IN THE SUPREME COURT OF NORTH CAROLINA

No. 59A23

Filed 22 March 2024

HALIKIERRA COMMUNITY SERVICES LLC

v.

NORTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES, 

DIVISION OF HEALTH BENEFITS; MEDICAL REVIEW OF NORTH 

CAROLINA, INC. d/b/a THE CAROLINAS CENTER FOR MEDICAL 

EXCELLENCE; KAY COX, in her individual capacity; PATRICK PIGGOTT, in his 

individual capacity

Appeal pursuant to N.C.G.S. § 7A-27(a)(2) from an order and opinion entered 

on 27 September 2022 by Special Superior Court Judge for Complex Business Cases 

Michael L. Robinson in Superior Court, Wake County, after the case was designated 

a mandatory complex business case by the Chief Justice pursuant to N.C.G.S. § 7A45.4(a). Heard in the Supreme Court on 13 February 2024.

Ralph T. Bryant Jr.; and Q Byrd Law, by Quintin D. Byrd, for plaintiffappellant.

Joshua H. Stein, Attorney General, by Ryan Y. Park, Solicitor General, John 

H. Schaeffer, Assistant Attorney General, James W. Whalen, Solicitor General 

Fellow, and Mary Elizabeth D. Reed, Solicitor General Fellow, for defendantappellee North Carolina Department of Health and Human Services, Division 

of Health Benefits.

No brief filed for defendant-appellees Medical Review of North Carolina, Inc. 

d/b/a The Carolinas Center for Medical Excellence, Kay Cox, and Patrick 

Piggott.

RIGGS, Justice.

This appeal requires us to determine whether summary judgment was 
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properly entered against plaintiff Halikierra Community Services LLC (Halikierra) 

on its substantive due process and equal protection violation claims against 

defendant North Carolina Department of Health and Human Services (DHHS)1 after 

DHHS placed Halikierra on Medicaid reimbursement prepayment review. We hold 

that the trial court properly granted summary judgment for DHHS because 

Halikierra’s evidentiary forecast failed to disclose any genuine issues of material fact

in support of its claims.

I. Factual and Procedural History

Beginning in 2009, Halikierra provided home personal care services to 

Medicaid beneficiaries through the North Carolina Medicaid Program. DHHS, which 

administers the Medicaid program, received reimbursement requests from 

Halikierra in connection with the provision of personal care services; once received, 

DHHS would ordinarily remit the Medicaid reimbursement to Halikierra. 

DHHS received several Medicaid overbilling complaints relating to 

Halikierra’s services between 2015 and 2017, leading DHHS to conduct several postpayment audits. In carrying out these audits, DHHS inspected Halikierra’s 

supporting documentation, determined that Halikierra had erroneously received 

excess Medicaid reimbursement funds on at least three occasions, and recovered 

those excess sums from Halikierra. DHHS also compared Halikierra’s billing 

1 Halikierra’s appeal only concerns claims against DHHS, and discussion of the other 

named defendants is therefore omitted from this opinion.
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patterns to comparable personal care providers, which showed an outsized volume of 

billing compared to its peers. Independent of these investigations into Halikierra’s 

billing practices, DHHS received a complaint that Halikierra was operating out of 

unlicensed locations. 

In October 2017, DHHS resolved to place Halikierra on prepayment review. 

Under this statutory auditing regime, DHHS held any reimbursements to Halikierra 

pending investigation. DHHS informed Halikierra of its decision by letter dated 4 

June 2018, which stated that “[i]dentification of aberrant billing practices as a result 

of investigations” and “[d]ata analysis performed by [DHHS]” merited prepayment 

review. These stated bases conformed with the statute governing prepayment claims 

review, N.C.G.S. § 108C-7(a) (2023), which authorizes such action on those precise 

grounds. 

By August 2018, DHHS had referred Halikierra to the North Carolina 

Attorney General’s Office for investigation into potential fraud. DHHS suspended 

Halikierra’s Medicaid participation that same month on suspicion that it was billing 

for services not rendered, hiring and providing services through unauthorized 

personnel, and operating out of unlicensed facilities. DHHS’s own audit through an 

independent investigator, completed in September 2018, revealed $530,579 in 

suspicious reimbursement claims; DHHS ultimately denied $982,789.50 of the 

$1,129,733.27 in Medicaid reimbursement claims submitted by Halikierra during the 

prepayment review period. Halikierra’s participation in Medicaid was subsequently 
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terminated on 2 October 2018.

Halikierra filed a petition with the Office of Administrative Hearings on 13 

December 2018, challenging DHHS’s denial of its Medicaid reimbursement claims. 

The Office of Administrative Hearings subsequently upheld DHHS’s actions in its 

Final Decision. 

Outside the administrative petition, Halikierra filed suit in the Superior 

Court, Wake County against DHHS alleging, inter alia, that DHHS’s decision to place 

Halikierra on prepayment review violated its substantive due process and equal 

protection rights under the North Carolina Constitution. The matter was 

subsequently designated a mandatory complex business case. On 27 September 

2022, the trial court granted summary judgment for DHHS on all pending claims. 

Halikierra subsequently filed timely notice of appeal, asserting error as to the 

dismissal of its substantive due process and equal protection claims against DHHS. 

II. Analysis

Halikierra’s argument on appeal is straightforward: DHHS acted arbitrarily 

and capriciously in placing Halikierra on prepayment review because DHHS had no 

established policies or procedures for doing so. Moreover, Halikierra contends, the 

evidence reveals inconsistent and contradictory bases behind DHHS’s prepayment 

review decision. We hold the trial court did not err in granting summary judgment 

to DHHS on these claims.

A. Standard of Review
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Summary judgment is proper where “the pleadings, depositions, answers to 

interrogatories, and admissions on file, together with the affidavits, if any, show that 

there is no genuine issue as to any material fact and that the moving party is entitled 

to a judgment as a matter of law.” N.C.G.S. § 1A-1, Rule 56(c) (2023). These materials 

are considered in the light most favorable to the nonmovant. Morrell v. Hardin Creek, 

Inc., 371 N.C. 672, 680 (2018). Material issues are those that “constitute a legal 

defense, or would affect the result of the action[,]” while genuine issues are those that 

“may be maintained by substantial evidence.” Koontz v. City of Winston-Salem, 280 

N.C. 513, 518 (1972). The movant “bears the initial burden of demonstrating the 

absence of a genuine issue of material fact. If the movant successfully makes such a 

showing, the burden then shifts to the nonmovant to come forward with specific facts 

establishing the presence of a genuine factual dispute for trial.” Liberty Mut. Ins. Co.

v. Pennington, 356 N.C. 571, 579 (2002) (citation omitted). We review a trial court’s 

summary judgment ruling de novo. N.C. Farm Bureau Mut. Ins. Co. v. Martin, 376 

N.C. 280, 285 (2020).

B. Substantive Due Process

The Law of the Land Clause in Article 1, Section 19 of the North Carolina 

Constitution—like its federal analogue found in the Fourteenth Amendment to the 

United States Constitution—serves “to secure the individual from the arbitrary 

exercise of the powers of government, unrestrained by the established principles of 

private rights and distributive justice.” Gunter v. Sanford, 186 N.C. 452, 456 (1923) 
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(cleaned up). “When reviewing an alleged violation of [these] substantive due process 

rights, a court’s first duty is to carefully describe the liberty interest the complainant 

seeks to have protected.” Standley v. Town of Woodfin, 362 N.C. 328, 331 (2008). 

Restrictions on fundamental rights—those rights that are “a part of every individual’s 

liberty,” State v. Dobbins, 277 N.C. 484, 497 (1971)—are subject to strict scrutiny,

Rhyne v. K-Mart Corp., 358 N.C. 160, 180 (2004). When the right involved is not 

fundamental, we apply the rational basis test and ask “whether the [government 

action] in question is rationally related to a legitimate government purpose.” 

Standley, 362 N.C. at 332 (cleaned up). Under this test, “any conceivable legitimate 

purpose is sufficient,” id. (cleaned up), and the act is not arbitrary so long as it bears 

a “rational . . . relation to the public health, morals, order, or safety, or the general 

welfare,” G I Surplus Store, Inc. v. Hunter, 257 N.C. 206, 210 (1962) (cleaned up).

Neither party asserts that a fundamental right is implicated by DHHS’s action 

in this case. And Halikierra does not argue that the prepayment review program 

violates substantive due process; instead, it argues only that the selection of 

Halikierra was unconstitutionally arbitrary under the Law of the Land Clause. 

Because any or all of the reasons for which Halikierra was placed on prepayment 

review are rationally related to a legitimate governmental interest, we hold that 

Halikierra has failed to establish a constitutional substantive due process violation. 

The forecast of evidence produced below shows that Halikierra was selected for 

prepayment review on several grounds. One DHHS investigator, Kay Cox, testified 
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that the adverse post-payment audits, consumer complaints, and data analysis 

showing comparatively outsized billing volumes were submitted to Patrick Piggott, 

the final decisionmaker at DHHS, for consideration of prepayment review. Mr. 

Piggott’s testimony was largely consistent with Ms. Cox’s,2 as he identified both the 

prior investigation and DHHS’s data analytics analysis as the bases for his decision. 

These unfavorable inquiries into Halikierra’s billing practices provided a rational 

basis for placing Halikierra on prepayment review, which purpose is to combat 

Medicaid fraud and “ensure that claims presented by a provider for payment by 

[DHHS] meet the requirements of federal and State laws and regulations” through 

investigation of “credible allegations of fraud, identification of aberrant billing 

practices as a result of investigations, [and] data analysis performed by [DHHS].” 

N.C.G.S. § 108C-7(a) (2023).

3

To be sure, an agency may act arbitrarily and capriciously for substantive due 

process purposes when it is granted unfettered discretion over a decision and fails to 

promulgate and adhere to policies governing that process. See In re Ellis, 277 N.C. 

419, 425–26 (1970) (observing that government action violates the substantive due 

2 Mr. Piggott testified that Ms. Cox would have only been assigned to review 

Halikierra after it was placed on prepayment review. This contradiction in the testimony is 

ultimately immaterial to the question of why Halikierra was selected for prepayment review, 

as Mr. Piggott’s stated bases for doing so were consistent with those offered by Ms. Cox.

Moreover, rational basis review is satisfied “[a]s long as there could be some rational basis.” 

Lowe v. Tarble, 313 N.C. 460, 462 (1985) (emphasis added).

3 Halikierra does not contend in its principal brief that this statute is ambiguous or 

that these statutory criteria were not met based on the evidence presented.
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process clauses of the state and federal constitutions when decisionmakers, “in the 

absence of standards, . . . could [render their decision] for a good reason, for a bad 

reason, or for no reason” (cleaned up)). And agencies may insulate themselves from 

prospective substantive due process challenges by creating and faithfully 

implementing such policies. While Halikierra may make sound policy arguments for 

why more detailed policies and procedures are desirable or even necessary, this Court 

cannot, on these facts, find error in the trial court’s ruling. The prepayment review 

statute in this case identifies the public purposes for which prepayment review may 

be exercised, and the rationales presented by the evidence for placing Halikierra on 

prepayment review fall within those enumerated therein. Because this case does not 

implicate fundamental rights and the evidence shows that DHHS’s prepayment 

review placement decision was rationally related to a legitimate governmental 

interest, Halikierra has failed to demonstrate a genuine issue of material fact in 

support of its substantive due process claim.4

C. Equal Protection

Like substantive due process, equal protection claims under the North 

Carolina Constitution are subjected to either strict scrutiny or rational basis review, 

4 Halikierra asserts that our ruling would permit an official to “make [prepayment 

review] decisions to benefit[ ] [a] criminally minded individual[,] . . . to feed [a] personal 

vice[,] . . . [or out of] personal ill will.” We do not so hold, and nothing in the record remotely 

suggests that any of these events occurred here. There are limits to the deference of rational 

basis review, but we do not find the facts in this case require us to probe the contours of those 

limits.
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with the former standard applicable to restrictions of fundamental rights or members 

of a suspect class. Rhyne, 358 N.C. at 180. For example, government action treating 

persons differently or more harshly than a similarly situated person or entity on the 

basis of race mandates the exacting standards of strict scrutiny review. Miller v. 

Johnson, 515 U.S. 900, 904 (1995). Other claims unrelated to disparate treatment of 

suspect classes or restrictions of fundamental rights, however, are subject to less 

stringent rational basis review. Under this standard, a claimant must establish that 

“he received treatment different from others similarly situated,” Maines v. City of 

Greensboro, 300 N.C. 126, 132 (1980), and that such disparate treatment did not “bear 

some rational relationship to a conceivable legitimate governmental interest,” Texfi 

Indus., Inc. v. City of Fayetteville, 301 N.C. 1, 11 (1980).

Here, Halikierra does not directly allege that it was treated differently or more 

harshly on any basis that would trigger strict scrutiny review. Nor has it introduced 

any evidence that would support such allegations. Without allegations or evidence 

disclosing that strict scrutiny applies, we proceed under rational basis review.

The parties’ evidentiary proffers do not demonstrate disparate treatment of 

Halikierra from those similarly situated; none of the evidence produced below

demonstrates that other personal care providers with outsized billing volumes, prior 

adverse post-payment audits, and a record of consumer complaints were not placed 

on prepayment review like Halikierra was. Nor has Halikierra identified evidence 

showing that DHHS utilized a different decision-making process than that used to 
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place other Medicaid providers on prepayment review. The burden fell to Halikierra 

to produce such evidence once DHHS made its initial showing that there were no 

genuine issues of material fact on this claim. See Liberty Mut. Ins. Co., 356 N.C. at 

579. Halikierra has not done so here, and on the record before us, we affirm the trial 

court’s order granting summary judgment on this claim.

III. Conclusion

For the foregoing reasons, we affirm the trial court’s order granting summary 

judgment in favor of DHHS and dismissing Halikierra’s claims.

AFFIRMED.