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Professional Therapies, Inc. v. Commonwealth, Department of Medical Assitance Services

Court of Appeals of Virginia

December 3, 2013

PROFESSIONAL THERAPIES, INC.
v.
COMMONWEALTH OF VIRGINIA, DEPARTMENT OF MEDICAL ASSISTANCE SERVICES

FROM THE CIRCUIT COURT OF THE CITY OF ROANOKE William D. Broadhurst, Judge

Elizabeth S. Skilling (Harman, Claytor, Corrigan & Wellman, on briefs), for appellant.

Jennifer L. Gobble, Assistant Attorney General (Kenneth T. Cuccinelli, II, Attorney General; Rita W. Beale, Deputy Attorney General; Kim F. Piner, Senior Assistant Attorney General, on brief), for appellee.

Present: Chief Judge Felton, Judge Kelsey and Senior Judge Bumgardner Argued at Richmond, Virginia

MEMORANDUM OPINION [*]

WALTER S. FELTON, JR. CHIEF JUDGE

Professional Therapies, Inc. (hereinafter "PTI") appeals from a judgment of the Circuit Court of the City of Roanoke (hereinafter "circuit court") affirming the decision of the Director of the Department of Medical Assistance Services (hereinafter "DMAS") that DMAS overpaid $32, 099 to PTI for Medicaid claims incurred August 1, 2008 through June 30, 2009. On appeal, PTI asserts that the circuit court erred in affirming the Director of DMAS's decision arguing (1) that the Director of DMAS applied the rationale contained in the 2003 regulation instead of applying the 2009 emergency regulation governing payments for Medicaid claims; (2) that DMAS's application of the regulation was arbitrary and capricious; and (3) that the circuit court ignored the "substantial evidence" standard of review because the Director of DMAS's decision was not supported by the evidence. For the following reasons, we affirm the judgment of the circuit court.

I. BACKGROUND

PTI is a certified rehabilitation agency providing physical, occupational, and speech therapy services for Medicaid patients. DMAS pays PTI for services PTI rendered to Medicaid patients. This appeal arises out of a dispute over the compensation amount paid by DMAS to PTI for services rendered to Medicaid patients between August 1, 2008 and June 30, 2009, PTI's partial fiscal year. DMAS asserted that it overpaid PTI $32, 099 in Medicaid claims for that period.

PTI disputed DMAS's claim and requested an evidentiary hearing. On January 10, 2011, following the evidentiary hearing, the hearing officer issued his written recommendations to the Director of DMAS. The hearing officer recommended DMAS's request for reimbursement of $32, 099 from PTI be denied. The hearing officer also recommended that DMAS pay PTI an additional $9, 825.89 for unpaid claims incurred between August 1, 2008 and June 30, 2009.

On March 11, 2011, the Director of DMAS rejected the hearing officer's recommendations and ordered PTI to refund $32, 099 to DMAS. The Director of DMAS concluded as follows:

In his Recommended Decision, the Hearing Officer agreed with [PTI's] interpretation of 12 VAC 30-80-200, [1] to mean that the interim fiscal period should be paid on a prospective rate based on a percentage of charges. The only authority [PTI] cited for their addition of the words "percentage of charges" to the regulation seems to come from Schedule E, Part IV (Form 1203)[2]. . . . Part IV of Schedule E is only used by providers for interim periods to project payment, but not for the final settlements. The Provider has clearly misconstrued the meaning of Part IV Schedule E in an attempt to disregard Part I-III which is clearly titled "Computation of Prospective Medicaid Reimbursement Rates For Period Beginning 08/01/2008." Neither Schedule E, nor 12 VAC 30-80-200 support the addition of the words "percentage of charges." Neither the Hearing Officer, nor the Provider offered a viable explanation to contradict the November 10th letter, [nor the testimony of the witnesses], nor to explain the absence of the words "percentage of charges." In fact, there is no evidence in the record to support their contradictory interpretation. Therefore, the Hearing Officer's findings must be rejected as a matter of law and because they are not supported by the record.

(Footnotes added).

The Director of DMAS further held that
After a review of the administrative record, the parties' exhibits, the testimony offered by the parties and the findings of the Hearing Officer, it is clear that no evidence or legal argument was submitted indicating that DMAS erred. The adjustment by the Department, while not agreed to by ...

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