#25337-a-DG 

2010 SD 24

IN THE SUPREME COURT 

OF THE 

STATE OF SOUTH DAKOTA 

* * * * 

KYLA SNELLING, Appellant, 

v. 

SOUTH DAKOTA DEPARTMENT OF 

SOCIAL SERVICES, SOUTH DAKOTA 

DEPARTMENT OF HUMAN SERVICES, Appellees. 

* * * * 

APPEAL FROM THE CIRCUIT COURT OF 

THE SECOND JUDICIAL CIRCUIT 

MINNEHAHA COUNTY, SOUTH DAKOTA 

* * * * 

HONORABLE KATHLEEN K. CALDWELL 

Judge 

* * * * 

DOMINIC M. SMITH 

South Dakota Advocacy Services 

Sioux Falls, South Dakota Attorney for appellant. 

MARTY J. JACKLEY 

Attorney General 

LAURIE M. BAUER 

Special Assistant Attorney General 

Department of Human Services 

Pierre, South Dakota Attorneys for appellees. 

* * * * 

CONSIDERED ON BRIEFS 

ON JANUARY 11, 2010 

 OPINION FILED 03/03/10
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GILBERTSON, Chief Justice 

[¶1.] Kyla Snelling (Kyla) appeals the circuit court’s decision and order 

affirming the Administrative Law Judge’s (ALJ) determination that Kyla was not 

eligible for services under a federally funded Medicaid waiver program for inhome/community-based services for the mentally retarded.1 Kyla also appeals the 

circuit court’s decision affirming the ALJ’s denial of reimbursement for a functional 

evaluation. We affirm. 

FACTS 

[¶2.] Kyla is a sixteen-year-old young woman with Spinal Atrophy Type II, a 

degenerative muscular disease.2 Unable to walk or stand, she uses an electric 

 (continued . . .) 

1. The distinction between a mental disability caused by a condition other than 

“mental retardation” and an individual who is “mentally retarded” is crucial 

in the federal statutes and regulations at issue in this opinion. For that 

reason, the term “mentally retarded,” as opposed to the more generally 

accepted terms mentally challenged or mentally handicapped, is used in this 

opinion. 

2. According to the National Institutes of Health, Spinal Muscular Atrophy 

(SMA) Type II, is a hereditary disease “that cause[s] weakness and wasting of 

the voluntary muscles in the arms and legs of infants and children.” The 

disorder is 

caused by an abnormal or missing gene known as the survival 

motor neuron gene (SMN1), which is responsible for the 

production of a protein essential to motor neurons. Without this 

protein, lower motor neurons in the spinal cord degenerate and 

die. . . . Type II (also known as juvenile SMA, intermediate 

SMA, or chronic SMA, has an onset between 6 and 18 months[)]. 

Legs tend to be more impaired than arms. Children with Type 

II are usually able to sit without support if placed in position. 

Some may be able to stand or walk with help. 
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________________________ 

(. . . continued) 

wheelchair. Kyla is unable to use her arms to transfer to and from her wheelchair. 

She is also unable to bathe, dress her lower body, attend to her personal hygiene 

needs, use the bathroom, prepare her meals, shop, clean her home, or do any 

activities of daily living without help. Kyla is physically limited by her ability to lift 

only small and light objects to and from her lap to a low countertop or table. She 

has begun experiencing difficulty tipping her head back to drink and uses a straw to 

compensate. Kyla can feed herself, but requires help cutting solid foods. Her 

mother, who also cares for two other physically disabled children in the home, 

provides all of Kyla’s care at home and transports her to all her activities. Her 

mother either uses an electric lift to transfer Kyla, or lifts her manually. Kyla’s 

mother is the sole caregiver except while Kyla is at school. 

[¶3.] Kyla has an IQ of 109, well within the normal range, and attends 

public high school in Sioux Falls with the help of an educational assistant. A Hoyer 

lift is used to transfer Kyla at school. Kyla is considered bright, social, and able to 

comport herself in school without any behavioral issues. Kyla is currently working 

on obtaining a driver’s license; although she will require an adapted automobile 

after she is licensed to drive. 

[¶4.] Kyla receives Supplemental Social Security Income (SSI) and services 

from a non-waiver family support program administered by the Department of 

Social Services (DSS) through Volunteers of America and funded exclusively with 

National Institutes of Health, National Institute of Neurological Disorders 

and Stroke, http://www.ninds.nih.gov/disorders/sma/sma.htm (last visited 

February 22, 2010). 
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general state funds. The state-funded, non-waiver program is codified at SDCL 

chapter 27B-2. Services through the state-funded non-waiver program are limited 

to individuals with a developmental disability as defined at SDCL 27B-1-18, which 

provides: 

A developmental disability is any severe, chronic disability of a 

person that: 

(1) Is attributable to a mental or physical impairment or 

combination of mental and physical impairments; 

(2) Is manifested before the person attains age twenty-two; 

(3) Is likely to continue indefinitely; 

(4) Results in substantial functional limitations in three or 

more of the following areas of major life activity: self-care, 

receptive and expressive language, learning, mobility, 

self-direction, capacity for independent living, and 

economic self-sufficiency; and 

(5) Reflects the person’s need for an array of generic services, 

met through a system of individualized planning and 

supports over an extended time, including those of a lifelong duration. 

(Emphasis added). 

[¶5.] A second family support program managed by DSS, administered 

through a Medicaid waiver and funded with federal funds (Medicaid FS Waiver 

program), is available to qualified South Dakota residents. The Medicaid FS 

Waiver program is limited to individuals in need of and eligible for institutionalized 

services in an Intermediate Care Facility for People with Mental Retardation 

(ICF/MR) as provided by 42 CFR § 440.150, but who could remain in their homes or 

in the community if services were available. 
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[¶6.] The Code of Federal Regulations, Chapter 42, Section 440.150, 

contains the eligibility requirements for services and institutionalization in an 

ICF/MR, which also determine whether an individual may also qualify for the 

Medicaid FS Waiver program. It provides: 

(a) “ICF/MR services” means those items and services furnished 

in an intermediate care facility for the mentally retarded if the 

following conditions are met: 

(1) The facility fully meets the requirements for a State license 

to provide services that are above the level of room and board. 

(2) The primary purpose of the ICF/MR is to furnish health or 

rehabilitative services to persons with mental retardation or 

persons with related conditions. 

(3) The ICF/MR meets the standards specified in subpart I of 

part 483 of this chapter. 

(4) The recipient with mental retardation for whom payment is 

requested is receiving active treatment, as specified in § 483.440 

of this chapter. 

(5) The ICF/MR has been certified to meet the requirements of 

subpart C of part 442 of this chapter, as evidenced by a valid 

agreement between the Medicaid agency and the facility for 

furnishing ICF/MR services and making payments for these 

services under the plan. 

42 CFR § 440.150. The Medicaid FS Waiver program’s objective is to avoid placing 

a qualified individual in an ICF/MR if necessary services are available in the 

community. See 42 USC § 1396a(a)(10)(A)(ii)(VI); 42 CFR § 441.301(b)(1)(ii) and 

(iii)(B); 42 CFR § 430.25(c)(2). An individual qualifies for placement in an ICF/MR 

under 42 CFR § 435.1010, which defines “Persons with related conditions” as 

follows: 
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Persons with related conditions mean individuals who have a 

severe, chronic disability that meets all of the following 

conditions: 

(a) It is attributable to-- 

(1) Cerebral palsy or epilepsy; or 

(2) Any other condition, other than mental illness, found to be 

closely related to mental retardation because this condition 

results in impairment of general intellectual functioning or 

adaptive behavior similar to that of mentally retarded persons, 

and requires treatment or services similar to those required for 

these persons. 

(b) It is manifested before the person reaches age 22. 

(c) It is likely to continue indefinitely. 

(d) It results in substantial functional limitations in three or 

more of the following areas of major life activity: 

(1) Self-care. 

(2) Understanding and use of language. 

(3) Learning. 

(4) Mobility. 

(5) Self-direction. 

(6) Capacity for independent living. 

(Emphasis added). 

[¶7.] South Dakota currently maintains one ICF/MR in Redfield, South 

Dakota. Services focus on the individual needs of each resident in the areas of 

“personal care, social interaction skills, behavioral impulse control, making 

appropriate choices, domestic skills, etc. Depending upon the person, techniques 

may be utilized to enhance sensory motor skills, responses to stimuli, orientation to 
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one’s environment, etc. Vocational and educational training are also offered.” S.D. 

Dep’t of Human Services, http://dhs.sd.gov/sddc/about.aspx (last visited February 

22, 2010). 

[¶8.] The Centers for Medicaid and Medicare approved South Dakota’s 

participation in the Medicaid FS Waiver program for home and community based 

services (HCBS). South Dakota Administrative Rules provide the qualifications for 

participation in the Medicaid FS Waiver program and mirror the federal 

requirements. An individual seeking to participate in the Medicaid FS Waiver 

program must meet the requirements of ARSD 67:54:04:04, which provides: 

In addition to qualifying under § 67:54:04:03, an individual must 

meet the following requirements: 

(1) Be developmentally disabled according to § 67:54:04:05; 

(2) Be appropriate for HCBS placement according to § 

67:54:04:06; and 

(3) Be in need of and eligible for placement in an intermediate 

care facility for the mentally retarded or the developmentally 

disabled according to § 67:54:03:04. 

An individual who has been denied social security or SSI 

disability benefits based on a disability is ineligible for HCBS. 

An individual may be eligible for the program if that person meets the requirements 

of ARSD 67:54:04:04, and the requirements of ARSD 67:54:04:03, which provides: 

HCBS may be available to an individual who meets one of the 

following requirements: 

(1) Is receiving AFDC, SSI, or a foster care maintenance 

payment under Title IV-E of the Social Security Act; or 

(2) Is aged, blind, or disabled and has an income less than 300 

percent of the SSI standard benefit but is not eligible for SSI. 
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The individual must also satisfy the requirements of ARSD 67:54:04:05, which 

provides: 

The provider shall maintain documentation signed by a 

physician or psychologist which indicates that the individual is 

developmentally disabled. An individual is considered 

developmentally disabled if the individual meets all of the 

following criteria: 

(1) The individual has a severe, chronic disability attributable to 

mental retardation, cerebral palsy, epilepsy, head injury, brain 

disease, or autism or any other condition, other than mental 

illness, closely related to mental retardation and requires 

treatment or services similar to those required for the mentally 

retarded. To be closely related to mental retardation, a 

condition must cause impairment of general intellectual 

functioning or adaptive behavior similar to that of mental 

retardation; 

(2) The disability manifested itself before the individual reached 

age 22; and 

(3) The disability is likely to continue indefinitely. 

(Emphasis added). Finally, an individual qualified by virtue of having a 

developmental disability as defined by ARSD 67:54:04:05 must need the types of 

services offered in an ICF-MR by demonstrating a “substantial functional 

limitation” in three or more of the functional areas listing in ARSD 67:54:03:04: 

(1) Self-care—the daily activities enabling a person to meet basic 

life needs for food, hygiene, and appearance; 

(2) Receptive and expressive language—communication 

involving verbal and nonverbal behavior that enables a person 

to understand others and to express ideas and information to 

others; 

(3) Learning/general cognitive competence—the ability to 

acquire new behaviors, perceptions, and information and to 

apply the experiences to new situations; 
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(4) Mobility—the ability to use fine or gross motor skills to move 

from one place to another with or without mechanical aids; 

(5) Self-direction—the management of one’s social and personal 

life; the ability to make decisions affecting and protecting one's 

self-interests; 

(6) Capacity for independent living—based on age, the ability to 

live without extraordinary assistance; and 

(7) Economic self-sufficiency—the maintenance of financial 

support. 

[¶9.] On December 10, 2007, Kyla submitted her Medicaid FS Waiver 

program application. DSS initially determined she was financially eligible for the 

program under ARSD 67:54:04:03 due to her receipt of SSI. On January 22, 2008, 

her application was submitted to the Division of Developmental Disabilities for 

further review by the Utilization Review Team (URT) because Kyla’s IQ exceeded 

seventy (70), the threshold for mental retardation or developmental deficiency. The 

URT met and determined Kyla was not eligible for the program because she did not 

meet the definition of “Persons with related conditions” in 42 CFR § 435.1010, in 

that she was neither mentally retarded nor did she have a “related condition” 

within the meaning of subsection (a)(2) as defined. It further determined that she 

was not appropriate for placement at Redfield because she was not in need of the 

same services as that facility’s population due to her normal intellectual abilities. 

Kyla’s application was denied by DSS. 

[¶10.] Kyla appealed the denial to an ALJ. Prior to the hearing before the 

ALJ, a functional evaluation was performed by Joan Mutchler, who had worked as 

Kyla’s occupational therapist since Kyla was three years old. That evaluation found 

Kyla met four of the seven functional areas listed in ARSD 67:54:03:04. The 
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functional evaluation was performed without prior approval from DSS, Division of 

Developmental Disabilities. 

[¶11.] On September 10, 2008, after a hearing on the matter, the ALJ issued 

a Notice of Pending Decision and Pending Decision affirming DSS’s denial of Kyla’s 

application. Kyla timely filed objections and a supporting brief. The ALJ then 

issued its final decision denying Kyla’s request. The ALJ also denied payment for 

Mutchler’s functional evaluation because prior approval for payment was not sought 

by Kyla and the evaluation was not necessary to determine whether Kyla was 

eligible for the program. The circuit court affirmed the ALJ’s decision. 

[¶12.] Kyla appeals to this Court raising the following two issues: 

1. Whether the circuit court erred in affirming the ALJ’s decision that 

Kyla was ineligible for the Medicaid FS Waiver program. 

2. Whether the circuit court erred in affirming the ALJ’s denial of 

reimbursement for the functional evaluation.

STANDARD OF REVIEW 

[¶13.] A review of an administrative agency’s decision requires this Court to 

“give great weight to the findings made and inferences drawn by an agency on 

questions of fact.” Tebben v. Gil Haugen Constr., Inc., 2007 SD 18, ¶15, 729 NW2d 

166, 171. Only when an agency’s decision is “clearly erroneous in light of the entire 

evidence in the record” we will reverse on appeal. Id. (citing Wells v. Howe Heating 

& Plumbing, Inc., 2004 SD 37, ¶9, 677 NW2d 586, 590) (quoting SDCL 1-26-36)). 

We examine de novo all questions of law, as well as documentary evidence 

contained in the record. Id. Statutory interpretation is also a question of law 
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reviewed under the de novo standard. Discover Bank v. Stanley, 2008 SD 111, ¶15, 

757 NW2d 756, 761. 

DECISION AND ANALYSIS 

[¶14.] 1. Whether the circuit court erred in affirming the ALJ’s 

 decision that Kyla was ineligible for the Medicaid FS 

Waiver program. 

[¶15.] The circuit court found that because Spinal Atrophy Type II was 

strictly a physical disability without any mental retarding effect, Kyla was 

ineligible for the Medicaid FS Waiver program despite having substantial 

functional limitations in four of the seven categories listed in 42 CFR § 435.1010. It 

further found that because Kyla lacked a diagnosis that qualified as “a severe, 

chronic disability attributable to mental retardation, cerebral palsy, epilepsy, head 

injury, brain disease, or autism or any other condition, other than mental illness, 

closely related to mental retardation,” as defined in ARSD 67:54:04:05 and 42 CFR 

§ 435.1010 “Persons with related conditions,” DSS did not need to consider Kyla’s 

functional limitations to determine her eligibility. 

[¶16.] Kyla argues she qualifies for the waiver because her condition causes 

impairment of adaptive behaviors similar to the deficits of the mentally 

handicapped population. She argues her need for assistance with almost all 

activities of daily living renders her at risk for institutionalization if her mother’s 

care is no longer available. Kyla further argues she is qualified for the Medicaid FS 

Waiver program because she has four of the seven substantial functional limitations 

as listed in ARSD 67:54:03:04 and 42 CFR § 435.1010 “Persons with related 

conditions” (d)(1)-(7). She also argues that the holding in Pacheco v. R.I. Dep’t of 
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Mental Health, Retardation and Hosps, 1996 WL 936911 (RISuper), supports 

expanding the eligibility for the Medicaid FS Waiver program beyond the diagnostic 

approach of using the categories of mental retardation, cerebral palsy, autism, 

epilepsy or other conditions closely related to mental retardation. DSS argues the 

language of ARSD 67:54:04:05(1) and 42 CFR § 435.1010 “Persons with related 

conditions” (a)(1)-(2) requires that an individual first meet the diagnostic 

requirements before it may consider any functional limitation. 

[¶17.] As we have previously stated: 

The purpose of statutory construction is to discover the true 

intention of the law which is to be ascertained primarily from 

the language expressed in the statute. The intent of a statute is 

determined from what the legislature said, rather than what the 

courts think it should have said, and the court must confine 

itself to the language used. Words and phrases in a statute 

must be given their plain meaning and effect. When the 

language in a statute is clear, certain and unambiguous, there is 

no reason for construction, and the Court’s only function is to 

declare the meaning of the statute as clearly expressed. 

Discover Bank, 2008 SD 111, ¶15, 757 NW2d at 761. 

[¶18.] A plain reading of the language in ARSD 67:54:04:05(1) and 42 CFR § 

435.1010 “Persons with related conditions” (a)(1)-(2) shows that an applicant must 

meet the diagnostic requirement of having “a severe, chronic disability attributable 

to mental retardation, cerebral palsy, epilepsy, head injury, brain disease, or autism 

or any other condition, other than mental illness, closely related to mental 

retardation,” before any consideration is given to the applicant’s functional 

limitations. The condition must also result in “impairment of general intellectual 

functioning or adaptive behavior similar to that of mentally retarded persons.” 

ARSD 67:54:04:05(1); 42 CFR § 435.1010 “Persons with related conditions” (a)(1)-
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(2). The diagnostic condition and resulting impairments must make placement in 

an ICF/MR appropriate. ARSD 67:54:04:05(1); 42 CFR § 435.1010 “Persons with 

related conditions” (a)(1)-(2). 

[¶19.] An applicant must meet all the requirements in 42 CFR § 435.1010 

“Persons with related conditions” subsections (a) through (d) to quality for the 

program as evidenced by the lack of the disjunctive word “or” between the four 

subsections. The same language and lack of a disjunctive connector exists between 

subsections (1) through (3) in ARSD 67:54:04:05, which shows an individual must 

first qualify as mentally retarded, or as having a condition closely related to mental 

retardation, before any consideration is given to functional limitations. 

[¶20.] The URT determined that Kyla was not an appropriate candidate for 

placement at Redfield due to her intellectual functional capacity and IQ in the 

normal range. The URT acknowledged that Kyla’s Spinal Muscular Atrophy Type 

II made her unable to provide for her own care, limited her mobility and selfdirection, and capacity for independent living. However, the disease did not do so 

by harming or retarding her intellect. Based on the record developed before the 

ALJ, the circuit court found Kyla was able to determine her physical needs and how 

best to care for them by applying her intellect and reasoning skills, unlike a 

mentally retarded person. It also found Kyla was able to direct others on how to 

best provide for her physical needs without the programming and services available 

at Redfield, including social interaction skills, behavioral impulse control, 

enhancement of sensory motor skills, responses to stimuli, and orientation to 

environment. Based on the determination that Kyla was not appropriate for 
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placement in South Dakota’s only ICR/MR institution, she was found ineligible for 

the Medicaid FS Waiver program because she was not at risk for 

institutionalization at that facility. We can find no error in the findings of fact 

regarding the lack of any connection between Kyla’s physical limitations and 

mental retardation or a closely related condition. 

[¶21.] Kyla’s reliance on Pacheco is misplaced. In that unpublished opinion, 

the Superior Court of Rhode Island held that Rhode Island’s state-funded nonwaiver program was available to Pacheco despite the lack of a diagnosis of mental 

retardation. 1996 WL 936911, at *5. It did so after determining that the statefunded non-waiver program applied equally to mentally retarded individuals and 

non-mentally retarded individuals with chronic disabilities. Id. (holding Pacheco 

was ultimately ineligible because although he was developmentally disabled, he did 

not meet the requirement of having at least three functional limitations required by 

the relevant statute). That case dealt with a program similar to the state-funded 

non-waiver program codified at SDCL chapter 27B-2, for which Kyla was already 

receiving benefits and was not at issue in this appeal. See RI Gen Laws § 40.1-21-

4.3 (defining “developmentally disabled adults to include both mentally retarded 

individuals and those with a severe chronic mental or physical disability”); § 40.1-

21-10 (codifying state appropriations for services for developmentally disabled 

adults). 

[¶22.] The circuit court did not err when it upheld the ALJ’s determination 

that Kyla was not qualified for the Medicaid FS Waiver program because she failed 

to meet the first qualification in that she was not mentally retarded nor did she 
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have a condition closely related to mental retardation. While Kyla’s physical 

limitations are similar to those of some individuals with qualifying medical 

conditions, Kyla’s cognitive abilities and IQ place her beyond the population for 

which the Medicaid FS Waiver program was intended as she is not appropriate for 

institutionalization at the Redfield program.3 

[¶23.] 2. Whether the circuit court erred in affirming the ALJ’s 

denial of reimbursement for the functional evaluation. 

[¶24.] The ALJ found Mutchler did not have a Medicaid provider agreement 

and that the South Dakota medical assistance program was authorized 

to make payments only to providers with such an agreement with DSS. It also 

found Mutchler’s evaluation was not necessary to determine whether Kyla was 

qualified for the program under ARSD 67:54:04:05 because she was neither 

mentally retarded nor did she have a condition closely related to mental 

retardation. The ALJ denied payment. The circuit court affirmed the ALJ’s 

decision. 

[¶25.] Kyla argues the functional evaluation performed by Mutchler prior to 

the hearing before the ALJ was necessary to her case, and therefore the circuit 

court erred when it upheld the ALJ’s denial of payment. DSS argues that because 

Kyla did not meet the first criteria under the program, she was neither mentally 

3. Kyla’s argument that she is at risk for institutionalization if her mother’s 

care is no longer available is valid. However, the type of placement 

appropriate for Kyla would not be at Redfield according to members of the 

URT. Kyla appears to be more appropriate for placement in a nursing home, 

or community-based facility for individuals with spinal cord injuries rather 

than a facility for the mentally retarded. 
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retarded nor did she have a condition closely related to mental retardation, the 

functional evaluation was not necessary. DSS further argues Kyla’s failure to 

obtain prior payment approval also supports denying reimbursement.

[¶26.] ARSD 67:17:02:23 (2007) (repealed 25 SDR 166, effective December 24, 

2008), provided: 

When a hearing involves medical issues, a medical assessment 

by a general practitioner or a specialist in the area of the alleged 

disability or incapacity other than that of the person involved in 

making the original medical examination shall be authorized if 

the hearing examiner considers it necessary and shall be made 

part of the record. If the additional medical assessment 

recommends referral for additional examination or testing, it 

shall be authorized and paid for by DSS. 

The ALJ determined the evaluation was not necessary to determine whether Kyla 

was qualified for the program. It also determined the assessment was not 

preauthorized as required. Given our holding in Issue 1, Mutchler’s evaluation was 

not necessary to determine Kyla’s eligibility. Failure to obtain preapproval from 

DSS for an unnecessary evaluation is fatal to this issue on appeal. 

[¶27.] Affirmed. 

[¶28.] KONENKAMP, ZINTER, MEIERHENRY, and SEVERSON, Justices, 

concur.