Court Opinion

ID: 4251434
Source: CourtListenerOpinion
Date Created: 2018-03-02 17:13:19.328917+00
Date Added: 2024-06-11T07:48:13.300530
License: Public Domain

IN THE SUPREME COURT OF NORTH CAROLINA

                                   No. 427A16

                                Filed 2 March 2018
ABRONS FAMILY PRACTICE AND URGENT CARE, PA; NASH OB-GYN
ASSOCIATES, PA; HIGHLAND OBSTETRICAL-GYNECOLOGICAL CLINIC,
PA; CHILDREN’S HEALTH OF CAROLINA, PA; CAPITAL NEPHROLOGY
ASSOCIATES, PA; HICKORY ALLERGY & ASTHMA CLINIC, PA; HALIFAX
MEDICAL SPECIALISTS, PA; and WESTSIDE OB-GYN CENTER, PA,
Individually and on Behalf of All Others Similarly Situated
             v.
NORTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES and
COMPUTER SCIENCES CORPORATION

      Appeal pursuant to N.C.G.S. § 7A-30(2) from the decision of a divided panel of

the Court of Appeals, ___ N.C. App. ___, 792 S.E.2d 528 (2016), reversing an order

dated 12 June 2015 by Judge Gregory P. McGuire, Special Superior Court Judge for

Complex Business Cases, in Superior Court, Wake County, and remanding for

additional proceedings.   On 26 January 2017, the Supreme Court allowed both

defendants’ petitions for discretionary review of additional issues. Heard in the

Supreme Court on 12 December 2017.

      Williams Mullen, by Camden R. Webb, Elizabeth C. Stone, and Ruth A. Levy,
      for plaintiff-appellees.

      Joshua H. Stein, Attorney General, by Olga Vysotskaya de Brito and Amar
      Majmundar, Special Deputy Attorneys General, for defendant-appellant North
      Carolina Department of Health and Human Services.

      Brooks, Pierce, McLendon, Humphrey & Leonard, LLP, by Charles F. Marshall
      III and Jennifer K. Van Zant, for defendant-appellant Computer Sciences
      Corporation.
 ABRONS FAM. PRAC. & URGENT CARE, P.A. V. N.C. DEP’T OF HEALTH & HUM. SERVS.

                                  Opinion of the Court

      Parker Poe Adams & Bernstein LLP, by Matthew W. Wolfe, for American
      Medical Association, North Carolina Academy of Family Physicians, North
      Carolina Hospital Association, North Carolina Health Care Facilities
      Association, and North Carolina Medical Society, amici curiae.

      Ott Cone & Redpath, P.A., by Matthew Jordan Cochran, Thomas E. Cone,
      Curtis B. Venable, and Stephen J. White, for Charlotte−Mecklenburg Hospital
      Authority, Duke University Medical Center, Mission Hospitals, Inc., The Moses
      H. Cone Memorial Hospital Operating Corporation, North Carolina Baptist
      Hospital, and WakeMed, amici curiae.

      JACKSON, Justice.

      In this appeal we consider whether the Court of Appeals correctly held that the

trial court erroneously dismissed plaintiffs’ action for lack of subject-matter

jurisdiction due to plaintiffs’ failure to exhaust administrative remedies in seeking

damages for denied Medicaid reimbursement claims.         Because we conclude that

plaintiffs have failed to exhaust their available administrative remedies, we reverse

the decision of the Court of Appeals reversing the trial court’s order granting

defendants’ motions to dismiss for lack of subject-matter jurisdiction.

      Plaintiffs Abrons Family Practice and Urgent Care, PA; Nash OB-GYN

Associates, PA; Highland Obstetrical-Gynecological Clinic, PA; Children’s Health of

Carolina, PA; Capital Nephrology Associates, PA; Hickory Allergy & Asthma Clinic,

PA; Halifax Medical Specialists, PA; and Westside OB-GYN Center, PA are medical

practices in North Carolina, all of which provide care to Medicaid-eligible patients

pursuant to Medicaid contracts with the State of North Carolina. Defendant North

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                                  Opinion of the Court

Carolina Department of Health and Human Services (DHHS or the Department)

administers the State’s Medicaid plan. Defendant Computer Sciences Corporation

(CSC) is a Nevada corporation with its principal office in Falls Church, Virginia.

After being required by the federal Centers for Medicare and Medicaid Services

(CMS) to replace its Medicaid Management Information System (MMIS), the State of

North Carolina awarded a contract to CSC to develop a new MMIS. CSC designed

and developed NCTracks, the new system intended to manage reimbursement

payments to health care providers for services provided to Medicaid recipients across

North Carolina. NCTracks went live on 1 July 2013, and plaintiffs began submitting

claims to DHHS for Medicaid reimbursements under the new system. In the first few

months of being in operation, NCTracks experienced over 3,200 software errors,

resulting in delayed, incorrectly paid, or unpaid reimbursements to plaintiffs.

      On 31 January 2014, plaintiffs filed a First Amended Class Action Complaint

against defendants. Plaintiffs asserted that NCTracks ultimately proved to be “a

disaster, inflicting millions of dollars in damages upon North Carolina’s Medicaid

providers.” Specifically, plaintiffs alleged that CSC was negligent in its design and

implementation of NCTracks and that DHHS breached its contracts with each of the

plaintiffs by failing to pay Medicaid reimbursements. Plaintiffs also alleged that they

had a contractual right to receive payment for reimbursement claims and that this

was “a property right that could not be taken without just compensation.” As a result

of these allegations, plaintiffs sought damages based upon claims of negligence and

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                                  Opinion of the Court

unfair and deceptive acts against CSC, and claims of breach of contract and violation

of Article I, Section 19 of the North Carolina Constitution against DHHS.

Additionally, plaintiffs sought a declaratory judgment that the methodology for

payment of Medicaid reimbursement claims established by DHHS violated Medicaid

reimbursement rules.

      Plaintiffs further maintained that, because the available administrative

procedures would not compel the State to adhere to Medicaid reimbursement rules or

provide recovery of certain damages, plaintiffs were not required to exhaust their

administrative remedies before filing their civil action.     Additionally, plaintiffs

contended that “the administrative procedures [were] futile and inadequate.”

      On 4 April 2014, defendants filed motions to dismiss pursuant to North

Carolina Rules of Civil Procedure 12(b)(1), 12(b)(2), and 12(b)(6). Defendants argued,

inter alia, that plaintiffs’ complaint failed to establish personal and subject-matter

jurisdiction. The trial court concluded that plaintiffs had failed to exhaust their

administrative remedies and had not demonstrated that the available administrative

remedies were inadequate. Because the trial court determined that it lacked subject-

matter jurisdiction over plaintiffs’ claims, it denied as moot defendants’ motions to

dismiss pursuant to Rules 12(b)(2) and 12(b)(6).

      The Court of Appeals majority reversed the trial court’s order, holding that the

trial court erred by dismissing plaintiffs’ complaint for failure to exhaust

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                                  Opinion of the Court

administrative remedies without resolving “whether DHHS issues final agency

decisions in Medicaid claim matters and whether DHHS supplies providers with

written notice of its final agency decisions.” Abrons Fam. Prac. & Urgent Care, PA v.

N.C. Dep’t of Health & Hum. Servs., ___ N.C. App. ___, ___, 792 S.E.2d 528, 539

(2016). The Court of Appeals majority also concluded that plaintiffs sufficiently

demonstrated that it would be futile to pursue administrative remedies. Id. at ___,

792 S.E.2d at 538. Because the Court of Appeals reversed the trial court’s order, it

did not address plaintiffs’ remaining arguments. See id. at. ___, 792 S.E.2d at 539.

      Judge McCullough dissented, concluding that the trial court’s decision should

be affirmed because plaintiffs did not exhaust the available administrative remedies

or prove that those remedies were inadequate to resolve their claims. Id. at ___, 792

S.E.2d at 539-540 (McCullough, J., dissenting). Both defendants appealed based on

the dissent and sought discretionary review of additional issues, which this Court

allowed.

      On appeal to this Court, defendants contend that the Court of Appeals erred

by reversing the dismissal of plaintiffs’ claims because plaintiffs failed to exhaust

their available administrative remedies prior to filing a lawsuit. Defendants also

argue that plaintiffs only have speculated that pursuing the available administrative

remedies would be futile or inadequate. We agree.

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                                   Opinion of the Court

      Section 108C-12 explicitly indicates that the Administrative Procedure Act

(APA) governs the appeals process for Medicaid providers. N.C.G.S. § 108C-12 (2017).

The APA states in relevant part that “any dispute between an agency and another

person that involves the person’s rights, duties, or privileges . . . should be settled

through informal procedures.” Id. § 150B-22 (2017). If the parties do not resolve the

dispute through informal procedures, either party may request a formal

administrative proceeding, “at which time the dispute becomes a ‘contested case.’ ”

Id. “[A] request for a hearing to appeal an adverse determination of the Department

[of Health and Human Services] . . . is a contested case subject to the provisions of”

the   Administrative   Procedure    Act.      N.C.G.S.    § 108C-12.   An “[a]dverse

determination” is defined, in relevant part, as “[a] final decision by [DHHS] to deny,

terminate, suspend, reduce, or recoup a Medicaid payment.” Id. § 108C-2(1) (2017).

Finally, if a party is aggrieved by the outcome of a contested case hearing and has

exhausted all available administrative remedies, the party “is entitled to judicial

review of the decision [pursuant to] this Article.” Id. § 150B-43 (2017).

      As authorized by the General Assembly in N.C.G.S. § 108A-54, the Department

has promulgated specific rules governing the informal review process. See generally

10A NCAC Subchapter 22J (2016).            These regulations enumerate the rights of

providers to appeal reimbursement rates and challenge the Department’s decisions

on various claims related to payments. 10A NCAC 22J .0101.

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                                   Opinion of the Court

      When a provider submits a Medicaid reimbursement claim, the Department

responds by sending the provider a “Remittance Statement” that discloses the initial

disposition of the claim. At this stage, claims are either paid, denied, or placed in

“pending” status. A provider may then request a reconsideration review, but must

do so within thirty calendar days “from receipt of final notification of payment,

payment    denial,   disallowances,    payment      adjustment,   notice   of   program

reimbursement and adjustments.” Id. .0102(a). This “final notification . . . means

that all administrative actions necessary to have a claim paid correctly have been

taken by the provider and . . . the fiscal agent has issued a final adjudication.” Id. If

the provider fails to request a reconsideration review within the specified time period,

the state agency’s decision becomes final. Id. In the alternative, a provider may

resubmit a denied claim to DHHS at any time within eighteen months “after the date

of payment or denial of [the] claim.” 10A NCAC 22B .0104(b) (2016).

      If a provider seeks a reconsideration review and disagrees with the result, the

provider may request a contested case hearing before the Office of Administrative

Hearings (OAH). Id. 22J .0104. Then, as outlined in the statutory framework, once

all administrative remedies are exhausted, the provider may seek judicial review.

N.C.G.S. § 150B-43. Judicial review “is generally available only to aggrieved persons

who have exhausted all administrative remedies made available by statute or agency

rule.” Empire Power Co. v. N.C. Dep't of Env't, Health & Nat. Res., 337 N.C. 569, 594,

447 S.E.2d 768, 783 (1994) (citing N.C.G.S. § 150B-43 (1991)). A plaintiff’s failure to

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                                   Opinion of the Court

exhaust administrative remedies may result in the dismissal of the complaint for lack

of subject-matter jurisdiction. See Presnell v. Pell, 298 N.C. 715, 722, 260 S.E.2d 611,

615 (1979); see also Vass v. Bd. of Trs. of the Teachers’ & State Emps.’ Comprehensive

Major Med. Plan, 324 N.C. 402, 408-09, 379 S.E.2d 26, 30 (1989).

      Here, after receiving Remittance Statements that indicated an adverse

determination on a Medicaid reimbursement claim, the providers failed to request a

reconsideration review or file a petition for a contested case. Instead, plaintiffs

bypassed the administrative procedures set forth above and filed a class action

complaint in the trial court.    To justify their failure to exhaust administrative

remedies, plaintiffs rely upon 10A NCAC 22J .0102 which indicates that the provider

has thirty calendar days “from receipt of final notification of payment [or] payment

denial” to request reconsideration review. 10A NCAC 22J .0102(a). Plaintiffs argue

that defendants cannot assert the defense of failure to exhaust administrative

remedies because defendants failed to provide the required final notification that

triggers the administrative review process. Subsection 150B-23(f) mandates that the

time limit to file a petition in a contested case commences “when notice is given of the

agency decision to all persons aggrieved” and states that the notice “shall be in

writing, and shall set forth the agency action, and shall inform the persons of the

right, the procedure, and the time limit to file a contested case petition.” N.C.G.S.

§ 150B-23(f) (2017). CSC argued before the trial court that a provider’s receipt of the

Remittance Statement triggers the option to pursue resubmission or administrative

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                                   Opinion of the Court

remedies. On the other hand, plaintiffs contend that defendants never provided the

required final notification. In addition to arguing that defendants failed to provide

final notification, plaintiffs also contend that defendants provided defective notice to

plaintiffs of their rights to pursue administrative remedies.

       In support of these arguments, plaintiffs cite Davidson County v. City of High

Point, 321 N.C. 252, 362 S.E.2d 553 (1987). The dispute in Davidson County centered

around the County’s issuance of a special use permit to allow renovation of a City-

owned sewage treatment plant. Id. at 253, 362 S.E.2d at 554. The County argued

that the City could not challenge the meaning of one of the prerequisite conditions

necessary to receive a permit because the City had failed to pursue the administrative

remedies afforded pursuant to the special use permit. Id. at 260, 362 S.E.2d at 558.

Plaintiffs in the present case contend that in Davidson County, the County provided

no notice of administrative remedies and that as a result, this Court rejected the

County’s assertion that the City failed to exhaust administrative remedies. This is

an incorrect interpretation of our conclusion in Davidson County. Moreover, an

administrative appeal that falls outside the framework of the APA does not provide

the best analog for analysis of a dispute that lies squarely within the purview of the

APA.

       In Davidson County this Court determined that “the City was unaware of the

County’s differing interpretation of” a prerequisite condition to receive a permit and

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                                  Opinion of the Court

as a result, “could not have known that it should have appealed the issue . . . within

thirty days of receiving the permit.” Id. at 260, 362 S.E.2d at 558. We concluded that

“[t]he County cannot now be heard to assert that the City should have pursued

administrative remedies for a problem it was unaware existed.” Id. at 260, 362 S.E.2d

at 558. The issue in Davidson County turned on whether one party was even aware

that a problem existed, not whether a party was aware of the available administrative

remedies. Unlike the plaintiffs in Davidson County, plaintiffs in the case sub judice

were aware not only of the existence of the problem but also of the existence of the

available administrative remedies.

      In addressing the applicable time limits in which a provider must appeal an

adverse determination, the Administrative Code states that a provider may seek

reconsideration review after receiving “final notification of payment.” 10A NCAC 22J

.0102(a). The Code further states that if a provider does not seek such review within

thirty days “from receipt of final notification,” then the Department’s “action shall

become final.” Id. As the Court of Appeals majority highlighted, the central problem

here is that the status of the Remittance Statement seems unclear if a “final

notification” later becomes “final.” Abrons, ___ N.C. App. at ___, 792 S.E.2d at 536

(majority opinion). The Administrative Code allows a provider to resubmit a denied

claim to DHHS at any time within eighteen months after receiving the Remittance

Statement, 10A NCAC 22B .0104(b); yet the previously mentioned provision indicates

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                                   Opinion of the Court

that if a provider does not seek reconsideration review within the thirty-day window,

then that decision becomes final, id. 22J .0102.

      There does appear to be confusion surrounding the time frame in which a

provider must seek reconsideration review, and the State conceded as much in oral

argument, acknowledging that there was no statute of limitations running, given the

inadequacy of notice. During rebuttal, the State addressed the Court’s question

originally posed to counsel for the appellee, as to whether Section 150B-23(f) tolls the

statute of limitations. Counsel for the State answered, “Of course it does.”

      Notwithstanding this inadequacy of notice, if a provider was aggrieved by the

denial of a reimbursement claim, a reconsideration review should have been

requested, followed by the filing of a petition for a contested case hearing, if

necessary.   In addition, the APA establishes a process by which a party may

commence a contested case by, inter alia, showing that an agency has failed to use

proper procedure. See N.C.G.S. § 150B-23(a) (2017) (providing that a petition for a

contested case shall state facts establishing that the agency has, inter alia, “[f]ailed

to use proper procedure” or “[f]ailed to act as required by law or rule”). The APA also

gives an aggrieved party the opportunity to request a declaratory ruling to determine

“the validity of a rule” or to resolve a conflict “regarding an interpretation of” a rule.

See id. § 150B-4(a) (2017). The declaratory ruling has the same effect as a final

agency decision and would have provided certainty to plaintiffs in pursuit of their

determination of whether the Remittance Statement itself was in fact a final

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                                     Opinion of the Court

statement by the Department.1 Although any procedural confusion as to finality and

notice does not relieve plaintiffs from the requirement to exhaust their available

administrative remedies, here the State has conceded that there is no issue with the

statute of limitations running; therefore, plaintiffs remain free to appeal the adverse

determinations by initiating contested case hearings at OAH.2

       This is an essential step in addressing the disputed payments.                   The

requirement to exhaust administrative remedies ensures that “matters of regulation

and control are first addressed by commissions or agencies particularly qualified for

the purpose.” Presnell, 298 N.C. at 721, 260 S.E.2d at 615. Although administrative

remedies were available to plaintiffs, none of the plaintiffs appear to have invoked

these available remedies. Without a single provider having initiated an appeal from

a denied reimbursement claim, it cannot be said that plaintiffs have exhausted all

available administrative remedies.

       As to their claims against CSC, plaintiffs contend that these claims “are

independent of [their] claims for reimbursement against DHHS”; however, their

       1  With that certain determination, there also would have been a very clear path for
plaintiffs to exhaust their administrative remedies prior to seeking relief in the General
Court of Justice.
        2 We express no opinion as to what our decision would have been in the absence of the

State’s concession; however, faced with a statute of limitations that concededly is not a bar
to plaintiffs’ pursuit of their administrative remedies, we are in the unusual position of
allowing them to do so notwithstanding the present action. Our research has disclosed no
similar precedent in our law, and we caution that the circumstances in the instant case and
magnitude of the current dispute present unique challenges that mandate a resolution which
should not be read broadly.

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                                   Opinion of the Court

amended complaint reveals how intertwined its claims are against DHHS and CSC.

For example, plaintiffs allege that “CSC’s contract obligated CSC to design and

develop NCTracks so that it provided a common, unified, and flexible system meeting

DHHS’ business requirements regarding Medicaid.” Plaintiffs further allege that

“DHHS and CSC have also placed thousands of reimbursement claims in ‘limbo’ by

failing to issue decisions on reimbursement claims.” The actual language of these

excerpts from the complaint indicate the sheer difficulty in wholly separating the

actions of DHHS from the actions of CSC.

      In further support of their argument that their claims against CSC are

independent of their claims against DHHS, plaintiffs also contend that they are suing

CSC for its conduct before it became the State’s fiscal agent, which took place on the

“go-live” date of 1 July 2013. Again, plaintiffs’ amended complaint indicates the close

involvement between the acts of DHHS and CSC. The amended complaint alleges

that CSC was negligent in that it “failed to exercise due care,” inter alia, “in the

attempts to fix defects found in NCTracks after go-live.”         Therefore, plaintiffs’

amended complaint itself uses language that indicates plaintiffs are suing CSC not

only for its conduct before it became the State’s fiscal agent, but also for its conduct

after said time. Furthermore, plaintiffs’ claims against CSC will be affected by the

outcome of their claims against DHHS. If, in fact, the reimbursement claims were

denied properly, then plaintiffs’ claims against CSC may fail or the damages awarded

may not be awarded in full. The record in this case reveals that plaintiffs’ claims

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                                   Opinion of the Court

against DHHS and CSC would be difficult, if not impossible, to wholly disentangle.

Similarly, the State’s and CSC’s defenses are interwoven as well.            Therefore,

plaintiffs’ causes of action against CSC remain viable, too.

      Plaintiffs also alleged in their complaint that they are exempt from the

requirement to exhaust administrative remedies because doing so would be futile and

the remedies would be inadequate. Our courts have not required plaintiffs to exhaust

administrative remedies prior to bringing suit, if the pursuit of administrative

remedies would be futile. State ex rel. Utils. Comm’n v. S. Bell Tel. & Tel. Co., 93

N.C. App. 260, 268, 377 S.E.2d 772, 776 (1989), rev'd on other grounds, 326 N.C. 522,

391 S.E.2d 487 (1990). The party claiming excuse from exhaustion bears the burden

of alleging both the inadequacy and the futility of the available administrative

remedies. See Snuggs v. Stanly Cty. Dep’t of Pub. Health, 310 N.C. 739, 740, 314

S.E.2d 528, 529 (1984) (per curiam). Plaintiffs first argue that initiating a dispute

with DHHS “is not available to Medicaid providers because of the overwhelming

number of reimbursement errors and because of [the] utter inability [of DHHS] to

address providers’ issues.” Plaintiffs allege that defendants have “placed thousands

of reimbursement claims in ‘limbo’ by failing to issue decisions on reimbursement

claims.” Not only do plaintiffs fail to provide an exact number of claims at issue, but,

given that there are eight plaintiffs, the inadequacy of the administrative procedures

cannot be evaluated on the basis of this bare allegation. Furthermore, this Court

previously has determined that the breadth of a claim may not create a burden

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                                   Opinion of the Court

sufficient to relieve a plaintiff of the exhaustion requirement. See Lloyd v. Babb, 296

N.C. 416, 426-28, 251 S.E.2d 843, 850-51 (1979) (requiring exhaustion of

administrative remedies notwithstanding plaintiffs having to individually challenge

the voting rights of between 6,000 and 10,000 people). Here, the sheer number of

claims does not satisfy plaintiff’s burden.

      Plaintiffs also asserted in their complaint that pursuing administrative

remedies would be futile because “[n]o procedures exist to recover for damage to the

Plaintiffs’ businesses, to recover for payment of the $100 re-enrollment fee . . . and to

recover damages in the form of time value of money.” The reasoning in Jackson ex.

rel. Jackson v. North Carolina Department of Human Resources Division of Mental

Health, Developmental Disabilities, & Substance Abuse Services, 131 N.C. App. 179,

505 S.E.2d 899 (1998), disc. rev. denied, 350 N.C. 594, 537 S.E.2d 213, 214 (1999)—

that plaintiffs’ insertion of a prayer for monetary damages does not relieve them from

the necessity for compliance with the exhaustion requirement—is persuasive here.

In Jackson the Court of Appeals acknowledged that, although the plaintiff sought

damages that could not be awarded through administrative procedures, the plaintiff’s

primary claim—“the provision of mental health care”—was an issue that first should

be determined by the agency. Id. at 188-89, 505 S.E.2d at 905. Similarly, plaintiffs’

claims in the present case stem from the failure of DHHS to pay Medicaid

reimbursement claims. The majority of the claims for relief even specifically mention

these unpaid reimbursements. Because resolution of the reimbursement claims must

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                                   Opinion of the Court

come from DHHS, simply inserting a prayer for monetary damages does not

automatically demonstrate that pursuing administrative remedies would be futile.

Notwithstanding the claims that are outside the relief that can be granted by an

administrative law judge, the reimbursement claims “should properly be determined

in the first instance by the agenc[y] statutorily charged with administering” the

Medicaid program. Id. at 188-89, 505 S.E.2d at 905. “Pursuing an administrative

remedy is ‘futile’ when it is useless to do so either as a legal or practical matter.”

Bailey v. State, 330 N.C. 227, 248, 412 S.E.2d 295, 308 (1991) (Mitchell, J., concurring

in part and dissenting in part) (quoting Honig v. Doe, 484 U.S. 305, 327, 108 S. Ct.

592, 606, 98 L. Ed. 2d 686, 709 (1988)), cert. denied, 504 U.S. 911, 112 S. Ct. 1942,

118 L. Ed. 2d 547 (1992), disavowed by Bailey v. State, 348 N.C. 130, 500 S.E.2d 54

(1998). Plaintiffs have failed to demonstrate that pursuing reconsideration review or

a contested case would be “useless.”

      Finally, in addressing plaintiffs’ allegations regarding business damages, the

trial court, in its Amended Opinion and Order on Motions to Dismiss, included the

following footnote:

             The Court notes that Plaintiffs did not cite to any authority
             to support their assertion that the business damages they
             seek could not be sought through the administrative
             process, and the Court is unable to find any specific statute,
             regulation, or case law expressly stating that tort-type
             damages are unavailable as a remedy at the administrative
             level in this context.

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                                   Opinion of the Court

This conclusion incorrectly interprets the scope of an administrative hearing. The

purpose of the APA is to “ensure that the functions of rule making, investigation,

advocacy, and adjudication are not all performed by the same person in the

administrative process.” N.C.G.S. § 150B-1(a) (2017). Furthermore, five specific

grounds for alleging an agency’s wrongdoing are enumerated in N.C.G.S. § 150B-

23(a). By its very nature, the quasi-judicial forum of an administrative hearing

precludes the adjudication of claims seeking compensatory damages; however, when

any part of the relief sought is provided through an administrative process, a plaintiff

must exhaust that process prior to seeking the same or related relief from the judicial

system.

      In conclusion, the Department’s decision to deny plaintiffs’ claims would be

subject to judicial review only after plaintiffs had exhausted their available

administrative remedies or demonstrated that doing so would have been futile.

Plaintiffs have not succeeded at either endeavor; however, given the inadequacy of

notice, plaintiffs still are entitled to exhaust the available administrative remedies.

Nevertheless, because plaintiffs have failed to exhaust their administrative remedies

and have failed to demonstrate futility of the available remedies at this time, the

Court of Appeals erred by reversing the dismissal of plaintiffs’ claims. For the

foregoing reasons, we reverse the decision of the Court of Appeals.

      REVERSED.

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