Court Opinion

ID: 6221143
Source: CourtListenerOpinion
Date Created: 2022-02-11 21:03:04.831489+00
Date Added: 2024-06-11T08:57:20.750453
License: Public Domain

FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

                                                     Electronically Filed
                                                     Intermediate Court of Appeals
                                                     CAAP-XX-XXXXXXX
                                                     11-FEB-2022
                                                     10:26 AM
                                                     Dkt. 78 OP
                  IN THE INTERMEDIATE COURT OF APPEALS

                          OF THE STATE OF HAWAI#I

                                   ---o0o---

            FREDERICK NITTA, M.D., Appellant-Appellant, v.
            DEPARTMENT OF HUMAN SERVICES, STATE OF HAWAI#I,
            and CATHY BETTS, DIRECTOR,1 Appellees-Appellees

                             NO. CAAP-XX-XXXXXXX

           APPEAL FROM THE CIRCUIT COURT OF THE THIRD CIRCUIT
                       (CIVIL NO. 3CC16-1-0000297)

                              FEBRUARY 11, 2022

          LEONARD, PRESIDING JUDGE, NAKASONE AND MCCULLEN, JJ.

                  OPINION OF THE COURT BY MCCULLEN, J.

             This is a secondary appeal from an administrative

proceeding regarding a physician's eligibility for enhanced

payments through Medicaid's Primary Care Physician (PCP) Program.

Appellant-Appellant Frederick Nitta, M.D. (Dr. Nitta) appeals

from the Circuit Court of the Third Circuit's2 judgment and the

underlying decision and order in favor of Appellee-Appellee

      1
         Pursuant to Hawaii Rules of Evidence Rule 201 and Hawai #i Rules of
Appellate Procedure Rule 43(c)(1), we take judicial notice that Cathy Betts is
the current Director of the Department of Human Services and she is
automatically substituted as an Appellee-Appellee in place of Pankaj Bhanot.
      2
          The Honorable Greg K. Nakamura presided.
 FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Department of Human Services (DHS), State of Hawai#i.          On appeal,

Dr. Nitta challenges the Circuit Court's finding that he was

ineligible to participate in the PCP Program, thereby entitling

DHS to monetary recoupment for Medicaid enhanced payments.
                             I. BACKGROUND

          Medicaid provides medical assistance to qualifying

individuals and families, and is jointly funded and administered

by the federal and state governments.       42 U.S.C. § 1396-1.          In

2010, Congress enacted the Affordable Care Act, which included a

temporary increase in payments to particular physicians who

provided primary-care services to Medicaid patients [hereinafter,

Medicaid Enhanced Payment Statute] requiring:
          payment for primary care services (as defined in subsection
          (jj)) furnished in 2013 and 2014 by a physician with a
          primary specialty designation of family medicine, general
          internal medicine, or pediatric medicine at a rate of not
          less than 100 percent of the payment rate that applies to
          such services and physician under part B of subchapter XVIII
          (or, if greater, the payment rate that would be applicable
          under such part if the conversion factor under section
          1395w-4(d) of this title for the year involved were the
          conversion factor under such section for 2009)[.]

42 U.S.C. § 1396a(a)(13)(C) (emphasis added).

          At the federal level, the Centers for Medicare and

Medicaid Services (CMS) administers the Medicaid program, and

promulgated its rule relating to 42 U.S.C. § 1396a(a)(13)(C), the

Final Medicaid Payment Rule.      42 C.F.R. § 447.400.      Requiring

board certification or a sixty-percent billing threshold, CMS's

Final Medicaid Payment Rule provided:
          (a) States pay for services furnished by a physician as
          defined in § 440.50 of this chapter, or under the personal
          supervision of a physician who self-attests to a specialty
          designation of family medicine, general internal medicine or
          pediatric medicine or a subspecialty recognized by the
          American Board of Medical Specialties (ABMS), the American
          Board of Physician Specialties (ABPS) or the American
          Osteopathic Association (AOA). Such physician then attests
          that he/she:

                                    2
  FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
                   (1) Is Board Certified with such a specialty or
                   subspecialty and/or
                   (2) Has furnished evaluation and management services
                   and vaccine administration services under codes
                   described in paragraph (b) of this section that equal
                   at least 60 percent of the Medicaid codes he or she
                   has billed during the most recently completed CY or,
                   for newly eligible physicians, the prior month.

42 C.F.R. § 447.400(a).3

             At the state level, DHS, through its Med-QUEST

division, is responsible for administering the Medicaid PCP

Program in Hawai#i.       42 C.F.R. § 447.400.       DHS's online PCP

Attestation Form relied on and tracked CMS's Final Medicaid

Payment Rule as follows:
             Increases in reimbursement are limited to physicians who
             attest that they are either:

             1.    Practicing in the specialty of family medicine,
                   general internal medicine, or pediatric medicine, or a
                   subspecialty of one of these specialties recognized by
                   the American Board of Medical Specialties, the
                   American Osteopathic Association, or the American
                   Board of Physician Specialties (refer to application
                   form); and

             2.    a.     Are board certified in the eligible specialty in
                          which they practice, or

                   b.     Have billed at least 60% of Medicaid services
                          provided, using the E&M vaccine administration
                          codes list above, during calendar year 2012.
                          For newly eligible physicians, the 60% billing
                          requirement will apply to Medicaid claims for
                          the prior month.

Additionally, the instructions for DHS's Attestation Form stated

that the "attestation may NOT be completed by anyone on the

provider's behalf.        Attestations that are submitted by anyone

      3
          As a note, paragraph (c), not (b), list the applicable codes:
             Primary care services designated in the Healthcare Common
             Procedure Coding System (HCPCS) are as follows:
             (1) Evaluation and Management (E&M) codes 99201 through
             99499.
             (2) Current Procedural Terminology (CPT) vaccine
             administration codes 90460, 90461, 90471, 90472, 90473 and
             90474, or their successor codes.
42 C.F.R. § 447.400(c).

                                        3
  FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

other than the individual provider named in the attestation

constitutes a false claim for Medicaid reimbursement which may

result in civil and criminal penalties . . . ."

            Dr. Nitta, a board certified Obstetrician-Gynecologist

(OB-GYN) who has practiced as both an OB-GYN and a PCP for more

than twenty years in Hilo, Hawai#i, enrolled in the PCP Program.

Dr. Nitta testified that he treats his patients for any ailments,

such as strokes and heart attacks, because his patients do not

have other doctors.4      Dr. Nitta also testified, "I've been

providing primary care in the Big Island, not because I wanted

to, it's because the patients don't have doctors. . . .             I have

no choice.    I have to do it."      He estimated that over 90 percent

of his patients are eligible for Medicaid or Medicare.

            At the suggestion of an AlohaCare representative, a

staff member from Dr. Nitta's office completed the online PCP

Attestation Form on DHS's website.         Dr. Nitta, himself, was

unaware he was participating in the program until he received

DHS's July 7, 2015 letter notifying him that he was ineligible

for the program.     In that letter, DHS informed Dr. Nitta that it

found him ineligible because:        (1) "[p]ractice characteristics

show [he was] not practicing in one of the designated specialties

or sub-specialties[;]" (2) "Med-QUEST has no record that [he was]

board certified in one of the designated specialties or sub-

specialties[;]" and (3) "[a] review of claims history shows the

      4
         To that point, according to the amicus curiae brief filed by the
Hawaii Medical Association and the American Medical Association, "it can be
two to three times more difficult to find a primary care physician" on the
island of Hawai#i, forcing residents to seek care at emergency rooms.

                                      4
 FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

designated codes . . . did not comprise at least 60% of all paid

Medicaid claims billed to Med-QUEST."

            DHS subsequently demanded repayment in the amount of

$205,940.13, prompting Dr. Nitta to request an administrative

hearing.    Following the administrative hearing, the hearings

officer found that Dr. Nitta (1) was not board certified in one

of the specified specialties or recognized subspecialties,

(2) was not known in the community as a PCP practicing in the

specified specialties or recognized subspecialties, (3) did not

self-attest, and (4) did not meet the sixty-percent billing

threshold.    The hearings officer then concluded that DHS

correctly determined Dr. Nitta "was not eligible to participate

in the [PCP] Program as set forth in Title 42, Code of Federal

Regulations §447.400," and that there was an overpayment of

$205,220.86.

            Dr. Nitta filed exceptions and administratively

appealed.    DHS's deputy director sustained the hearings officer's

decision and adopted it as DHS's final decision.

            On appeal to the Circuit Court, Dr. Nitta attached to

his opening brief the complaint in Averett v. U.S. Department of

Health and Human Services, a case in the United States District

Court, Middle District of Tennessee, filed by a group of

Tennessee doctors.    In its answering brief, DHS asserted, among

other things, that the plaintiffs in Averett were not similarly

situated to Dr. Nitta and, thus, were distinguishable.

            Relying on the Medicaid Enhanced Payment Statute, CMS's

Final Medicaid Payment Rule, and DHS's Self Attestation

Instruction, the Circuit Court found that Dr. Nitta failed to

                                  5
 FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

self-attest that he satisfied the PCP Program's requirements, and

Dr. Nitta was not board certified in one of the specialties.             In

light of those findings, the Circuit Court concluded there was no

need to reach the sixty-percent billing threshold issue.           The

Circuit Court then found an overpayment of $205,338.88.

Dr. Nitta filed a timely appeal with this Court.

          While this appeal was pending, the United States Court

of Appeals for the Sixth Circuit rendered its opinion in Averett

v. United States Dep't of Health & Hum. Servs, 943 F.3d 313, 319

(6th Cir. 2019), affirming the lower court's decision

invalidating CMS's Final Medicaid Payment Rule.         Averett, 306

F. Supp. 3d 1005, 1020-21 (M.D. Tenn. 2018).         We ordered, and the

parties filed, supplemental briefing as to the effect, if any,

Averett has on this appeal.     Dr. Nitta argues that, based on

Averett, he was entitled to enhanced payments.         DHS, however,

avers that Averett supports its conclusion that Dr. Nitta was

"never qualified for the program because he did not practice in a

qualified specialty by his own self designation on his Medicaid

provider application and his [National Provider Identifier]

application."
                       II. STANDARD OF REVIEW

          This court must determine whether the circuit court was

right or wrong in its decision, applying the standards set forth

in Hawaii Revised Statutes (HRS) § 91-14(g) (2012) to the

agency's decision.    HRS § 91-14(g) provides:
                Upon review of the record the court may affirm the
          decision of the agency or remand the case with instructions
          for further proceedings; or it may reverse or modify the
          decision and order if the substantial rights of the
          petitioners may have been prejudiced because the
          administrative findings, conclusions, decisions, or orders
          are:

                                    6
 FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
                (1)   In violation of constitutional or statutory
                      provisions; or
                (2)   In excess of the statutory authority or
                      jurisdiction of the agency; or

                (3)   Made upon unlawful procedure; or
                (4)   Affected by other error of law; or

                (5)   Clearly erroneous in view of the reliable,
                      probative, and substantial evidence on the whole
                      record; or
                (6)   Arbitrary, or capricious, or characterized by
                      abuse of discretion or clearly unwarranted
                      exercise of discretion.

"Under HRS § 91-14(g), conclusions of law are reviewable under

subsections (1), (2), and (4); questions regarding procedural
defects under subsection (3); findings of fact under subsection

(5); and an agency's exercise of discretion under subsection

(6)."   United Pub. Workers, AFSCME, Local 646, AFL-CIO, v.

Hanneman, 106 Hawai#i 359, 363, 105 P.3d 236, 240 (2005)

(brackets in original omitted) (quoting Paul's Elec. Serv., Inc.

v. Befitel, 104 Hawai#i 412, 416, 91 P.3d 494, 498 (2004)).
                            III. DISCUSSION

           In this appeal, Dr. Nitta raises three points of error

challenging the finding that he was disqualified from the PCP

Program.   Dr. Nitta contends that:      (1) his staff completing the

Attestation Form was a "mere technical defect;" (2) the statutory

and regulatory framework was vague and ambiguous, the CMS

regulations and guidance were arbitrary and capricious, and the

DHS Attestation Form and Memoranda included misleading and

incorrect statements; and (3) "the [sixty-percent] billing

threshold and overpayment calculations were based upon redacted

data that [he] was not able to fairly address."            Starting with

                                    7
 FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Dr. Nitta's challenge to the validity of CMS's Final Medicaid

Payment Rule, we look to the federal courts for guidance.
A.    CMS's Final Medicaid Payment Rule Was Invalid

           In Averett, the plaintiffs were twenty-one Tennessee

physicians practicing family medicine, mostly in disadvantaged

rural areas, who received increased payments in 2013 and 2014 for

their participation in the Tennessee Medicaid program (TennCare).

Averett, 306 F. Supp. 3d at 1011.     Each physician attested that

he or she was eligible for enhanced payments under the Medicaid

Enhanced Payment Statute and the Final Medicaid Payment Rule.

Id.   None of the physicians were board certified, so they

attested to having the required "primary specialty designation"

based upon meeting the sixty-percent primary care services

billing threshold.   Id.   Each physician was later audited and

found to have not met the sixty-percent billing threshold.

TennCare thus sought recoupment from the physicians.     Id.

           The Sixth Circuit first noted that Medicare and

Medicaid providers were required to complete forms where they

designated a primary specialty.    Averett, 943 F.3d at 315.   The

Sixth Circuit then addressed whether CMS correctly "interpreted

the phrase 'primary specialty designation' as used in § 1396a(a),

to mandate not only that the physician have the requisite

designation of primary specialty, but also that the physician

either be board-certified in that specialty or satisfy the 60-

percent-of-billings requirement."     Id. at 317.   In doing so, it

compared the Medicare and Medicaid statutes.

                                  8
 FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

           Under Medicare, to be eligible for the enhanced

payments, "a physician must have had a primary specialty

designation of certain primary-care services (for example, family

medicine or internal medicine)."       Id. at 315 (internal quotation

marks omitted).   "The Medicare provision also required physicians

to attest that primary-care services accounted for at least 60

percent of their recent billings under Medicare."      Id. at 315-16

(internal quotation marks omitted).      CMS "interpreted the phrase

'a physician . . . who has a primary specialty designation' to

refer simply to physicians who had enrolled in Medicare with a

primary specialty designation of one of the specialties recited

in § 1395l(x)(2)(A)(i)(I)," and per the Medicare statute, CMS's

rule required a sixty-percent billing threshold.      Id. at 316

(some internal quotation marks & brackets omitted).

           Under Medicaid, however, the statute "required a

physician only to have a primary specialty designation of one of

those same primary-care services . . . ."      Id. (internal

quotation marks omitted).   But, CMS interpreted the phrase "a

physician with a primary specialty designation" as requiring "the

physician to show that (1) she was Board certified in that

specialty or that (2) 60 percent of her recent Medicaid billings

were for certain primary-care services . . . ."      Id.

           Employing traditional tools of statutory construction,

the Sixth Circuit determined that the term "primary specialty"

simply refers to "the physician's principal area of practice or

expertise," and "designate" means "to indicate or specify; point

out."   Id. at 317 (brackets omitted).     It then determined that

Congress, in both the Medicare provision and Medicaid provision

                                   9
 FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

of the Affordable Care Act, "used precisely the same term--

'primary specialty designation'--in precisely the same context of

providing a temporary bump in payments to primary-care

providers."   Id.

           Turning to the sixty-percent billing threshold, the

Sixth Circuit explained that "the actual content of the Final

Medicaid Payment Rule only underscores its lack of any statutory

basis," as Congress included a sixty-percent billing threshold in

the Medicare Enhanced Payment Statute but chose to omit that

requirement in the Medicaid Enhanced Payment Statute.    Id. at

318.   And "[o]mitting a phrase from one statute that Congress has

used in another statute with a similar purpose virtually commands

the inference that the two statutes have different meanings."

Id. (internal quotation marks omitted) (quoting Prewett v. Weems,

749 F.3d 454, 461 (6th Cir. 2014)).

           By enforcing the sixty-percent billing threshold

requirement against Medicaid physicians in its Final Medicaid

Payment Rule, the Sixth Circuit held that CMS "overlooked that,

where a statute's language carries a plain meaning, the duty of

an administrative agency is to follow its commands as written,

not to supplant those commands with others it may prefer."

Averett, 943 F.3d at 319 (citation, internal quotation marks, and

brackets omitted); see also, e.g., Hadden v. United States, 661

F.3d 298, 303 (6th Cir. 2011) (explaining that the question

whether "to treat Medicaid [physicians] differently from Medicare

ones, is for Congress to decide").

                                10
 FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

          In sum, the Sixth Circuit held that the phrase "a

physician with a primary specialty designation" means "a

physician who has himself designated, as his primary specialty,

one of the specialties recited in those provisions," and that

there was no sixty-percent billing threshold.    Id. at 319.   The

Sixth Circuit further held that the Final Medicaid Payment Rule

was "flatly inconsistent" with Congress' intent and, thus, was

invalid. Id.

          In addressing TennCare's argument that invalidating

CMS's rule did not entitle the doctors to keep the enhanced

payments, the Sixth Circuit stated, "this suit is not so much

about whether these doctors are 'entitled to keep' monies paid to

them years ago, as about whether the government is entitled to

take those monies away."    Averett, 943 F.3d at 317.   "The

payments at issue have been the plaintiff's property for years;

the Tennessee Medicaid agency sought to deprive the plaintiffs of

that property solely by means of enforcing the Final Medicaid

Payment Rule[,]" which was deemed invalid.    Id.

          We find Averett particularly instructive and adopt the

Sixth Circuit's analysis.    See In re Gardens at W. Maui Vacation

Club v. Cty. of Maui, 90 Hawai#i 334, 343-44, 978 P.2d 772, 781-

82 (1999) (applying the Sixth Circuit's analysis to determine

whether county ordinance was unconstitutionally vague); State v.

Lee, 75 Haw. 80, 103, 856 P.2d 1246, 1259 (1993) (adopting the

federal courts' analyses to ascertain whether state law was void

for vagueness).

                                 11
 FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

B.   DHS's Attestation Form Was Invalid

          DHS's Attestation Form specifically relied on CMS's

Final Medicaid Payment Rule stating, "Federal regulation 42 CFR

447.400 requires that the physician must attest to practicing one

of the designating specialities or subspecialties and must attest

that s/he" is board certified or meets the sixty-percent billing

threshold.   But, as the Sixth Circuit explained in Averett, the

Medicaid Enhanced Payment Statute simply requires a physician to

have a "primary specialty designation" in family, internal, or

pediatric medicine.   Averett, 943 F.3d at 319; 42 U.S.C. §

1396a(a)(13)(C).   And it is the "physician who has himself

designated, as his primary specialty, one of the specialties

recited in those provisions."    Averett, 943 F.3d at 319.

          Because DHS's Attestation Form, like CMS's Final

Medicaid Payment Rule, conflicts with the Medicaid Enhanced

Payment Statute, it too was invalid and cannot be the basis for

which DHS may require repayment.      Camara v. Agsalud, 67 Haw. 212,

216, 685 P.2d 794, 797 (1984) (commenting that, in order for an

agency's decision to be granted deference, it must be consistent

with the legislative purpose).

          Since the Circuit Court relied on DHS's Attestation

Form to determine that Dr. Nitta failed to self attest and relied

on CMS's Final Medicaid Payment Rule to determine that Dr. Nitta

was not board certified in one of the listed specialties, the

Circuit Court's conclusion that Dr. Nitta was ineligible under

the Medicaid Enhanced Payment Statute was likewise wrong.     See

                                 12
 FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Averett, 943 F.3d at 319.    Based on our disposition, we need not

address Dr. Nitta's remaining points.
                            IV. CONCLUSION

          The Circuit Court's May 19, 2017 judgment and the

underlying April 12, 2017 decision and order is vacated.          The DHS

Administrative Appeals Office's July 25, 2016 Final Decision on

Administrative Appeal is also vacated, and this case is remanded

to the DHS Administrative Appeals Office for further proceedings

as may be necessary.

On the briefs:                         /s/ Katherine G. Leonard
                                       Presiding Judge
Eric A. Seitz
Della A. Belatti                       /s/ Karen T. Nakasone
Bronson Avila                          Associate Judge
for Appellant-Appellant
                                       /s/ Sonja M.P. McCullen
Heidi M. Rian                          Associate Judge
Lili A. Young
Deputy Attorneys General
for Appellee-Appellee
Department of Human Services,
State of Hawai#i

Jeffrey S. Portnoy
(Cades Schutte)
for Amicus Curiae
Hawaii Medical Association and
American Medical Association

                                  13