Ann Morrow & Assoc. v. N.M. Human Servs. Dep't
Background
- Ann Morrow & Associates (Morrow) provided Medicaid behavioral-health services under contract with New Mexico Human Services Division (HSD/MAD).
- HSD audited Morrow (audit began 2011); payments were withheld under a credible-allegation-of-fraud rule; MFCU declined prosecution in 2015.
- HSD issued overpayment demands totaling $441,997.05 for three categories: no documentation for services, double billing, and billing for more time than actually provided (up‑coding).
- Administrative hearing: HSD presented audit evidence and an expert who testified HSD’s policy was to recoup the entire amount of an up‑coded claim; ALJ and MAD director ordered full recoupment for the challenged claims.
- Morrow appealed, challenging the double‑billing/up‑coding recoupment of $130,575.80; the district court affirmed the agency, relying on a regulatory reading (and Alliance Health) that “claim” could support recouping the full payment.
- The Court of Appeals reviewed the narrow legal question whether HSD may recoup the entire amount paid on a claim when only part of the billed services were unearned, and reversed and remanded for recalculation.
Issues
| Issue | Plaintiff's Argument (Morrow) | Defendant's Argument (HSD) | Held |
|---|---|---|---|
| Whether HSD may recoup the entire amount paid on a claim when only part of the billed services were not provided (up‑coding/double billing). | Recoup only the portion representing unearned units; Morrow should keep payment for time actually provided. | Regulations and HSD practice permit recouping the whole claim amount when a claim contains errors; reliance on 8.351.2.13 NMAC and Alliance Health. | Court held HSD may not automatically recoup the full claim; it may recover the portion paid in excess of the MAD allowable amount (i.e., only the erroneously billed portion). Reversed and remanded. |
| Whether the district court properly relied on Alliance Health to treat a claim’s face value as forfeitable when any part of it was erroneous. | Alliance Health is inapposite because it addressed a different regulation and issue; here recovery is governed by the overpayment definition in 8.351.2.13 NMAC. | Alliance Health supports treating the entire claim as recoverable when a provider was not entitled to payment. | Court held Alliance Health dealt with a different regulatory context and cannot justify full‑claim forfeiture here; the district court erred by failing to harmonize the overpayment definitions in 8.351.2.13 NMAC. |
Key Cases Cited
- Princeton Place v. N.M. Hum. Servs. Dep’t, 419 P.3d 194 (N.M. Ct. App. 2018) (standard of review for administrative appeals).
- Alliance Health of Santa Teresa, Inc. v. National Presto Industries, Inc., 173 P.3d 55 (N.M. Ct. App. 2007) (interpreting "claim" as entire submission in a different regulatory context).
- Key v. Chrysler Motors Corp., 918 P.2d 350 (N.M. 1996) (instruction to harmonize statutory/regulatory provisions to avoid conflict).
- Counseling Ctr., Inc. v. N.M. Hum. Servs. Dep’t, 429 P.3d 326 (N.M. Ct. App. 2018) (courts not bound by agency legal interpretations).
- Perez v. N.M. Dep’t of Workforce Sols., 345 P.3d 330 (N.M. 2015) (questions of law reviewed de novo).
- Stennis v. City of Santa Fe, 244 P.3d 787 (N.M. Ct. App. 2010) (start interpretation with ordinary meaning of text).