the conversion 

factor under section 1395w-4(d) of this title 

for the year involved were the conversion 

factor under such section for 2009)[.]1

As further explained by the ICA, the Centers for Medicare 

and Medicaid Services (“CMS”) administers Medicaid, and 

promulgated the Rule, 42 C.F.R. § 447.400, further delineating 

physician eligibility for the Program. Nitta, 151 Hawaiʻi at 

125, 508 P.3d at 1211. The Rule set out a board certification 

 

1 42 U.S.C. § 1396a(jj) then provides:

(jj) Primary care services defined

For purposes of subsection (a)(13)(C), the term

“primary care services” means—

(1) evaluation and management services that are 

procedure codes (for services covered under 

subchapter XVIII) for services in the category 

designated Evaluation and Management in the 

Healthcare Common Procedure Coding System 

(established by the Secretary under section 1395w4(c)(5) of this title as of December 31, 2009, and as 

subsequently modified); and 

(2) services related to immunization administration 

for vaccines and toxoids for which CPT codes 90465, 

90466, 90467, 90468, 90471, 90472, 90473, or 90474 

(as subsequently modified) apply under such System.
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or a sixty-percent billing threshold requirement, requiring 

that: 

(a) [s]tates pay for services furnished by a physician as 

defined in § 440.50 of this chapter, or under the personal 

supervision of a physician who self-attests to a specialty 

designation of family medicine, general internal medicine 

or pediatric medicine or a subspecialty recognized by the 

American Board of Medical Specialties (ABMS), the American 

Board of Physician Specialties (ABPS) or the American 

Osteopathic Association (AOA). Such physician then attests 

that [they]:

(1) [Are] Board Certified with such a specialty or 

subspecialty and/or

(2) Has furnished evaluation and management services 

and vaccine administration services under codes 

described in paragraph (b) of this section that equal 

at least 60 percent of the Medicaid codes he or she 

has billed during the most recently completed CY or, 

for newly eligible physicians, the prior month.

42 C.F.R. § 447.400(a). Nitta, 151 Hawaiʻi at 125, 508 P. 3d at 

1211.

Thus, the Statute allowed for enhanced payments to “a 

physician with a primary specialty designation of family 

medicine, general internal medicine, or pediatric medicine.” 

The Rule, however, further required physicians to self-attest to 

a specialty designation of family medicine, general internal 

medicine or pediatric medicine and then also attest that they 

are board-certified in one of those designations (or a 

recognized subspecialty2) or show that at least sixty percent of

their billings were for the provision of PCP services. 

 

2 According to the American Board of Medical Specialties, the 

subspecialties of family medicine are adolescent medicine, geriatric 

(continued. . .)
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In Hawai‘i, pursuant to the Rule, DHS required physicians 

seeking enhanced payments to complete a form on its website 

self-attesting to those requirements (“self-attestation form”). 

The form tracked Rule requirements and also said it could not be 

completed by anyone on the provider’s behalf. Nitta, 151 Hawaiʻi 

at 125, 508 P.3d at 1211.

2. Dr. Nitta’s involvement with the Program

Dr. Nitta was board-certified as an OB/GYN in the early 

1990’s and has practiced medicine in Hilo, Hawai‘i for many 

years. When Dr. Nitta began practicing in 1993, he submitted an 

application to DHS to participate as a Medicaid provider, 

listing OB/GYN as his specialty. In 2006, Dr. Nitta received 

 

(continued. . .)

medicine, hospice and palliative medicine, pain medicine, sleep medicine, 

sports medicine; the subspecialties of internal medicine are adolescent 

medicine, adult congenital heart disease, advanced heart failure and 

transplant cardiology, cardiovascular disease, clinical cardiac 

electrophysiology, critical care medicine, endocrinology, diabetes, and 

metabolism, gastroenterology, geriatric medicine, hematology, hospice and 

palliative medicine, infectious disease, interventional cardiology, medical 

oncology, nephrology, neurocritical care, pulmonary disease, rheumatology, 

sleep medicine, sports medicine, and transplant hepatology; and the 

subspecialties of pediatric medicine are adolescent medicine, child abuse 

pediatrics, development-behavioral pediatrics, hospice and palliative 

medicine, medical toxicology, neonatal-perinatal medicine, pediatric 

cardiology, pediatric critical care medicine, pediatric emergency medicine, 

pediatric endocrinology, pediatric gastroenterology, pediatric hematologyoncology, pediatric hospital medicine, pediatric infectious diseases, 

pediatric nephrology, pediatric pulmonology, pediatric rheumatology, 

pediatric transplant hepatology, sleep medicine, and sports medicine. See

Specialty and Subspecialty Certificates, AMERICAN BOARD OF MEDICAL SPECIALTIES, 

https://www.abms.org/member-boards/specialty-subspecialty-certificates/

[perma.cc/D666-JDHK] (last visited November 1, 2022).
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his National Provider Identifier, which also indicated a 

specialty of OB/GYN.3

More than ninety percent of Dr. Nitta’s patients, however, 

are eligible for Medicaid or Medicare and do not have other 

doctors. Thus, although he is a board-certified OB/GYN 

physician, Dr. Nitta provides PCP services for his patients, is 

recognized in the community as a PCP, and provides a broad range 

of services to his patients. 

Hence, in 2013, at the suggestion of an AlohaCare 

representative, a staff member from Dr. Nitta’s office enrolled 

him in the Program via the DHS website. The parties do not 

dispute that Dr. Nitta was attested to have a specialty 

designation of family medicine, general internal medicine, or 

pediatric medicine. 

It appears Dr. Nitta first learned he was participating in 

the Program when he received a letter from DHS dated July 7, 

2015 telling him he was ineligible because he did not satisfy 

Rule requirements. Then, in a letter dated November 6, 2015, 

DHS demanded repayment of $205,940.13 in payments made to him 

via the Program. 

 

3 The National Provider Identifier program is discussed in Section IV.A.2 

below.
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B. Procedural background

1. At DHS

a. DHS administrative hearing decision

On December 4, 2015, Dr. Nitta submitted an administrative 

hearing request with DHS contesting the repayment demand. On 

March 18, 2016, the parties participated in a hearing before a 

DHS hearing officer.4 On June 16, 2016, the hearing officer 

issued his decision in DHS’s favor and against Dr. Nitta. In 

summary, the hearing officer ruled DHS was entitled to repayment 

because Dr. Nitta was board certified in OB/GYN, not in family 

medicine, general internal medicine, or pediatric medicine, and 

because Dr. Nitta had not met the sixty percent billing 

requirement under the Rule. 

b. DHS final decision 

Dr. Nitta then sought an administrative appeal with DHS. 

On July 25, 2016, then-DHS Deputy Director Pankaj Bhanot issued 

DHS’s final decision, basically adopting the hearing officer’s 

decision. 

This final decision, however, also included findings that 

HMSA, UnitedHealthcare, AlohaCare, and Hilo Medical Center all 

 

4 The testifiers were Kurt Kresta, the DHS Financial Integrity Staff 

investigator in charge of Dr. Nitta’s case; Dr. Nitta; Dr. Lori Kanemoto, an 

OB/GYN familiar with Dr. Nitta and his practice; and Della Marie Shirota, a 

coding auditor for Hilo Medical Center, who opined Dr. Nitta was eligible for 

the enhanced payments. 
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identified Dr. Nitta as a PCP (with an OB/GYN specialization), 

and that Hilo Medical Center listed Dr. Nitta as a PCP. In 

addition, the final decision noted that community medical 

professionals identified Dr. Nitta as a PCP who practices in the 

areas of OB/GYN and primary care. The DHS final decision 

ordered repayment from Dr. Nitta, however, based on his 

inability to meet Rule requirements for the Program. 

2. Circuit court appeal (Civil No. 16-1-0297)

Dr. Nitta then filed an appeal with the circuit court. On 

April 12, 2017, the circuit court5 issued its decision and order. 

The circuit court noted that, under CMS guidance, physicians had 

to (1) self-attest to a specialty in one of the enumerated areas 

or in a recognized subspecialty; and (2) be board certified in 

that specialty or subspecialty or meet the sixty percent billing 

threshold. The circuit court ruled that (1) Dr. Nitta failed to 

meet the self-attestation requirement of the Program because his 

staff member had completed the attestation; (2) Dr. Nitta did 

not have a specialty or subspecialty designation in one of the 

requisite areas; (3) because Dr. Nitta was ineligible, there was 

no need to address DHS’s calculations regarding the sixty 

percent billing threshold; and (4) a review of the DHS 

overpayment calculations showed Dr. Nitta owed $205,338.88, not 

 

5 The Honorable Greg K. Nakamura presiding.
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$205,220.886. The circuit court affirmed the DHS final decision 

and entered its judgment on May 9, 2017. 

3. ICA appeal

a. The appeal

On May 19, 2017, Dr. Nitta filed an appeal with the ICA. 

The parties basically repeated their arguments below.

b. Amicus brief (HMA & AMA)

The Hawaiʻi Medical Association (“HMA”) and the American 

Medical Association (“AMA”) (“amici”) filed an amicus brief. 

Amici highlighted the critical and worsening physician shortage 

in Hawaiʻi, noting that primary care has the greatest shortage, 

especially for Medicaid patients in East Hawaiʻi.6 Amici posited 

 

6 Citing articles and other reports, the amici explained that, on 

neighbor islands in particular, patients often wait four to five months for a 

doctor’s appointment. On Hawaiʻi Island, it is sometimes two to three times 

more difficult to find a PCP. Consequently, many residents seek care at the 

nearest hospital emergency room, costing them “upward of $600-$800 for an 

emergency room visit, as opposed to an average co-pay of $15-$50 for a visit 

to a primary care physician.” 

The amici attributed Hawaiʻi’s physician shortage to a number of issues: 

(1) having one of the oldest physician workforces in the nation, meaning an 

exacerbated shortage as physicians retire; (2) Hawaiʻi’s high cost of living 

in conjunction with the costs of attending medical school; and (3) the lack 

of funding for physicians at hospitals and in private practice. The last 

issue, in particular, limits the number of physicians a hospital is able to 

hire and forces physicians in private practice to adopt business models that 

exclude Medicaid patients. In rural areas, the effect on Medicaid patients

is even greater. 

Also, according to the federal Health Resources and Services 

Administration, East Hawaiʻi, where Dr. Nitta practices, is a “Health 

Professional Shortage Area.” Thus, Dr. Nitta is a physician who provides 

“vital services to vulnerable populations with limited access to medical 

care.” Amici asserted DHS’s recoupment efforts against Dr. Nitta jeopardizes 

(continued. . .)
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that DHS’s continued recoupment efforts against physicians 

providing primary care services to Medicaid beneficiaries only 

worsens the shortage. Amici also urged that the payments to Dr. 

Nitta were consistent with the ACA’s purpose to “benefit 

physicians that provide primary care services to the Medicaid 

population.”7 

 

(continued. . .)

his ability to continue his practice, threatening to further reduce the 

already limited number of PCPs in the area. 

7 According to amici, DHS “arbitrarily determined that medical directory 

listings were the deciding factor of a physician’s practice 

characteristics[.]” Amici also argued that DHS arbitrarily and capriciously 

interpreted and applied the Rule by providing DHS with “unfettered discretion 

to determine physician eligibility.” They pointed to Questions and Answers 

(“Q&As”) published by CMS regarding how states might review physician 

eligibility for the Program. There, the CMS provided a non-exhaustive list 

of ways a state could verify a physician’s practice characteristics (i.e., 

how the physician represented himself in the community, medical directory 

listings, billings to other insurers, advertisements, etc.). Amici contended 

other evidence demonstrated Dr. Nitta’s PCP status: (1) recognition by other 

doctors and medical providers in the East Hawaiʻi community as a PCP; (2) 

acceptance and payment by medical insurers as a PCP; and (3) hundreds of 

written and oral testimony by people in support of a finding that he is a 

PCP. 

Amici also argued that DHS’s “formula to determine the sixty-percentthreshold requirement [was] in complete disregard for actual medical 

practice.” To determine whether a physician met the threshold, DHS used 

“paid billing codes,” which do not take into account the “percentage of total 

services provided in a managed care environment by that physician.” The CMS 

interpretation of the Medicaid Enhanced Payment Statute, however, stated that 

physicians could also self-attest that, as an alternative, sixty percent of 

all Medicaid services they “provide[] in a managed care environment” are PCP 

services. 

Amici noted that, in actual practice, PCPs sometimes bill under their 

provider number for ancillary services (i.e., urine testing, blood work, Xrays) furnished by other professions under the physician’s supervision. In 

group practices, physicians sometimes also bill for ancillary services under 

the group provider number. By including these ancillary services in the 

denominator (i.e., the total services provided by the physician) of its 

formula, according to amici, DHS unfairly skews the actual ratio of PCP 

services to total services provided by a physician. 

(continued. . .)
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c. Averett

While the ICA appeal was pending, the Sixth Circuit issued 

its Averett opinion invalidating the Rule that set forth 

additional eligibility requirements for the Program. 943 F.3d 

at 319. In Averett, Tennessee’s Medicaid agency, TennCare, had 

sought to recoup an average of more than $100,000.00 per 

physician from twenty-one physicians practicing in family 

medicine in rural Tennessee. Averett, 943 F.3d at 316. 

TennCare alleged that the physicians had not met the sixty 

percent billing requirement of the Rule.8 Id. In turn, the 

 

(continued. . .)

According to amici, in Dr. Nitta’s case, a medical billing and coding 

expert had testified that a full audit of his patient records, not just his 

billing records, showed that well over sixty percent of his time and work 

went toward providing PCP services to Medicaid beneficiaries. Amici 

concluded that DHS’s “use of ‘paid billing codes’ rather than a full audit of 

a physician’s patient records in consideration of services provided in a 

managed care environment is a manipulation that produces absurd results 

contrary to the intent of the Medicaid Enhanced Payment Statute.” Thus, 

amici requested that the ICA vacate and remand the DHS and lower court’s 

decisions. 

8 Recall that the CMS Final Medicaid Payment Rule defined “primary 

specialty designation” by requiring either board certification in one of the 

listed specialties (or a recognized subspecialty) or the satisfaction of a 

sixty percent billing threshold:

(a) States pay for services furnished by a physician as 

defined in § 440.50 of this chapter, or under the personal 

supervision of a physician who self-attests to a specialty 

designation of family medicine, general internal medicine 

or pediatric medicine or a subspecialty recognized by the 

American Board of Medical Specialties (ABMS), the American 

Board of Physician Specialties (ABPS) or the American 

Osteopathic Association (AOA). Such physician then attests 

that he/she:

(1) Is Board Certified with such a specialty or 

subspecialty and/or

(continued. . .)
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physicians challenged the requirement, arguing that it 

contravened the Statute. Id.

After the district court declared the rule invalid and 

TennCare appealed, the Sixth Circuit addressed

whether, in the [Rule], [CMS] correctly interpreted the 

phrase “primary specialty designation” as used in [the 

Statute], to mandate not only that the physician have the 

requisite designation of primary specialty, but also that 

the physician either be board-certified in that specialty 

or satisfy the 60-percent-of-billings requirement.

Averett, 943 F.3d at 317. The Sixth Circuit opined that the 

term “primary specialty designation” in the Statute was 

unambiguous. Id. Neither party disputed the meanings of 

“primary specialty” as the physician’s principal area of 

practice or expertise, or the meaning of the word “designate,” 

as in “[t]o indicate or specify; point out.” Id. (citing The 

American Heritage Dictionary 506 (3d ed. 1992)).

The Sixth Circuit discussed CMS’s interpretation of the 

term “primary specialty designation” under a parallel Medicare

provision. Averett, 943 F.3d at 317. Although Congress used 

the same term in the same context for both the Medicare and 

Medicaid programs, CMS interpreted the term differently from the 

 

(continued. . .)

(2) Has furnished evaluation and management services and 

vaccine administration services under codes described in 

paragraph (b) of this section that equal at least 60 

percent of the Medicaid codes he or she has billed 

during the most recently completed CY or, for newly 

eligible physicians, the prior month.

42 C.F.R. § 447.400(a).
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Medicaid and Medicare counterpart rules. Averett, 943 F.3d at 

318. For Medicaid, CMS added board certification and sixty 

percent billing threshold requirements to the Rule. Id. For 

Medicare, however, CMS interpreted the term to simply mean “the 

physician’s own designation, as her primary specialty, of one of 

the specialties recited in that Medicare provision.” Averett, 

943 F.3d at 317 (citing 42 C.F.R. § 414.80(a)(i)(A)). 

The Sixth Circuit determined that the latter was the proper 

interpretation because, unlike the Rule,9 it did not conflict 

with the language of the Statute. Averett, 943 F.3d at 318-19. 

It indicated this interpretation made “perfect sense, given the 

apparently uniform practice of physician self-designation under 

Medicare and Medicaid.” Averett, 943 F.3d at 317. Thus, the 

Sixth Circuit held that the phrase “a physician with a primary 

specialty designation” for purposes of the Statute meant “a 

physician who has himself designated, as his primary specialty, 

one of the specialties recited in those provisions.” Averett, 

 

9 The Sixth Circuit also noted that CMS did not offer any actual 

interpretation of the Statute in support of its construction; it offered only 

policy arguments. Averett, 943 F.3d at 318. CMS had argued that, because 

Congress did not limit the definition of “primary specialty designation,” CMS 

was required and had authority to do so itself. Id. The Sixth Circuit 

disagreed, stating that the “specific limitations” were the words themselves, 

and that no one seemed to be confused about what they meant. Id. 

Additionally, Congress had included a sixty percent billing threshold in its 

Medicare provision but specifically left it out of its Medicaid provision. 

Averett, 943 F.3d at 318-19.
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943 F.3d at 319. The Sixth Circuit invalidated the Rule as 

inconsistent with the Statute. Id. 

d. Supplemental briefing

On December 23, 2021, the ICA ordered the parties to submit 

supplemental briefing “addressing whether and how Averett

applied to the issues on appeal, and the relief sought, in light 

of Averett.” 

On January 4, 2022, Dr. Nitta filed his supplemental brief, 

arguing that, like the physicians in Averett, he was entitled to 

enhanced payments under the Program. On January 5, 2022, DHS 

filed its supplemental brief, arguing that Averett invalidated 

the Rule only and not the Statute. DHS argued the plain 

language of the Statute still required Dr. Nitta to have a 

primary specialty designation of “family medicine, general 

internal medicine, or pediatric medicine.” 

DHS also argued Averett also defined “primary specialty 

designation” and had discussed two sources that would indicate a 

physician’s primary specialty: the physician’s Medicaid 

application and the National Provider Identifier (“NPI”). DHS 

argued that both Dr. Nitta’s 1993 Medicaid application and 2006 

NPI form listed his primary specialty designation as OB/GYN. 
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e. ICA opinion 

On February 11, 2022, the ICA published an opinion holding 

that (1) the Rule was invalid; and (2) the DHS self-attestation 

form modelled on the Rule was therefore also invalid. Nitta, 

151 Hawaiʻi at 128-29, 508 P.3d at 1214-15. The ICA adopted the 

Sixth Circuit’s analysis in Averett and held the circuit court 

wrongly concluded that Dr. Nitta was ineligible by relying on 

the Rule. Id. Based on Averett, the ICA also held that DHS’s 

self-attestation form conflicted with the Statute because it 

included the Rule’s additional requirements. Nitta, 151 Hawaiʻi 

at 129, 508 P.3d at 1215.

The ICA (1) vacated DHS’s final decision and the circuit 

court’s decision and order; and (2) remanded the case to the DHS 

Administrative Appeals Office “for further proceedings as may be 

necessary.” Id. 

4. Certiorari application 

On May 23, 2022, DHS filed its application for writ of 

certiorari, arguing (1) Dr. Nitta was still ineligible for 

enhanced payments based on the Statute; (2) the circuit court’s 

conclusions relied on the Statute; and (3) DHS is required to 

recoup the overpayment because there was never money 

appropriated to pay Dr. Nitta. 
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III. Standards of Review

For judicial review of contested administrative cases, HRS 

§ 91-14(g) (2012) provides:

(g) Upon review of the record the court may affirm the 

decision of the agency or remand the case with instructions 

for further proceedings; or it may reverse or modify the 

decision and order if the substantial rights of the 

petitioners may have been prejudiced because the 

administrative findings, conclusions, decisions, or orders 

are:

(1) In violation of constitutional or statutory 

provisions; 

(2) In excess of the statutory authority or jurisdiction 

of the agency; 

(3) Made upon unlawful procedure; 

(4) Affected by other error of law; 

(5) Clearly erroneous in view of the reliable, 

probative, and substantial evidence on the whole record; 

or

(6) Arbitrary, or capricious, or characterized by abuse 

of discretion or clearly unwarranted exercise of 

discretion.

IV. Discussion

A. Dr. Nitta is eligible for the Program under the Statute

1. DHS’s position

DHS does not contest the ICA’s adoption of the Averett

holding invalidating the Rule. DHS instead argues that the ICA 

should have addressed Dr. Nitta’s eligibility under the Statute, 

and that he was still ineligible. DHS contends that Dr. Nitta 

was ineligible because his “primary specialty designation” was 
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OB/GYN, not family medicine, general internal medicine, or 

pediatric medicine. 

We agree that Dr. Nitta’s eligibility under the Statute 

should be addressed, and we now do so. We disagree with DHS, 

however, that Dr. Nitta was not eligible for the Program under 

the Statute. For the reasons below, he was.

2. A physician can have more than one specialty

At the outset, it is important to note that the term 

“primary specialty designation” appears in 42 U.S.C., which 

concerns “The Public Health and Welfare,” only twice: in the 

Medicaid Statute at issue here, 42 U.S.C. § 1396a(a)(13)(C), and 

in the parallel Medicare statute discussed in Averett, 42 U.S.C. 

§ 1395l(x). 

DHS asserts Dr. Nitta’s 1993 Medicaid application and 2006 

NPI specialty designation control what constitutes his “primary 

specialty designation” for purposes of the Program. DHS posits 

that because Dr. Nitta had previously designated a “specialty” 

of OB/GYN, he was precluded from later self-designating a 

different “primary specialty” under the Statute.10 Thus, DHS 

assumes that a physician cannot have more than one specialty. 

 

10 The NPI program replaced previous provider identifiers. See NPI Fact 

Sheet: For Healthcare Providers Who Are Individuals, CMS (Jan. 2006), 

https://www.cms.gov/Regulations-and-Guidance/AdministrativeSimplification/NationalProvIdentStand/Downloads/NPIFactSheet012606.pdf

(continued. . .)
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Just as the Rule at issue here could not contravene the 

Statute, however, NPI designations required pursuant to 

administrative guidance cannot violate the statutes on which 

they are based.

In this regard, the Sixth Circuit discussed the NPI in the 

following introductory passage:

The Medicare program is funded and administered by the 

federal government; the Medicaid program is funded largely 

by the federal government but administered primarily by the 

states. In 1996, Congress directed the Secretary of Health 

and Human Services to create a “standard unique health 

identifier” for each “health care provider” participating 

in the Medicare and Medicaid programs and to “take into 

account” each provider's “specialty classifications.” 42

U.S.C. § 1320d-2(b). Accordingly, at the time relevant 

here, the Secretary required Medicare and Medicaid 

providers to complete a “National Provider Identifier” form 

that required providers to designate their “primary 

specialty.” See Form CMS-10114 (11/08) at 1–2. Medicare 

providers also completed a form that required them to 

“designate [their] primary specialty[.]” See CMS-855I 

(02/08) at 8. Medicaid providers likewise designated their 

primary specialties through “self-attestation” during most 

if not all states’ enrollment processes. See 77 Fed. Reg.

66,673–75 (Nov. 6, 2012).

Averett, 943 F.3d at 315 (emphasis added). 

As indicated in Averett, NPI designations are based on 

administrative guidance promulgated pursuant to 42 U.S.C. § 

1320d-2(b). This statute is part of 42 U.S.C. Chapter 7 (Social 

Security), Subchapter XI (General Provisions, Peer Review, and 

Administrative Simplification), Part C (Administrative 

 

(continued. . .)

[perma.cc/EWL2-EWK2] (last visited November 1, 2022). We therefore address 

the effect of Dr. Nitta’s 2006 NPI identifier. 
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Simplication); in other words, 42 U.S.C. § 1320d et. seq. is 

concerned with “administrative simplification.”11 

Within this Part C, 42 U.S.C. § 1320d-2 is titled 

“Standards for information transactions and data elements.” 

Subsection (b) provides:

(b) Unique health identifiers

(1) In general

The Secretary shall adopt standards providing for a 

standard unique health identifier for each individual, 

employer, health plan, and health care provider for use in 

the health care system. In carrying out the preceding 

sentence for each health plan and health care provider, the 

Secretary shall take into account multiple uses for 

identifiers and multiple locations and specialty 

classifications for health care providers.

(2) Use of identifiers

The standards adopted under paragraph (1) shall specify the 

purposes for which a unique health identifier may be used.

(Emphasis added.) Hence, 42 U.S.C. § 1320d-2 created NPIs 

 

11 The NPI system was actually established for billing and payment 

purposes. 42 U.S.C. § 1395u(r): 

(r) Establishment of physician identification system

The Secretary shall establish a system which provides for a 

unique identifier for each physician who furnishes services 

for which payment may be made under this subchapter. Under 

such system, the Secretary may impose appropriate fees on 

such physicians to cover the costs of investigation and 

recertification activities with respect to the issuance of 

the identifiers.

See also National Provider Identifier Standard (NPI), CMS (Dec. 1, 2021), 

https://www.cms.gov/Regulations-and-Guidance/AdministrativeSimplification/NationalProvIdentStand [perma.cc/DR7S-V7Q9] (last visited 

November 1, 2022).
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for informational and data purposes.12 This statute requires a 

“standard unique health identifier for each individual . . . 

health care provider for use in the health care system.” But, 

pursuant to 42 U.S.C. § 1320d-2(b)(1), the NPI system clearly 

allows for “multiple . . . specialty classifications for health 

care providers.” 

This raises the question of whether an individual physician 

can be a “health care provider” with “multiple specialty 

classifications.” In this regard, 42 U.S.C. § 1320d provides 

definitions for all terms under Part C. 42 U.S.C. § 1320d(3) 

then defines “health care provider” as follows:

(3) Health care provider

The term “health care provider” includes a provider of 

services (as defined in section 1395x(u)13 of this title), a 

provider of medical or other health services 

(as defined in section 1395x(s) of this title), and any 

other person furnishing health care services or supplies.

(Emphasis added.) Thus, pursuant to 42 U.S.C. § 1320d(3), a 

“provider of medical or other health services (as defined in 

section 1395x(s)” can be a “health care provider” with “multiple 

specialty classifications” under 42 U.S.C. § 1320d-2(b)(1). The 

 

12 Again, the NPI system was actually created for billing and payment 

purposes. See supra note 11.

13 “Provider of services” is defined by 42 U.S.C. § 1395x(u) as “a 

hospital, critical access hospital, rural emergency hospital, skilled nursing 

facility, comprehensive outpatient rehabilitation facility, home health 

agency, hospice program”; thus, an individual physician cannot be a “provider 

of services” under this definition. 
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additional question then is whether an individual physician can 

be a “provider of medical or other health care services” “as 

defined in section 1395x(s).”

 42 U.S.C. § 1395x(s) provides as follows:

(s) Medical and other health services

The term “medical and other health services” means any of the 

following items or services:

(1) physicians' services;

. . . .

(2)

(L) certified nurse-midwife services;

(M) qualified psychologist services;

(N) clinical social worker services (as defined in subsection 

(hh)(2))[.]

(Emphasis added.) 42 U.S.C. § 1395x(s) makes clear that an 

individual physician (like an individual nurse-midwife, 

psychologist, or clinical social worker), as a provider of 

“medical and other health services,” is a “health care 

provider.”

Therefore, under governing federal law, individual 

physicians can have multiple specialty classifications under the 

NPI system. Thus, the fact that Dr. Nitta’s initial NPI 

designation listed a specialty of OB/GYN did not prevent him 

from having another “specialty” that was his “primary specialty” 

during the time period at issue.

 
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3. Dr. Nitta self-designated as having one of the 

requisite specialties as his “primary specialty”

Accordingly, Dr. Nitta was authorized to have more than one 

medical specialty. In order to qualify for the Program under 

the Statute, however, Dr. Nitta was required to have a “primary 

specialty designation” of “family medicine, general internal 

medicine, or pediatric medicine” for the relevant time period. 

The issue then is how that designation was to occur.

In this respect, we agree with the Sixth Circuit and the 

ICA that the Rule, which contained requirements inconsistent 

with Statute, was invalid. We also agree with the Sixth Circuit 

and ICA that “a physician with a primary specialty designation” 

for purposes of the eligibility under the Statute means “a 

physician who has himself designated, as his primary specialty, 

one of the specialties recited in those provisions[,]” which 

are family, general internal, or pediatric medicine. 

DHS and the circuit court ruled Dr. Nitta ineligible based 

on invalidated Rule requirements. The parties do not actually 

dispute that Dr. Nitta did designate, as his primary specialty, 

either family medicine, general internal medicine, or pediatric 

medicine. 

As the Rule and self-attestation form have been 

invalidated, the fact that Dr. Nitta did not personally submit 

the on-line application is immaterial. To the extent a staff 
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member had enrolled Dr. Nitta in the Program based on the 

recommendation of AlohaCare, Dr. Nitta ratified the action of 

his office staff regarding the “self-designation” and indicated 

that because he practices in internal medicine “all day,” he was 

self-attesting to being a PCP who works in general internal 

medicine. Thus, Dr. Nitta did self-designate internal medical 

as his principal area of practice, or primary specialty, for the 

time period of the Program. This self-designation was 

consistent with the findings in DHS’s final decision that HMSA, 

UnitedHealthcare, AlohaCare, and Hilo Medical Center, as well as 

Hilo community medical professionals in general, recognized Dr. 

Nitta as a PCP. 

Accordingly, we hold that Dr. Nitta was eligible for 

enhanced payments under the Statute. 

Our holding is consistent with the purposes of the Program. 

Congress clearly intended the enhanced payments as incentives 

for the provision of primary care services, regardless of a 

physician’s other practice areas. We agree with amici that

[t]he legislative history accompanying the [Statute] 

indicates that the enhanced payments were meant to address 

Medicaid reimbursement rates for primary care services that 

were substantially lower than the Medicare rates for the 

same services. [See H.R. Rep. No. 111-299, pt. 1, at 617-

19 (2009).] Congress stated that the enhancements were 

necessary because:

These low Medicaid payment rates do not provide 

adequate incentives for physicians to participate in 

Medicaid, limiting access to physicians’ services by 

Medicaid beneficiaries. In addition, low Medicaid 
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payment rates discourage young physicians and other 

health professionals from entering careers in primary 

care, undermining efforts to address the shortage of 

primary care practitioners in many areas of the 

country. [Id.]

The legislative history further indicates that Congress 

intended the enhanced payments to apply broadly to “primary 

care services furnished by any participating physician or 

health professional, not just a primary care physician or 

professional[.]” [Id. at 618 (emphasis added).]

For all of these reasons, Dr. Nitta was eligible for 

enhanced payments pursuant to the Statute. 

B. DHS’s other points on certiorari lack merit

1. The circuit court relied solely on the invalid Rule 

when it deemed Dr. Nitta ineligible for the Program

DHS also asserts on certiorari that the circuit court did 

not solely rely on the Rule, but also relied on the Statute when 

it deemed Dr. Nitta ineligible for the Program. 

Our holding above resolves this issue. If the circuit 

court had determined Dr. Nitta ineligible based on the Statute, 

it would have been wrong. But the record reflects the circuit 

court (and DHS) relied solely on the invalidated Rule in deeming 

Dr. Nitta ineligible and not did not rely on the Statute. 

2. DHS waived its appropriation argument

Finally, we reject DHS’s third issue on certiorari, that 

DHS is required to recoup the overpayment because there was 

never money appropriated to pay Dr. Nitta. This is a new 

argument never raised below and is therefore waived. See Ass’n

of Apt. Owners of Wailea Elua v. Wailea Resort Co., 100 Hawaiʻi
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97, 107, 58 P.3d 608, 618 (2002) (“Legal issues not raised in 

the trial court are ordinarily deemed waived on appeal.”)

V. Conclusion

Having determined Dr. Nitta eligible for enhanced payments 

under the Statute, we vacate the ICA’s March 23, 2022 judgment 

on appeal to the extent it remanded the case “to the DHS 

Administrative Appeals Office for further proceedings as may be 

necessary.” The ICA’s judgment on appeal is otherwise affirmed.

Erin N. Lau /s/ Mark E. Recktenwald

for petitioner

/s/ Sabrina S. McKenna

Eric A. Seitz

for respondent /s/ Michael D. Wilson

Frederick Nitta, M.D.

/s/ Todd W. Eddins

/s/ Shirley M. Kawamura