Allen Dental Laboratories, Inc., App v. Washington State Health Care Authority, Resp
75905-1
| Wash. Ct. App. | Nov 6, 2017Background
- Allen Dental Laboratories (owned by Andon Allen) participated in Washington Medicaid under a core provider agreement requiring compliance with agency regulations and retention of medical records; HCA may audit and recoup payments.
- HCA audited claims from May 1, 2007 to April 30, 2010 (audit universe 12,247 claims), reviewed 363 claims (338 randomly sampled for extrapolation; 25 high-dollar claims reviewed individually).
- Auditor found pervasive insufficient documentation (lack of authenticated chart notes); HCA issued extrapolated overpayment findings (initially $184,347.96, later reduced to $174,909.56).
- Allen Dental sought administrative hearing, contested 22 specific claims and asserted defenses including improper use of extrapolation, equitable estoppel, and alleged unpaid/underpaid claims; ALJ and HCA Board affirmed most overpayments and rejected estoppel.
- Superior court affirmed the administrative decision; Court of Appeals reviews issues of documentation adequacy, extrapolation, estoppel, and excluded exhibits.
Issues
| Issue | Allen Dental's Argument | HCA's Argument | Held |
|---|---|---|---|
| Adequacy of documentation | Provider agreement/regulations do not require patient charts; ledgers/appointment books suffice | Regulations and agreement require "legible, accurate, complete charts and records"; business records are inadequate | Court: Regulations and agreement require authenticated chart notes; business records/ledgers insufficient; overpayments supported by substantial evidence |
| Use of extrapolation | New statute (RCW 74.09.195) limits extrapolation and should be applied retroactively to invalidate extrapolated recovery | Extrapolation was authorized by then-applicable rules; retroactive application would impair contractual/vested rights | Court: Declines retroactive application; extrapolation permitted and Allen Dental failed to rebut sampling/statistical methodology |
| Adequate opportunity to rebut extrapolation | Allen Dental contends HCA did not validate sampling or provide fair methodology evidence | HCA offered auditor testimony and sampling evidence; provider had opportunity to rebut but did not present counter-evidence | Court: Allen Dental failed to rebut extrapolation evidence; sampling/extrapolation permissible in Medicaid audits |
| Equitable estoppel | Preauthorizations, payments, and prior interactions led Allen to reasonably rely on HCA and estop recoupment | Preauthorization/payment do not preclude later audit or require HCA to waive record requirements; estoppel would impair government functions | Court: Estoppel not shown by clear and convincing evidence (no prior inconsistent HCA action, no reasonable reliance, impairment of government function) |
Key Cases Cited
- Bircumshaw v. Washington State Health Care Authority, 194 Wn. App. 176 (Wash. Ct. App. 2016) (upheld recoupment where provider failed to maintain updated patient charts; business records inadequate)
- Ratanasen v. State of California Department of Health Services, 11 F.3d 1467 (9th Cir. 1993) (approves statistical sampling and extrapolation in public benefit program audits where party may rebut)
- Illinois Physicians Union v. Miller, 675 F.2d 151 (7th Cir. 1982) (sampling and extrapolation not inherently unfair in audit recoupment procedures)