MAINE	SUPREME	JUDICIAL	COURT Reporter	of	Decisions

Decision: 2020 ME	131

Docket: Ken-19-221

Argued: December	6,	2019

Decided: November	10,	2020

Panel: MEAD,	 GORMAN,	 JABAR,	 HUMPHREY,	 HORTON,	 and	 CONNORS, JJ.,	 and	 CLIFFORD,	

A.R.J.*

CHARLES	W.	PALIAN

v.

DEPARTMENT	OF	HEALTH	AND	HUMAN	SERVICES

CONNORS,	J.

[¶1]		Charles	W.	Palian,	DMD,	appeals	 from	a	judgment	of	 the	Superior	

Court	(Kennebec	County,	Stokes,	J.)	denying	his	petition	for	judicial	review of	

final	 agency	 action,	 M.R.	 Civ.	 P.	 80C,	 and	 affirming	 the decision	 of	 the	

Commissioner	of	the	Department	of	Health	and	Human	Services	accepting	the	

recommendation	 of	 an	 administrative	 presiding officer	 that	 the	 Department	

correctly	 established	 and	 maintained	 a	 claim	 in	 the	 amount	 of $116,852.05	

against	Dr.	Palian.

 *

		Although	Chief	Justice	Saufley	participated	in	the	appeal,	she	resigned	before	this	opinion	was	

certified.		 Justice	Alexander	also	participated	in	 the	appeal,	but	he	retired	before	 this	opinion	was	

certified.		Although	not	present	at	oral	argument,	Justice	Horton,	Justice	Connors,	and	Active	Retired	

Justice	Clifford	participated	in	the	development	of	this	opinion.		See M.R.	App.	P.	12(a)(2)	(“A	qualified	

Justice	may	participate	in	a	decision	even	though	not	present	at	oral	argument.”).
2

[¶2]		We	reject	the	bulk	of	Dr.	Palian’s	arguments, but	remand	as	to	one	

aspect	of	 the	Department’s	decision,	which	imposed the	maximum	allowable	

penalties	 for	 Dr.	 Palian’s	 failure	 to	 adequately	 document	 time	 spent	 with	

patients	following	his	administration	of	anesthesia.

I.		BACKGROUND

[¶3]	 	 The	 following	 undisputed	 facts	 are	 drawn	 from	 the	 presiding

officer’s	 recommended	decision,	and	 the	procedural	 facts	are	 taken	 from	 the

court’s record.		See Manirakiza	v.	Dep’t	of	Health	&	Hum. Servs.,	2018	ME	10,	¶ 2,	

177	A.3d	1264.

[¶4]	 	 Until	 he	 retired	 in	 2013,	 Dr.	 Palian	 was	 an	 oral	 surgeon	 and	

MaineCare	 provider1 whose	 practice,	 Central	 Maine	 Oral	 and	 Maxillofacial	

Surgery	Associates,	P.A.	 (Central	Maine),	was	based	in	Auburn.		In	late	2014,	

after	Dr.	Palian’s retirement,	the	Department	initiated	a	post-payment	review	

of	claims	that	Dr.	Palian	had	submitted	for	reimbursement.2		The	review	was	

conducted	 by	 Valerie	 Hooper,	 an	 employee	 in	 the	 Department’s	 Program	

Integrity	Unit.		In	October 2015,	based	on	Hooper’s post-payment	review,	the	

 1		Dr.	Palian	signed	a	MaineCare/Medicaid	provider	agreement	in	September	2009,	contractually	

obligating	him	to	adhere	to	MaineCare’s	rules	and	regulations.

2		The	Department	randomly	selected	100	dates	of	service	within	an	identified	review	period	of	

September	1,	2010,	to	December	31,	2013.
3

Department	issued	a	notice	of	violation	(NOV), alleging	that Dr.	Palian	had	been	

overpaid	by	$189,770.08.3

[¶5]		By	statute,	22	M.R.S.	§	42(7)	(2020),	and	pursuant	to	the	MaineCare	

Benefits	 Manual,	 see generally 10-144	 C.M.R.	 ch. 101,	 ch. I,	 §	 1 (effective	

Sept. 17, 2018),

4 an	 administrative	 challenge	 to	 an	 NOV	 is	 multi-tiered.	 	 A

provider	may	first request	an	informal	review	to	be	conducted	by	the	Director	

of	MaineCare	Services	or	a designated	Department	representative	who	was	not	

involved	in	the	decision	under	review.		Id. §	1.23-1.		After	obtaining	an	informal	

review decision,	if	the	provider	remains	dissatisfied,	he	or	she	may	request	an	

administrative	hearing	before	a	presiding	officer.		Id. § 1.23-1(A).		The	presiding	

officer	 then	 issues	 a	 written	 decision	 to	 the	 provider	 or	 a	 written	

recommendation	 to	 the	 Commissioner	 of	 Health	 and	 Human	 Services, who	

makes the	final	decision.		Id.		The	final	decision may	be	appealed	to	the	Superior	

 3		The	NOV	cited	 the	 following	 violations	of	MaineCare	 rules	and	 regulations:	 (1)	improper	or	

incomplete	documentation	with	 respect	 to	interpreter	 services,	 radiographs,	 anesthesia	 recovery	

times,	 tooth	 numbers	 for	 tooth extractions	 and	 dates	 of	 service;	 (2)	 improper	 coding	 for	

nonemergency	hospital	procedures;	(3)	improper	coding	for	Versed,	Fentanyl,	Ketamine,	Propofol,	

and	 Valium;	 (4)	 billing	 for	 drugs	 above	 acquisition	 cost;	 (5)	 duplicate	 payments,	 payments	 for	

services	 covered	 through	 primary	 insurance,	 or	 payments	 not	 billed	 to	 primary	 insurance;	

(6) improper	 coding	 for	 comprehensive	 oral	 evaluation;	and	 (7)	improper	 coding	 for	 alveoplasty	

when	fewer	than	four	teeth	per	quadrant	were	extracted.

4		During	the	periods	of	time	relevant	to	this	appeal,	10-144	C.M.R.	ch.	101,	ch.	I,	§	1	was	amended	

several	 times,	most	 recently	on	September	17,	2018.		None	of	 the	amendments	is	 relevant	 to	 the	

issues	presented	on	appeal,	and	the	parties	do	not	contend	that	any	of	the	amendments	affect	our	

analysis.
4

Court	 in	 accordance	 with	 the	 Maine	 Administrative	 Procedure	 Act.	 	 Id.;	

see 5 M.R.S.	§ 11001 (2020).

[¶6]		Dr.	Palian	requested	an	informal	review	in	which	he	responded	to	

the	Department’s	allegations	and	argued	that	the	Department	failed	to	pay	him	

for	multiple	claims	that	he	submitted	for	reimbursement.		Hooper	reviewed	and	

prepared	 responses	 to	 Dr.	 Palian’s	 request,	 consulted	 with	 Herbert	 Downs,	

director	of	the	Department’s	Division	of	Audit,	and	provided	to	Downs	a	draft	

letter	 of	 decision	for	 his use	 in	the	informal	 review.	 	Downs	issued	his final	

informal	review	decision	in	August	2016,	adopting	Hooper’s	draft	letter,	which	

revised the	overpayment	calculation	 to	$147,329.89	based	on	 the	arguments	

raised	by	Dr.	Palian.

[¶7]		Dr.	Palian	 timely	requested	an	administrative	hearing,	which	was	

held	on	July	17,	2017,	and	January	9,	2018.	 Based	on	evidence	presented	at	the	

hearing,	 and before	 a	 decision	 was	 issued	 by	 the	 presiding officer,	 the	

Department	 reduced	 its	 total	 claim	 to	 $116,852.05.	 	 Before	 the	 hearing,	 the	

Department	 had imposed	 penalties	 of	 100%	 for	 lack	 of	 documentation	 of	

anesthesia	recovery	times. Those	penalties were	upheld	at	the	informal	review	

stage	because	Dr. Palian’s	records	did	not	indicate	that	he	spent	any	time	with	

MaineCare	patients	after	administering anesthesia.		Following	the	hearing,	the	
5

Department	reduced	these	anesthesia	penalties	from	100%	to	20% because	it	

accepted	Dr.	Palian’s	testimony	that	his	standard	practice	was	to	remain	with	

patients	as the	standard	of	care required.

[¶8]	 	 The	 presiding	 officer	 issued	 a	 recommended	 decision on	

June 5, 2018, upholding	the	Department’s	recoupment	claim	for	$116,852.05,	

as	provided	in	a revised	recoupment	demand	spreadsheet	submitted	after	the	

hearing.		In	 so	 recommending,	 the	presiding	 officer	concluded	 that	Hooper’s	

assistance	 of	 Downs	 in	 conducting	 the	 informal	 review	 did	 not	 violate	

Dr. Palian’s	 procedural	 rights;	 the	 Department	 was	 not	 equitably	 estopped	

from	 maintaining	 its	 claims;	 and	 Dr.	 Palian	 failed	 to	 preserve	 his	 argument	

regarding	penalties	for	improperly	documented	claims,	except	with	respect	to	

the	 20% penalties	 for	 improper	 documentation	 of	 anesthesia	 recovery	 time	

because	those	penalties	were	not	in	effect	at	the	time	of	the	informal	review.

[¶9]		Dr.	Palian	filed	responses	and	exceptions	to	the	presiding officer’s	

recommended	 decision on	 June	 19,	 2018.	 	 Two	 weeks	 later,	 Commissioner	

Ricker	Hamilton	issued	 a	one-sentence	final	 decision	 adopting	 the	presiding

officer’s	 recommended	 decision	 in	 full.5	 	 Dr.	 Palian	 timely	 appealed	 the	

 5		Although	the	Commissioner’s	final	decision	is	the	decision	of	the	fact-finding	agency,	because	

the	 Commissioner	 adopted	 the	 presiding	 officer’s	 recommended	 decision	 with	 no	 further	

explanation,	the	recommended	decision	contains	the	relevant	findings	of	fact	and	conclusions	of	law.
6

Commissioner’s	decision	to	the	Superior	Court	pursuant	to	M.R.	Civ.	P.	80C.		The	

court	 denied	 his	 petition	 for	 judicial	 review,	 and	Dr.	 Palian timely	 appealed	

from	the	judgment.		M.R.	App. P. 2B(c).

II.		DISCUSSION

[¶10]	 	 “When	 the	 Superior	 Court	 acts	 in	 an	 intermediate	 appellate	

capacity	 pursuant	 to	M.R.	Civ.	P.	80C,	we	 review	 the	 administrative	agency’s	

decision	 directly	 for	 errors	 of	 law,	 abuse	 of	 discretion,	 or	 findings	 not	

supported	by	substantial	evidence	in	the	record.”		Manirakiza,	2018	ME	10,	¶ 7,	

177 A.3d 1264 (quotation	 marks	 omitted).	 We	 review	 questions	 of	 law	

de novo,	and	“[t]he	party	seeking	to	overturn	the	agency’s	decision	bears	the	

burden	of	persuasion.”		Doe	v.	Dep’t	of	Health	&	Hum. Servs.,	2018	ME	164,	¶ 11,	

198	A.3d	782.

A. Equitable	Estoppel

[¶11]		Dr.	Palian	argues	that	the	Department should	be	estopped	 from	

seeking	 recoupment	 or	imposing	 penalties	 because	 he	 followed	MaineCare’s	

instructions	 for	 submitting	 claims	 and	 reasonably	 relied	 on	 MaineCare’s	

repeated	approval	and	payment	of	his	claims.

[¶12]		“Equitable	estoppel	precludes	a	party	from	asserting	rights	which	

might	perhaps	have	 otherwise	existed . .	 .	 .”		Dep’t	 of	Health	&	Hum. Servs.	v.	
7

Pelletier,	 2009	 ME	 11,	 ¶	 17,	 964	 A.2d	 630 (quotation	 marks	 omitted).	 	 In	

general,	we	view	with	caution	any	effort	to	invoke	equitable	estoppel	against	

the	 government.	 	 Mrs. T.	 v.	 Comm’r	 of	 the	 Dep’t	 of	 Health	 &	 Hum. Servs.,	

2012 ME 13,	 ¶	 10,	 36	 A.3d	 888.	 	 To	 prevail,	 a	 party	 asserting	 an	 equitable	

estoppel	 defense	 against	 a	 governmental	 entity	 must	 show	 that “(1)	 the	

statements	or	conduct	of	the	government	official	or	agency	induced	the	party	

to	act;	(2)	the	reliance	was	detrimental; and	(3)	the	reliance	was	reasonable.”		

Pelletier,	 2009 ME	 11, ¶	 17,	 964	 A.2d	 630.	 	 Equitable	 estoppel	 requires	 a	

misrepresentation,	which	need	not	consist	of	an	affirmative	statement	but may	

arise	through	a	combination	of	misleading	statements,	conduct,	or	silence.		Id.

¶ 18.		“When	reviewing	an	equitable	estoppel	defense,	we	consider	the	totality	

of	the	circumstances,	including	the	nature	of	the	government	official	or	agency	

whose	actions	provide	 the	basis	 for	 the	claim	and	 the	governmental	 function	

being	discharged	by	that	official	or	agency.”		Id.	¶	17	(quotation	marks	omitted).

[¶13]	 	 The	 MaineCare	 Benefits	 Manual and	 the	 MaineCare	 provider	

agreement	 both	 contain	 several	 provisions	 that	 put—or	 should	 have	 put—

Dr. Palian	on	notice	that	his	billing	activity	might	one	day	be	scrutinized	more	

closely.		The	Manual	states,	“The	Division	of	Audit	or	duly	Authorized	Entities	

appointed	by	the	Department	have	the	authority	to	monitor	payments	to	any	
8

MaineCare	provider	by	an	audit	or post-payment	review.”		10-144	C.M.R.	ch.	101,	

ch. I,	§	1.16	(emphasis	added).

6

[¶14]	 	 More	 specifically,	 the	 Manual	 requires	 that	 “records	 must	 be	

retained	for	a	period	of	not	less	than	five	(5)	years	from	the	date	of	service	or	

longer	if	necessary	to	meet	other	statutory	requirements.		If	an	audit	is	initiated	

within	the	required	retention	period,	the	records	must	be	retained	until	the	audit	

is	completed	and	a	settlement	has	been	made.”		Id. §	1.03-8(M)(3) (emphasis

added).7		The	Manual	also	requires	providers	to	“[m]aintain	accurate,	auditable	

and	 sufficiently	 detailed	 financial	 and	 statistical	 records	 to	 substantiate	 cost	

reports,	negotiated	rates,	by	report	items,	or	any	other	fee	for	service	rate	for	a	

period	 of	 at	 least	 five	 (5)	 years	 following	 the	 date	 of	 final	 settlement	 or	

established	rate	with	the	Department.”		Id.	§	1.03-8(Z)	(emphasis	added).

8		The	

Manual	 clearly	 contemplates	 that	 an	 audit	 or	 post-payment	 review	 may	 be	

initiated	after	the	provider	has	been reimbursed for	services.

 6		The	version	of	this	provision	in	effect	at	the	relevant	time	used	the	term	“Authorized	Agents”	

rather	than	“Authorized	Entities.”		10-144	C.M.R.	ch.	101,	ch.	I,	§	1.16	(effective	Jan.	11,	2010).

7	 	This	 provision	was	 previously	located	 at	 10-144	C.M.R.	 ch.	 101,	 ch.	 I,	 §	 1.03-3(N)	 (effective	

Jan. 11,	2010)	and	10-144	C.M.R.	ch.	101,	ch.	I,	§	1.03-3(M)	(effective	June 24,	2013).

8	 	This	 provision	was	previously	located	 at	 10-144	 C.M.R.	 ch.	 101,	 ch.	 I,	 § 1.03-3(X)	 (effective	

Jan. 11,	2010).
9

[¶15]		Further,	the	provider	agreement	Dr.	Palian	signed expressly	states	

that	the	Department	“may	collect	any	debts,	including	overpayments,	through	

offset	 or	 recoupment.”	 	 The	 agreement	 requires	 that	 providers	 “retain	 all	

medical,	 financial,	administrative	and	other	records	and	documents	required	

by	the	[Manual]	.	.	.	for	at	least	five	(5)	years	from	the	date	of	service.”		It	goes	

on	 to	 say	 that	 “[i]f	 any	 litigation,	 claim,	 negotiation,	 audit or	 other	 action	

involving	 the	 records	 has	 been	 started	 before	 the	 expiration	 of	 the	 5-year	

period,	the	records	must	be	retained	until	completion	of	the	action	.	.	.	or	until	

the	end	of	the	regular	5-year	period,	whichever	is	later.”		(Emphasis	added.)

[¶16]	 	 Pursuant	 to	 the	 provider	 agreement,	 Dr.	 Palian	 was	 “expressly	

responsible	 for	 understanding	 and	 applying	 applicable	 regulations	 and	

requirements	for	proper	billing.”9		Thus,	he	knew	or	should	have	known	that	

the	Department	could	conduct	an	audit	or	post-payment	review	even	after	his	

claims	for	reimbursement	were	submitted	and	approved.		See	id. §	1.16.

[¶17]	 	 Although	 Dr.	 Palian	 argues	 that	 the	 remittance advice	 forms	

provided	 to	 him	 by	 the	 Department	 indicated	 that	 his	 claims	 had	 been	

“allowed,”	there	is	no	record	evidence	that	the	Department	ever	represented	to	

 9		Contrary	to	Dr.	Palian’s	position,	his	“familiarity	with	the	MaineCare	rules”	is	not	“irrelevant.”		

Pursuant	to	the	provider	agreement,	he	was	responsible	for	understanding	and	applying	the	rules.
10

Dr.	Palian	that	the	claims,	once	paid,	would	never	be	subject	to	further	review	

or	 that	 payment	 of	 the	 claims	 marked	 the	 end	 of	 the	 matter.	 	 The	 Manual’s	

repeated	 references	 to	 “post-payment	 review”	 make	 clear	 that	 the	 mere	

payment	 of	 claims	 does	 not	 immunize	 payments	 from	 later	 review.10	 	 Id.

§§ 1.16,	1.18.		In	light	of	the	unambiguous	provisions	in	both	the	Manual	and	

the	provider	agreement	clearly	indicating	that	claims	may	be	subject	to	audit	

or	post-payment	review,	Dr.	Palian’s	claimed	reliance	on	the	remittance	advice	

forms	was	not	reasonable.11		See	id. §	1.16;	cf.	Shackford	&	Gooch,	Inc.	v.	Town	of	

Kennebunk,	486	A.2d	102,	106	(Me.	1984).

[¶18]	 	 In	 sum, given	 the	 claw-back	 provisions	 contained	 in	 the	

Department’s	 regulations, the	 Commissioner	 did	 not	 err	 in	 accepting	 the	

 10		Dr.	Palian’s	reliance	argument	rests	on	 the	notion	 that	if	 the	Department	had	“let	Dr.	Palian	

know	 in	 a	 timely	 manner	 that	 it	 objected	 to	 his	 billing	 practices,	 he	 could	 have	 modified	 those	

practices	 while	 he	 was	 still	 in	 practice.”	 	 Pursuant	 to	 the	 provider	 agreement,	 however,	 it	 was	

Dr. Palian’s	responsibility—not	the	Department’s—to	ensure	that	his	billing	practices	complied	with	

the	Manual.

11		Dr.	Palian	relies	heavily	on	the	fact	that	the	Manual	instructs	providers	“to	bill	their	usual	and	

customary	charge	for	all	dental	services.”		10-144	C.M.R.	ch.	101,	ch.	III,	§	25	(effective	July	1,	2014).		

However,	he	fails	to	acknowledge	that	the	next	sentence	in	the	billing	instructions	clearly	states	that	

MaineCare	will	“pay the	lowest	of .	.	.	[t]he	fee	established	by	MaineCare	and	noted	in	the	Maximum	

Allowance	column	 of	 the	 fee	schedule;	 .	 .	 .	 [t]he	lowest	amount	allowed	by	Medicare;	 or	 .	 .	 .	[t]he	

provider’s	 usual	 and	 customary	 charge.”	 	 Id.	 (emphasis	 added)	 (quotation	 marks	 omitted).		

Therefore,	even	though	providers	are	requested	to	bill	their	usual	and	customary	charge,	the	Manual	

is	clear	that	MaineCare	may	not	reimburse	them	for	that	amount,	and,	again,	Dr. Palian	agreed	that	

the	Department	was	entitled	to	recoup	any	overpayments	by	signing	the	provider	agreement.
11

presiding officer’s	conclusion	that	the	Department	was	not	equitably	estopped	

from	recouping	the	$116,852.05	in	overpayments	made	to	Dr.	Palian.

B. Informal	Review	of	the	NOV

[¶19]		Next,	Dr.	Palian	argues	that	the	Commissioner	erred	in	accepting	

the	presiding officer’s	conclusion	that	the	Department	did	not	violate	its	own	

rules	 when	 Hooper,	 who	 prepared	 and	 issued	 the	 original	 NOV,	 drafted	 the	

informal	 review	 decision	 ultimately	 adopted	 by	 Downs.	 	 See	 10-144	 C.M.R.	

ch. 101,	ch. I,	§	1.23-1.

12

[¶20]		Whether	the	Department violated	its	rules is	a	question	of	law	that	

we	review	de	novo,	and	Dr.	Palian	bears	the	burden	of	persuading	us	that	an	

error	 occurred.	 	 See	Doe,	 2018 ME 164,	 ¶ 11,	 198	 A.3d	 782.	 	Our	 precedent	

instructs	us	to	“give	considerable	deference	to	the	agency’s interpretation	of	its	

own	rules,	regulations,	and	procedures,	and	[we]	will	not	set	aside	the	agency’s	

findings	 unless	 the	 rule	 or	 regulation	 plainly	 compels	 a	 contrary	 result.”		

Beauchene	v.	Dep’t	 of	Health	&	Hum. Servs.,	2009 ME	 24,	¶	11,	 965	 A.2d	866

(quotation	marks	omitted).

 12	 	 This	 provision	 was	 previously	 located	 at	 10-144	 C.M.R.	 ch.	 101,	 ch.	 I,	 §	 1.21-1	 (effective	

Jan. 11, 2010). It	has	not	been	amended	in	any	way	relevant	to	this	appeal.
12

[¶21]		The	Manual	provides	that	informal	reviews	“will	be	conducted	by	

the	 Director	 of	 MaineCare	 Services,	 or	 other	 designated	 Department	

representative	 who	 was	 not	 involved	 in	 the	 decision	 under	 review.”		

10-144 C.M.R.	ch.	101,	ch. I,	§	1.23-1.		Downs,	the	director	of	the	Department’s	

Division	of	Audit,	conducted	the	informal	review.		He	was	not	involved	in	the	

decision	under	review—the	NOV.

[¶22]		Although	it	is	undisputed	that	Hooper,	who	prepared	and	issued	

the	 NOV,	 was	 involved	 in	 the	 informal	 review	 process,	 the	 presiding officer	

found,	 based	 on	 competent	 evidence	in	 the	 record,	 that	 “Mr.	 Downs	 applied	

Ms. Hooper’s	 consultative	 work	 as	 a	 part of	 the	 Final	 Informal	 Review	 he	

conducted—that	 he,	 as	 the	 Director	 of	 the	 office	 in	 which	 she	 worked,	

independently	 gauged	 the	 correctness	 of	 her	 review	 and	 conclusions,	 and	

adopted	 those	 that	 his	 judgment	 determined	 were	 correctly	 reached.”	 	 The	

relevant Manual	 provision,	 10-144	 C.M.R.	 ch.	 101,	 ch. I,	 § 1.23-1,	 does	 not	

plainly	 compel	 a	 contrary	 result;	 thus,	 we	 defer	 to	 the	 Department’s	

interpretation	 and	 implementation	 of	 this	 provision.	 	 See Beauchene,	

2009 ME 24,	¶	11,	965	A.2d	866.
13

C. Penalties

1. Imposition	of	Penalties	for	Improperly	Documented	Claims

[¶23]		Dr.	Palian	challenges	the	Department’s	methodology	for	imposing	

penalties	for	improperly	documented	claims.		Our	discussion	here	pertains	to	

the	penalties	of	20% that	were	imposed	in	the	NOV and	were	in	effect	at	the	

time	 of	 the	 request	 for	 an	 informal	 review.13	 	 Dr.	 Palian	 argues	 that	 the	

Department	abused	its	discretion	in	imposing	these	“original” 20% penalties	

because	it	failed to	consider	the	various	factors	laid	out	in	the	Manual	that	may

be	considered	when	determining	penalties	to	be	imposed,	and he contests	the	

presiding	officer’s	conclusion	that	he	waived	this	argument	by	failing	to	raise	

this	issue	in	his	request	for	an	informal	review.

[¶24]		Again,	we	review	questions	of	law	de	novo,	and	Dr.	Palian	bears	

the	burden	of	persuasion.		See	Doe,	2018	ME	164,	¶	11,	198	A.3d	782.		We	defer	

to	 the	 agency’s	 interpretation	 of	 the	 relevant	 provisions	 of	 the	 MaineCare	

Benefits	Manual.		See	Beauchene,	2009	ME	24,	¶	11,	965	A.2d	866.

[¶25]	 	 The	 Manual	 provides	 that	 “[i]issues	 that	 are	 not	 raised	 by	 the	

provider	 .	 .	 .	 through	 the	 written	 request	 for	 an	 informal	 review	 or	 the	

 13		These	penalties	are	distinct	from	the	penalties	for	improper	documentation	of	time	spent	with	

patients	during	anesthesia	recovery,	discussed	below,	which	were	reduced	to	20% after	the	informal	

review.
14

submission	 of	 additional	 materials	 for	 consideration	 prior	 to	 the	 informal	

review	are	waived	in	subsequent	appeal	proceedings.”		10-144	C.M.R.	ch.	101,	

ch. I,	§	1.23-1.		In	his	written	request	for	an	informal	review,	Dr. Palian	argued	

that	 certain	 sanctions	 for	 improper	 or	 inadequate	 documentation	 were	

incorrectly	 imposed,	 but	 he	 did	 not	 argue	 that	 the	 Department	 abused	 its	

discretion	by	imposing	the	maximum	sanction	of	20%,	as	opposed	to	a	lesser	

penalty,	or by failing	to	consider	the	factors	set	out	in	the	Manual.		See 10-144	

C.M.R.	ch.	101,	ch. I,	§	1.20-3(A)(1).

14		In	other	words,	he	argued	only	that	no	

penalty	should	have	been	imposed,	not	 that	a	lesser	penalty	was	appropriate	

based	 on	 the	discretionary	 factors contained	in	 the	Department’s	 rules.		The	

Commissioner,	therefore, committed	no	legal	error	in	accepting	the	presiding

officer’s	conclusion	that	Dr.	Palian	waived	this	issue	by	failing	to	raise	it	in	his	

request	for	informal	review.15

 14		This	provision	was	previously	located	at	10-144	C.M.R.	ch.	101,	ch.	I,	§	1.19-3(A)(1)	(effective	

Jan.	11,	2010).		It	has	not	been	amended	in	any	way	relevant	to	this	appeal.

15		Contrary	to	Dr.	Palian’s	argument,	this	rule	deeming	issues	not	raised	at	the	informal	review	

stage	waived	does	not	conflict	with	22	M.R.S.	§	42(7)	(2020).		Dr.	Palian	contends	that	because	the	

administrative	hearing	was	conducted	de	novo,	he	was	free	to	raise	any	issue,	regardless	of	whether	

it	 was	 raised	 at	 the	 informal	 review	 stage.	 	 This	 proposition	 is	 supported	 neither	 by	 the	 text	 of	

section 42	nor	the	case	law	cited	by	Dr.	Palian.		Section	42(7)(A)	describes	the	administrative	hearing	

as	“an	appeal	hearing	for	review of	the	department’s	informal	review	decision.”		(Emphasis	added.)		

Issues	that	could	have	been	but	were	not	raised	at	the	informal	review	stage	could	not	be	properly	

reviewed	 at	 the	 administrative	 hearing	 stage	 because	 the	 Department	 never	 had	 the	 chance	 to	

address	them	in	the	first	instance.
15

2. Claims	for	Nonemergency	Hospital	Procedures

[¶26]		Next,	Dr.	Palian	argues	that	the	Commissioner	erred	in	accepting	

the	presiding officer’s	recommendation	to	uphold	the	“penalties”	imposed	for	

incorrectly	using	a	certain	billing	code,	D9410,	listed	in	10-144	C.M.R.	ch.	101,	

ch. III,	§	25	(effective	July	1,	2014),	to	bill	MaineCare	for	procedures	performed	

in	a	hospital	operating	room.16

[¶27]		The	Manual directs	providers	to	the	American	Dental	Association’s

Current	Dental	Terminology (CDT) for	guidance,	which	is	published annually	

and	includes	a	glossary	and	schedule	of	billing	codes. Id. (“Every	effort	should	

be	made	to	utilize	the	correct	code.		Billing	should	be	done	in	accordance	with	

the	CDT	guidelines	and	Chapter	II	and	Chapter	III,	Section	25.”).		Pursuant	to	

the	 CDT,	 billing	 code	 D9410	 allows	 for additional payment	 when	 dental	

services	are	performed	in	houses or	extended	care	facilities,	such	as	“nursing	

homes,	long-term	care	facilities,	hospice	sites,	[or]	institutions.”		To	receive	this	

additional	 payment,	 providers	 are	 instructed	 to	 bill	 for	 qualifying	 services	

under	 D9410	 “in	 addition	 to	 reporting	 appropriate	 code	 numbers	 for	 actual	

services	performed.”

 16		Although	Dr.	Palian	uses	 the	 term	 “penalties,”	 the	 record	 reflects	 that	 the	Department	 only	

sought	recoupment	of	overpayment	for procedures	performed	in	a	hospital	setting.
16

[¶28]		Dr.	Palian	contends	that	he	was	permitted	to	bill	for	the	procedures	

he	performed	in	a	hospital	operating	room	under	billing	code	D9410	because	

hospitals	fall	within	the	category	of	“institutions.”		The	Department’s	position	

is	 that	 hospitals	 are	 not	 “institutions”	 as	 that	 term	 is	 used	 in D9410.	 	 The	

Department	 maintains	 that	 providers	 may	 receive	 additional	 payment	 for	

dental	services	rendered	in	a	hospital	by	using	a	different	billing	code, D9420,	

but	only	when	the	service	provided	is “emergency	room	trauma	care.”17 Id.		The

CDT indicates that	 a	 provider	 may	 receive	 additional	 payment	 using	 billing	

code	 D9420	 when	 treating	 a	 patient “in	 a	 hospital or	 ambulatory	 surgical	

center,”18 but	 section	 25	 expressly	 limits the	 use	 of	 billing	 code	 D9420	 to	

“emergency	 room	 trauma	 care.”	 	Thus,	 unless	 the	 services	 are	 provided	in	 a	

house or	 extended	 care	 facility, or	 for	 emergency	 room	 trauma	 care	 in	 a	

hospital	or	ambulatory	surgical	center, a MaineCare	provider	may bill	only	for	

the	services	provided and	is	not	eligible	for	any	additional	payment.

[¶29]	 	 The	 Department’s	 interpretation	 is	 a	 reasonable	 one, and	 the	

language	of	the	billing	codes	at	issue	does	not	plainly	compel	a	contrary	result.		

 17	 	Dr.	 Palian	does	 not	 contend	 that	 the	 services	 he	 provided	in	 the	 hospital	settings	were	 for	

emergency	room	trauma	care.		See 10-144	C.M.R.	ch.	101,	ch.	III,	§	25	(effective	July	1,	2014).

18		At the	administrative	hearing,	 the	presiding	officer	admitted	in	evidence	excerpts	 from	 the	

2009-2010	and	2011-2012	editions	of	the	CDT.		The	title	and	definition	of	billing	code	D9420	was	

amended	in	the	2011-2012	edition	but	not	in	any	way	that	affects	this	appeal.
17

See	 10-144	 C.M.R.	 ch.	 101,	 ch. III,	 §	 25; Beauchene,	 2009	 ME	 24,	 ¶	 11,	

965 A.2d 866.	 	 The	 very	 names	 assigned	 to	 the	 two	 codes	 support	 the	

Department’s	 position:	 billing	 code	 D9410	 is	 titled	 “House/Extended	 Care	

Facility	Call”	and	billing	code	D9420	is	titled	“Hospital	or	Ambulatory	Surgical	

Call Center.”19		10-144	C.M.R.	ch.	101,	ch.	III,	§	25.		Moreover,	if	the	Department	

had	intended	 to	permit	providers	 to	claim	additional	payments for	 ordinary,	

nonemergency	 hospital	 visits,	 it	 could	 have	 simply	 omitted	 the	 limitation	 in	

D9420.		Without	that	limitation,	all	services	rendered	in	hospitals,	emergency	

or	 otherwise,	 would	 be	 covered.	 	 See	 id.	 	In	 light	 of	 the	 plain	 language	 and	

express	 limitation	 in	 D9420,	 we	 are	 not	 persuaded	 that	 D9410—a	 separate	

code	 applicable	 to	 house	 and	 extended	 care	 facility	 visits	 that	 makes	 no	

reference	to	hospitals—encompasses	all	services	provided	in	hospital	settings.		

See	 In	 re	 Pharm.	 Indus.	 Average	 Wholesale	 Price	 Litig.,	 582	 F.3d	 156, 168	

(1st Cir. 2009) (“[I]f	 the	 language	 of	 a	 statute	 or	 regulation	 has	 a	 plain	 and	

ordinary	meaning,	courts	need	look	no	further	and	should	apply	the	regulation	

as	it	is	written.”	(quotation	marks	omitted)).

 19		Billing	code	D9420	was	previously	titled	“Hospital	Call”	but	contained	the	same	limitation	of	

“[u]se	for	emergency	room	trauma	care.”		10-144	C.M.R.	ch.	101,	ch.	III,	§	25 (effective	Aug.	9,	2010).
18

[¶30]		Therefore,	the Commissioner	did	not	err	in	accepting	the	presiding

officer’s	conclusion	that	“[n]either	code	is	applicable,	based	on	plain	language,	

to	 non-emergency,	 outpatient	 surgeries	 performed	 in	 hospital	 operating	

rooms”	and	“that	the	proper	billing	procedure	for	dental	surgeries	performed	

on	a	non-emergency,	outpatient	basis	in	hospital	operating	rooms	is	to	employ	

only	the	code	for	the	underlying	dental	surgery	service	performed.”

3. Overpayments	Related	to	the	Acquisition	Cost	of	Drugs

[¶31]		Next,	Dr.	Palian	contends	that	the	Commissioner	erred	in	accepting	

the	presiding officer’s	conclusion	that	the	Department	was	entitled	to	recoup	

the	difference	between	what	he	billed	per	dose	of	certain	drugs	and	 the	 true	

acquisition	cost	of	those	drugs.

[¶32]	 	 Dr.	 Palian	 is	 correct	 that	 the	 Manual	 states,	 “Providers	 are	

requested	 to	 bill	 their	 usual	 and	 customary	 charge	 for	 all	 dental	 services.”		

10-144	 C.M.R.	 ch.	 101,	 ch. III,	 §	 25.	 	 The	 billing	 code	 related	 to	 the	

administration	 of	 the	 relevant	 drugs,	 however, plainly	 limits the	 MaineCare	

reimbursement	to	“[a]cquisition	cost	only.”		Id.		Thus,	although	Dr. Palian	was	

permitted	to	bill	his	usual	and	customary	charge	for	administering	the	drugs,	

the	Department	was	entitled	to	limit	its	payment	to	the	acquisition	cost	and	to	

seek	recoupment	of	any	overpayment.
19

4. Imposition	 of	 20% Penalties for	 Failure	 to	 Properly	 Document	

Time	Spent	with	Patients	Following	Administration	of	Anesthesia

[¶33]		We	now	 turn	 to	Dr.	Palian’s	claim	 that	 the	Department	erred	by	

imposing	20%	penalties	for	his	failure	to	properly	document	time	spent	with	

patients	 following	his	administration	of	anesthesia.		As	a	preliminary	matter,	

Dr.	Palian	claims that	it	was	error	for	the	Commissioner	to	accept	the	presiding

officer’s	recommendation	to	uphold	the	20% penalties assessed	against	him	for	

improperly	documenting	time	spent	with	patients	following	administration	of	

anesthesia	 because	 he	 was	 not	 required	 to	 keep	 “any	 specific	 form	 of	

documentation	 .	 .	 .	 substantiating	 his	 determination	 as	 to	 when	 it	 was	

appropriate	to leave	a	patient	following	anesthesia.”20

[¶34]	 	 MaineCare	 providers	 are	 required	 to	 “[m]aintain	 and	 retain	

contemporaneous	 financial,	 provider,	 and	 professional	 records	 sufficient	 to	

fully	and	accurately	document	the	nature,	scope	and	details	of	the	health	care	

and/or	 related	 services	 or	 products	 provided	 to	 each	 individual	 MaineCare	

member.”		10-144	C.M.R.	ch.	101,	ch. I,	§	1.03-8(M).

21		The	provider’s	records	

 20	 	 As	 already	 noted,	 these	 anesthesia-related	 penalties	 are	 distinct	 from	 the	 “original” 20%

penalties	discussed	above	because they were	initially	imposed	at	100%,	upheld	at	that	level	in	the	

final	informal	review	decision,	and	reduced	to	20% only	after	the	Department	accepted	Dr.	Palian’s	

testimony	at	the	hearing.

21		This	provision	was	previously	located	at	10-144	C.M.R.	ch.	101,	ch.	 I,	§	1.03-3(M)	(effective	

Jan. 11,	2010)	and	did	not	contain	the	word	“contemporaneous.”
20

must	include,	among	other	things,	the	“duration	of	services.”		Id.	§ 1.03-8(M)(1).		

Therefore,	Dr.	Palian’s	assertion	that	no	documentation	was	required	to	show	

how	 long	 he	 stayed	 with	 patients	 following	 anesthesia	 administration	 is	

incorrect.

[¶35]	 	 Dr.	 Palian	 also	 argues,	 however,	 that	 the	 Department	 did	 not

properly	exercise	its	discretion	in	setting	the	anesthesia-related	penalties	at	the	

20% cap.		To	support	his	argument,	Dr.	Palian	points	to	Hooper’s	testimony	at	

the	hearing	that	she	had	no	discretion	in	determining	whether	a	penalty	below	

20% was	 warranted	 and	 that	 it	 is	 “sort	 of	 the	 standard	 practice”	 of	 the	

Department	to	penalize	at	the	cap.

[¶36]	 	 Pursuant	 to its	 rules	 and	 consistent	 with	 statute,	 22	 M.R.S.	

§ 42(7)(H),	the	Department	may	impose	a	penalty	equal	to 100%	recoupment

of services	deemed	not	medically	necessary,	not	covered	by	MaineCare,	or	not	

actually	provided.		10-144	C.M.R.	ch.	101,	ch.	I,	§	1.20-2(H)(1).22		In	contrast,	if	

the	issue	is	merely a	lack	of	documentation	for	properly	provided	and	covered	

 22		This	provision	was	previously	located	at	10-144	C.M.R.	ch.	101,	ch.	I,	§	1.19-2(G)(1)	(effective	

Jan. 11,	2010).
21

services,	then	the	Department	may	impose	a	penalty	“not	to	exceed”	20%.		Id.

§ 1.20-2(H)(2).

23		The Department	rule	provides:

1.20-3		Rules	Governing	the	Imposition	and	Extent	of	Sanction

A. Imposition	of	Sanction

The	 decision	 to	 impose	 a	 sanction	 shall	 be	 the	

responsibility	of the	Commissioner	of	the	Department	

of	 Health	 and	 Human	 Services,	 who	 may	 delegate	

sanction	 responsibilities	 to	 the	Division	 of	Audit,	and	

the	Director	of	MaineCare	Services.

1. The	 following	 factors	 may	 be	 considered	 in	

determining	the	sanction(s)	to	be	imposed:

a. Seriousness	of	the	offense(s);

b. Extent	of	violation(s);

c. History	of	prior	violation(s);

d. Prior	imposition	of	sanction(s);

e. Prior	provision	of	provider	education;

f. Provider	willingness	to	obey	MaineCare	rules;

g. Whether	 a	 lesser	 sanction	 will	 be	 sufficient	 to	

remedy	the	problem;	and

h. Actions	 taken	 or recommended	by	peer	 review	

groups,	other	payers,	or	licensing	boards.

 23 This	provision	was	previously	located	at	10-144	C.M.R.	ch.	101,	ch.	I,	§	1.19-2(G)(2)	(effective	

Jan. 11,	2010).
22

10-144	C.M.R.	ch.	101,	ch. I,	§	1.20-3(A)(1).

[¶37]		Dr.	Palian	first	raised	this	argument	as	to	the	Department’s	lack	of	

exercise	of	discretion	in	applying	 the	 factors	in	its	rule	in	his	written	closing	

argument	 at	 the	 administrative	 hearing.	 	The	Department	 countered	 that,	 as	

with	 the	 penalties	 originally	 set	 by	 the	 Department	 before	 the	 hearing,	 the	

argument	was	not	preserved	because	Dr.	Palian	did	not	argue	at	the	informal	

review	stage	that	a	penalty	at	the	cap	was	not	warranted.		The	presiding	officer	

rejected	 the	 Department’s	 position	 because	 the penalties	 on	 these	

anesthesia-related	 claims	 had	 not	 been	 calculated	 at	 20% when	 Dr.	 Palian	

submitted	his	informal	review	request.

[¶38]		As	the	presiding officer’s	recommended	decision	recognized,	the	

Department’s	reduction	of	the	penalties from	100%	to	20% was	based	on	its	

acceptance	 of	 Dr.	 Palian’s	 hearing	 testimony	 “as	 proof	 that	 the	 time	 billed	

actually	 correlated	 to	 the	 services	 provided.”	 	 See	 id.	 §	 1.20-2(H).	 	 Thus,	 as	

Dr. Palian	 points	 out,	there	is	 no	dispute	at	 this	 stage	that	 the	monitoring	 of	

patients	took	place or that	the	monitoring	was	medically	necessary.		See	id.

[¶39]	 	As the	 presiding officer	 found	 and	 the	 Commissioner	 accepted,	

however,	 Dr.	 Palian’s “relevant	 patient	 records	 did	 not	 satisfy	 the	

documentation standard	where	they	did	not	clearly	indicate	the	amount	of	time	
23

actually	spent	with	the	patients	after	anesthesia	was	administered”	(emphasis	

added), as	required	by	10-144	C.M.R.	ch.	101,	ch. I,	§ 1.03-8(M).

[¶40]		For	 this	reason,	and	without	further	explanation or	reference	 to	

the	 factors	 contained	 in	 the	 rule	 governing	 the	 imposition	 and	 extent	 of	

sanctions,	 the	presiding	 officer concluded that	 “the	Department	 .	 .	 .	correctly	

maintained	 such	 violations	 at	 the	 20[%] sanction	 rate.”	 	 The	 one-sentence	

adoption	by	the	Commissioner	of	the	presiding	officer’s	recommendation	does	

not	elaborate	upon	this	point,	and	thus	also	does	not	articulate	whether	or	how	

the	Department	exercised	its	discretion	in	penalizing	Dr.	Palian	at	the	cap.

[¶41]	 	 When	 “dealing	 with	 a	 determination	 or	 judgment	 [that]	 an	

administrative	 agency	 alone	 is	 authorized	 to	 make,	 a	 court	 must	 judge	 the	

propriety	 of	 such	 action	 solely	 by	 the	 grounds	 invoked	 by	 the	 agency.”		

Me. Motor	 Rate	 Bureau,	 357	 A.2d	 518,	 527	 (Me.	 1976) (alteration	 omitted)	

(quoting	 SEC	 v.	 Chenery	 Corp.,	 332	 U.S.	 194,	 196	 (1947)).	 	 An	 “important	

corollary”	to	this	rule	is	that	the	basis	for	the	agency’s	action	“must	be	set	forth	

with	such	clarity	as	to	be	understandable.”		Id. (quotation	marks	omitted). We	

cannot	“guess	at	the	theory	underlying	the agency’s	action,”	nor	can	we	“chisel	

that	which	must	be	precise	from	what	the	agency	has	left	vague	and	indecisive.”		

Id.;	see	Zegel v.	 Bd.	 of	 Soc.	Worker	 Licensure,	 2004 ME	 31,	 ¶	 24,	 843 A.2d 18
24

(holding	that	“we	may	not	hypothesize”	about	an	agency’s	reasoning);	Gashgai	

v.	Bd.	of	Registration	in	Med.,	390 A.2d 1080,	1085	(Me. 1978) (“Courts	need	to	

know	what	 an	 agency	 has	 really	 determined	in	 order	 to	 know	 even	what	 to	

review.		We	must	know	what	a	decision	means	before	the	duty	becomes	ours	

to	 say	 whether	 it	 is	 right	 or	 wrong.”	 (citation	 omitted)	 (quotation	 marks	

omitted)).

[¶42]		In	 sum, although	 the	Commissioner	did	not	err in	accepting	 the	

presiding officer’s	 recommendation	 to	 uphold	 some	 penalty for	 lack	 of	

documentation,	the	Department’s	decision is	devoid	of	any	explanation why it	

chose	to	impose	the	penalties	at	the	cap.		The	Department failed	to	identify	any	

factors	 it	 considered,	 let	 alone	 whether	 any	 of	 those	 factors	 fell	 within	 the	

parameters	established	in	its	rule.

[¶43]	 	 We	 addressed	 a	 similar	 issue	 in	 Zegel	 v.	 Bd. of	 Soc. Worker

Licensure,	2004	ME	31,	843	A.2d	18.		 In	 that	case,	the	appellant	challenged	a	

decision	of	 the	Board	of	Social	Worker Licensure	on	 the	basis	 that	 the	Board	

had	 failed	 to	articulate	why	it	chose	 the	specific	sanctions	it	imposed	against

her.		Id. ¶	20.		The	Board	countered	“that	it	was	not	required	to	explain	why	it	

chose”	 the	 sanctions	 “over	 any	 other	 sanctions	 because	 it	 appropriately	

exercised	 its	 discretion	 in	 imposing	 the	 sanctions.”	 	Id.	 	In	 our	 decision,	 we	
25

noted	that	there	was	no	dispute	that	the	appellant	had	violated	the	pertinent	

rules	and	that	the	Board	had	the	authority to	impose	the	sanctions	it	chose.		Id.

¶¶ 14,	22.		But	we	nevertheless	vacated	the	Board’s	decision	on	the	basis	that	

the	Board	failed	“to	explain	why it	decided	to	impose	the	sanctions	it	chose.”		Id.

¶	24 (emphasis	added).		We	stated:

Both	statute	and	case	law	require	the	Board	to	set	out	findings	that	

justify	 its	 decision;	 we	 may	 not	 hypothesize	 about	 the	 Board’s	

reasoning.	 	 Because	 we	 may	 only	 determine	 whether	 the	 Board	

acted	 within	 the	 bounds	 of	 its	 discretion	 if	 we	 understand	 the	

specific	 facts	 that	justify	 the	sanctions	imposed,	we	must	require	

the	agency	to	articulate	its	reasons	for	imposing	the	sanctions.

Id.	(citations	 omitted);	see also Gashgai,	 390	 A.2d	 at	 1085;	 5	 M.R.S.	 §	 9061	

(2020).		The	same	reasoning	applies	with	equal	force	in	this	case.

[¶44]	 	 The	 Department’s	 treatment	 of	 its	 rule	 listing	 factors	 it	 may	

consider	further	underscores	the	lack	of	an	articulated	rationale	reflecting	the	

exercise	of	discretion.

[¶45]		It	is	a	fundamental	tenet	of	administrative	law	that	agencies	must	

follow	 their	own	rules	and	regulation.		Rotinsulu	v.	Mukasey,	515	F.3d	68,	72	

(1st Cir.	2008);	see	also	Ariz.	Grocery	Co.	v.	Atchison,	Topeka &	Santa	Fe Ry.	Co.,	

284	U.S.	370,	388-89	(1932)	(holding	that	an	administrative	agency	was	bound	

to	recognize	the	validity	of	its	prescribed	rules).		Dr.	Palian	contends that	the	

eight	factors listed	in	10-144	C.M.R.	ch.	101,	ch.	I,	§	1.20-3(A)(1)	“constitute	the	
26

exclusive	list”	 of	 factors	 that	 the	Department	must consider	in	 exercising	its	

discretion	 in	 setting	 the	 penalty	 between	 zero	 and	 20%.	 	 The	 Department	

responds	that	the	rule	does	not	make	consideration	of	these	factors	mandatory,	

and	it was	“not	required	to	apply	the	factors .	.	.	toward	reducing	the	sanction	

below	20[%].”		While	we	defer	to	a	reasonable	interpretation of	a	rule	by	a	state	

agency,	Beauchene,	2009	ME	24,	¶	11,	965	A.2d	866,	it	is	unclear	exactly	how	

the	Department	is	interpreting	its	 rule—whether	 the	 eight	listed	 factors	 are	

those	that it	 may	 consider	 and	 no	 others or	 whether	 it	 may	 consider	 those	

factors	along	with	others	not	listed	in	the	rule.		Instead,	the	Department	appears	

to	be	positing	that	it	need	not	consider	any factor,	whether	listed	in	the	rule	or	

not.		This	interpretation	would	not	only	render	the	rule	wholly	irrelevant	but	

suggests	that	the	Department	is	arguing that	it	may	set	the	penalty	at	the	cap	

based	on	no	factor	at	all,	thereby	abdicating	its	duty	to	apply	discretion.

[¶46]	 	 While	 the	 relevant	 question	 for	 us	 is	 what	 the	 Department	

articulated in	its	written	decision, and	not	on	which	 factors	we	speculate	 the	

Department	may have	based	its	decision	given	the	evidentiary	record,	as	noted	

above, Hooper	testified	that	no	discretion	was exercised	at	the	NOV	stage,	and	

neither	Downs	 nor	 the	 Commissioner	 testified	 at	 the	 hearing	 to	 suggest	 any	
27

factors—either	listed	in	its	rule	or	otherwise—were	considered	at	their	stages	

of	review.24

[¶47]	 	 Because	 the	 Department	 failed	 to	 explain	 its	 decision,	 and,	

therefore,	 we	 are	 unable	 to	 determine	 whether	 the	 Department	 properly	

exercised	its	discretion,	we	vacate	that	portion	of	the	judgment affirming	that	

the	Department	acted	within	its	discretion	in	imposing penalties	at	 the	20%

rate for	 the	 anesthesia-related	 claims	 and	 remand	 the	 matter	 to	 the	

Department	to	articulate	its	rationale.		See	Zegel,	2004	ME	31,	¶	24,	843 A.2d	

18;	see also	Dep’t	 of	Homeland	Sec.	v.	Regents	 of	 the	Univ.	of	Cal., 591 U.S. ___,

140 S.	Ct.	1891,	1907 (2020) (“It	is	a	foundational	principle	of	administrative	

law	 that	 judicial	 review	 of	 agency	 action	 is	 limited	 to	 the	 grounds	 that	 the	

agency	invoked	when	it	 took	the action.	 	If	 those	 grounds	 are	inadequate,	 a	

court	may	remand	for	the	agency	to	.	.	.	offer	a	fuller	explanation	of	the	agency’s	

reasoning	.	.	.	.” (citation	omitted)	(quotation	marks	omitted)).

 24		Furthermore,	at	the	hearing,	in	discussing	a	non-anesthesia-related	penalty	initially	set	at	20%,	

when	Hooper	was	asked	whether	a	particular	billing	discrepancy	was	“a	serious	mistake,”	and	she	

responded	that	it	was	“subjective,”	counsel	for	the	Department	objected,	arguing	“[T]hat’s	irrelevant	

whether	it	was	serious	or	not.		It’s	irrelevant	whether	she	considers	it	serious	or	not.		It	doesn’t	meet	

the	 rule	 requirement.”	 	 The	 gravity	 of	 an	 offense	 seems	 to	 fit	 the	 first	 two	 factors	 listed	 in	 the	

Department’s	 rule,	 10-144	 C.M.R.	 ch.	 101,	 ch.	 I,	 §	 1.20-3(A)(1)(a)-(b), and	 would	 be	 a	 logical	

consideration	in	exercising	discretion.		Not	only	is	it	not	our	role	to	“chisel”	from	the	record	a	viable	

rationale	for	an	agency	decision,	Me.	Motor	Rate	Bureau,	357	A.2d	518,	527	(Me. 1976),	this	record	is	

at	a	minimum	confused	as	to	whether	the	Department	views	numerosity	or	other	similar	aspects	of	

a	deficiency	relating	to	its	gravity	as	even	relevant.
28

[¶48]		It	would	be	helpful	for	the	Department,	in	explaining	its	rationale,	

to	provide	its	interpretation	as	to	the	import	of	its	existing	rule.		We	note	that	

by	listing	 specific	 factors	 for	 review	in	 setting	 a	 penalty,	 a rule	promulgated	

pursuant	to	the	Maine	Administrative	Procedure	Act can	set parameters for	the	

exercise	of	agency discretion that	advance the	goal	of predictable,	nonarbitrary	

decision-making.	 Cf.	Uliano	v.	Bd.	of	Env’t.	Prot.,	2009	ME	89,	¶	28,	977	A.2d	400

(“[B]y	 providing	 significant	 protection	 against	 abuses	 of	 discretion	 by	 the	

Board	in exercising	its	rule-making	authority,	the	requirement	that	the	Board	

promulgate	 rules	 subject	 to	 the Maine	 Administrative	 Procedure	 Act	

compensates	 substantially	 for	 the	 want	 of	 precise	 [legislative] guidelines.”	

(quotation	marks	omitted)).

[¶49]		In	all	other	respects,	we	affirm	the	judgment.

The	entry	is:

Judgment	 affirmed	in	 part and	 vacated	 in	 part.		

Remanded	 to	 the	Superior	Court	 for	remand	 to	

the	 Department	 of	 Health	 and	 Human	 Services	

for	 further	 proceedings	 consistent	 with	 this	

opinion.
29

Joshua	D.	Hadiaris,	Esq. (orally),	and	David	A.	Goldman,	Esq.,	Norman,	Hanson	

&	DeTroy,	LLC,	Portland,	for	appellant	Charles	Palian

Aaron	 M.	 Frey,	 Attorney	 General,	 and	 Thomas	 C.	 Bradley,	 Asst.	 Atty.	 Gen.

(orally),	Office	 of	 the	 Attorney	 General,	 Augusta,	 for	 appellee	 Department	 of	

Health	and	Human	Services

Kennebec	County	Superior	Court	docket	number	AP-2018-49

FOR	CLERK	REFERENCE	ONLY