Court Opinion

ID: 1061930
Source: CourtListenerOpinion
Date Created: 2013-10-09 19:07:39.440018+00
Date Added: 2024-06-11T12:40:42.927925
License: Public Domain

COURT OF APPEALS OF VIRGINIA

Present: Judges Frank, Haley and Powell
Argued at Richmond, Virginia

VIRGINIA DEPARTMENT OF
 MEDICAL ASSISTANCE SERVICES
                                                                   OPINION BY
v.     Record No. 1634-10-2                                   JUDGE ROBERT P. FRANK
                                                                   MAY 31, 2011
PATIENT TRANSPORT SYSTEMS, INC.

                FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND
                             Margaret P. Spencer, Judge

               Elizabeth A. McDonald, Special Counsel (Kenneth T. Cuccinelli, II,
               Attorney General; David E. Johnson, Deputy Attorney General;
               Kim F. Piner, Senior Assistant Attorney General, on briefs), for
               appellant.

               Jonathan M. Joseph (Belinda D. Jones; Christian & Barton, L.L.P.,
               on briefs), for appellee.

       In this administrative appeal under the Virginia Administrative Appeals Act (VAPA)

Code § 2.2-4027, Virginia Department of Medical Assistance Services (DMAS) appeals the

decision of the circuit court which sets aside the decision of DMAS in favor of DMAS for its

failure to file a proper “case summary” as required by 12 VAC 30-20-540(B). For the reasons

stated, we affirm the circuit court’s judgment.

                                        BACKGROUND

       DMAS determined that Patient Transport Systems (Transport) was overpaid, i.e., that

medical transportation ambulance service providers had been erroneously receiving co-insurance
and deductible payments from cross-over claims for dual eligibles1 above the authorized

payment level authorized by federal law and mandated by 12 VAC 30-80-170.

       By letter dated September 15, 2008, DMAS notified Transport of the overpayment,

enclosing a computer disc (CD) with the letter. The CD spreadsheet listed in columns:

“Reference Number,” “Recipient ID,” “Paid Date,” “Procedure,” “Units,” “Service Date,” and

“Paid Amount,” with numbers or dates under each column. While the September 15, 2008 letter

indicated the CD included the amount of overpayment, the exhibit listing the contents of the CD

shows no such listing.

       Transport appealed this overpayment determination through the two levels of agency

review; the informal fact finding conference (IFFC) (Code § 2.2-4019) where DMAS prevailed

and the formal agency hearing (Code § 2.2-4020). At the latter level Transport challenged the

adequacy of DMAS’s case summary, citing 12 VAC 30-20-540(B).

       The hearing officer found in favor of DMAS but indicated he did not have the authority

to rule on the adequacy of the case summary. In DMAS’s final agency decision, the director

remanded the matter to the hearing officer to make a recommendation concerning the adequacy

of the case summary. The hearing officer issued a revised decision dated November 20, 2009,

concluding the case summary failed to meet the requirements of 12 VAC 30-20-540(B),

specifically, that the case summary “failed to address each individual adjustment in the recovery

sought by DMAS[,]” and “[t]he computer disk accompanying the September 15, 2008 recovery

letter was not a part of the DMAS informal case summary.”

       1
         Dual eligibles are those individuals who are eligible for coverage by both the Medicare
and Medicaid program. Medicare “crossover” claims are those claims for which the
transportation provider first bills Medicare for payment, and then the claims automatically “cross
over” to Medicaid for any appropriate additional payment.

                                               -2-
        The hearing officer cited the testimony of Robert Chapman, a DMAS employee who

prepared the CD, who stated the CD simply showed the amounts DMAS paid for Medicare

co-insurance and deductibles. Chapman testified he did not analyze the claims, nor did the CD

state DMAS’s position for each adjustment. The hearing officer also referred to the testimony of

Tom Lawson, DMAS transportation contract manager, who testified he did not mail the case

summary to Transport.

        The acting director’s final agency decision overruled the hearing officer’s finding, and

determined as a matter of law that DMAS’s case summary complied with 12 VAC 30-20-540(B)

and that the hearing officer’s conclusion was not supported by the evidence. The director found

the CD was incorporated by reference into the case summary. Further, the director concluded

that the regulation does not require mailing by United States Postal Service, but can be

accomplished by mailing electronically, as was done in this case.

        Transport appealed the final agency decision to circuit court. The circuit court overruled

that decision in favor of Transport, holding that the case summary did not incorporate the CD,

and even if the summary incorporated the CD, the case summary did not comply with the

requirements of 12 VAC 30-20-540(B). The circuit court opined that the CD “was neither

attached as an exhibit to the case summary nor incorporated by reference within the case

summary.” Further, the circuit court concluded that neither the CD nor the case summary

contained a detailed factual basis for each adjustment, thus the agency “had no evidential support

for its conclusions . . . .”

        This appeal follows.

                                           ANALYSIS

        The narrow issue raised in this appeal is whether the case summary submitted by DMAS

comported with the requirements of regulation 12 VAC 30-20-540(B), which provides:

                                               -3-
               DMAS shall file a written summary with the DMAS Appeals
               Division within 30 days of the filing of the provider’s notice of
               informal appeal. DMAS shall mail a complete copy of the case
               summary to the provider on the same day that the case summary is
               filed with the DMAS Appeals Division. The case summary shall
               address each adjustment, patient, service date, or other disputed
               matter and shall state DMAS’ position for each adjustment,
               patient, service date, or other disputed matter. The case summary
               shall contain the factual basis for each adjustment, patient, service
               date, or other disputed matter and any other information, authority,
               or documentation DMAS relied upon in taking its action or making
               its decision. Failure to file a written case summary with the
               Appeals Division in the detail specified within 30 days of the filing
               of the provider’s notice of informal appeal shall result in dismissal
               in favor of the provider on those issues not addressed in the detail
               specified.

       To summarize, the case summary shall address each adjustment, patient, service date, or

other disputed matters, and shall state DMAS’s position on each of the above. The case

summary shall contain the factual basis for each adjustment, patient, service date or other

disputed matter and any other information, authority, or documentation DMAS relied upon in

taking its action or making its decision.

       DMAS raises three issues on appeal, alleging error in the circuit court’s finding: 1) there

was no evidentiary support in the record to support the agency’s finding that the case summary

incorporated the CD; 2) that the case summary did not satisfy the requirements of

12 VAC 30-20-540(B); and 3) the agency rewrote the regulation and thus did not act in

accordance with the law.

                                        Standard of Review

       Our analysis begins with the applicable standard of review to determine whether the case

summary complies with the requirements of 12 VAC 30-20-540(B).

       “The Virginia Administrative Process Act authorizes judicial review of agency

decisions.” Avante at Roanoke v. Finnerty, 56 Va. App. 190, 197, 692 S.E.2d 277, 280 (2010);

Code § 2.2-4027. Under well established principles governing the appeal of such decisions, “the
                                               -4-
burden is upon the appealing party to demonstrate error.” Carter v. Gordon, 28 Va. App. 133,

141, 502 S.E.2d 697, 700-01 (1998). “Our review is limited to determining (1) ‘[w]hether the

agency acted in accordance with law;’ (2) ‘[w]hether the agency made a procedural error which

was not harmless error;’ and (3) ‘[w]hether the agency had sufficient evidential support for its

findings of fact.’” Finnerty, 56 Va. App. at 197, 692 S.E.2d at 280 (quoting Johnston-Willis,

Ltd. v. Kenley, 6 Va. App. 231, 242, 369 S.E.2d 1, 7 (1988)).

       In Board of Supervisors v. State Bldg. Code Tech. Review Bd., 52 Va. App. 460, 663

S.E.2d 571 (2008), we held:

                [C]ourts give “great deference” to an agency’s interpretation of its
                own regulations. See Holtzman Oil Corp. v. Commonwealth, 32
                Va. App. 532, 539, 529 S.E.2d 333, 337 (2000). This deference
                stems from Code § 2.2-4027, which requires that reviewing courts
                “take due account” of the “experience and specialized competence
                of the agency” promulgating the regulation. Va. Real Estate Bd. v.
                Clay, 9 Va. App. 152, 160-61, 384 S.E.2d 622, 627 (1989)
                (interpreting former Code § 9-6.14:17). Even so, “deference is not
                abdication, and it requires us to accept only those agency
                interpretations that are reasonable in light of the principles of
                construction courts normally employ.” EEOC v. Arabian
                American Oil Co., 499 U.S. 244, 260 (1991) (Scalia, J.,
                concurring).

                        No matter how one calibrates judicial deference, the
                administrative power to interpret a regulation does not include the
                power to rewrite it. When a regulation is “not ambiguous,”
                judicial deference “to the agency’s position would be to permit the
                agency, under the guise of interpreting a regulation, to create de
                facto a new regulation.” Christensen v. Harris County, 529 U.S.
                576, 588 (2000).

Id. at 467, 663 S.E.2d at 574.

       The circuit court correctly held this regulation is unambiguous. 2 As stated above, the

regulation clearly states what the case summary must contain. The case summary either

complies with the regulation or it does not. No interpretation by the agency is necessary, nor

       2
           In its reply brief, DMAS acknowledges the regulation is unambiguous.
                                              -5-
does the agency’s specialized competence govern our review. “However, when an issue

involves a pure question of statutory interpretation, that issue does not invoke the agency’s

specialized competence but is a question of law to be decided by the courts.” Alliance to Save

the Mattaponi v. Commonwealth Dep’t of Envt’l Quality, 270 Va. 423, 442, 621 S.E.2d 78, 88

(2005) (other citations omitted); see also Avalon Assisted Living Facilities v. Zager, 39 Va. App.

484, 503, 574 S.E.2d 298, 307 (2002) (noting that principles of statutory construction apply with

equal force “to the interpretation of regulations adopted by an administrative agency”).

                        Incorporation of the CD into the Case Summary 3

       DMAS contends the case summary provided to Transport incorporated by reference the

CD that was sent to Transport with the notification letter of September 15, 2008. DMAS reasons

that the case summary provided to Transport on November 13, 2008 refers to the CD twice.

Additionally, the case summary listed the September 15, 2008 letter as an exhibit, and that letter

referred to the CD twice. Thus, concludes DMAS, because the CD was mentioned four times in

the case summary, it was therefore incorporated by reference into the case summary. DMAS

also points out that Transport was at all times in possession of the CD and had sufficient

knowledge of its contents.

       Transport responds that the regulation does not allow an agency to rely on “information

previously provided,” and more importantly, the passing references to the CD within the body of

the case summary and in the exhibits are not sufficient to put Transport on notice of DMAS’s

intent to include the contents of the CD in its case summary.

       In its September 15, 2008 letter, DMAS advised Transport of the alleged overpayment

and demanded payment. Transport appealed this decision and requested an IFFC under Code

       3
         The parties were directed to file supplemental briefs, including additional authority, on
the issue of whether the CD was incorporated by reference into the case summary.

                                               -6-
§ 2.2-4019. Under 12 VAC 30-20-540(A), Transport was required to file a written notice of

appeal which identified the issues being appealed. At that point in the appeal process, Transport

could only rely on the September 15, 2008 letter, including the CD, to identify those issues.

       Under 12 VAC 30-20-540(B), DMAS then was required to file a written case summary

within thirty days of the filing of the notice of appeal.

       From the express terms of the regulation, it is clear that the case summary must contain

more detailed information than the original agency adjustment letter. If the latter satisfied the

regulation, the requirements of subsection (B) would be meaningless and there would be no need

for the case summary. See Hubbard v. Henrico Ltd. Pshp., 255 Va. 335, 340, 497 S.E.2d 335,

338 (1998) (“[E]very part of a statute is presumed to have some effect and no part will be

considered meaningless unless absolutely necessary.”).

       DMAS’s argument improperly focuses on what information Transport had in its

possession prior to its notice of appeal. The regulation focuses on what information must be

provided by the agency after the notice of appeal.

       Transport responds that the regulation does not allow an agency to rely on “information

previously provided.” It contends that the unambiguous language of the regulation, i.e., that the

“case summary shall contain the factual basis for each adjustment . . .” and the “case summary

shall address each adjustment . . .” precludes the agency from relying on information previously

provided the provider. We agree with Transport.

       The circuit court concluded:

                       The cited regulation here states the factual basis for each
               matter shall be contained in the case summary. The regulation
               does not state the factual basis for each matter “may be included in
               a document or CD accompanying an exhibit previously mailed to
               the provider.” The regulation contains the words “shall address,”
               “shall state” and “shall contain” rather than the words “shall be
               found in information previously provided.”

                                                 -7-
       “A primary rule of statutory construction is that courts must look first to the language of

the statute. If a statute is clear and unambiguous, a court will give the statute its plain meaning.”

Loudoun County Dep’t of Social Servs. v. Etzold, 245 Va. 80, 85, 425 S.E.2d 800, 802 (1993).

“Generally, the words and phrases used in a statute should be given their ordinary and usually

accepted meaning unless a different intention is fairly manifest.” Woolfolk v. Commonwealth,

18 Va. App. 840, 847, 447 S.E.2d 530, 534 (1994). These principles of statutory interpretation

apply with equal force “to the interpretation of regulations adopted by an administrative agency

pursuant to statutory authority granted it by the legislature.” Avalon Assisted Living, 39

Va. App. at 503, 574 S.E.2d at 307.

       The regulation expressly mandates that the case summary must “contain” certain

information. From this unambiguous language, we conclude that DMAS must include, not

incorporate, any information or authority it relies upon in taking its action or making its decision.

Therefore, if the desired information is not within the case summary itself, it is not to be

considered as part of the case summary.

       We find that the CD and its contents were not contained within the case summary as

contemplated by 12 VAC 30-20-540(B). The case summary did not include the CD itself as an

exhibit, nor did it contain the contents of the CD.

                        Sufficiency of the Case Summary without the CD

       DMAS conceded at oral argument that the case summary, by itself, was not sufficient to

satisfy the requirements of 12 VAC 30-20-540(B). An appellant’s concession of law “qualifies

either as a waiver for purposes of Rule 5A:18 or as an express withdrawal of an appellate

challenge to a trial court judgment.” Logan v. Commonwealth, 47 Va. App. 168, 173 n.4, 622

S.E.2d 771, 773 n.4 (2005). Either way, we accept appellant’s concession and do not address

this issue on appeal. Id.

                                                -8-
                                        Notice to Transport

       DMAS also maintains that Transport, by virtue of the September 15, 2008 letter, with the

attached CD, had notice of any contrary fact basis or information in the possession of the agency

that can be relied upon in making an adverse decision. DMAS points to Transport’s efforts to

address individual claims that were listed on the CD at the IFFC, concluding Transport had

specific details required by the regulation. Essentially, DMAS contends that pre-hearing notice

is sufficient to comply with the regulation.

       Even if we accept DMAS’s position that the September 15, 2008 letter was adequate

notice to Transport, DMAS’s argument fails. We note that we have already held that the case

summary in its entirety is not sufficient to satisfy 12 VAC 30-20-540(B). It is self-evident that if

the whole of the case summary is not adequate, a mere component of the case summary is not

sufficient to comply with the regulation.

                                               Mailing

       DMAS also challenges the circuit court’s finding that it did not “mail” the case summary

to Transport, as required by the regulation. It is uncontroverted that the case summary was

timely electronically mailed to Transport. DMAS contends electronic mailing satisfies the

mailing requirement. It concludes that even if the requirement was not met, the regulation does

not permit dismissal for the failure. 4 Since we conclude that the case summary does not comply

with the regulation, we need not address this issue.

       4
          12 VAC 30-20-540(B) provides in part that “failure to file a written case summary . . .
shall result in dismissal in favor of the provider on those issues not addressed in the detail
specified.”
                                                 -9-
                                         CONCLUSION

       For the foregoing reasons, we find the trial court did not err in finding the case summary

insufficient to satisfy the requirements of 12 VAC 30-20-540(B) and that the agency had no

evidentiary basis to support its decision. Accordingly, the judgment of the trial court is affirmed.

                                                                                          Affirmed.

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