ROBERT F. COLWELL JR. v. IOWA DEPARTMENT OF HUMAN SERVICES
No. 18–0464
IN THE SUPREME COURT OF IOWA
Filed February 8, 2019
An agency appeals an adverse judicial review decision by the district court. AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
Thomas J. Miller, Attorney General, J. Bradley Horn and Gretchen Kraemer, Assistant Attorneys General, for appellant.
Rebecca A. Brommel of Brown, Winick, Graves, Gross, Baskerville and Schoenebaum, P.L.C., for appellee.
A managed care organization (MCO) denied reimbursement of claims submitted by a dentist who contracts with the MCO as a provider. The dentist sought review by the Iowa Department of Human Services (DHS) of the MCO’s denials of reimbursement. DHS denied the dentist’s requests for a state fair hearing, reasoning that the issue was a contract dispute between the MCO and the dentist and thus was not appealable to DHS under Iowa law. The dentist filed a petition for judicial review, challenging DHS’s denials of his requests for state fair hearings. The district court agreed with the dentist and found DHS incorrectly interpreted
On appeal, we find
Therefore, we remand the case back to the district court to enter a judgment consistent with this opinion. After doing so, the district court shall remand the case back to DHS to provide a state fair hearing appeal to the dentist.
I. Background Facts and Proceedings.
In 2013, the Iowa legislature established the Iowa Health and Wellness Plan (the Plan), which expanded healthcare coverage for low income, uninsured adults who were not previously eligible for Medicaid. See 2013 Iowa Acts ch. 138, div. XXXIII (codified at
Beginning in April 2014, DHS and Iowa Medicaid Enterprise (IME) entered into a series of amended contracts with Delta Dental of Iowa, establishing Delta Dental as an MCO for the dental benefits. As such, Delta Dental conducts all aspects of the implementation and ongoing management of the Dental Wellness Program, including processing claims and building a network of dentists to serve in the program.3 Pursuant to the contract, DHS and IME make capitated payments to Delta Dental for Delta Dental’s administration of the plan. These capitated payments are the total obligation of DHS with respect to the costs of dental care and services provided. Delta Dental is responsible for paying providers for all covered services rendered. In the event a payment is in dispute, the contract provides, “[Delta Dental] shall have a system in place for Enrollees
Dr. Robert Colwell is a dentist practicing in Council Bluffs, Iowa, and Bellevue, Nebraska. Colwell became a participating dentist in Delta Dental’s network in April 2014. At that time, he entered into a Participating Dentist’s Dental Wellness Plan Agreement with Delta Dental, which incorporated the Delta Dental Wellness Plan Office Manual (Office Manual). Gretchen Hageman, government program director at Delta Dental, testified the documents Delta Dental uses with it its providers are approved by DHS. This includes the Office Manual that incorporates the state fair hearing appeal process.
Colwell provided services to Plan participants until late 2014. He submitted claims to Delta Dental for the Plan patients, and Delta Dental denied reimbursement for a number of those claims in whole or in part for a lack of documentation and other errors.
Shortly thereafter, in January 2015, Delta Dental terminated its provider agreements with Colwell and his associates. Colwell appealed, which ultimately led to a settlement agreement between the parties. The 2016 settlement agreement reinstated Colwell as a provider and allowed Colwell to seek an appeal for claims denied in whole or in part prior to January 2015, pursuant to the formal appeals process set forth in the 2016 Office Manual. Colwell appealed those denied claims.
On October 12, 2016, Delta Dental issued two letters stating its final decisions on Colwell’s appeals. Delta Dental upheld nearly all of its prior decisions denying claims Colwell submitted. On November 10, Delta Dental sent Colwell an addendum to the October 12 letters, stating, “You have the right to seek a state fair hearing with respect to the claims that
Colwell sought a state fair hearing for the denied claims. In a letter to DHS, Colwell wrote, “We are making an appeal on behalf of . . . our patients, the enrollees.” DHS declined to grant Colwell a state fair hearing, saying, “The issue you appealed is not an issue [DHS] can grant a hearing on. This appears to be a contract issue between Delta Dental and yourself.” Colwell requested that DHS reconsider, stating he satisfied the criteria for which DHS could grant a state fair hearing for a provider. Again, DHS denied Colwell’s request to reopen the appeal based on its conclusion this was a contract issue between Delta Dental and Colwell because Colwell’s claims arose from the 2016 settlement agreement.
The 2016 Office Manual, in effect at all times material to this action, states,
Covered Enrollees, and Participating Dentists acting on the behalf of a Covered Enrollee, have access to the Grievance System.
This system includes an Appeals and Complaint Process and access to the Iowa Department of Human Service’s state fair hearing system.
The Office Manual further states, “A Participating Dentist may request the hearing if the State permits the Participating Dentist to act as the Covered Enrollee’s authorized representative.” The terms of these provider contracts depend upon what the state allows.4
“Aggrieved person” means a person against whom the department has taken an adverse action. This includes a person who meets any of the following conditions:
. . . .
7. For providers, a person or entity:
- Whose claim for payment or request for prior authorization of payment has been denied in whole or in part and who states that the denial was not made according to department policy. Providers of Medicaid services must accept reimbursement based on the department’s methodology.
. . . .
- Who has been notified that the managed care reconsideration process has been exhausted and who remains dissatisfied with the outcome.
. . . .
- Who, as a managed care organization (MCO) provider or Iowa plan contractor when acting on behalf of a member, has a dispute regarding payment of claims.
II. Issues.
DHS raises four issues in this appeal. First, whether
III. Standard of Review.
The applicable standard of review depends upon the error asserted by the petitioner. Burton v. Hilltop Care Ctr., 813 N.W.2d 250, 256 (Iowa 2012). When the legislature has clearly vested interpretive authority with an agency, we defer to the agency’s interpretation of the statutory language and reverse only when the agency’s interpretation is “irrational, illogical, or wholly unjustifiable.” Gartner v. Iowa Dep’t of Pub. Health, 830 N.W.2d 335, 343 (Iowa 2013) (quoting NextEra Energy Res. LLC v. Iowa Utils. Bd., 815 N.W.2d 30, 37 (Iowa 2012)). However, when the legislature has not clearly vested interpretive authority with an agency, our standard of review is for errors of law. Id. “To determine whether an agency has been given authority to interpret statutory language, ‘we carefully consider “the specific language the agency has interpreted as well as the specific duties and authority given to the agency” ’ ” regarding the particular statutes. Banilla Games, 919 N.W.2d at 13 (quoting Gartner, 830 N.W.2d at 343).
We have held that
We need not decide whether we defer to DHS’s interpretation of
IV. Whether Iowa Code Section 249A.4(11) Requires DHS to Provide State Fair Hearings for Providers.
DHS claims it correctly concluded
[T]he director is hereby specifically empowered and directed to . . . provide an opportunity for a fair hearing before the department of inspections and appeals to an individual whose claim for medical assistance under this chapter is denied or is not acted upon with reasonable promptness. Upon completion of a hearing, the department of inspections and appeals shall issue a decision which is subject to review by the department of human services.
The chapter does not define “individual.” See
We examine the entire statute and interpret the term “individual” in a manner consistent with the statute as an integrated whole. See Tow v. Truck Country of Iowa, Inc., 695 N.W.2d 36, 39 (Iowa 2005). While the legislature did not define the term “individual,” it did use the term elsewhere in chapter 249A. The legislature used “individual” in the definition of “discretionary medical assistance” three times, each time referring to persons receiving medical assistance:
“Discretionary medical assistance” means mandatory medical assistance or optional medical assistance provided to medically needy individuals whose income and resources are in excess of eligibility limitations but are insufficient to meet all of the costs of necessary medical care and services, provided that if the assistance includes services in institutions for mental diseases or intermediate care facilities for persons with an intellectual disability, or both, for any group of such individuals, the assistance also includes for all covered groups of such individuals at least the care and services enumerated in Tit. XIX of the Federal Social Security Act . . . .
The district court concluded that because of the plain language in the definition of provider, individual in the context of
Moreover, the legislature used “individual” throughout the chapter to describe persons eligible for Medicaid. See
In addition,
Therefore, we find the language used by the legislature did not intend to mandate DHS to provide a review process for providers but only for Medicaid recipients. We reach this conclusion because of the legislature’s use of the term “individual” throughout the Code to refer to Medicaid recipients, not providers, and the language used in our statute mirrors the federal language, which does not obligate a state fair hearing for providers. Accordingly, we reverse the district court on this issue.
V. Whether Colwell Has a Right to a State Fair Hearing Individually and on Behalf of His Patients Under the Rules.
While
Colwell argues the administrative rules in effect at the time provide him a state fair hearing both independently and as a representative of a patient. The administrative rules provide for a state fair hearing concerning decisions regarding services. In relevant part they provide,
Decisions and actions by the department regarding eligibility or services provided under this chapter may be appealed pursuant to 441—Chapter 7. A provider requesting a hearing on behalf of a member must have the prior express written consent of the member or the member’s lawfully appointed guardian. Notwithstanding any contrary provision in 441—Chapter 7, no hearing will be granted unless the provider submits a document providing the member’s consent to the request for a state fair hearing.
Administrative rule 441—7.1 defines an aggrieved provider in relevant part as,
7. . . . [A] person or entity:
- Whose claim for payment or request for prior authorization of payment has been denied in whole or in part and who states that the denial was not made according to department policy. Providers of Medicaid services must accept reimbursement based on the department’s methodology.
. . . .
- Who has been notified that the managed care reconsideration process has been exhausted and who remains dissatisfied with the outcome.
. . . .
- Who, as a managed care organization (MCO) provider or Iowa plan contractor when acting on behalf of a member, has a dispute regarding payment of claims.
The administrative rules specifically state that an aggrieved provider has a right to appeal for the claims Colwell makes. See
The record supports that these provisions give Colwell the right to a state fair hearing. Delta Dental acknowledged Colwell’s right to appeal in the addendum to Delta Dental’s final decisions sent to Colwell on November 10, 2016. As the addendum noted, the 2016 Office Manual describes the process for the state fair hearing. The Office Manual, which “includes an [a]ppeal and [c]omplaint [p]rocess and access to the Iowa Department of Human Service’s state fair hearing system,” allows “[p]articipating [d]entists acting on the behalf of a [c]overed [e]nrollee” to access the grievance system.
Thus, reading the plain language of the administrative rules and accompanying department policy—the contract between Colwell and Delta Dental—a provider wishing to access the state fair hearing process after the denial of claims by Delta Dental must first file an appeal to Delta Dental on behalf of his patients. If he is still dissatisfied with the outcome of the appeal, he can appeal for a state fair hearing on behalf of himself or his patients.
Another factor supporting our conclusion that a state fair hearing is available to Colwell is DHS’s actions in amending the rules after Colwell filed his petition for judicial review. After Colwell filed his appeal, DHS amended its rules by creating a new category for state fair hearings from managed care decisions and eliminating the aggrieved person provider-specific definitions relied upon by Colwell. See 39 Iowa Admin. Bull. 2368, 2374–75 (June 7, 2017) (filing ARC 3093C which revised
Therefore, Colwell is entitled to appeal for a state fair hearing on behalf of himself or his patients, where the parties can properly litigate which claims Delta Dental must reimburse Colwell for either in full or in part.
VI. Whether Colwell May Bill Patients for Services Not Covered or Reimbursed by Delta Dental.
Colwell argues he may charge patients for services not covered by the Dental Wellness Program. DHS disagrees, saying providers must accept what Medicaid pays upon adjudication of providers’ claims, even if the amount is zero.
First, it is necessary to define the dispute between the parties. Colwell makes it clear he is not claiming that he can bill his patients the difference between his usual and customary charges and what he receives from Medicaid or Delta Dental on a specific claim. He refers to that situation as “balance billing.”
The administrative rules state,
[T]he provider agrees . . . [t]hat the charges as determined in accordance with the department’s policy shall be the full and complete charge for the services provided and no additional payment shall be claimed from the recipient or any other person for services provided under the program.
The real issue is whether a provider can bill for services not covered at all by the Dental Wellness Program. In this regard, the rules provide that before a provider performs a service, the provider must inform the recipient that the recipient will be responsible for the bill if the provider performs a noncovered service.
Colwell relies on the definition of “covered services” from Iowa Dental Ass’n v. Iowa Insurance Division, 831 N.W.2d 138, 149 (Iowa 2013). The relevant Code section in that case defined “covered services” as “services reimbursed under the dental plan.” See
The flaw with relying on Iowa Dental in the present case is two-fold. First, Iowa Dental was interpreting a private insurance contract. See id. at 140. The provisions of
Second, the administrative rules state which dental procedures the Dental Wellness Program covers.
The purpose of Medicaid is to “provid[e] federal financial assistance to States that choose to reimburse certain costs of medical treatment for needy persons.” Clark by Clark v. Iowa Dep’t of Human Servs., 513 N.W.2d 710, 710 (Iowa 1994) (alteration in original). If we were to hold a participating provider could charge Medicaid recipients for services that are normally covered by Medicaid, but that are not reimbursed for whatever reason, the purpose of Medicaid would be frustrated.
As in the case before us, Delta Dental may deny coverage based on alleged errors on the part of the provider. For instance, Delta Dental documented that it denied numerous claims submitted by Colwell for insufficient documentation of services provided and insufficient documentation of need before providing services. While DHS should hold a state fair hearing for Colwell and Delta Dental to dispute the validity of the denials, the outcome of whether an indigent person must pay for the
Moreover, examining the federal statutory framework of Medicaid bolsters this conclusion. The Medicaid program is a cooperative state-federal program, and while participation is voluntary, “once a state chooses to participate, it must comply with the federal statutory requirements.” Anderson v. Iowa Dep’t of Human Servs., 368 N.W.2d 104, 108 (Iowa 1985). Under the federal Medicaid regulations, providers must accept the amount Medicaid pays as payment in full.
One federal circuit court has found the federal DHS’s interpretation of covered services reasonable, when the term refers to coverable services under the federal Medicaid program. See Banks v. Sec’y of Ind. Family & Soc. Servs. Admin., 997 F.2d 231, 243–44 (7th Cir. 1993) (finding federal Secretary of Health and Human Services’ interpretation that federal law disallows providers to collect payment from Medicaid recipients for covered Medicaid services, even where the provider’s claim for reimbursement was denied, was reasonable and “comports with the purposes of the Medicaid Act and Congress’s intention to provide assistance to individuals who lack the wherewithal to meet the necessary costs of medical care”).
In conclusion, we hold when providers render services that are not recoverable under the Dental Wellness Program, with the proper pretreatment disclosures required by
VII. Whether Colwell Is Entitled to an Award of Attorney Fees.
In general, a court may not award attorney fees unless authorized by statute or contract. NevadaCare, Inc. v. Dep’t of Human Servs., 783 N.W.2d 459, 469 (Iowa 2010). Under the Iowa Code, a party that prevails in a judicial review matter brought against the state pursuant to
1. Unless otherwise provided by law, . . . the court in . . . an action for judicial review brought against the state pursuant to chapter 17A other than for a rulemaking decision, shall award fees and other expenses to the prevailing party unless the prevailing party is the state. However, the court shall not make an award under this section if it finds one of the following:
a. The position of the state was supported by substantial evidence.
b. The state’s role in the case was primarily adjudicative.
c. Special circumstances exist which would make the award unjust.
d. The action arose from a proceeding in which the role of the state was to determine the eligibility or entitlement of an individual to a monetary benefit or its equivalent or to adjudicate a dispute or issue between private parties or to establish or fix a rate.
The first applicable exception is “the state’s role in the case was primarily adjudicative.”
It is a fundamental principle of our jurisprudence that a court has the inherent power to decide if it has subject matter jurisdiction over a matter. As we said over fifty years ago,
Every court has inherent power to determine whether it has jurisdiction over the subject matter of the proceedings before it. It makes no difference how the question comes to its attention. Once raised, the question must be disposed of, no matter in what manner of form or stage presented. The court on its own motion will examine grounds of its jurisdiction before proceeding further.
Carmichael v. Iowa State Highway Comm’n, 156 N.W.2d 332, 340 (Iowa 1968).
Here, Colwell filed for a state fair hearing to determine if Delta Dental should pay his claims. In other words, DHS was deciding if Delta Dental followed the appropriate rules, laws, or guidelines when it denied Colwell’s claims. However, before reaching the merits of the dispute, the agency determined it did not have subject matter jurisdiction to hear the case.
We also find a second exception applies. It provides,
The action arose from a proceeding in which the role of the state was to determine the eligibility or entitlement of an individual to a monetary benefit or its equivalent or to adjudicate a dispute or issue between private parties or to establish or fix a rate.
Therefore, we find the State is not liable for any of Colwell’s attorney fees under
VIII. Disposition.
We reverse the judgment of the district court finding
Therefore, we remand the case back to the district court to enter a judgment consistent with this opinion. After doing so, the district court shall remand the case back to DHS to provide a state fair hearing appeal to Colwell. We assess the costs equally between the parties.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.