Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Virginia Department of Medical Assistance Services v. United States Department of Health and Human Services and Kathleen

May 8, 2012

VIRGINIA DEPARTMENT OF MEDICAL ASSISTANCE SERVICES,
APPELLANT
v.
UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES AND KATHLEEN SEBELIUS, SECRETARY OF THE UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, APPELLEES



Appeals from the United States District Court for the District of Columbia (No. 1:09-cv-00392) (No. 1:09-cv-01587)

The opinion of the court was delivered by: Karen Lecraft Henderson, Circuit Judge

Argued March 14, 2012

Before: HENDERSON, ROGERS and GRIFFITH, Circuit Judges.

Opinion for the Court filed by Circuit Judge HENDERSON.

The Virginia Department of Medical Assistance Services and the Kansas Health Policy Authority (collectively, States) both appeal the district court's grants of summary judgment in favor of the U.S. Department of Health and Human Services and the Secretary of Health and Human Services (HHS or Secretary). See Va. Dep't of Med. Assistance Servs. v. U.S. Dep't of Health & Human Servs., 779 F. Supp. 2d 129 (D.D.C. 2011) (Virginia v. HHS); Kan. Health Policy Auth. v. U.S. Dep't of Health & Human Servs., 798 F. Supp. 2d 162 (D.D.C. 2011) (Kansas v. HHS). The district court upheld HHS's disallowance of certain Medicaid claims for Federal Financial Participation (FFP) as ineligible for "medical assistance" under the "Institution for Mental Diseases" (IMD) exclusion set forth in section 1905(a) of 42 U.S.C. §§ 1396 et seq. (Medicaid Statute).*fn1 The IMD exclusion generally carves out from FFP any claims for "payments with respect to care or services for any individual who has not attained 65 years of age and who is a patient in an institution for mental diseases." 42 U.S.C. § 1396d(a)(B). In particular, HHS excluded the States' claims as outside the narrow statutory exception to the IMD exclusion for "inpatient psychiatric hospital services for individuals under age 21" (under-21 exception). Id. § 1396d(a)(B), (16). Because HHS correctly concluded that the disputed claims are not eligible for FFP under the plain language of the IMD exclusion and the under-21 exception, we affirm the court's grants of summary judgment in HHS's favor.

I.

The Congress enacted the Medicaid Statute in 1965 to provide federal financial assistance to states that reimburse certain costs of medical treatment for needy persons pursuant to an approved state medical assistance plan, which plan identifies the groups of individuals eligible for assistance as well as the services that are covered. Pharm. Research & Mfrs. of Am. v. Walsh, 538 U.S. 644, 650-51 (2003). Section 1905(a) of the Medicaid Statute, 42 U.S.C. § 1396d(a), sets out which "care and services" are eligible for "medical assistance" (and consequently for FFP) under a state plan. Since its enactment in 1965, section 1905(a) has generally excluded from medical assistance any services provided to individuals in an IMD who are not age 65 or older. Social Security Amendments of 1965, Pub. L. No. 89-97, title I, § 121(a)(B), 79 Stat. 286, 351-52 (1965) (codified at 42 U.S.C. § 1396d(a)(B)).

In 1972, the Congress added an exception to the IMD exclusion aimed at individuals under age 21. Section 1905(a)(B) now excludes services for individuals under 65 "except as otherwise provided in paragraph (16)." 42 U.S.C. § 1396d(a)(B). Paragraph (16) identifies "inpatient psychiatric hospital services for individuals under age 21, as defined in subsection (h)," as among the services for which medical assistance is expressly authorized. Id. § 1396d(a)(16).

Subsection (h), in turn, defines "inpatient psychiatric hospital services for individuals under age 21" in some detail, to include[] only-- (A) inpatient services which are provided in an institution (or distinct part thereof) which is a psychiatric hospital as defined in section 1395x(f) of this title or in another inpatient setting that the Secretary has specified in regulations; (B) inpatient services which, in the case of any individual (i) involve active treatment which meets such standards as may be prescribed in regulations by the Secretary, and (ii) a team, consisting of physicians and other personnel qualified to make determinations with respect to mental health conditions and the treatment thereof, has determined are necessary on an inpatient basis and can reasonably be expected to improve the condition, by reason of which such services are necessary, to the extent that eventually such services will no longer be necessary; and (C) inpatient services which, in the case of any individual, are provided prior to (i) the date such individual attains age 21, or (ii) in the case of an individual who was receiving such services in the period immediately preceding the date on which he attained age 21, (I) the date such individual no longer requires such services, or (II) if earlier, the date such individual attains age 22; . . . 42 U.S.C. § 1396d(h)(1)(A)-(C) (emphasis added).

In 2001-02, the HHS Inspector General audited Medicaid claims for IMD residents under age 21 in several states--including Virginia. As a result of the audit, the Centers for Medicare and Medicaid Services (CMS)*fn2 disallowed FFP claims totaling $3,948,532 from Virginia as not authorized by the under-21 exception because they were not documented to be for "psychiatric hospital services provided in and by an IMD." Letter from Ted Gallagher, Assoc. Rgn'l Adm'r, Div. of Medicaid & Children's Health Operations, CMS, to Patrick W. Finnerty, Dir., Va. Dep't of Med. Assistance Servs., at 2 (Feb. 29, 2008) (CMS Virginia Letter).*fn3 Subsequently, following an audit of Kansas's 2007-08 claims, CMS similarly disallowed $3,883,143 of FFP claims because they were for "services other than inpatient psychiatric services to residents of a [Psychiatric Residential Treatment Facility (PRTF)]." Letter from James G. Scott, Assoc. Rgn'l Adm'r, Div. of Medicaid & Children's Health Operations, CMS, to Marcia J. Nielsen, Exec. Dir., Kansas Health Policy Auth., at 2 (Oct. 20, 2008) (CMS Kansas Letter).*fn4 Virginia and Kansas both appealed to HHS's Departmental Appeals Board (DAB).

The DAB rejected Virginia's challenge to "CMS's determination that the exception applies only to 'inpatient psychiatric services.' " Va. Dep't of Med. Assistance, DAB Dec. No. 2222, at 1 (App. Div. Dec. 31, 2008). In particular, the DAB declined Virginia's invitation to reconsider its earlier decision in New York State Department of Health, DAB Dec. No. 2066 (App. Div. Feb. 8, 2007). Va. Dep't of Med. Assistance, DAB Dec. No. 2222, at 2-3. In New York State, which arose from the multi-state 2001-02 audit, the DAB upheld CMS's interpretation of the IMD exception's "plain language," as applied by the HHS Inspector General, that paragraph (16) "provides for only one category of Medicaid service--inpatient psychiatric hospital services for individuals under age 21 as defined in subsection (h)" and that subsection (h) "in turn defines those services to mean 'only' those inpatient services that are provided under the direction of a physician in an institution that qualifies and that meet other specified requirements." New York State, Dec. No. 2066, at 9-10. Accordingly, the DAB rejected New York's contention that " 'if the eligible individuals happen to be under the age of 21, in addition to the other benefits set out in the statute, they are also entitled to receive inpatient psychiatric hospital services.' " Id. at 9 (quoting New York State brief). Consistent with New York State, the DAB upheld CMS's disallowance of Virginia's IMD claims. Id. at 26. In the Kansas appeal, the DAB likewise upheld the disallowance explaining that it "ha[d] previously held that the statutory exception to the IMD exclusion is available only for services, provided in and by a qualifying facility, meeting the statutory and regulatory requirements for 'inpatient psychiatric facility services' " and that CMS had "determined that the health care services at issue were not part of [such] inpatient services." Kan. Health Policy Auth., DAB Decision No. 2255, at 1-2 (App. Div. June 23, 2009).

Virginia and Kansas then filed these actions in the district court, challenging HHS's interpretation of the IMD exclusion and its under-21 exception and the disallowance of the States' claims based thereon. The district court granted summary judgment in favor of HHS in both cases. In Virginia v. HHS, the district court agreed with HHS that "the relevant statutory language is unambiguous." 779 F. Supp. 2d at 135. The court specifically found that (1) the IMD exclusion "is clear: except as provided in paragraph (16), FFP is not available for any medical care for any individual under age 65 who is a patient in an IMD" and (2) the " 'under-21 exception' to the IMD exclusion is equally clear: FFP is only available for inpatient psychiatric hospital services for individuals under age 21 that are provided in an IMD." Id. at 135-36. In Kansas v. HHS, the court summarily rejected Kansas's challenge, declining to "revisit its ruling on this issue" in Virginia v. HHS. 798 F. Supp. 2d at 164. Virginia and Kansas both filed timely notices of appeal and the two appeals were consolidated.

II.

"We review the district court's grant of summary judgment de novo pursuant to the Administrative Procedure Act and therefore will uphold the Secretary's decision unless it is 'arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,' 5 U.S.C. § 706(2)(A)." Pharm. Research & Mfrs. of Am. v. Thompson, 362 F.3d 817, 821 (D.C. Cir. 2004). We review the Secretary's interpretation of the Medicaid Statute under the familiar two-step ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.