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Inc. v. Department of Medical Assistance Servs.

Court of Appeals of Virginia

April 8, 2014

1ST STOP HEALTH SERVICES, INC., d/b/a 1ST STOP HOME CARE
v.
DEPARTMENT OF MEDICAL ASSISTANCE SERVICES, CYNTHIA B. JONES, DIRECTOR

Page 184

FROM THE CIRCUIT COURT OF FAIRFAX COUNTY. Lorraine Nordlund, Judge.

Martin A. Donlan, Jr. (J. Nelson Wilkinson; Williams Mullen, 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: Felton Chief Judge, Petty and McCullough Judges.

OPINION

Page 185

[63 Va.App. 268] STEPHEN R. McCULLOUGH, JUDGE.

The Director of the Department of Medical Assistance Services issued a decision retracting $128,736.72 in payments made to 1st Stop Health Services, Inc. The decision was based on 1st Stop's failure to maintain adequate documentation. 1st Stop appealed to the Circuit Court of Fairfax County, which affirmed in part and reversed in part. 1st Stop now appeals to this Court, raising the following eight assignments of error.

[63 Va.App. 269] 1. The Final Agency Decision [" FAD" ] is not supported by substantial evidence as it ignores the evidence of 1st Stop and testimony of 1st Stop's Administrator, which the Hearing Officer found to be undisputed.
2. The FAD erred under Va. Code Ann. § 32.1-325.1.B because it failed to adopt the Hearing Officer's Recommended Decision [" RD" ] when such RD complied with applicable law and DMAS policy.
3. The FAD erred under Va. Code Ann. § 2.2-4020.C because it does not give due deference to the findings of fact made by the Hearing Officer.
4. The FAD erred in not applying contract standards of law to determine whether any deficiency in 1st Stop's documentation constituted a material breach of the Provider Agreement, and if they did, in not requiring DMAS to prove the amount of damages incurred by DMAS that arose from such breach.
5. The FAD is arbitrary and capricious and constitutes an abuse of the Director's discretion because it fails to apply applicable contract law in that all the services required to be provided to each recipient was provided and enabled recipients not to be placed in a nursing home during the audit period; any deficiency in the DMAS-90s, the Aide Records and other documentation was not substantive and/or was corrected; DMAS failed to show that any harm occurred to any recipient or that any damage was sustained by DMAS in any material or substantive amount; and a basis for forfeiture of all provider payments was not established because DMAS and its recipients received all of the services for which payments were made and avoidance of a nursing home admission was accomplished.
6. The FAD erred in not applying contract law in this case because 1st Stop only became subject to Medicaid laws, regulations and policies by contracting with DMAS through its Provider Agreement.
[63 Va.App. 270] 7. The FAD erred in not applying Virginia's breach of contract materiality standards in this case, in that the Director failed to find:
a. the extent to which the injured party will be deprived of the benefit which it reasonably expected;
b. the extent to which the injured party can be adequately compensated for the part of the benefit of which it was deprived;
c. the extent to which the party failing to perform or to offer to perform will suffer forfeiture;
d. the likelihood that the party failing to perform or to offer to perform will cure his failure, taking into account all of the circumstances, including any reasonable assurances; and
e. the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing.
8. The FAD is arbitrary and capricious and constitutes an abuse of discretion because the conduct at issue here does not involve any substandard quality of care and all services were provided as authorized by DMAS.

For its part, DMAS assigns error to the trial court's application of contract principles. We affirm the ...


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