Carolina E. Leach v. Commonwealth ( 1995 )

COURT OF APPEALS OF VIRGINIA
Present: Chief Judge Moon, Judge Annunziata and
Senior Judge Hodges
Argued at Richmond, Virginia
CAROLINA E. LEACH, an Infant,
Who Sues By and Through Barbara
Leach, her Mother and Next Friend
v. Record No. 1925-94-2 MEMORANDUM OPINION * BY
CHIEF JUDGE NORMAN K. MOON
COMMONWEALTH OF VIRGINIA, AUGUST 22, 1995
Ex Rel. Department of Medical
Assistance Services
FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND
Randall G. Johnson, Judge
John W. Jansak (Joseph Ryland Winston; Harriman,
Jansak, Levy & Wylie, on brief), for appellant.
Craig M. Burshem, Assistant Attorney General
(James S. Gilmore, III, Attorney General; William
H. Hurd, Deputy Attorney General; Siran S.
Faulders, Senior Assistant Attorney General &
Section Chief, on brief), for appellee.
Carolina Leach, an infant, by and through Barbara Leach, her
mother and next friend ("Appellant"), appeals a decision by the
Department of Medical Assistance Services (DMAS) finding that she
was no longer eligible for participation in the Technology
Assisted Waiver Program ("Waiver Program") which provides payment
for home-based services for disabled individuals and is
administered under Virginia's Medicaid State Plan in cooperation
with the federal government. 42 U.S.C.S. § 1396. Appellant
contends that the DMAS wrongfully terminated her benefits because
*
Pursuant to Code § 17-116.010 this opinion is not
designated for publication.
the DMAS incorrectly applied an individual cost-effectiveness
test to determine her eligibility for participation in the Waiver
Program. Appellant also argues that in reviewing the DMAS's
decision, the circuit court did not base its decision to affirm
solely on the agency record as required by the Administrative
Process Act. Code § 9-6.14:16 (B). We disagree and affirm the
DMAS decision.
"Code § 9-6.14:17 requires that reviewing courts `take due
account of the presumption of official regularity, the experience
and specialized competence of the agency, and purposes of the
basic law under which the agency has acted.'" Virginia Real
Estate Bd. v. Clay, 9 Va. App. 152, 160-61, 384 S.E.2d 622, 627
(1989) (emphasis added); see also Johnston-Willis, Ltd. v.
Kenley, 6 Va. App. 231, 243, 369 S.E.2d 1, 13 (1988). "[W]here
the question involves an interpretation which is within the
specialized competence of the agency and the agency has been
entrusted with wide discretion by the General Assembly, the
agency's decision is entitled to special weight in the courts."
Kenley, 6 Va. App. at 244, 369 S.E.2d at 8.
Furthermore, notwithstanding the provisions of § 9-16.14:17,
this Court's review, as well as that of the circuit court, shall
be based solely upon the agency record, and . . . shall be
limited to ascertaining whether there was evidence in the agency
record to support the case decision of the agency acting as the
trier of fact.
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Code § 9-6.14:16 (B).
The DMAS is the Virginia agency charged with administering
the state's Medicaid program. See Code §§ 32.1-323 et seq. The
DMAS possesses the requisite experience and competence necessary
to determine who is eligible for the programs it administers
under the Virginia Medicaid State Plan. As such, its
interpretations of the statutes and regulations governing who
qualifies for the Waiver Program "are entitled to deference by a
reviewing court and should only be overturned when found to be
arbitrary and capricious." Fralin v. Kozlowski, 18 Va. App. 697,
701, 447 S.E.2d 238, 241 (1994).
We hold that the DMAS decision to apply an individual cost-
effectiveness test to determine appellant's eligibility for
participation in the Waiver Program was correct under the DMAS's
interpretation of applicable law and its own procedures, pursuant
to the state plan. Appellant contends that Virginia elected not
to apply such a test. The sole basis of appellant's argument is
a pre-printed waiver form, filled out by the DMAS as part of
Virginia's request for renewal of its Waiver Program. This pre-
printed form indicates that an individual cost-effectiveness test
would not apply. However, as the DMAS points out, an internal
conflict exists: attached to the waiver form and incorporated
into the request was the DMAS manual which states that it would
apply such a test.
In addressing this conflict, the DMAS was entitled to
consider the primary intent of the authors of the state plan and
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to construe the DMAS procedures to effectuate that intent. See
VEPCO v. Board of County Supvrs., 226 Va. 382, 388, 309 S.E.2d
308, 311 (1983); Norfolk So. Ry. Co. v. Lassiter, 193 Va. 360,
364, 68 S.E.2d 641, 643 (1952). In doing so, the DMAS looked to
the regulations governing the waiver to determine what test
Virginia intended to apply when it requested the waiver. Based
on its construction of the state plan, DMAS determined that in
cases like the appellant's Virginia intended to apply the
individual cost-effectiveness test.
We also find that the circuit court's decision to affirm the
DMAS ruling was based solely on the agency record as required by
the Administrative Process Act. Code § 9-6.14:16 (B). The
agency record supports the circuit court's affirmance of the
DMAS's ruling. Based on her receipt of private insurance to
cover the cost of her medical expenses, the appellant was not
entitled to continue in the Waiver Program.
Appellant argues that her entitlement to private insurance
coverage was not an issue before the circuit court. She argues
that, because her private insurance was not the basis for DMAS's
denial of her participation in the Waiver Program, it is not to
be considered as part of the agency record. However, the agency
record belies appellant's argument. An individual's entitlement
to private insurance coverage is inextricably bound to a
determination of one's eligibility to receive Medicaid benefits.
Pursuant to 42 U.S.C. § 1396n(c)(4), the DMAS was authorized to
include appellant's private health insurance coverage in
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determining the cost-effectiveness for her participation in the
Waiver Program. Moreover, § 1396n(c)(1) permits the states to
pay home and community-based services for:
individuals with respect to whom there has been a
determination that but for the provision of such
services the individual would require the level of care
provided in a hospital or nursing facility or
intermediary care facility for the mentally retarded,
the cost of which would be reimbursed under the state
plan.
Additionally, § 1396b(o) states that "no payment shall be
made to a State . . . for expenditures for medical assistance
provided for an individual under its State Plan . . . to the
extent that a private insurer . . . would have been obligated to
provide such assistance. . . ."
Thus, the agency record, including the above-cited statutes,
shows that the circuit court was correct in affirming the DMAS
decision based on appellant's receipt of private insurance
benefits. Appellant's hospital expenses would not have been
reimbursed under Virginia's state plan because her entitlement to
private insurance coverage made her ineligible for Medicaid
benefits. Hence, as someone who would not be otherwise
reimbursed under the state plan, she was not eligible to
participate in the Waiver Program. 42 U.S.C. 1396n(c)(1).
Similarly, appellant's private insurance coverage disqualified
her by way of a cost-effectiveness analysis, since § 1396n(c)(4)
directs states to compare the expected "amount of medical
assistance provided" with the application of waiver to the amount
provided without the waiver. When the waiver was not applied, no
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medical assistance would have been provided to the appellant
because her private insurance would pay for her hospital
expenses.
Accordingly, the decision of the DMAS to terminate
appellant's participation in the Waiver Program is affirmed.
Affirmed.
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