Myers v. South Carolina Department of Health & Human Services
Myers v. South Carolina Department of Health & Human Services
Opinion of the Court
In this appeal from the administrative law court (ALC), Albert Myers claims the South Carolina Department of Health and Human Services (DHHS)—and more specifically, its agent, the South Carolina Department of Disabilities and Special Needs (DDSN) (collectively, the Department)—erred in failing to properly notify him of his reduction in Medicaid services in violation of his statutory and constitutional rights. Myers also contends the ALC erred in permitting a reduction or termination of his Medicaid services when the Department’s decision did not comply with regulations promulgated in accordance with the South Carolina Administrative Procedures Act
I. FACTS/PROCEDURAL HISTORY
Myers is a thirty-eight-year-old Medicaid-eligible individual, who is mentally and developmentally disabled. He is nonverbal and suffers from athetoid quadriplegia, cerebral palsy, severe scoliosis, epilepsy, and arthrogroposis. Because Myers cannot swallow properly, he must ingest food and medications through a gastric tube. Myers filed this action after the Department either reduced or eliminated certain services that Myers received pursuant to the South Carolina Intellectual Disability/Related Disabilities (ID/RD) waiver program.
The ID/RD waiver program, created pursuant to 42 U.S.C. § 1396n(c) (2012), permits states to waive the requirement that persons with mental retardation or a related disability reside in an institutional setting to receive certain Medicaid services. See Doe v. Kidd, 501 F.3d 348, 351 (4th Cir. 2007). The waiver program provides Medicaid reimbursement to participant states for providing community-based services to individuals who would otherwise require institutionalized care. See 42 U.S.C. § 1396n(c).
Because the waiver program is governed by federal statute, when a state elects to participate in the program, it must comply with all federal Medicaid laws and regulations. Kidd, 501 F.3d at 351. Among other requirements, a state’s waiver program “must specify the amount, duration, and scope of each service it provides.” 42 C.F.R. § 440.230(a) (2012). States are expressly authorized to place limits on services or reduce the amount, duration, or scope of a provided service, so long as such reductions are approved by the federal government prior to implementation and such reductions are not done in an arbitrary manner or upon some other impermissible basis. Id. § 440.230(b)-(d). Once a waiver program is approved, the waiver remains in effect for a period of three years, but it may be renewed thereafter in five-year increments. 42 U.S.C. § 1396n(c)(3).
Federal law mandates a single state agency administer a state’s Medicaid plan. 42 U.S.C. § 1396a(5). In South Carolina, DHHS is the state agency responsible for administering and
In 2009, South Carolina submitted to the Centers for Medicare & Medicaid Services (CMS) a waiver renewal application, which eliminated certain nonmandatory services and implemented service limitations or caps on other categories of services. See Stogsdill v. S.C. Dep’t of Health & Human Servs., 410 S.C. 273, 275, 763 S.E.2d 638, 639 (Ct. App. 2014). CMS approved the waiver renewal application, and the renewed waiver—including the service caps—became effective January 1, 2010. Id.
Prior to the 2010 waiver renewal, Myers received the following: dental services; specialized medical equipment, medical supplies, and assistive technology; one hour of physical therapy per week; forty-five hours of personal care aide (PCA) II per week; six hours of community services per week; six hours of day services per week; forty-eight days of daily respite care; and 456 hours of hourly respite care per year. PCA services consist of hands-on personal care that Myers needs to accomplish his activities of daily living such as bathing, toileting, dressing, and eating. See id. “Respite [c]are can be a range of services, including personal care[,] but is designed to provide services when the normal caregiver is absent or needs relief.” Id.
After the waiver renewal, Myers’ services were modified as follows: physical therapy and daily respite care were eliminated; twenty-eight hours per week of PCA II services (reduction of seventeen hours); one full day of adult day health care services in lieu of the half-day community and day services; and sixty-eight hours per month of respite care, with an exception granting Myers an additional thirty-three hours per month (total of 101 hours of respite care per month). Beginning January 12, 2011, Myers was authorized to receive six hours of PCA I services and psychological counseling. Myers was subsequently institutionalized in a long-term care facility
Myers filed this appeal in December 2009 when his services coordinator informed him that his Medicaid services would be reduced on January 1, 2010. On January 13, 2010, two weeks after Myers’ services were altered, the director of DDSN notified Myers in writing that his request for reconsideration was denied. A hearing officer for DHHS issued an interlocutory order on February 25, 2010, in which the officer requested that Myers submit any allegations of error pertaining to his service modifications. Counsel for Myers responded on March 15, 2010, and DDSN replied to Myers’ allegations. Based on these filings, the DHHS hearing officer issued an order of dismissal on May 6, 2010. However, the hearing officer failed to conduct an evidentiary hearing prior to issuing the order of dismissal.
In light of his failure to receive an evidentiary hearing, Myers appealed the order of dismissal to the ALC on June 18, 2010, challenging DHHS’s May 6, 2010 order of dismissal (First Appeal). The ALC issued an order on November 9, 2011 (November 2011 Order), finding'—among other things—that Myers’ argument regarding the Department’s failure to provide adequate notice was abandoned, and Myers was entitled to an evidentiary hearing regarding the reduction or elimination of his services to comply with due process. The ALC accordingly remanded Myers’ case to the DHHS hearing officer for an evidentiary hearing. After the hearing officer conducted a hearing, she issued an order on February 9, 2012, upholding the reductions in Myers’ services. Myers timely filed a motion to alter or amend, which the hearing officer denied on March 19, 2012. Myers then appealed to the ALC on April 13, 2012 (Second Appeal), challenging DHHS’s final decision in this matter.
Myers raised the same issues
II. STANDARD OF REVIEW
This court’s standard of review is governed by the APA. See S.C. Code Ann. § 1-23-380(5) (2005 <& Supp. 2016). Pursuant to the APA, the court of appeals may affirm the agency’s decision or remand the matter for further proceedings. Id. The court may also reverse or modify the decision
if substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions, or decisions are:
(a) in violation of constitutional or statutory provisions;
(b) in excess of the statutory authority of the agency;
(c) made upon unlawful procedure;
(d) affected by other error of law;
(e) clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record; or
(f) arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.
Id.
“Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Stogsdill, 410 S.C. at 276, 763 S.E.2d at 640 (quoting S.C. Dep’t of Mental Health v. Moore, 295 S.C. 42, 45, 367 S.E.2d 27, 28 (1988)). “When determining whether the record contains substantial evidence to support an administrative
III. LAW/ANALYSIS
A. Notice & Due Process
Myers first claims his due process rights were violated because the Department failed to properly notify him of the reduction or termination in his Medicaid services. We disagree.
42 C.F.R. § 431.210 (2013) addresses the content of notices regarding changes in the waiver program as follows:
A notice required under § 431.206(c)(2), (c)(3), or (c)(4) of this subpart must contain—
(a) A statement of what action the State, skilled nursing facility, or nursing facility intends to take;
(b) The reasons for the intended action;
(c) The specific regulations that support, or the change in Federal or State law that requires, the action;
(d) An explanation of—
(1) The individual’s right to request an evidentiary hearing if one is available, or a State agency hearing; or
(2) In cases of an action based on a change in law, the circumstances under which a hearing will be granted; and
(e) An explanation of the circumstances under which Medicaid is continued if a hearing is requested.
It is uncontested that the Department’s notice to Myers failed to include a citation to a specific regulation supporting the reduction in his benefits, or the changes in federal or state law
In its November 2011 Order, the ALC stated Myers failed to preserve the issue because the notice argument was only referenced in the facts section of his brief and was not designated separately as a ground for appeal. The ALC also held Myers failed to include any citation to legal authority on the notice issue within the discussion section of his brief.
In Myers’ motion to alter or amend the ALC’s November 2011 Order, Myers quoted the argument section of his brief to the ALC, wherein he stated, “States that accept Medicaid funds obligate themselves to comply with all federal Medicaid laws. Doe v. Kidd, [501 F.3d 348, 351 (4th Cir. 2007) ]. CMS, the federal Medicaid agency, has promulgated regulations to implement the statutes at 42 C.F.R. 431.200 et seq. which [the Department] is bound to follow.” Myers then argued DHHS was aware of his notice argument because it responded in its brief with a full citation to 42 C.F.R. 431.210 and a statement that “[Myers] knew exactly what was being reduced and eliminated and what to appeal.” Despite these arguments, the ALC denied Myers’ motion to alter or amend, holding it appropriately ruled upon the notice issue in its initial November 2011 Order.
When Myers raised the defective notice issue in the Second Appeal to the ALC, the ALC noted the ruling from November 2011. However, the ALC also ruled on the merits of Myers’ notice argument, finding, to overturn the Department’s decision, Myers had to establish he was substantially prejudiced by the defective notice. Upon a review of the record, the ALC concluded
[Myers] was sufficiently aware of the proposed changes in his services as a result of the waiver renewal, he was afforded the opportunity to a fair hearing, and he was represented by an attorney throughout the appeals process before [the Department]. [Myers] has not shown how the process or his fair hearing would have been conducted*618 differently had the notices complied with the technical requirements of 42 C.F.R. § 431.210. As such, [Myers] has simply not provided any evidence to the [cjourt of how he was prejudiced by the lack of technical compliance with 42 C.F.R. § 431.210.
Initially, we are not convinced the ALC’s ruling regarding preservation of Myers’ notice claim is properly before this court. Myers contends it was the Department’s responsibility to compile and present the record to the ALC, and the Department intentionally omitted Myers’ brief, thus precluding the ALC from having sufficient evidence to make a proper decision in its November 2011 Order. While it appears the ALC did in fact have Myers’ brief to consider in the First Appeal,
Assuming Myers’ notice argument was adequately raised to the ALC, Myers argues he was substantially prejudiced because if the Department had provided adequate notice that the medical necessity of his services would be challenged, then he could have provided live testimony from his treating physicians and dentist about the medical necessity of home-based services. We disagree.
“Any party in an administrative agency proceeding is entitled to certain procedural opportunities of notice and a fair hearing.” Palmetto All., Inc. v. S.C. Pub. Serv. Comm’n, 282 S.C. 430, 435, 319 S.E.2d 695, 698 (1984). “Furthermore, proof of a denial of due process in an administrative proceeding requires a showing of substantial prejudice.” Id.
In Stogsdill, this court addressed a similar factual and legal scenario.
B. Lawfulness of Reduction in Waiver Services
Myers next claims the reduction in his Medicaid services was unlawful because they were not promulgated as regulations pursuant to the APA. We disagree.
Under the APA, “ ‘[regulation’ means each agency statement of general public applicability that implements or prescribes law or policy or practice requirements of any agency. Policy or guidance issued by an agency other than in a regulation does not have the force or effect of law.” S.C. Code Ann. § 1-23-10(4) (2005).
[WJhether an agency’s action or statement amounts to a rule—which must be formally enacted as a regulation—or a general policy statement—which does not have to be enacted as a regulation—depends on whether the action or statement establishes a “binding norm.” When the action or statement “so fills out the statutory scheme that upon application one need only determine whether a given case is within the rule’s criterion,” then it is a binding norm which should be enacted as a regulation. But if the agency remains free to follow or not follow the policy in an individual ease, the agency has not established a binding norm.
Sloan v. S.C. Bd. of Physical Therapy Exam’rs, 370 S.C. 452, 475-76, 636 S.E.2d 598, 610 (2006) (quoting Ryder Truck Lines, Inc. v. U.S., 716 F.2d 1369, 1377 (11th Cir. 1983)), overruled on other grounds by Joseph v. S.C. Dep’t of Labor, Licensing, & Regulation, 417 S.C. 436, 790 S.E.2d 763 (2016).
We again turn to Stogsdill, wherein this court addressed the same issue of whether the 2010 Medicaid service caps under the ID/RD waiver program were lawful when the changes to the waiver program were not passed as regulations pursuant
However, we went on to hold that, “based on the relevant statutory scheme and federal/state nature of Medicaid and the [wjaiver, DDSN was not required to pass a regulation to enact the cap as an enforceable provision.” Id. Specifically, this court concluded that 42 U.S.C. § 1396n(c) permits states to waive federal Medicaid requirements to provide enhanced community support services to Medicaid recipients who would otherwise require institutionalization. Id. at 280, 763 S.E.2d at 642. Because CMS approved South Carolina’s waiver plan, the terms of the waiver program carried the force and effect of federal law and were not required to be promulgated as regulations under the state’s APA. Id.
The Stogsdill court also highlighted our supreme court’s holding in Doe v. South Carolina Department of Health & Human Services, 398 S.C. 62, 727 S.E.2d 605 (2011), as support for the conclusion that the state may change its waiver program so long as those changes are included and approved in the waiver application to the federal government. 410 S.C. at 279, 763 S.E.2d at 641. The precise issue in Doe— whether the state could impose a definition of mental retardation that was more restrictive than the federal definition for purposes of determining eligibility for waiver services—is not before this court. However, we find the holding of Doe—that federally approved waiver provisions carry the force and effect of law—answers the question Myers raises here. As a result, it is unnecessary for such provisions to be promulgated as state regulations to be enforceable. See Doe, 398 S.C. at 74, 727 S.E.2d at 611 (explaining “it is clear that South Carolina could have listed additional criteria in the waiver application for the purpose of defining the population to whom it would provide waiver services” and finding that because DDSN took no steps to formally impose more restrictive eligibility requirements, either through the federal waiver application process or through the state process for promulgating regulations,
Based upon this court’s holding in Stogsdill, we disagree with the ALC’s finding in its February 2014 Order that “CMS’s approval of the State’s Medicaid Plan ... does not make it a binding document. ... Although CMS approved South Carolina’s proposed waiver reductions, the new service caps do not have the force and effect of law.” Consistent with Stogsdill, we find approval by state regulation was not required for the 2010 service caps to carry the force and effect of law. Consequently, we modify the ALC’s holding that the waiver caps were not binding because they had not been promulgated as regulations.
C. Medical Necessity of Services
Myers argues the ALC erred in disregarding the overwhelming evidence from Myers’ treating physician and other qualified sources regarding the amount and types of services that were medically necessary to prevent Myers’ institutionalization.
We believe that, consistent with Olmstead and Pashby, Myers has presented an overwhelming amount of evidence that a reduction or termination of his services would place him at risk of institutionalization. Myers’ treating physician, Dr. Susan Munn, stated that Myers requires continuous and constant supervision due to his “extremely medically complex condition,” and because “[h]is mother is well trained in his
Myers also provided the testimony of Sandra Ray, Myers’ guardian ad litem and a certified speech language pathologist. Ray stated the best place for Myers’ care was in his home because his mother could anticipate his physical and emotional needs and could “in essence [be] the expert for him and about him.” Ray also concluded Myers needed a speech-generating device, which was available pursuant to the waiver program, physical therapy and nursing services to prevent hospitalization, and grief counseling to prevent depression.
Lennie Mullís, Myers’ psychological counselor, also discussed Myers’ need for psychological services and how respite care was an unacceptable substitute for the personal care services Myers received prior to the waiver renewal. Mullís also concurred with Dr. Munn’s assessment of which specialized services Myers needed. Although Mullís acknowledged that Myers was eligible for physical therapy and a certain amount of nursing services under the Medicaid state plan, she believed Myers needed a speech-generating device, dental services, and psychological services to maintain his quality of life and avoid hospitalization, and these services were only available under the waiver program.
Significantly, we find the Department failed to present any medical evidence to dispute the treatment decisions of Dr. Munn. While we do not suggest the ALC is required to absolutely defer to the treating physician’s recommendations, we find no evidence in the record that the Department considered other medical testimony or other conflicting, yet credible, opinions regarding the necessary services for Myers’ care. We are not persuaded by the service coordinator’s testimony that
Accordingly, we reverse the ALC’s conclusion that the Department presented substantial evidence that Myers’ daily needs were being met under the revised provisions of the waiver and remand the case for an assessment of required hours and services without reference to the caps in the waiver.
IV. CONCLUSION
We hold the caps in the waiver were not required to be promulgated as regulations to carry the force and effect of law, and we conclude Myers was not denied due process by the Department’s inadequate notice. However, based on the substantial evidence in the record, we find the ALC erred in concluding Myers’ reduction in services did not pose a substantial risk of institutionalization. Consequently, we remand Myers’ case to DDSN for a consideration of the appropriate
AFFIRMED IN PART, REVERSED IN PART, and REMANDED.
. S.C. Code Ann. § 1-23-110 (2005 & Supp. 2016) (outlining the procedures for promulgating regulations).
. 29 U.S.C. § 794 (2012).
. 42 U.S.C. §§ 12101-12213 (2012).
. 42 U.S.C. §§ 2000d-2000d-7 (2012).
. Myers also claimed DHHS and an employee of DDSN improperly engaged in ex parte communications concerning his case. Myers, however, does not specifically raise that issue on appeal to this court.
. In its November 2011 Order, the ALC responded to Myers’ claim that he did not receive a fair hearing before DHHS’s hearing officer by stating "[w]hile some documents were omitted from the record in this matter, all documents omitted are now a part of the record.”
. Although Stogsdill had not been decided prior to the parties’ submission of their briefs—and thus, was not addressed by either party in this case—the supreme court eventually dismissed Stogsdill’s petition for certiorari as improvidently granted. See Stogsdill v. S.C, Dep't of Health & Human Servs., 415 S.C. 242, 781 S.E.2d 719 (2016). Likewise, the United States Supreme Court denied certiorari on October 3, 2016. See -U.S.-, 137 S.Ct. 278, 196 L.Ed.2d 51 (2016).
. We again, as we did in Stogsdill, reiterate our concern regarding the Department’s non-compliance with the mandatory statutory notice requirement set forth in 42 C.F.R. § 431.210. Despite our finding that Myers suffered no prejudice, we do not condone the Department’s shortcoming in this respect as this regulation is intended to ensure affected recipients have the fullest and fairest opportunity to exercise their rights.
. Myers frames this issue as whether the ALC failed to give Myers' treating physician, Dr. Munn, the “greatest deference” as required by Justice Kennedy’s concurrence in Olmstead as well as whether the ALC's decision ignored the overwhelming evidence regarding the medical necessity of Myers’ services. See Olmstead v. L.C. ex rel. Zimring, 527 U.S, 581, 610, 119 S.Ct. 2176, 144 L.Ed.2d 540 (1999) ("It is of central importance, then, that courts apply today's decision with great deference to the medical decisions of the responsible, treating physicians and, as the Court makes clear, with appropriate deference to the program funding decisions of state policymakers.”). Although Myers does not specifically raise an ADA argument in this section of his brief, we find the crux of his argument is that substantial, reliable evidence in the record proves Myers’ reduction in services poses a substantial risk of institutionalization in violation of the ADA. Accordingly, we address the argument as such.
We believe this approach is proper considering this court’s resolution of the same issue in Stogsdill. 410 S.C. at 284-85, 763 S.E.2d at 644
. We decline to address Myers' claim that the Department retaliated against him and his mother in violation of federal anti-retaliation law because resolution of Myers’ risk of institutionalization argument is dispositive. See Futch v. McAllister Towing of Georgetown, Inc., 335 S.C. 598, 613, 518 S.E.2d 591, 598 (1999) (recognizing an appellate court need not address an issue when resolution of a prior issue is disposi-tive).
Case-law data current through December 31, 2025. Source: CourtListener bulk data.