STATE OF NORTH CAROLINA
COUNTY OF MARTIN
IN THE OFFICE OF
ADMINISTRATIVE HEARINGS
08 DHR 0442
FOCUS HEALTH SERVICES, INC.
via Annette Johnson, Owner/Operator
Petitioner,
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)
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)
v.
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NORTH CAROLINA DEPARTMENT OF )
HEALTH AND HUMAN SERVICES ,
)
Division of Mental Health,
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Respondent,
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and
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ALBEMARLE MENTAL HEALTH
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CENTER FOR DEVELOPMENTAL
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DISABILITIES AND SUBSTANCE
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ABUSE SERVICES,
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Intervenor-Respondent.
)
DECISION
THIS MATTER came on for contested case hearing on 29 April 2008 in the Martin
County Courthouse, Williamston, North Carolina. At the start of the hearing John Morrison,
Esq., of the Twiford Law Firm addressed the court stating that he was making a limited
appearance on behalf of the Albemarle Mental Health Center for Developmental Disabilities and
Substance Abuse Services (“AMH”). AMH also is known as the Local Management Entity
(“LME”) in this matter. Mr. Morrison suggested to the court that it lacked subject matter
jurisdiction to hear this case because Petitioner should have filed the action against AMH in the
Martin County Superior Court. Upon inquiry by the court, Attorney Morrison responded that if
the court found that it had subject matter jurisdiction, AMH would accept the court’s offer to
become a party as an intervenor-respondent. Attorney Morrison made an oral motion to
intervene in this matter which was allowed without objection.
Under Article 3 of Chapter 150B of the North Carolina General Statutes, the court,
having reviewed the file and having considered information and arguments presented to aid the
court, makes the following findings of fact by a preponderance of the evidence, makes the
following conclusions of law, and enters the following orders regarding outstanding motions and
a decision on the merits of the case.
RESPONDENT’S MOTION TO DISMISS
FINDINGS OF FACT
1.
Respondent filed a Motion to Dismiss this action on 1 April 2008 arguing that the court
lacked subject matter jurisdiction to hear the case because Petitioner incorrectly named
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the North Carolina Department of Health and Human Services, Division of Mental
Health (“DMH”) as Respondent in this matter. Respondent further argued that AMH was
the correct entity to name as Respondent in the matter because AMH was the statutorilydesignated decision maker concerning Petitioner’s endorsement to bill Medicaid for
mental health services in Petitioner’s geographic catchment area.
2.
Petitioner filed a Response Opposing Respondent’s Motion to Dismiss on 4 April 2008
arguing that the Medicaid program was the State’s responsibility and that the Legislature
did not intend to divest the State of this responsibility when it designated that LMEs
would decide who receives endorsements and who can provide Medicaid-reimbursed
mental health services in their catchment areas.
3.
It is undisputed that Respondent is a State agency and official notice is taken of that fact.
CONCLUSIONS OF LAW
1.
The parties properly are before the Office of Administrative Hearings.
2.
For the purposes of determining who may provide Medicaid-reimbursed mental health
services in North Carolina, the LME, AMH in this case, is Respondent’s agent. As such,
the decisions of AMH concerning Medicaid-reimbursed mental health services are
Respondent’s decisions.
3.
AMH’s intervention will not prejudice the rights of the already-joined parties, unduly
delay the action, or otherwise become a detriment to this court’s ability to decide the
controverted issues in this matter.
Based upon the foregoing findings of fact and conclusions
HEREBY IS ORDERED, ADJUDGED, AND DECREED as follows:
1.
Respondent’s Motion to Dismiss is denied.
2.
The court has subject matter jurisdiction to hear the case.
3.
AMH’s motion to intervene is allowed.
of
law,
IT
PETITIONER’S MOTION FOR SANCTIONS
FINDINGS OF FACT
1.
The court adopts the above Findings of Fact, Conclusions of Law, and Orders and
Decrees as if fully set out herein.
2.
This court conducted a Preliminary Injunction hearing on 13 March 2008 and entered a
Preliminary Injunction Order on that date.
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3.
That order reads as follows: “Respondent shall give Petitioner a conditional (temporary)
endorsement to bill Medicaid for community support services Petitioner provides to its
mental health consumers in the Albemarle Mental Health Local Management Entity
catchment area.”
4.
This court further ordered that its Preliminary Injunction Order would go into effect when
Petitioner paid security in the amount of $5,000 to the Clerk of the Office of
Administrative Hearings and that the order would remain in effect until the conclusion of
the contested case hearing in this matter.
5.
Petitioner, Annette Johnson, personally gave to the Clerk of the Office of Administrative
Hearings five $1,000 money orders on 14 March 2008, constituting a $5,000 security
bond.
6.
Thereafter, neither Respondent nor its agent AMH endorsed Petitioner to bill for
Medicaid-reimbursed community support services in AMH’s catchment area.
7.
On 2 April 2008 Petitioner filed a Motion to Show Cause requesting that Respondent and
its agents be ordered to appear before the court and show cause as to why they should not
be held in contempt of court for willfully refusing to comply with the court’s Preliminary
Injunction Order.
8.
Respondent filed a Response to the Motion to Show Cause on 7 April 2008 asserting that
it was willing to allow Petitioner to bill Medicaid for community support services but that
AMH would not allow it to do so.
9.
Petitioner then filed a Verified Motion for Sanctions on 15 April 2008 requesting
monetary relief and such further relief as the court saw fit to order.
10.
After the court allowed AMH to intervene in this contested case hearing, AMH requested
a continuance so that it could prepare a defense against Petitioner’s Verified Motion for
Sanctions and Petitioner’s Petition for a Contested Case Hearing. AMH orally argued
that it had been noticed for this hearing only a week prior when Assistant Attorney
General Diane M. Pomper subpoenaed AMH employees to the hearing.
11.
A review of the file shows that Petitioner sent AMH, via Attorney John Morrison,
courtesy copies of the following pleadings: the Petition for a Contested Case Hearing and
its associated Motion for Temporary Restraining Order/Preliminary Injunction filed 15
February 2008, the Motion to Show Cause filed 2 April 2008, and the Verified Motion
for Sanctions filed 15 April 2008.
12.
The court also notes that Respondent, in its Response to Petitioner’s Motion to Show
Cause filed on 2 April 2008 asserted that it was willing to comply with the Preliminary
Injunction Order but that AMH was refusing to comply with that order.
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13.
The court further notes that despite having knowledge of this matter as early as midFebruary 2008 AMH only now, 29 April 2008, comes forward and requests to intervene
and continue this matter.
14.
The court acknowledges that it did not serve a copy of its Preliminary Injunction Order
on AMH but the court finds that AMH is Respondent’s agent in this action and thus
AMH had constructive knowledge of the Preliminary Injunction Order. Assistant
Attorney General Pomper also stated to the court that she had made her best effort to
convince AMH to voluntarily comply with the preliminary injunction until the case could
be heard on the merits but was not successful in that effort.
15.
The court asked AMH if it would be willing to comply with the court’s 13 March 2008
Preliminary Injunction Order if the court continued the matter as requested by AMH. By
and through Attorney Morrison, AMH said that it would not comply with that order on
the basis that AMH did not believe that the Office of Administrative Hearings had
jurisdiction over a local management entity such as AMH in this case.
CONCLUSIONS OF LAW
1.
Respondent and its agents, including AMH (now a party to the case), have willfully
refused to comply with this court’s 13 March 2008 Preliminary Injunction Order despite
having the ability to do so.
2.
The court’s 13 March 2008 Preliminary Injunction Order remains in effect until the
conclusion of the contested case hearing in this matter.
3.
The purpose of the 13 March 2008 Preliminary Injunction Order still may be served by
compliance with that order.
4.
Respondent and its agents, including AMH, have the ability to take reasonable measures
to comply with that order.
5.
The court does not have the authority to levy monetary sanctions against Respondent and
its agents.
6.
Under N.C. Gen. Stat. §§ 150B-29(a) and 150B-33(b)(8) the court has authority to
impose sanctions, including exclusion of Respondent’s and AMH’s evidence presentation
during the contested case hearing.
Based upon the foregoing findings of fact and conclusions of law, IT HEREBY IS
ORDERED, ADJUDGED AND DECREED as follows:
1.
AMH’s motion for continuance is denied.
2.
Respondent and AMH are precluded from presenting evidence during the contested case
hearing of this matter.
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3.
The matters and things alleged in Petitioner’s contested case petition and other pleadings
are taken as true without further proof.
DECISION
FINDINGS OF FACT
1.
The court adopts the above Findings of Fact, Conclusions of Law, and Orders and
Decrees as if fully set out herein.
2.
Petitioner represented to the court that it had reached a settlement agreement with the
respondent in 08 DHR 0441. Contested case 08 DHR 0441 is a related case to this action
in which the Respondent in that case, Department of Health and Human Services,
Division of Health Service Regulation, has accused Petitioner of committing a Type A
violation as that term is defined in N.C. Gen. Stat. § 122C-24.1(a)(1).
3.
Petitioner further asserted that the settlement agreement in that action did not include a
finding or conclusion that Petitioner had committed a Type A violation.
4.
Upon the court’s order precluding Respondent and AMH from presenting evidence,
Petitioner rested on the pleadings in this contested case.
Based on the pleadings filed by all parties in this matter, as circumscribed by the
foregoing order of sanctions, the court finds as follows by a preponderance of the evidence:
5.
Petitioner, Focus Health Services, Inc., is a mental health service provider operating in
Martin County, North Carolina.
6.
Petitioner has been in business approximately 10 years operating group homes and
providing various mental health services, including CAP, MR, and DD services, to
mental health consumers in AMH’s cathcment area.
7.
On 30 May 2007, Intervenor-Respondent conditionally (temporarily) endorsed Petitioner
to provide a type of mental health service known as “community support service” to
financially needy mental health consumers residing in AMH’s catchment area in and
around Williamston, North Carolina. This conditional endorsement allowed Petitioner to
bill the State’s Medicaid program for financial reimbursement for providing these
community support services.
8.
Petitioner’s conditional endorsement was retroactive to 21 December 2006 as Petitioner
had been providing community support services since that date. This conditional
endorsement was to expire on 20 September 2007 but AMH extended it to 31 December
2007.
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9.
Petitioner began the process of gaining full (permanent) endorsement to provide
community support services and bill Medicaid for them in the summer of 2007 with the
intent that the full endorsement would begin on or before the termination of the
conditional endorsement.
10.
On or about 1 November 2007 Respondent’s agents inspected Petitioner’s facilities as
part of the endorsement process and found two alleged deficiencies: (1) Petitioner was
not conducting background checks on its employees before hiring them and (2) Petitioner
was not properly managing consumer funds.
11.
Petitioner prepared a plan of correction, corrected the deficiencies, and submitted its plan
of correction to Respondent’s agents on or about 22 November 2007.
12.
On 31 December 2007 Petitioner’s conditional endorsement to bill Medicaid for
community support services expired and neither Intervenor-Respondent nor Respondent
had granted Petitioner full endorsement.
13.
Petitioner telephonically contacted Respondent’s agents and asked about the full
endorsement, but received no response.
14.
Respondent’s agents, AMH, again visited Petitioner’s facilities on or about 23 January
2008 and found the following alleged deficiencies: (1) Petitioner had failed to make an
incident report on a particular incident that had occurred in October 2007; (2) Petitioner
failed to follow a treatment regimen for one of its previously discharged consumers; (3)
Petitioner failed to conduct a criminal background check on one of its employees; (4)
Petitioner had neglected one of its previously discharged consumers; and (5) Petitioner
was not exercising proper management of its consumers’ funds.
15.
Petitioner denied the alleged deficiencies arising from this facility visit.
16.
Issues (1), (2), and (4) from paragraph 14 above were the basis of the petition filed in 08
DHR 0441. The Department of Health and Human Services, Division of Health Service
Regulation accused Petitioner of committing a Type A violation as that term is defined in
N.C. Gen. Stat. § 122C-24.1(a)(1) based on these three issues. The parties in 08 DHR
0441 settled that matter out of court prior to this contested case hearing and that
settlement agreement did not include a finding or conclusion that Petitioner had
committed a Type A violation.
CONCLUSIONS OF LAW
1.
Respondent, via its agent AMH, willfully and unjustifiably refused to fully endorse
Petitioner and allow it to bill Medicaid for community support services beyond 31
December 2007, in the absence of any further showing of justification by IntervenorRespondent or Respondent. Respondent and its agents acted erroneously, arbitrarily, and
capriciously in refusing to fully endorse Petitioner and allow it to bill Medicaid for
community support services beyond 31 December 2007.
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2.
Intervenor-Respondent’s decision, as an agent of Respondent in matters of provision of
mental health services, including the provider endorsement process, to refuse to fully
endorse Petitioner and allow it to bill Medicaid for community support services beyond
31 December 2007 deprived Petitioner of property and otherwise substantially prejudiced
Petitioner’s rights under the evidence of record within the present posture of this
contested case.
Based upon the foregoing findings of fact and conclusions
HEREBY IS ORDERED, ADJUDGED AND DECREED as follows:
of
law,
IT
1.
Intervenor-Respondent’s decision, as an agent of Respondent under the facts of this case,
to not allow Petitioner to bill Medicaid for community support services in the AMH
catchment area beyond 31 December 2007, under a full or extended temporary
endorsement, is REVERSED.
2.
Respondent and AMH shall allow Petitioner to apply for full endorsement to bill
Medicaid for community support services in the AMH catchment area.
3.
Respondent and AMH shall approve Petitioner’s Medicaid endorsement application if it
currently meets previously established standards that Respondent and AMH have put in
place for previously endorsed mental health services providers in AMH’s catchment area.
4.
Petitioner shall be allowed to continue to provide other mental health services that it was
previously providing to mental health consumers in the AMH catchment area to include
but not limited to CAP, MR, and DD services as those services were not at issue during
this contested case hearing.
5.
All parties shall bear their own costs in this action but the Clerk immediately shall return
Petitioner’s $5,000 bond to Petitioner.
NOTICE
The Agency that will make the final decision in this contested case is the North Carolina
Department of Health and Human Services.
The Agency is required to give each party an opportunity to file exceptions to the
decision and to present written arguments to those in the Agency who will make the final
decision. N.C. Gen. Stat. § 150-36(a). The Agency is required by N.C. Gen. Stat. § 150B-36(b)
to serve a copy of the final decision on all parties and to furnish a copy to the parties' attorneys of
record and to the Office of Administrative Hearings.
In accordance with N.C. Gen. Stat. § 150B-36 the Agency shall adopt each finding of fact
contained in the Administrative Law Judge's decision unless the finding is clearly contrary to the
preponderance of the admissible evidence. For each finding of fact not adopted by the agency,
the agency shall set forth separately and in detail the reasons for not adopting the finding of fact
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and the evidence in the record relied upon by the agency in not adopting the finding of fact. For
each new finding of fact made by the agency that is not contained in the Administrative Law
Judge's decision, the agency shall set forth separately and in detail the evidence in the record
relied upon by the agency in making the finding of fact.
This the 12th day of June, 2008.
________________________________
Beecher R. Gray
Administrative Law Judge