380 P.3d 524
Wash. Ct. App.2016Background
- Dr. Harold Bircumshaw, an optometrist enrolled in Washington Medicaid, was audited for claims submitted June 2003–May 2006; DSHS audited a sample and extrapolated to 9,506 claims, assessing $224,114.64 plus interest.
- The audit scope was compliance with statutes, WAC rules, DSHS billing instructions, and Bircumshaw’s Core Provider Agreement; Airway Optical was the exclusive vendor for lenses and supplied preprinted order forms.
- DSHS found insufficient documentation for many claims, miscoding of E/M visits, duplicate fittings/repairs, and billing errors; the ALJ largely affirmed and the HCA Board of Appeals affirmed some findings, reversed others on due‑process notice grounds, and ordered recalculation of the extrapolation.
- Central factual issue: Bircumshaw produced largely Airway order forms and sparse chart notes; DSHS/HCA concluded the forms alone did not satisfy WAC recordkeeping requirements to justify billed services.
- Procedural posture: HCA final order affirmed by superior court; Bircumshaw appealed to Court of Appeals, Division II, which affirmed HCA’s order in full.
Issues
| Issue | Plaintiff's Argument (Bircumshaw) | Defendant's Argument (HCA/DSHS) | Held |
|---|---|---|---|
| Authority to recoup Medicaid payments for inadequately documented services | HCA lacked statutory/regulatory/contractual authority to recoup solely because documentation was incomplete without proof services weren’t provided | Federal/state statutes, WACs, and Core Provider Agreement authorize post‑payment audits and recoupment where required documentation is missing | HCA has authority to recoup payments for inadequately documented claims under statute, regulation, and contract |
| Whether recoupment requires proof services were not provided or not medically necessary | Recoupment without disproving provision/necessity is impermissible punishment | Payment eligibility requires meeting all conditions (including recordkeeping); recoupment may be based on failure to keep required records | Recoupment may be imposed without separate proof that services were not provided or not medically necessary |
| Proper application of recordkeeping rules and acceptance of alternative records (Airway forms) | Airway order forms and other materials suffice to infer provision/necessity; HCA should accept substantial compliance | WAC and contract mandate specific records; listed items are required and not satisfied by the Airway forms alone | HCA properly required the statutorily/contractually specified records; Airway forms alone were insufficient |
| Sufficiency of evidence for specific findings of inadequate documentation | Evidence (orders, receipts, schedules) established services were provided and authorized | The records lacked chart notes, authentication, authorization, or dates required by WAC and contract; sample supported extrapolation | Specific HCA findings reviewed were supported by substantial evidence; many other findings deemed verities because not properly assigned on appeal |
| Whether recoupment is punitive, excessive, or violates due process / unjust enrichment | Recoupment functions as punishment or unjust enrichment because services were actually provided; amount is excessive without proof of no service | Recoupment is compensatory — dollar‑for‑dollar recovery of payments not entitled; procedure includes notice and review; unjust enrichment not an appropriate defense | Recoupment is compensatory not punitive; no due process violation shown; unjust enrichment claim fails |
| Whether HCA acted arbitrarily, capriciously, or inconsistently | HCA’s demand for form over substance was arbitrary; final order internally inconsistent (affirming some findings, reversing others) | HCA followed statutes/regulations/contract, explained reasoning, reversed two findings solely on notice/due‑process grounds without evidentiary acquittal | Not arbitrary or capricious; no internal inconsistency that invalidates the order; recalculation of projection was permissible |
Key Cases Cited
- Puget Soundkeeper Alliance v. State, Pollution Control Hr’gs Bd., 189 Wn. App. 127 (review standard for agency statutory/regulatory interpretation)
- Pal v. State, Dep’t of Soc. & Health Servs., 185 Wn. App. 775 (review of agency final decision rather than superior court)
- Miotke v. Spokane County, 181 Wn. App. 369 (definition of substantial evidence standard)
- Fuller v. Dep’t of Emp’t Sec., 52 Wn. App. 603 (assignment of error to administrative findings)
- Austin v. Ettl, 171 Wn. App. 82 (elements of unjust enrichment)
- State v. McCarter, 173 Wn. App. 912 (an action is not punitive just because perceived so by defendant)
- Broughton Lumber Co. v. BNSF Ry. Co., 174 Wn.2d 619 (punitive damages require statutory authorization)
- Ass’n of Wash. Spirits & Wine Distrib. v. Wash. State Liquor Control Bd., 182 Wn.2d 342 (standard for arbitrary and capricious review)
- BMW of North Am., Inc. v. Gore, 517 U.S. 559 (due process limits on grossly excessive punitive awards)