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From Health Law Daily, October 7, 2016

Denial of payment based on irrelevant findings of fact is arbitrary and capricious

By Susan Smith, J.D., M.A.

After reviewing the Texas Health and Human Services Commission’s (HHSC’s) findings supporting its denial of payment for a custom power wheelchair, the Texas Court of Appeals found no rational connection between HHSC’s findings and its conclusion. Concluding that the HHCS’s decision was not supported by substantial evidence and was arbitrary and capricious, the appellate court affirmed the trial court’s judgment (Texas Health and Human Services Commission v. Lukefahr, October 6, 2016, Goodwin, M.).

Prior authorization request. A Medicaid-enrolled provider of durable medical equipment (DME) submitted a prior authorization request for a custom power wheelchair with an integrated standing feature for a Medicaid recipient who was born with cerebral palsy and has spastic quadriplegia with dystonia. The recipient’s physician attested to the medical necessity of the recommended wheelchair. Although the Texas Medicaid and Health Partnership (TMHP) denied the prior authorization stating that "under section of HHSC’s 2013 Texas Medicaid Provider Procedures Manual, ‘mobile standers, power standing system on a wheeled mobility device’ are not a benefit of Texas Medicaid," TMHP noted that the request could be appealed for exceptional circumstances if submitted with certain documentation.

The documentation included identification of the recipient’s specific medical needs that can only be addressed by the requested equipment, a letter of medical necessity of why alternative DME had been ruled out, and a minimum of two articles of evidence-based medical peer reviewed literature demonstrating validated, uncontested data for the use of the requested equipment to treat the recipient’s medical condition.

Exceptional circumstances request denials. The DME provider submitted the exceptional circumstances request along with the requested documentation and a letter of medical necessity signed by the recipient’s physician and physical therapist explaining her medical and functional needs. TMHP denied the request after concluding that the documentation submitted failed to support the medical necessity of the standing feature of the power wheelchair or the standing feature would serve a medical purpose for the recipient.

The recipient filed suit for judicial review following a fair hearing and an administrative review where the fair hearing officer and an HHCS attorney upheld HHSC’s denial of the exceptional circumstances request. The trial court found that HHSC violated the recipient’s due process rights and concluded that the decision denying her a custom wheelchair with an integrated standing feature was not supported by substantial evidence and was arbitrary and capricious. HHSC appealed the trial court decision.

HHSC’s substantial evidence claim. HHSC argued that the agencies numerous findings of fact supported its denial. Specifically, that the recipient failed to establish that the wheelchair would serve a specific medical purpose for her and she does not currently have a static stander and was not evaluated for one. The appellate court disagreed with HHSC finding and stated that whether the recipient currently had a static stander and was not evaluated for a static stander did not establish that an integrated stander is not medically necessary or would not serve a specific medical purpose. Further, the court said that there is no requirement for the recipient to be evaluated for, try, or request an alternative DME prior to authorization of the requested wheelchair.

The court determined that none of the findings of fact reasonably related to the reasons for HHSC’s denial or supported the agency’s decision. The court found that HHSC’s statements were either irrelevant or factually incorrect assertions that were contradicted by documentation and testimony and, in some instances were not based on a consideration of all relevant factors. On the other hand, the court stated that the record showed that both the documentation and the testimony of the physical therapist explained the recipient’s need for an integrated standing feature and that HHSC presented no testimony to contradict the documentary evidence and testimony of the physician and physical therapist. According to the court, "to the extent the agency based its decision on legally irrelevant findings of fact, the decision was arbitrary and capricious."

The case is No. 03-15-00325-CV.

Attorneys: Kara Holsinger, Office of the Attorney General, for Texas Health and Human Services Commission. Maureen O'Connell (Attorney at Law) for Jessica Lukefahr.

Companies: Texas Health and Human Services Commission

MainStory: TopStory MedicaidPaymentNews MDeviceNews TexasNews

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