MPS HEALTHCARE, INC., d/b/a CONTINUUM PEDIATRIC NURSING SERVICES
DEPARTMENT OF MEDICAL ASSISTANCE SERVICES/COMMONWEALTH OF VIRGINIA
Petition for Rehearing 7th day of May, 2019.
THE CIRCUIT COURT OF THE CITY OF RICHMOND Daniel T. Balfour,
Belinda Jones (Jonathan M. Joseph; Harrison M. Gates;
Christian & Barton, L.L.P., on briefs), for appellant.
Koduru, Assistant Attorney General (Mark R. Herring, Attorney
General; Cynthia V. Bailey, Deputy Attorney General; Kim F.
Piner, Senior Assistant Attorney General, on brief), for
Present: Judges Humphreys, Petty and Chafin Argued by
M. CHAFIN, JUDGE
Director of the Department of Medical Assistance Services
("DMAS") issued a final agency decision
("FAD") requiring that MPS Healthcare, Inc., doing
business as Continuum Pediatric Nursing Services
("MPS"), reimburse DMAS for an overpayment of $63,
972.15. The decision was based on a failure to maintain
adequate documentation of criminal background checks. MPS
appealed to the Circuit Court for the City of Richmond, which
affirmed the Department's decision. MPS then appealed to
April 9, 2019, we issued an opinion affirming the circuit
court in this case. MPS Healthcare, Inc. v. Dep't of
Med. Assistance Servs., 70 Va.App. 140, 152,
reh'g granted, 70 Va.App. 348 (2019). In that
opinion we held that the circuit court did not err in (1)
affirming the Department's FAD, which rejected the
hearing officer's recommendation in favor of MPS
concerning the criminal background checks at issue; (2)
finding that MPS violated Code § 32.1-162.9:1(A) and 12
VAC 30-120-1730(A)(5); and (3) determining that an
overpayment amount of $63, 972.15 related to Error Code 913
should be returned to DMAS. Id.
to Rule 5A:33(a), MPS submitted a request that we reconsider
our holdings that Virginia law permits criminal background
checks to be provided to DMAS for audit purposes and that the
FAD properly rejected the hearing officer's decision. By
order entered on May 7, 2019, we stayed our prior decision
and granted MPS's petition for rehearing. Upon
reconsideration of these matters, and for the reasons that
follow, we find no reversible error and affirm the judgment
of the circuit court.
the state agency authorized to administer the medical
assistance program known as Medicaid, which is a federally
and state funded program providing medical assistance to the
eligible and medically indigent citizens of Virginia. The
Social Security Act requires the state to establish a medical
assistance plan setting forth state regulations governing
Virginia's Medicaid program. 42 U.S.C. § 1396(a).
DMAS is empowered to exercise administrative discretion and
to issue rules, regulations, and policies on Department
matters. 42 C.F.R. § 431.10(c)(1)(i) and (ii).
Technology Assisted Waiver Program ("Tech Waiver")
is a Medicaid program that provides services to persons
dependent on a medical device, and therefore, requiring
ongoing nursing care for the management of the device and for
everyday activities. Under such a waiver program, qualifying
individuals are enabled "to remain in their homes or
communities instead of residing in a nursing home."
1st Stop Health Servs. v. Dep't of Med. Assistance
Servs., 63 Va.App. 266, 270 (2014).
an enrolled provider of private duty nursing services under
the Medicaid program. In the Provider Participation
Agreement, MPS contracted "to provide services in
accordance with the Provider Participation Standards
published periodically by DMAS in the appropriate Provider
Manual(s) . . . ." In the same agreement, MPS agreed to
"keep such records as DMAS determines necessary"
and "to comply with all applicable state and federal
laws, as well as administrative policies and procedures of
[DMAS] as from time to time amended." Pursuant to 12 VAC
30-120-1730(A)(5), providers are required to obtain criminal
background checks performed by Virginia State Police on all
employees who may have contact or provide services to the
regulations require that providers maintain sufficient
records documenting fully and accurately the nature, scope,
and details of the services provided. 12 VAC
30-120-930(A)(12). "To ensure accountability, the state
conducts after-the-fact audits. In order for these audits to
function efficiently, uniformity and clarity of documentation
is essential." 1st Stop Health Servs., 63
Va.App. at 277.
its internal auditors, DMAS conducted a "desk
audit" of MPS's services provided to twenty-five
Medicaid recipients from October 1, 2014, through December
31, 2014.On August 18, 2015, the auditors requested
information on MPS staff who provided care, including
criminal background checks performed by the Virginia State
Police. On September 9, 2015, MPS responded with invoices and
proof of payment to the Virginia State Police for all but
four nurses. The invoices disclosed the names of the MPS
employees, the month in which the request for a background
check was made, and the dates of the completed searches.
Kaufman, a DMAS Healthcare Compliance specialist, conducted
the audit of MPS. On July 13, 2016, she wrote a file
memorandum stating that criminal background checks were
missing for several employees and a few supervisory employees
for whom MPS had not submitted personnel files. On August 5,
2016, Kaufman sent a preliminary findings report to MPS
advising it of the preliminary review and requested the
submission of additional documentation regarding certain
claims within thirty days of the receipt of the letter. An
attached report and spreadsheet stated that certain criminal
background check information was missing. The report
indicated three error codes. Error Code 101 pertained to
requirements for written documentation to support claims
billed. Error Code 913 pertained to the requirement that a
Medicaid provider perform criminal background checks and
verify personal references of prospective employees. Under
this error code, the auditors identified a lack of
documentation for criminal record checks for three nurses.
Error Code 915 pertained to the lack of personnel files,
including criminal background checks, for staff.
Hubbard, the MPS Director of Nursing, testified that MPS did
not receive the August 5, 2016 letter, and thus, MPS did not
send the documentation within the thirty days. On September
20, 2016, DMAS allotted five additional days for MPS to
submit the missing documentation.
September 21, 2016, MPS sent additional documentation to DMAS
excluding criminal background checks, stating that the
criminal background checks were in the personnel files but
could not be provided due to Virginia State Police
dissemination policies. MPS stated that "[f]or each
employee and registered nurse providing the supervisory
visits for the recipients in question we have submitted, paid
for and received back the information from the Virginia
police and are maintained in a file."
November 14, 2016, Kaufman issued a notification and
collection letter to MPS indicating that MPS was responsible
for an overpayment of $74, 894.25 for services rendered in
the audited time frame. The letter indicated that no
documentation was submitted showing the completion of a
criminal background check for three nurses. Although
personnel files were submitted for five registered nurses,
the files did not contain a criminal background check, nor
were their names noted in the invoices submitted on September
9, 2015. These deficiencies were identified under Error Code
913. Further, the letter stated that no personnel files were
submitted for one licensed practical nurse (L.P.N.) and one
R.N. These deficiencies were identified under Error Code 915.
filed an appeal of DMAS's findings with the DMAS Appeals
Division and requested an informal hearing. An informal
appeal decision was issued on May 9, 2016, which upheld the
overpayment determinations. MPS again appealed and requested
a formal hearing. On October 4, 2017, the hearing officer
issued his recommended decision. He recommended reversing the
retractions associated with Error Codes 913 and 915. DMAS and
MPS both filed exceptions to the recommended decision. An FAD
was filed on December 1, 2017. The FAD upheld the retractions
associated with Error Code 913, but reversed the retractions
associated with 915. As all administrative remedies had been
exhausted, MPS appealed to the circuit court. On June 18,
2018, the circuit court affirmed the FAD and ordered that the
overpayment amount of $63, 972.15 related to Error Code 913
should be returned to DMAS. MPS appealed to this Court.
STANDARD OF REVIEW
the [Virginia Administrative Process Act ("VAPA")],
the circuit court reviews an agency's action in a manner
'equivalent to an appellate court's role in an appeal
from a trial court.'" Family Redirection Inst.,
Inc. v. Dep't of Med. Assistance Servs., 61 Va.App.
765, 771 (2013) (quoting Mattaponi Indian Tribe v.
Commonwealth, 43 Va.App. 690, 707 (2004) (citations
omitted)). "The circuit court has no authority under
VAPA to reweigh the facts in the agency's evidentiary
record." Id. "Instead, 'when the
appellant challenges a judgment call on a topic on which the
agency has been entrusted with wide discretion by the General
Assembly, we will overturn the decision only if it can be
fairly characterized as arbitrary or capricious and thus a
clear abuse of delegated discretion.'" Id.
at 772 (quoting Citland, Ltd. v. Commonwealth ex rel.
Kilgore, 45 Va.App. 268, 275 (2005) (citation and
quotation marks omitted)).
Court "afford[s] DMAS 'great deference' in its
administrative 'interpretation and application of its own
regulations.'" Id. (quoting Finnerty v.
Thornton Hall, Inc., 42 Va.App. 628, 634 n.2 (2004)
"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." [Bd. of
Supervisors v. State Bldg. Code Tech. Review Bd., 52
Va.App. 460, 466 (2008)] (quoting Real Estate Bd. v.
Clay, 9 Va.App. 152, 160-61 (1989)). However,
"'deference is not abdication, and it requires us to
accept only those principles of agency interpretations that
are reasonable in light of the principles of construction
courts normally employ.'" Id. (quoting
EEOC v. Arabian American Oil Co., 499 U.S. 244, 260
Avante at Roanoke v. Finnerty, 56 Va.App. 190, 197
(2010); see also Appalachian Voices v. State Air
Pollution Control Bd., 56 Va.App. 282, 293 n.2 (2010);
Avalon Assisted Living Facilities, Inc. v.
Zager, 39 Va.App. 484, 503 (2002).
this Court gives no deference to an agency's
interpretation of its own regulation that is "arbitrary
and capricious," meaning an interpretation that is
"'unreasonable'" or "'without
determining principle.'" Williams v.
Commonwealth of Va. Real Estate Bd., 57 Va.App. 108, 135
(2010) (quoting Sch. Bd. of the City of Norfolk v.
Wescott, 254 Va. 218, 224 (1997)).
appeal, MPS contends that the circuit court erred in
affirming the DMAS Director's FAD. Specifically, MPS
argues that the FAD arbitrarily and capriciously reversed the
retractions associated with Error Code 913. Next, MPS
contends that the circuit court erred in finding that MPS
violated Code § 32.1-162.9:1(A) and 12 VAC
30-12-1730(A)(5). Lastly, MPS argues that the circuit court
erred in determining that the overpayment amount of $63,
972.15 associated with Error Code 913 should be remitted to
DMAS. For the reasons that follow, we affirm the decision of
the circuit court.
contends on appeal that the Error Code 913 retractions
"arose as a result of the [a]uditor arbitrarily setting
new and inconsistent standards not supported by Virginia
law." Specifically, MPS refers to the auditor advising
MPS that proof of criminal background check requirements
could be met by simply a written statement saying that the
criminal background checks were completed, then later