Opinion ID: 2762875
Heading Depth: 4
Heading Rank: 2

Heading: Coventry

Text: Whether Coventry was a necessary party to the district court appeal is likewise dependent upon whether it was a “party of record” at the State fair hearing.32 Coventry contends that it was not a “party of record,” but should have been. We 25 Neb. Rev. Stat. § 68-908(1) (Cum. Supp. 2014). 26 Neb. Rev. Stat. § 68-905 (Reissue 2009). 27 § 68-908(2)(b). 28 McDougle, supra note 20. 29 Neb. Rev. Stat. § 68-910(2) (Reissue 2009). 30 Neb. Rev. Stat. § 68-914(1) (Cum. Supp. 2014). 31 Neb. Rev. Stat. § 68-912(1)(a) (Cum. Supp. 2014). 32 See § 84-917(2)(a)(i). Nebraska Advance Sheets 750 289 NEBRASKA REPORTS c­ onclude that the question of whether Coventry was a “party of record” at the State fair hearing and thus a necessary party in the district court appeal is a jurisdictional issue which does not involve a factual dispute; thus, we must resolve the question independently on the basis of the record and applicable law.33 The bill of exceptions from the State fair hearing proceedings does not specifically identify any “parties of record.” While this creates some ambiguity on the point, the failure of the Department to make this important determination on the record in the administrative proceeding does not resolve the jurisdictional issue. As we noted in McDougle,34 there is no statutory directive that the phrase “parties of record” for purposes of judicial review of an administrative determination is limited to those parties named in the underlying administrative proceeding. This position is consistent with holdings by other state courts. In an Oklahoma case, the court found that even though two entities were not named and joined as parties in the caption of the administrative action, they both appeared, participated, and were entitled by law to participate; thus, they were parties of record and failure to join them on appeal was a jurisdictional defect.35 Similarly, a Washington court defined a party of record as a person “‘to whom the agency action is specifically directed,’” or a person “‘named as a party to the agency proceeding or allowed to intervene or participate as a party in the agency proceeding.’”36 For two principal reasons, we conclude Coventry was a “party of record” at the State fair hearing. First, as an MCO, Coventry was required by federal law to be a party to the State fair hearing. Because Nebraska has elected to participate in the 33 See McDougle, supra note 20. 34 Id. 35 Oklahoma Foundation v. Dept. of Central, 180 P.3d 1 (Okla. Civ. App. 2007). 36 Litowitz v. Growth Management Bd., 93 Wash. App. 66, 69, 966 P.2d 422, 423 (1998) (emphasis supplied). See Wash. Rev. Code Ann. § 34.05.010(12)(a) and (b) (West Cum. Supp. 2015). Nebraska Advance Sheets SHAFFER v. NEBRASKA DEPT. OF HEALTH & HUMAN SERVS. 751 Cite as 289 Neb. 740 federal Medicaid program, it must comply with standards and requirements imposed by federal statutes and regulations.37 A federal Medicaid regulation governing resolution of grievances and appeals specifically provides: “The parties to the State fair hearing include the MCO . . . as well as the enrollee and his or her representative . . . .”38 Second, it is clear from the administrative record that Coventry participated in the State fair hearing and was treated as a party by the hearing officer. Pursuant to § 84-909, the Department has adopted rules and regulations governing the appeals process in Medicaid cases.39 Pursuant to these regulations, a Medicaid client may request a State fair hearing after denial or limitation of an authorization,40 as Shaffer did in this case. The parties to the fair hearing include “the petitioner or person by whom a contested case is brought and the Department or other decision maker whose decision is subject to appeal or a person or party granted leave to intervene.”41 The “decision . . . subject to appeal” was Coventry’s decision to deny Shaffer’s request for coverage of PDN care to be provided by Delores. Coventry appeared at the fair hearing to explain and defend its decision. Its representatives presented evidence, cross-examined witnesses, entered into stipulations, and presented arguments. At the beginning and conclusion of the hearing, the hearing officer referred to Shaffer and Coventry as the “parties.” We conclude as a matter of law that Coventry was a “party of record” at the State fair hearing and therefore a necessary party pursuant to § 84-917(2)(a)(i) in the subsequent appeal to the district court. Coventry prevailed at the administrative proceeding, but was not given an opportunity to participate in or be heard in the district court appeal that resulted in a reversal 37 See, Thorson v. Nebraska Dept. of Health & Human Servs., 274 Neb. 322, 740 N.W.2d 27 (2007); Neb. Rev. Stat. § 68-906 (Cum. Supp. 2014). 38 42 C.F.R. § 438.408(f)(2). 39 465 Neb. Admin. Code, ch. 6 (1995); 482 Neb. Admin. Code, ch. 7 (2010). 40 482 Neb. Admin. Code § 7-003(2). 41 465 Neb. Admin. Code § 6-004.02. Nebraska Advance Sheets 752 289 NEBRASKA REPORTS of the administrative decision. Because the presence of a necessary party is jurisdictional, the failure to make Coventry a party to the appeal deprived the district court of jurisdiction. In light of this determination, we are required to vacate the judgment of the district court and therefore do not address Coventry’s third assignment of error.