Texas Health and Human Services Commission v. Jessica Lukefahr

ACCEPTED 03-15-00325-CV 6891639 THIRD COURT OF APPEALS AUSTIN, TEXAS 9/11/2015 3:05:40 PM JEFFREY D. KYLE CLERK No. 03-15-00325-CV _______________________________________________________________ FILED IN 3rd COURT OF APPEALS IN THE COURT OF APPEALS AUSTIN, TEXAS FOR THE THIRD DISTRICT OF TEXAS 9/11/2015 3:05:40 PM AT AUSTIN JEFFREY D. KYLE Clerk _______________________________________________________________

TEXAS HEALTH AND HUMAN SERVICES COMMISSION Appellant,

v. JESSICA LUKEFAHR Appellee. ________________________________________________________________

On Appeal from the 345th Judicial District Court of Travis County, Texas Cause No. D-1-GN-14-002158 The Honorable Stephen Yelenosky Presiding __________________________________________________________________

AMENDED APPELLANT’S BRIEF __________________________________________________________________

KEN PAXTON KARA HOLSINGER Attorney General of Texas Assistant Attorney General State Bar No. 24065444 CHARLES E. ROY OFFICE OF THE ATTORNEY GENERAL First Assistant Attorney General OF TEXAS Administrative Law Division JAMES E. DAVIS P.O. Box 12548, Capitol Station Deputy Attorney General for Civil Austin, Texas 78711-2548 Litigation Telephone: (512) 475-4203 Facsimile: (512) 320-0167 DAVID A. TALBOT, JR. kara.holsinger@texasattorneygeneral.gov Chief, Administrative Law Division COUNSEL FOR APPELLANT ORAL ARGUMENT REQUESTED September 11, 2015

IDENTITIES OF PARTIES AND COUNSEL

Defendant/Appellant: Texas Health & Human Services Commission Counsel:

Kara Holsinger Assistant Attorney General State Bar No. 24065444 OFFICE OF THE ATTORNEY GENERAL OF TEXAS Administrative Law Division P.O. Box 12548, Capitol Station Austin, Texas 78711-2548 Telephone: (512) 475-4203 Facsimile: (512) 320-0167 kara.holsinger@texasattorneygeneral.gov

Plaintiff/Appellee: Jessica Lukefahr Counsel:

Maureen O’Connell Texas Bar No. 00795949 Southern Disability Law Center 1307 Payne Avenue Austin, Texas 78757 Phone: 512-458-5800 Fax: 512-458-5850 moconnell458@gmail.com

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TABLE OF CONTENTS

Identities of Parties and Counsel............................................................................... ii Table of Contents ..................................................................................................... iii Table of Authorities ...................................................................................................v Glossary of Abbreviated Terms ............................................................................. viii Statement of the Case.................................................................................................1 Statement Regarding Oral Argument ........................................................................2 Issues Presented .........................................................................................................2 Statement of Facts ......................................................................................................3 I. Procedural History ...........................................................................................3 II. Exceptional Circumstances Review ................................................................6 Summary of the Argument.......................................................................................11 Argument and Authorities......................................................................................112 I. Standard of Review........................................................................................12 II. Applicable Law and Policy............................................................................14

III. The District Court Erred in Reversing HHSC’s Decision Affirming the Denial of a Custom Power Wheelchair with an Integrated Standing Feature because Substantial Evidence Showed that Covered Durable Medical Equipment would meet Ms. Lukefahr’s Medical Needs ...............................18

A. Substantial evidence in the record showed that a static stander would meet Ms. Lukefahr’s medical need to stand........................................18

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B. Additionally, durable medical equipment that is covered by Texas Medicaid meets Ms. Lukefahr’s other medical needs as expressed in the exceptional circumstances request ................................................22

i. Substantial evidence in the record showed that covered durable medical equipment would meet Ms. Lukefahr’s medical need to change positions frequently .........................................................23

ii. Substantial evidence in the record showed that covered durable medical equipment would meet Ms. Lukefahr’s needs in her activities of daily living ...............................................................24

IV. The District Court Erred in Reversing HHSC’s Decision as Arbitrary and Capricious or in Violation of Due Process because the Hearing Officer and Reviewing Attorney Fulfilled their Duties and Provided Ms. Lukefahr with all Required Due Process ...............................................................................26

A. The hearing officer provided all required due process, including making findings of fact supported by the record ................................26

B. The reviewing attorney provided all required due process .................29 Prayer .......................................................................................................................31 Certificate of Compliance ........................................................................................32 Certificate of Service ...............................................................................................33 Appendices .............................................................................................................334 Index of Appendices ..............................................................................................335

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TABLE OF AUTHORITIES

CASES

Bd. of Law Exam’rs v. Stevens, 868 S.W.2d 773 (Tex. 1994)....................................................................... 12, 13, 24

Bd. of Trs. of Emps. Ret. Sys. v. Benge, 942 S.W.2d 742 (Tex. App.—Austin 1997, writ denied) ..................... 13, 21, 24, 25

Beal v. Doe, 432 U.S. 438 (1977) .......................................................................................... 17, 25

City of El Paso v. Pub. Util. Comm’n, 883 S.W.2d 179 (Tex. 1994) ....................................................................................13

Deloitte & Touche LLP v. Fourteenth Court of Appeals, 951 S.W.2d 394 (Tex. 1997) ....................................................................................14

Detgen v. Janek, 752 F.3d 627 (5th Cir. 2014) ...................................................................................15

Gulf States Util. v. Pub. Util. Comm’n, 841 S.W.2d 459 (Tex. App.—Austin 1992, writ denied) ........................... 12, 13, 29

McMullen v. Emps. Ret. Sys., 935 S.W.2d 189 (Tex. App.—Austin 1997, writ denied) ........................................13

Moore v. Reese, 637 F.3d 1220 (11th Cir. 2011) ........................................................................ 17, 25

Poole v. Karnack Indep. Sch. Dist., 344 S.W.3d 440 (Tex. App.—Austin 2011, no pet.) ...............................................12

Rush v. Parham, 625 F.2d 1150 (5th Cir. 1980) .................................................................................17

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State v. Pub. Util. Comm’n, 883 S.W.2d 190 (Tex. 1994) ....................................................................... 12, 13, 22

Tex. Rivers Prot. Ass’n v. Tex. Natural Res. Conservation Comm’n, 910 S.W.2d 147 (Tex. App.—Austin 1995, writ denied) ............... 13, 18, 20, 21, 28

Tex. State Bd. of Med. Exam’rs v. Birenbaum, 891 S.W.2d 333 (Tex. App.—Austin 1995, writ denied) ........................................13

United Copper Indus. v. Grissom, 17 S.W.3d 797 (Tex. App.—Austin 2000, pet. dism’d) ............................................6

TEXAS STATUTES Tex. Gov't Code Tex. Gov’t Code § 2001.174............................................................................. 12, 31

Tex. Gov’t Code § 531.019(c) .................................................................................29 Tex. Gov’t Code § 531.019(e)(2) ............................................................................29 Tex. Gov’t Code § 531.019(g) .................................................................................12

FEDERAL STATUTES AND REGULATIONS 42 C.F.R. § 440.230(d) ............................................................................................17

RULES

1 Tex. Admin. Code § 354.1031(12) .......................................................................14 1 Tex. Admin. Code § 354.1039(a)(4)(D) ...................................... 2, 3, 6, 15, 21, 23 1 Tex. Admin. Code § 357.1(19) ...............................................................................4 1 Tex. Admin. Code § 357.1(31) ...............................................................................3 1 Tex. Admin Code § 357.5 .....................................................................................27

vi RULES (continued) 1 Tex. Admin. Code § 357.5(c) ...............................................................................26 1 Tex. Admin. Code § 357.5(c)(3)(A)-(D) ..............................................................27 1 Tex. Admin. Code § 357.5(c)(3)(B) .....................................................................19 1 Tex. Admin. Code § 357.703(b)(3) ......................................................................30 1 Tex. Admin. Code § 357.9 ......................................................................................6 1 Tex. Admin. Code § 357.9(1) .................................................................................4

OTHER AUTHORITIES

Texas Medicaid Provider Procedures Manual TMPPM § 2.2.2 (2013) ............................................................................................19 TMPPM § 2.2.15.22 (2013) .......................................................................................8

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GLOSSARY OF ABBREVIATED TERMS

A.R. Administrative Record C.R. Clerk’s Record DME Durable Medical Equipment HHSC Health and Human Services Commission H.R. Fair Hearing Audio Recording OMD HHSC’s Office of the Medical Director TMHP Texas Medicaid Healthcare Partnership TMPPM Texas Medicaid Provider Procedures Manual

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No. 03-15-00325-CV _______________________________________________________________

IN THE COURT OF APPEALS FOR THE THIRD DISTRICT OF TEXAS AT AUSTIN _______________________________________________________________

TEXAS HEALTH AND HUMAN SERVICES COMMISSION Appellant,

v. JESSICA LUKEFAHR Appellee. ________________________________________________________________

On Appeal from the 345th Judicial District Court of Travis County, Texas Cause No. D-1-GN-14-002158 The Honorable Stephen Yelenosky Presiding __________________________________________________________________

APPELLANT’S BRIEF __________________________________________________________________

TO THE HONORABLE JUDGE OF SAID COURT:

NOW COMES the Texas Health and Human Services Commission (“HHSC”), appellant in this cause, and files Appellant’s Brief.

STATEMENT OF THE CASE

HHSC appeals the district court’s final judgment reversing a fair hearing decision that sustained HHSC’s denial of appellee Jessica Lukefahr’s (Ms. Lukefahr’s) exceptional circumstances request for a custom power wheelchair with an integrated standing feature. Administrative Record (A.R.) 563-74; 580-91; *2 Clerk’s Record (C.R.) 226; Appendix A (Final Judgment); Appendix B (Fair Hearing Decision); Appendix C (Administrative Review of the Fair Hearing Decision).

STATEMENT REGARDING ORAL ARGUMENT

HHSC requests oral argument to aid the Court’s understanding of HHSC’s review of Ms. Lukefahr’s exceptional circumstances request for an item not covered by Texas Medicaid. See 1 Tex. Admin. Code § 354.1039(a)(4)(D), Appendix D (exceptional circumstances rule); A.R. 428-31, Appendix E (Medicaid Program Policy Manual Exceptional Circumstances Policy).

ISSUES PRESENTED

1. Whether substantial evidence supports HHSC’s decision affirming the denial of Ms. Lukefahr’s request for a custom power wheelchair with an integrated standing feature on exceptional circumstances review, since the evidence showed that Ms. Lukefahr’s medical needs could be met through the use of equipment covered by Texas Medicaid.

2. Whether HHSC’s decision was arbitrary and capricious and a violation of Ms. Lukefahr’s due process rights, considering that it was based on findings of fact supported by the record and Ms. Lukefahr received all required due process during the fair hearing and subsequent administrative review.

STATEMENT OF FACTS

I. Procedural History

Ms. Lukefahr’s Durable Medical Equipment (“DME”) provider sought prior authorization1 of a custom power wheelchair with an integrated standing feature (also called a mobile standing feature or power stander) through the Texas Medicaid and Healthcare Partnership (“TMHP”), which administers Texas Medicaid on behalf of HHSC. A.R. 376-399. TMHP denied prior authorization because integrated standers are not a covered benefit of Texas Medicaid and the wheelchair, as requested, could not be ordered without the integrated stander. A.R. 367-369.

Ms. Lukefahr’s DME provider then submitted a request for exceptional circumstances review for a custom power wheelchair with an integrated standing feature. A.R. 208-241; see also A.R. 71-115, 129-207. To be eligible for the integrated stander under exceptional circumstances review, Ms. Lukefahr was required to show that it could “be medically substantiated as a part of the treatment plan that such service would serve a specific medical purpose on an individual case basis.” See 1 Tex. Admin. Code § 354.1039(a)(4)(D); Apps. D-E. However, Ms. Lukefahr was unable to “medically substantiate” that that an integrated stander

1 Prior authorization is a “request for services that is reimbursable only if authorization or approval for the services is obtained before services are rendered.” 1 Tex. Admin. Code § 357.1(31).

“would serve a specific medical purpose” in her individual case, and HHSC denied her exceptional circumstances request. A.R. 58-60, Appendix F (exceptional circumstances denial letter to Jessica Lukefahr). The denial letter stated, in part:

After reviewing and studying the clinical points of your request and your special medical needs it was found you may have a medical need for a power wheelchair without a standing feature and a static standing system to meet both your medical and mobility needs. This equipment may be considered for you through Texas Medicaid if requested. The papers sent failed to support medical necessity for the standing feature (and its parts as part of the power wheelchair requested) or that the standing feature would serve a specific medical purpose for you. Because the standing feature on the power wheelchair would not serve a specific medical purpose for you, it could not be approved under the exceptional circumstances provision of 1 Texas Administrative Code § 354.1039(a) as requested by your provider. Because the standing feature cannot be separated from the power wheelchair requested the power wheelchair requested could not be approved.

Id. (emphasis added).

Ms. Lukefahr then requested a fair hearing regarding the exceptional circumstances denial. A.R. 495-505. A fair hearing is “[a]n informal proceeding held before an impartial HHSC hearings officer in which a client appeals an agency action.” 1 Tex. Admin. Code § 357.1(19). At the fair hearing, HHSC had the burden of proof by a preponderance of the evidence. 1 Tex. Admin. Code § 357.9(1). The hearing officer sustained HHSC’s denial of the custom power wheelchair with integrated stander, concluding:

Because mobile standers, power standing systems on a wheeled mobility device are not a benefit of Home Health Services and exceptional circumstances for DME were not met, the decision by TMHP on September 12, 2013 to deny Appellant a Permobil C500 VS power wheelchair with integrated standing feature and seat elevation system WAS in accordance with applicable law and policy; therefore the agency’s action is SUSTAINED.

A.R. 572 (emphasis in original); App. B. An administrative review of the fair hearing decision followed, in which the reviewer, an HHSC attorney, upheld the hearing officer’s decision and issued a final agency decision adopting the hearing officer’s findings of fact and conclusion of law. A.R. 580-591; App. C.

A suit for judicial review followed in which the district court issued a final judgment reversing HHSC’s decision and remanding the case to HHSC for further proceedings consistent with the judgment. C.R. 226; App. A. The Court found that HHSC “violated the due process rights of Ms. Lukefahr and the decision denying Plaintiff a custom power wheelchair with integrated standing feature is not supported by substantial evidence and is arbitrary and capricious.” Id. In a letter announcing his judgment, the district court provided some of the reasons for the decision, stating in part as follows. C.R. 221-24; Appendix G (letter from the district court).

Due process, as embodied in state and federal Medicaid law, requires that a denial letter provide the reasons for denial. When a denial is challenged, the Medicaid authority has the burden to prove to the Hearings Officer that the reasons given are supported by a preponderance of the evidence. . . The reasons for denial must be a

common thread that runs through each of these stages [of review]. Without that, the Medicaid client cannot adequately prepare for a fair hearing, judicial review, or appeal, and there is no due process.

Id. at 221; App. G. Here, the district court reversed HHSC’s decision, finding that none of the findings of fact in the fair hearing decision related to the reasons given in the denial letter.2 Id. at 222; App. G. Now, HHSC appeals this final judgment. II. Exceptional Circumstances Review

Ms. Lukefahr submitted an exceptional circumstances request for a custom power wheelchair with an integrated standing feature. A.R. 208-241; see also A.R. 71-115, 129-207. In order to receive approval for the integrated stander under exceptional circumstances, Ms. Lukefahr was required to show that it could “be medically substantiated as a part of the treatment plan that such service would serve a specific medical purpose on an individual case basis.” 1 Tex. Admin. Code § 354.1039(a)(4)(D); A.R. 428-31; Apps. D-E.

2 The district court elevated the due process required in a Medicaid benefits denial in stating that a denial letter must provide reasons for denial that must be a “common thread” through each stage of the proceedings. C.R. 221; App. G. Rather, traditional due process requirements apply, and Ms. Lukefahr received all required due process, as is discussed herein. See United Copper Indus. v. Grissom, 17 S.W.3d 797, 805 (Tex. App.—Austin 2000, pet. dism’d) (“Basic due process requires that when a decision maker is called upon to make a decision grounded on evidence, the parties involved should be provided fair notice and a meaningful opportunity to present their evidence.”). And, in a fair hearing, the denial itself must be supported by a preponderance of the evidence, not each reason therefore. 1 Tex. Admin. Code § 357.9. (“The burden of proof in a fair hearing regarding a specific issue is proof by a preponderance of the evidence.” “The agency or its designee bears the burden of proof.”).

Ms. Lukefahr has been diagnosed with spastic quadriplegia, dystonia, and cerebral palsy. A.R. 76.3 Due to her medical conditions, Ms. Lukefahr has limited range of motion in her arms, which limits her ability to reach, and has only isolated finger movements with deliberate thought. A.R. 166. Additionally, her muscle strength is limited and her endurance poor, requiring frequent rest breaks. A.R. 83, 87, 166, 170.

Ms. Lukefahr lives independently in a handicapped-accessible apartment and has assistance with her activities of daily living from an attendant. A.R. 82, 168. She has a college degree and works four hours a day, five days per week at a museum. A.R. 82, 168. Ms. Lukefahr can transfer independently to and from her wheelchair using transfer bars.4 Id.; Fair Hearing Audio Recording (“H.R.”) 1:45. Ms. Lukefahr’s prior authorization request for a custom power wheelchair included requests for seat elevation, tilt and recline feature, leg elevation power function, and transfer bars. A.R. 59, 84, 162-65, 367. There is no dispute that these features are medically necessary for Ms. Lukefahr (and her current wheelchair has these features). A.R. 59, 572; Apps. B, F. Seat elevation, tilt and recline, and leg elevation provide many medical benefits to Ms. Lukefahr, and her physician did

3 Although additional medical conditions were noted in a letter of medical necessity, these are not medical diagnoses as provided by her treating physician. Compare A.R. 76 with A.R. 88. 4 Despite stating that Ms. Lukefahr can transfer independently, her physician also asserted that she would require assistance from an attendant to transfer from a wheelchair to a static stander. Compare A.R. 82, 168 with A.R. 145.

not document any evidence of pressure sores or skin breakdown. A.R. 84, 167; H.R. 3:16-3:18.

Patricia Cannizzaro, a registered nurse who reviewed the exceptional circumstances request for TMHP, testified that Ms. Lukefahr has a medical need to stand for one hour a day, five days per week, to strengthen her muscles. AR 145-146, 167, 170, 427; H.R. 2:09.30. Ms. Lukefahr’s DME provider stated that she has a postural control walker, but she is only able to use this walker for a few minutes at a time, and it is no longer meeting her medical need to stand. A.R. 145. But, Ms. Lukefahr’s DME provider stated that, with the use of a stander, she would be able to stand for thirty or more minutes at a time. A.R. 170.

Donna Clayes, a registered nurse who reviewed the exceptional circumstances request for HSHC’s Office of the Medical Director5 (“OMD”) testified that a that a static stander,6 an item of DME that is covered by Texas Medicaid, would meet Ms. Lukefahr’s medical need to stand, and that none of Ms. Lukefahr’s medical conditions supported the use of an integrated standing feature rather than a static stander. H.R. 1:16-1:28, H.R. 2:09 (Ms. Cannizzaro testifying to

5 OMD decides exceptional circumstances requests based on a review and recommendation by TMHP and review by an OMD doctor. A.R. 423-27; H.R. 1:00.00. Ms. Clayes testified that she reviewed Ms. Lukefahr’s exceptional circumstances request with an OMD doctor, who dictated the findings she used in developing the response to Ms. Lukefahr’s request. H.R. 1:07.45. 6 “A stander is a device used by a client with neuromuscular conditions who is unable to stand alone. Standers and standing programs can improve digestion, increase muscle strength, decrease contractures, increase bone density, and minimize decalcification (this list is not all inclusive).” TMPPM § 2.2.15.22 (2013).

the same); A.R. 59, App. F. Ms. Lukefahr’s DME provider and treating physician did not try a static stander in order to determine whether a static stander would meet Ms. Lukefahr’s medical need to stand, and no prior authorization request for a static stander has been submitted to Texas Medicaid. A.R. 59, 145, 376-99; App. F. Ms. Clayes and Ms. Cannizzaro testified that no documentation was provided to support a finding that an integrated stander was necessary to treat Ms. Lukefahr’s chronic pain or bone density loss, improve her respiratory capacity, or reduce spasticity, contractures, constipation, or skin breakdown. A.R. 59, App. F; H.R. 1:16-1:20, 2:49-2:55. Ultimately they testified that the information submitted in support of Ms. Lukefahr’s exceptional circumstances request did not support the use of an integrated stander as a treatment for Ms. Lukefahr’s medical conditions. H.R. 1:16-1:18, 2:53.

Additionally, an item requested through exceptional circumstances review must be supported by “evidence-based medical peer-reviewed literature that demonstrate validated, uncontested data for use of the requested equipment to treat the client’s specific medical condition, and that the requested equipment has been found to be safe and effective.” A.R. 429; App. E (exceptional circumstances policy). Although Ms. Lukefahr’s DME provider submitted articles to support the exceptional circumstances request, Ms. Cannizzaro and Ms. Clayes testified that these were not sufficient to support the need for an integrated stander in Ms. *10 Lukefahr’s case. Ms. Cannizarro testified that the 2009 RESNA paper submitted by Ms. Lukefahr’s DME provider is merely a position or opinion paper, which concludes only that integrated standers are “medically beneficial” (rather than medically necessary), but that further research is needed. A.R. 147-54; H.R. 1:55-2:00, see also H.R. 1:24 (Ms. Clayes also testified that the articles did not rise to the level of “peer-reviewed” literature). And Ms. Cannizarro testified that many of the studies on which the RESNA paper is based were performed using static standers, rather than integrated standers, and did not show that integrated standers in particular have a proven medical benefit. H.R. 1:55-2:09. The claims in the RESNA paper have not been substantiated by evidenced based, peer-reviewed medical studies, and many of the reasons provided to substantiate medical necessity in this case were taken directly from this paper. Compare A.R. 147-54 with AR 145-46; H.R. 1:55-1:59, 2:04, 2:05.50-2:06.30. Further, Ms. Cannizzaro testified that the study “Load Redistribution in Variable Position Wheelchairs in People with Spinal Cord Injury” submitted by Ms. Lukefahr’s DME provider concludes that standing in a static stander or the use of tilt and recline features can prevent skin breakdown by assisting people in wheelchairs to shift their weight, and did not indicate that both were needed. A.R. 155-61; H.R. 2:02. There is no dispute as to the medical necessity of a tilt and recline feature for Ms. Lukefahr. A.R. 58-60, App. F. As such, the documentation provided in support of Ms. *11 Lukefahr’s exceptional circumstances request did not substantiate the need for an integrated stander in her individual case. A.R. 59; App. F.

SUMMARY OF THE ARGUMENT

TMHP denied Ms. Lukefahr’s exceptional circumstances request for a custom power wheelchair with an integrated stander. HHSC’s fair hearing decision affirming the denial is supported by substantial evidence because TMHP and OMD registered nurses who reviewed the exceptional circumstances request testified that Ms. Lukefahr’s medical needs could be met through the use of DME that is covered by Texas Medicaid.

Additionally, HHSC’s decision is not arbitrary and capricious because it is based on findings of fact that are supported by the record. And HHSC did not otherwise violate Ms. Lukefahr’s due process rights in denying her exceptional circumstances request because the hearing officer and attorney conducting the administrative review provided Ms. Lukefahr with all due process required. Therefore, the district court erred in reversing the fair hearing decision, and this Court should reverse the district court’s judgment and affirm HHSC’s denial of the custom power wheelchair with an integrated stander.

ARGUMENT AND AUTHORITIES

I. Standard of Review

“Judicial review of a decision made by a hearing officer for the commission or a health and human services agency related to public assistance benefits is under the substantial evidence rule and is instituted by filing a petition with a district court in Travis County, as provided by Subchapter G, Chapter 2001.” Tex. Gov’t Code § 531.019(g); see also Tex. Gov’t Code § 2001.174 (substantial evidence review under the Administrative Procedure Act). The Court presumes the order is supported by substantial evidence, and Ms. Lukefahr has the burden of proving otherwise. Poole v. Karnack Indep. Sch. Dist., 344 S.W.3d 440, 443 (Tex. App.— Austin 2011, no pet.).

It is well established that in applying the substantial evidence test to an agency’s decision, the reviewing court is prohibited from substituting its judgment for that of the agency as to the weight of the evidence on questions committed to agency discretion. Bd. of Law Exam’rs v. Stevens, 868 S.W.2d 773, 778 (Tex. 1994; Gulf States Util. v. Pub. Util. Comm’n, 841 S.W.2d 459, 474 (Tex. App.— Austin 1992, writ denied). The test for review of an agency action is not whether the agency reached the correct conclusion, but whether some reasonable basis for the agency’s action exists in the record. State v. Pub. Util. Comm’n, 883 S.W.2d 190, 204 (Tex. 1994). Texas courts have stated that although substantial evidence *13 is more than a mere scintilla, the evidence may actually preponderate against the agency decision, and yet still amount to substantial evidence supporting the result reached by the agency. Id; City of El Paso v. Pub. Util. Comm’n, 883 S.W.2d 179, 185 (Tex. 1994). The Court must uphold HHSC’s Decision in this case “on any legal basis shown in the [administrative] record.” Bd. of Trs. of Emps. Ret. Sys. v. Benge, 942 S.W.2d 742, 744 (Tex. App.—Austin 1997, writ denied); accord McMullen v. Emps. Ret. Sys., 935 S.W.2d 189, 191 (Tex. App.—Austin 1997, writ denied). As long as a properly supported finding given in the order supports an agency’s action, a court will uphold the action despite the existence of other findings that are irrelevant or unsupported by the record. Tex. Rivers Prot. Ass’n v. Tex. Natural Res. Conservation Comm’n, 910 S.W.2d 147, 155 (Tex. App.— Austin 1995, writ denied). If reasonable minds could have reached the conclusion that HHSC reached on the record presented, then the Court must uphold HHSC’s order. Stevens, 868 S.W.2d at 777-78; Tex. State Bd. of Med. Exam’rs v. Birenbaum, 891 S.W.2d 333, 337 (Tex. App.—Austin 1995, writ denied).

Further, “to determine if an agency acted arbitrarily and capriciously, even though substantial evidence supports its order or action, we look to see if the order was based on a consideration of all relevant factors.” Gulf States Utils. Co., 841 S.W.2d at 474. An agency’s exercise of its discretion may only be reversed as arbitrary and capricious if it constitutes a clear abuse of discretion. State v. Pub. *14 Util. Comm’n, 883 S.W.2d at 201; see also Deloitte & Touche LLP v. Fourteenth Court of Appeals, 951 S.W.2d 394, 396 (Tex. 1997) (internal citation omitted) (an Agency’s decision amounts to “a clear abuse of discretion” if it is “devoid of any guiding principles of law”). II. Applicable Law and Policy

Ms. Lukefahr’s DME provider first sought prior authorization of a custom power wheelchair with an integrated standing feature, which is an item of durable medical equipment.7 But, because integrated standers are not covered under Texas Medicaid, this prior authorization request was denied. Ms. Lukefahr then submitted an exceptional circumstances request for the wheelchair. The denial of this request precipitated the instant case.

Pursuant to HHSC’s 2013 Texas Medicaid Provider Procedures Manual (“TMPPM”) § 2.2.15.26 “[m]obile standers, power standing system on a wheeled mobility device” are not a benefit of Texas Medicaid.” See also A.R. 567 (referencing TMPPM § 2.2.15.26), App. B. According to Centers for Medicare and Medicaid Service guidance in the “DeSario Letter,” HHSC’s categorical exclusion of integrated standers is a permissible policy: “A State may develop a list of pre-approved items of ME [Medical Equipment] as an administrative convenience

7 See 1 Tex. Admin. Code § 354.1031(12) (“Durable medical equipment--Machinery and/or equipment which meet one or both of the following criteria: (A) the projected term of use is more than one year; or (B) reimbursement is made at a cost more than $1,000.”).

because such a list eliminates the need to administer an extensive application process for each ME request submitted.” See A.R. 517; Appendix H (the “DeSario letter”). The Fifth Circuit Court of Appeals recently confirmed the use of categorical exclusions of certain items of DME from Texas Medicaid benefits in Detgen v. Janek, noting that “the state can choose by definition to exclude” an item of DME from Medicaid coverage. 752 F.3d 627, 632 (5th Cir. 2014) (emphasis in original), Appendix I (Detgen opinion). According to Detgen, “[i]t is hardly unreasonable for a state to exclude—even categorically—any medical device whose purpose can be served by a more cost-effective method.” Id.

States must provide a “reasonable and meaningful procedure for requesting items that do not appear on a State’s pre-approved list.” A.R. 517 (DeSario Letter); App. H. Texas accomplishes this through exceptional circumstances review: “Medical equipment or appliances not listed in subparagraph (C) of this paragraph [related to covered appliances and equipment] may, in exceptional circumstances, be considered for payment when it can be medically substantiated as a part of the treatment plan that such service would serve a specific medical purpose on an individual case basis.” 1 Tex. Admin. Code § 354.1039(a)(4)(D); App. D.

HHSC’s Medicaid Program Policy Manual contains a policy for Medicaid Exceptional Circumstances review. A.R. 428-29, App. E. According to this *16 policy, a provider requesting exceptional circumstances review must include the following information:

Providers may invoke the Exceptional Circumstances provision upon written notice to TMHP, provided the written notice meets all of the following conditions. The notice must include:

3.1 A completed Home Health Services (Title XIX) DME/Medical Supplies Physician Order Form signed and dated by the prescribing physician;

3.2 The client’s diagnosis;

3.3 A clear, concise description of the DME requested;

3.4 Identification of the client’s specific medical needs that can only be met by the requested equipment;

3.5 Letters of Medical Necessity (LOMN) from the client’s clinical professionals documenting alternative measures and alternative DME that have been tried and that have failed to meet the client’s medical need(s), or have been ruled out, and an explanation of why it failed or was ruled out;

3.6 A minimum of two articles from evidence-based medical peer- reviewed literature that demonstrate validated, uncontested data for use of the requested equipment to treat the client’s specific medical condition, and that the requested equipment has been found to be safe and effective.

NOTE: Marketing materials, brochures, or claims made by the equipment manufacturer do not satisfy this requirement. The articles provided must support the information contained within the LOMN that indicates why the covered DME cannot meet the client’s specific medical need(s), and

3.7 Submission of either the manufacturer’s suggested retail pricing (MSRP) for the DME requested or an invoice documenting the provider’s cost.

Id. Ms. Lukefahr provided this information in support of her exceptional circumstances request. A.R. 122 (table of contents of documentation submitted with exceptional circumstances request).

Additionally, both the physician and the State have roles in determining what medical measures are necessary, and the physician’s letter of medical necessity is not dispositive. Moore v. Reese, 637 F.3d 1220, 1248 (11th Cir. 2011) citing Rush v. Parham, 625 F.2d 1150, 1155 (5th Cir. 1980). Further, “a participating state is not required to fund desirable but medically unnecessary services requested by a Medicaid recipient’s physician and . . . the Medicaid Act endows participating states with broad discretion to fashion standards for determining the extent of medical assistance, so long as such standards are reasonable and congruous with the purposes of the Act.” Moore, 637 F.3d at 1244 citing Beal v. Doe, 432 U.S. 438, 444 (1977); see also 42 C.F.R. § 440.230(d) (under federal Medicaid regulations, the state has the right to place appropriate limits on a service based on such criteria as medical necessity and utilization review).

III. The District Court Erred in Reversing HHSC’s Decision Affirming the Denial of a Custom Power Wheelchair with an Integrated Standing Feature because Substantial Evidence Showed that Covered Durable Medical Equipment would meet Ms. Lukefahr’s Medical Needs.

The district court issued a final judgment, stating, in part, that HHSC’s decision denying Ms. Lukefahr’s exceptional circumstances request was not supported by substantial evidence. C.R. 226; App. A. In a letter announcing the judgment, the district court stated that there were no findings of fact supporting the decision that were based on reasons for denial provided in the denial letter. C.R. 221-22; App. G. The court was in error, because properly supported findings of fact support the decision. Hence, the decision is supported by substantial evidence. Tex. Rivers Prot. Ass’n, 910 S.W.2d at 155 (As long as a properly supported finding given in the order supports an agency’s action, a court will uphold the action despite the existence of other findings that are irrelevant or unsupported by the record.).

A. Substantial evidence in the record showed that a static stander would meet Ms. Lukefahr’s medical need to stand.

HHSC affirmed the denial of Ms. Lukefahr’s exceptional circumstances request because the evidence showed that a static stander would meet her medical need to stand. See A.R. 59, App. F. In order to have an integrated stander approved for Texas Medicaid coverage, Ms. Lukefahr was required to show that other, covered, DME would not meet her medical needs. A.R. 428, App. E (exceptional *19 circumstances policy). But, registered nurses for TMHP and the OMD testified that a static stander, covered under Texas Medicaid, would meet Ms. Lukefahr’s medical need to stand. As such, substantial evidence in the record supports HHSC’s decision affirming denial of the integrated stander, and the district court erred in reversing the decision.

The hearing officer determined, and the administrative reviewer affirmed, that “exceptional circumstances for DME were not met” and the decision to deny the integrated stander “WAS in accordance with applicable law and policy; therefore, the agency’s action is SUSTAINED.”8 A.R. 572, 590; Apps. B-C. This conclusion is supported by findings of fact that a static stander would meet Ms. Lukefahr’s medical need to stand.

FINDING OF FACT NO. 5: Appellant does not currently have a static stander for use at her home and was not evaluated for prior authorization of one.

...

FINDING OF FACT NO 12: TMHP did not dispute that Appellant met medical necessity criteria for a power wheelchair and static stander or that these items met DME criteria.9

8 In addition to other responsibilities, the hearing officer “determines whether the agency’s or its designee’s action is in compliance with statutes, policies, or procedures.” 1 Tex. Admin. Code § 357.5(c)(3)(B). 9 The hearing officer’s finding of fact that Ms. Lukefahr met DME criteria for a power wheelchair and static stander is a finding that these items would meet her medical needs, as covered DME is only eligible for reimbursement if it is “required to correct or ameliorate a client’s disability, condition, or illness.” TMPPM § 2.2.2 (2013); A.R. 566; App. B.

A.R. 571-72; App. B. Because findings of fact support the hearing officer’s decision affirming HHSC’s denial of the exceptional circumstances request, the district court erred in reversing this decision as not supported by substantial evidence.10 Tex. Rivers Prot. Ass’n, 910 S.W.2d at 155 (As long as a properly supported finding given in the order supports an agency’s action, a court will uphold the action despite the existence of other findings that are irrelevant or unsupported by the record.).

The findings and conclusion are supported by evidence in the record. TMHP’s letter denying Ms. Lukefahr’s exceptional circumstances request stated: “The papers [provided in support of the exceptional circumstances request] did not state why a static stander that you could transfer into and out of would not meet your medical needs.” A.R. 59; App. F. The denial letter further stated “it was found you may have a medical need for a power wheelchair without a standing feature and a static standing system to meet both your medical and mobility needs. . . The papers sent failed to support medical necessity for the standing feature . . . or that the standing feature would serve a specific medical purpose for you.” Id. Ms. Lukefahr’s failure to try or rule out the use of a static stander in accordance with

10 Although the district court judge stated that these findings did not comport with the notice Ms. Lukefahr received in the denial letter, Ms. Lukefahr knew that she was required to show that covered DME, like a static stander, would not meet her medical needs because she utilized the criteria for exceptional circumstances review in submitting materials to TMHP. See, e.g., A.R. 122, 176. Also, the denial letter clearly stated that the information provided showed that a static stander would meet her medical needs. A.R. 59, App. F.

exceptional circumstances review policy was a primary reason for denial of the exceptional circumstances request. A.R. 428-29; App. E (exceptional circumstances review policy).

Both Ms. Clayes and Ms. Cannizarro testified that an integrated stander was not necessary to treat Ms. Lukefahr’s medical conditions because a static stander would meet her medical need to stand. H.R. 1:28, 2:09. Additionally, Ms. Lukefahr was never considered or evaluated for a static stander, and Ms. Clayes and Ms. Cannizarro testified that the information Ms. Lukefahr’s DME provider submitted in support of her exceptional circumstances request did not show that a static stander would not meet her medical need to stand, or that her individual circumstances required Texas Medicaid to provide her with an integrated stander in order to meet her medical needs. Id.; 1 Tex. Admin. Code § 354.1039(a)(4)(D), App. D; A.R. 428, App. E (HHSC’s exceptional circumstances policy requires that the exceptional circumstances request identify the client’s specific medical needs that can only be met by the requested equipment, and must show why alternative DME has been ruled out). Thus, as the hearing officer based his findings on testimony and evidence presented at the fair hearing, substantial evidence in the record supports HHSC’s decision. Benge, 942 S.W.2d at 744 (The Court must uphold the agency’s decision “on any legal basis shown in the record.”); Tex. Rivers Prot. Ass’n, 910 S.W.2d at 155.

Despite some evidence in the record that access to constant standing with an integrated stander would be convenient for Ms. Lukefahr, there is “more than a mere scintilla” of evidence in the record to support HHSC’s order affirming the denial of the integrated stander, which is sufficient to affirm the order on substantial evidence review. State v. Pub. Util. Comm’n, 883 S.W.2d at 204 (Substantial evidence is more than a mere scintilla; the evidence may actually preponderate against the agency decision, and yet still amount to substantial evidence supporting the result reached by the agency.). Therefore, this Court should reverse the district court’s final judgment and affirm HHSC’s decision in this case.

B. Additionally, durable medical equipment that is covered by Texas Medicaid meets Ms. Lukefahr’s other medical needs as expressed in the exceptional circumstances request.

Substantial evidence in the record also showed that covered DME would meet Ms. Lukefahr’s other medical needs. A.R. 59; App. F. The denial letter stated: “it was found you may have a medical need for a power wheelchair without a standing feature and a static standing system to meet both your medical and mobility needs. This equipment may be considered for you through Texas Medicaid if requested.” A.R. 59; App. F. The hearing officer also found that it is undisputed “that Appellant met medical necessity criteria for a power wheelchair and a static stander or that these items met DME criteria.” A.R. 589 (Finding of *23 Fact no 12); App. B. The record as a whole supports this conclusion. As substantial evidence showed that covered DME would meet Ms. Lukefahr’s medical needs, HHSC’s order should have been affirmed. 1 Tex. Admin. Code § 354.1039(a)(4)(D); App. D.

i. Substantial evidence in the record showed that covered durable medical equipment would meet Ms. Lukefahr’s medical need to change positions frequently.

Although Ms. Lukefahr’s physician stated that a static stander would not allow Ms. Lukefahr to stand any time she needs to adjust her posture due to pain or to relieve other secondary effects of her medical conditions, substantial evidence in the record showed that she could meet these medical needs through the use of covered DME, including the tilt and recline, seat elevation, and leg elevation functions of her custom power wheelchair. A.R. 145-46; 571 (“Finding of Fact 3: Appellant is currently operating a Permobil C300 wheelchair with a seat elevation system, tilt/recline, and elevated leg rests features provided to her six years earlier.”); App. B.

Ms. Cannizzaro testified that Ms. Lukefahr may use these components of her custom power wheelchair to meet her need to frequently change position, and the information Ms. Lukefahr provided in support of her exceptional circumstances request also supports this conclusion. H.R. 2:02. One study submitted by Ms. Lukefahr in the exceptional circumstances request entitled “Load Redistribution in *24 Variable Position Wheelchairs in People With Spinal Cord Injury” concludes that the benefits of repositioning with an integrated stander can also be achieved through tilt and recline. See A.R. 155-61. Ms. Lukefahr’s physical therapist also noted the benefits that can be achieved through tilt and recline, seat elevation, and elevating leg rests including, but not limited to, positioning for eating, self-care, reaching, and repositioning, facilitating bowel/bladder management, addressing circulatory issues and blood pressure, reducing edema, reducing respiratory distress, and facilitating independent transfer. A.R. 84. As such, if Ms. Lukefahr has an immediate need to change position, substantial evidence in the record shows that other, covered, DME will meet her medical needs. Therefore, substantial evidence in the record as a whole supports HHSC’s decision affirming denial of the exceptional circumstances request. Benge, 942 S.W.2d at 744 (The Court must uphold the agency’s decision “on any legal basis shown in the record.”); Stevens, 868 S.W.2d at 777-78 (if reasonable minds could have reached the conclusion that HHSC reached on the record presented, then the Court must uphold HHSC’s order).

ii. Substantial evidence in the record showed that covered durable medical equipment would meet Ms. Lukefahr’s needs in her activities of daily living.

Ms. Lukefahr’s physician also stated that an integrated stander would allow her more independence in her activities of daily living by allowing her to cook and *25 be more independent in the kitchen and in performing personal hygiene tasks. A.R. 82, 146. But the information submitted by Ms. Lukefahr’s DME provider showed that Ms. Lukefahr may use a seat elevator to allow more independence in the kitchen and bathroom. A.R. 84. Further, the DME provider noted that recline “offers the most functional positions for eating, self care, reaching, and repositioning” and adjustable seat height offers “better positioning for reaching, which can lead to independence in many activities, such as eating, cooking, and hand washing.” Id. And, due to the evidence in the exceptional circumstances request that Ms. Lukefahr has limited mobility in her arms and hands and limited muscle strength, at least some evidence showed that integrated standing would not allow her to be significantly more independent in her activities of daily living. A.R. 166-67. Given the evidence in the record that showed an integrated stander would not provide Ms. Lukefahr additional benefit in her activities of daily living as compared with covered DME, this Court should reverse the district court’s final judgment and affirm HHSC’s decision.11 Benge, 942 S.W.2d at 744 (The Court must uphold the agency’s decision “on any legal basis shown in the record).

11 Ms. Lukefahr’s providers also expressed that an integrated stander would help her progress at work. A.R. 82, 145. But Ms. Lukefahr’s progress at work is unrelated to her medical needs and, as such, is not a basis for coverage under exceptional circumstances. Moore, 637 F.3d at 1244 citing Beal, 432 U.S. at 444 (“a participating state is not required to fund desirable but medically unnecessary services requested by a Medicaid recipient’s physician”); see also H.R. 3:16 (Ms. Cannizzaro testified that Ms. Lukefahr’s exceptional circumstances request did not show a medical need to stand at work).

IV. The District Court Erred in Reversing HHSC’s Decision as Arbitrary and Capricious or in Violation of Due Process because the Hearing Officer and Reviewing Attorney Fulfilled their Duties and Provided Ms. Lukefahr with all Required Due Process.

Additionally, the district court judgment reversed HHSC’s decision as arbitrary and capricious and in violation of Ms. Lukefahr’s due process rights. C.R. 226; App. A. The district court found that HHSC’s order lacked any findings of fact to support the decision, and stated that the hearing officer and reviewing attorney failed to provide adequate due process in this case.12 C.R. 222-25; App. G. But, as discussed in part III, HHSC’s decision was supported by findings of fact. And the hearing officer and reviewing attorney fulfilled their statutory duties, providing all due process required. Thus, the district court erred in reversing the decision as arbitrary and capricious and in violation of due process.

A. The hearing officer provided all required due process, including making findings of fact supported by the record.

The district court found that HHSC’s decision was arbitrary and capricious because it was not supported by any findings of fact. C.R. 266; App. A. The district court noted that many of the hearing officer’s findings of fact merely recite

12 The district court again elevated due process required in a fair hearing, especially considering the informal nature thereof. 1 Tex. Admin. Code 357.5(c) (“The hearings officer conducts the fair hearing as an informal proceeding, not as a formal court hearing, and is not required to follow the Texas Rules of Evidence or the Texas Rules of Civil Procedure.”). As is discussed in this section, the district court’s concerns amount to disagreements with the wording of the fair hearing findings of fact and the administrative review order that do not amount to a denial of due process or render the decision arbitrary and capricious. See C.R. 223-24; App. E.

procedural history, and asserted that the findings of fact may not have been based on the hearing officer’s consideration of the evidence. C.R. 223; App. G. But the hearing officer fulfilled his duties in the fair hearing, and the decision was not arbitrary and capricious.

The hearing officer presiding over a fair hearing has many responsibilities. 1 Tex. Admin Code § 357.5 (“Hearing Officer Responsibilities”). During the hearing, among other responsibilities, the hearing officer “ensures consideration of all relevant points at issue and facts pertinent to the appellant’s situation at the time the action was taken,” “requests, receives, and makes part of the record all relevant evidence,” and “regulates the conduct and course of the fair hearing to ensure due process and an orderly hearing.” Id. As relevant here, the hearing officer is responsible for the following after a fair hearing:

(3) After the hearing, the hearings officer:

(A) makes a decision based on the evidence presented at the hearing;

(B) determines if the agency’s or its designee’s action is in compliance with statutes, policies, or procedures;

(C) allows the appellant to request and receive a copy of the recording at no charge;

(D) except as provided in subparagraph (E) of this paragraph, issues a timely written decision, and includes findings of fact, conclusions of law, pertinent statutes, and a final order; . . .

1 Tex. Admin. Code § 357.5(c)(3)(A)-(D).

The district court erred in finding that the hearing officer failed to make findings of fact. As discussed fully in part III, the hearing officer made findings of fact that were more than mere procedural recitations. A.R. 571-72. On substantial evidence review, a decision may be affirmed on the basis of any finding of fact, even if there are other irrelevant findings. Tex. Rivers Prot. Ass’n, 910 S.W.2d at 155 (As long as a properly supported finding given in the order supports an agency’s action, a court will uphold the action despite the existence of other findings that are irrelevant or unsupported by the record.). Thus, the decision was not arbitrary and capricious for an absence of findings of fact, and the district Court erred in reversing on this basis.

And, although the district court asserted that the hearing officer failed to specifically state that the findings of fact represented the hearing officer’s findings after considering the evidence, the hearing officer prefaced the findings of fact by stating: “The hearing officer has carefully considered the evidence contained in the hearing record and makes findings of fact and conclusions of law based on the weight of the evidence presented and according to the burdens of proof explained in 1 TAC 357.9.” A.R. 570; App. B. As the hearing officer clearly stated that his findings of fact were based on a consideration of the evidence presented during the hearing, he also fulfilled his duty in this regard, and did not violate Ms. Lukefahr’s due process rights. Therefore, the district court erred in reversing the fair hearing *29 decision as arbitrary and capricious and for due process violations. Gulf States Utils. Co., 841 S.W.2d at 474 (an agency’s order is not arbitrary and capricious if it is based on a consideration of all relevant factors).

B. The reviewing attorney provided all required due process.

The district court also asserted that the reviewing attorney failed to fulfill his duty on administrative review by failing to review the fair hearing decision for errors of law and fact using a “preponderance of the evidence” standard. C.R. 223; App. G. But, as the reviewing attorney also fulfilled his duties and provided Ms. Lukefahr with all due process, the district court erred in reversing HHSC’s decision on this basis.

“Before an applicant for or recipient of public assistance benefits may appeal a decision of a hearing officer for the commission . . ., the applicant or recipient must request an administrative review by an appropriate attorney for [HHSC] . . .”. Tex. Gov’t Code § 531.019(c). The reviewing attorney has a statutory duty to complete “an administrative review of the decision and notify the applicant or recipient in writing of the results of that review.” Tex. Gov’t Code § 531.019(e)(2). “The assigned attorney reviews the hearing decision and the hearings record upon which it is based for errors of law and errors of fact using the ‘preponderance of evidence’ standard. This standard means that the evidence as a whole shows that *30 the fact sought to be proved is more probable than not.” 1 Tex. Admin. Code § 357.703(b)(3).

The administrative review decision shows that the reviewing attorney fulfilled his duty by reviewing the fair hearing decision for errors of law and fact, providing Ms. Lukefahr with all required due process in the administrative review. The administrative review order states:

Based on my review of the matter, I have determined that the Hearings Officer developed the record appropriately, and the record reflects that Appellant’s denial of the Permobil C500 VS power wheelchair with integrated standing feature and seat elevation system was in accordance with applicable law and policy. It is, therefore, ORDERED that the Hearing Officer’s decision in this matter is SUSTAINED.

A.R. 591 (emphasis in original); App. C. Thus, the order itself references consideration of the record and the evaluation of the record in light of the applicable law. Id.

And, as the district court noted, the reviewing attorney also states: “[b]ased on a preponderance of the evidence presented, substantial evidence exists to support the agency’s action, and the Hearings Officer’s conclusions and decision; therefore, the Hearings Officer’s Decision is Sustained.” A.R. 590; App. C. Again, the reviewing attorney states that the fair hearing decision is supported by a preponderance of the evidence. Id. Despite the district court’s assertion that the reviewing attorney conflated the preponderance of the evidence standard with *31 substantial evidence review, nothing in the Order supports the conclusion that the reviewing attorney’s the reference to “substantial evidence” is tied to the meaning of that term on judicial review under the Administrative Procedure Act. C.R. 223 note 5; Tex. Gov’t Code § 2001.174. Thus, as the reviewing attorney provided all required due process in Ms. Lukefahr’s case, the decision should have been affirmed. Therefore, this Court should reverse the district court’s judgment and affirm HHSC’s order in all respects.

PRAYER

HHSC asks this Court to reverse the district court’s judgment because HHSC’s order denying Ms. Lukefahr’s request for a custom power wheelchair with an integrated stander is supported by substantial evidence and is not arbitrary and capricious or in violation of Ms. Lukefahr’s due process rights.

Respectfully submitted,

KEN PAXTON Attorney General of Texas

CHARLES E. ROY First Assistant Attorney General

JAMES E. DAVIS Deputy Attorney General for Civil Litigation

DAVID A. TALBOT, JR. Chief, Administrative Law Division

/s/ Kara Holsinger KARA HOLSINGER Assistant Attorney General State Bar No. 24065444 Office of the Attorney General of Texas Administrative Law Division P.O. Box 12548, Capitol Station Austin, Texas 78711-2548 Telephone: (512) 475-4203 Facsimile: (512) 320-0167 kara.holsinger@texasattorneygeneral.gov Attorneys for Appellant

CERTIFICATE OF COMPLIANCE

In compliance with Travis County Local Rule 10.5 and Texas Rule of Appellate Procedure 9.4(i)(3) and relying on the word count function in the word processing software used to produce this document, I certify that the number of words in this document is 8,491 including the portions that would otherwise be exempted by TRAP Rule 9.4(i)(1).

/s/ Kara Holsinger KARA HOLSINGER

CERTIFICATE OF SERVICE

A true and correct copy of the foregoing Appellant’s Brief was served via eserve and e-mail on this the 11th day of September, 2015 to the following:

Maureen O’Connell Texas Bar No. 00795949 Southern Disability Law Center 1307 Payne Avenue Austin, Texas 78757 Phone: 512-458-5800 Fax: 512-458-5850 moconnell458@gmail.com

Attorney for Appellee

/s/ Kara Holsinger KARA HOLSINGER Assistant Attorney General

APPENDICES

INDEX OF APPENDICES

Final Judgment in Jessica Lukefahr v. Texas Health and Human Services Commission, Cause No. D-1-GN-14-002158 .................................................. Tab A

Fair Hearing Decision In the Matter of Jessica Lukefahr ................................ Tab B

Administrative Review of Fair Hearing Decision In the Matter of Jessica .... Tab C Lukefahr

1 Tex. Admin. Code § 354.1039 ...................................................................... Tab D 2013 Medicaid Program Policy Manual Exceptional Circumstances Policy .. Tab E

Texas Medicaid & Healthcare Partnership Letter to Jessica Lukefahr Denying Exceptional Circumstances Request ................................................. Tab F

Letter from 345th District Court of April 28, 2015 ......................................... Tab G DeSario Letter .................................................................................................. Tab H Detgen v. Janek, 752 F.3d 627, 632 (5th Cir. 2014) ........................................ Tab I

TAB A

TAB B

TAB C

TAB D

Page 1

TEXAS ADMINISTRATIVE CODE

*** This document reflects all regulations in effect as of August 31, 2015 ***

TITLE 1. ADMINISTRATION PART 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION CHAPTER 354. MEDICAID HEALTH SERVICES SUBCHAPTER A. PURCHASED HEALTH SERVICES DIVISION 3. MEDICAID HOME HEALTH SERVICES

1 TAC § 354.1039 (2015) § 354.1039. Home Health Services Benefits and Limitations

(a) The State determines authorization requirements and limitations for covered home health service benefits. The home health agency is responsible for obtaining prior authorization where specified for the healthcare service, supply, equipment, or appliance. Home health service benefits include the following: (1) Skilled nursing. Nursing services provided by a registered nurse (RN) who is currently licensed by the Board of Nurse Examiners for the State of Texas and/or a licensed vocational nurse (LVN) licensed by the Texas Board of Vocational Nurse Examiners provided on a part-time or intermittent basis and furnished through an enrolled home health agency are covered benefits. Billable nursing visits may also include: (A) nursing visits required to teach the recipient, the primary caregiver, a family member and/or neighbor how to administer or assist in a service or activity which is necessary to the care and/or treatment of the recipient in a home setting; (B) RN visits for skilled nursing observation, assessment, and evaluation, provided a physician specifically requests that a nurse visit the recipient for this purpose. (i) The physician's request must reflect the need for the assessment visit. (ii) Nursing visits for the primary purpose of assessing a recipient's care needs to develop a plan of care are considered administrative and are not billable; and (C) RN visits for general supervision of nursing care provided by a home health aide and/or others over whom the RN is administratively or professionally re- sponsible. (2) Home health aide services. Home health aide services to provide personal care under the supervision of an RN, licensed physical therapist (PT), or occupational therapist (OT) employed by the home health agency are covered benefits. (A) The primary purpose of a home health aide visit must be to provide personal care services. (B) Duties of a home health aide include the performance of simple procedures such as personal care, ambulation, exercise, range of motion, safe transfer, positioning, and household services essential to health care at home, assistance with medications that are ordinarily self-administered, reporting changes in the patient's condition and needs, and completing appropriate records. (C) Written instructions for home health aide services must be prepared by an RN or therapist as appropriate.

Page 2 1 TAC § 354.1039

(D) The requirements for home health aide supervision are as follows. (i) When only home health aide services are being furnished to a recipient, an RN must make a supervisory visit to the recipient's residence at least once every 60 days. These supervisory visits must occur when the aide is furnishing patient care. (ii) When skilled nursing care, PT, or OT are also being furnished to a recipient, an RN must make a supervisory visit to the recipient's residence at least every two weeks. (iii) When only PT or OT is furnished in addition to the home health aide services, the appropriate skilled therapist may make the supervisory visits in place of an RN. (E) Visits made primarily for performing housekeeping services are not covered services. (3) Medical supplies. Medical supplies are covered benefits if they meet the following criteria. (A) Medical supplies must be: (i) documented in the recipient's plan of care as medically necessary and used for medical or therapeutic purposes; (ii) supplied through an enrolled home health agency in compliance with the recipient's plan of care; or (iii) supplied by an enrolled medical supplier under written, signed, and dated physician's prescription; and (iv) prior authorized unless otherwise specified by the department. (B) Items which are not listed in subparagraph (C) of this paragraph may be medically necessary for the treatment or therapy of qualified recipients. If a prior authorization request is received for these items consideration will be given to the request. Approval for reasonable amounts of the requested items may be given if circumstances justify the exception and the need is documented. (C) Covered items include, but are not limited to: (i) colostomy and ileostomy care supplies; (ii) urinary catheters, appliances and related supplies; (iii) pressure pads including elbow and heel protectors; (iv) incontinent supplies to include incontinent pads or diapers for clients over the age of four for medical necessity as determined by the physician; (v) crutch and cane tips; (vi) irrigation sets; (vii) supports and abdominal binders (not to include braces, orthotics, or prosthetics); (viii) medicine chest supplies not requiring a prescription (not to include vitamins or personal care items such as soap or shampoos); (ix) syringes, needles, IV tubing and/or IV administration setups including IV solutions generally used for hydration or prescriptive additives; (x) dressing supplies; (xi) thermometers; (xii) suction catheters;

Page 3 1 TAC § 354.1039

(xiii) oxygen and related respiratory care supplies; or (xiv) feeding related supplies. (4) Durable medical equipment (DME). Durable Medical Equipment must meet the following requirements to qualify for reimbursement under Medicaid home health services. (A) DME must: (i) be medically necessary and the appropriateness of the health care service, supply, equipment, or appliance prescribed by the physician for the treatment of the individual recipient and delivered in his place of residence must be documented in the plan of care and/or the request form. (ii) be prior authorized unless otherwise specified by the department; (iii) meet the recipient's existing medical and treatment needs; (iv) be considered safe for use in the home; (v) be provided through an enrolled home health agency under a current physician's plan of care; or (vi) be provided through an enrolled DME supplier under a written, signed and dated physician's prescription. (B) The department will determine whether DME will be rented, purchased, or repaired based upon the duration and use needs of the recipient. (i) Periodic rental payments are made only for the lesser of: (I) the period of time the equipment is medically necessary; or (II) when the total monthly rental payments equal the reasonable purchase cost for the equipment. (ii) Purchase is justified when the estimated duration of need multiplied by the rental payments would exceed the reasonable purchase cost of the equipment or it is otherwise more practical to purchase the equipment. (iii) Repair of durable medical equipment and appliances will be considered based on the age of the item and the cost to repair the item. (I) A request for repair of durable medical equipment or appliances must include a statement or medical information from the attending physician substantiating that the medical appliance or equipment continues to serve a specific medical purpose and an itemized estimated cost list of the repairs. Rental equipment may be provided to replace purchased medical equipment or appliances for the period of time it will take to make necessary repairs to purchased medical equipment or appliances. (II) Repairs will not be authorized in situations where the equipment has been abused or neglected by the patient, patient's family, or caregiver. (III) Routine maintenance of rental equipment is the responsibility of the provider. (C) Covered medical appliances and equipment (rental, purchase, or repairs) include, but are not limited to: (i) manual or powered wheelchairs; (I) non-customized including medically justified seating, supports and equipment; or

Page 4 1 TAC § 354.1039

(II) customized, specifically tailored or individualized, powered wheelchairs including appropriate medically justified seating, supports and equipment not to exceed an amount specified by the department. (ii) canes, crutches, walkers, and trapeze bars; (iii) bed pans, urinals, bedside commode chairs, elevated commode seats, bath chairs/benches/seats; (iv) electric and non-electric hospital beds and mattresses; (v) air flotation or air pressure mattresses and cushions; (vi) bed side rails and bed trays; (vii) reasonable and appropriate appliances for measuring blood pressure and blood glucose suitable to the recipient's medical situation to include replacement parts and supplies; (viii) lifts for assisting recipient to ambulate within residence; (ix) pumps for feeding tubes and IV administration; and (x) respiratory or oxygen related equipment. (D) Medical equipment or appliances not listed in subparagraph (C) of this paragraph may, in exceptional circumstances, be considered for payment when it can be medically substantiated as a part of the treatment plan that such service would serve a specific medical purpose on an individual case basis. (5) Physical therapy. To be payable as a home health benefit, physical therapy services must: (A) be provided by a physical therapist who is currently licensed by the Texas Board of Physical Therapy Examiners, or physical therapist assistant who is licensed by the Texas Board of Physical Therapy Examiners who assists and is supervised by a licensed physical therapist; (B) be for the treatment of an acute musculoskeletal or neuromuscular condition or an acute exacerbation of a chronic musculoskeletal or neuromuscular condition; (C) be expected to improve the patient's condition in a reasonable and generally predictable period of time, based on the physician's assessment of the patient's restorative potential after any needed consultation with the therapist; and (D) not be provided when the patient has reached the maximum level of improvement. Repetitive services designed to maintain function once the maximum level of im- provement has been reached are not a benefit. Services related to activities for the general good and welfare of patients such as general exercises to promote overall fitness and flexibility and activities to provide diversion or general motivation are not reimbursable. (6) Occupational therapy. To be payable as a home health benefit, occupational therapy services must be: (A) provided by one who is currently registered and licensed by the Texas Board of Occupational Therapy Examiners or by an occupational therapist assistant who is licensed to assist in the practice of occupational therapy and is supervised by an occupational therapist; (B) for the evaluation and function-oriented treatment of individuals whose ability to function in life roles is impaired by recent or current physical illness, injury or condition; and

Page 5 1 TAC § 354.1039

(C) specific goal directed activities to achieve a functional level of mobility and communication and to prevent further dysfunction within a reasonable length of time based on the therapist's evaluation and physician's assessment and plan of care. (7) Insulin syringes and needles. Insulin syringes and needles must meet the following requirements to qualify for reimbursement under Medicaid home health services. (A) Pharmacies enrolled in the Medicaid Vendor Drug Program may dispense insulin syringes and needles to eligible Medicaid recipients with a physician's prescription. (B) Prior authorization is not required for an eligible recipient to obtain insulin syringes and needles. (C) Insulin syringes and needles obtained in accordance with this section will be reimbursed through the Medicaid Vendor Drug Program. (D) A physician's plan of care is not required for an eligible recipient to obtain insulin syringes and needles under this section. (8) Diabetic supplies and related testing equipment. Diabetic supplies and related testing equipment must meet the following requirements to qualify for reimbursement under Medicaid home health services. (A) diabetic supplies and related testing equipment must be prescribed by a physician; (B) prior authorization is required unless otherwise specified by the department; and (b) Home health service limitations include the following. (1) Patient supervision. (A) Patients must be seen by their physician within 30 days prior to the start of home health services. This physician visit may be waived when a diagnosis has already been established by the attending physician and the patient is currently undergoing active medical care and treatment. Such a waiver is based on the physician's statement that an additional evaluation visit is not medically necessary. (B) Patients receiving home health care services must remain under the care and supervision of a physician who reviews and revises the plan of care at least every 60 days or more frequently as the physician determines necessary. (2) Time limited prior authorizations. (A) Prior authorizations for payment of home health services may be issued by the department for a service period not to exceed 60 days on any given authorization. Specific authorizations may be limited to a time period less than the established maximum. When the need for home health services exceeds 60 days, or when there is a change in the service plan, the provider must obtain prior approval and retain the physician's signed and dated orders with the revised plan of care. (B) The provider shall be notified by the department in writing of the au- thorization (or denial) of requested services. (C) Prior authorization requests for covered Medicaid home health services must include the following information: (i) The Medicaid identification form with the following information: (I) full name, age, and address; (II) Medical Assistance Program Identification number;

Page 6 1 TAC § 354.1039

(III) health insurance claim number (where applicable); (IV) Medicare number; (ii) the physician's written, signed and dated plan of care (submitted by the provider if requested); (iii) the clinical record data (completed and submitted by provider if requested); (iv) a description of the home or living environment; (v) a composition of the family/caregiver; (vi) observations pertinent to the overall plan of care in the home; and (vii) the type of service the patient is receiving from other community or state agencies. (D) If inadequate or incomplete information is provided, the provider will be requested to furnish additional documentation as required to make a decision on the request. (3) Medication administration. Nursing visits for the purpose of administering medications are not covered if: (A) the medication is not considered medically necessary to the treatment of the individual's illness; (B) the administration of medication exceeds the therapeutic frequency or duration by accepted standards of medical practice; (C) there is not a medical reason prohibiting the administration of the medication by mouth; or (D) the patient, a primary caregiver, a family member and/or neighbor has been taught or can be taught to administer intramuscular (IM) and intravenous (IV) injections. (4) Prior approval. Services or supplies furnished without prior approval, unless otherwise specified by the department, are not benefits. (5) Recipient residence. Services, equipment, or supplies furnished to a recipient who is a resident or patient in a hospital, skilled nursing facility, or intermediate care facility are not benefits. (c) Home health services are subject to utilization review which includes the following: (1) the physician is responsible for retaining in the client's record a copy of the plan of care and/or a copy of the request form documenting the medical necessity of the health care service, supply, equipment, or appliance and how it meets the recipient's health care needs; and (2) the home health services provider is responsible for documenting the amount, duration, and scope of services in the recipient's plan of care, the equipment/supply order request, and the client record based on the physician's orders. This information is subject to retrospective review; and (3) the State or its designated contractor may establish random and targeted utilization review processes to ensure the appropriate utilization of home health benefits and to monitor the cost effectiveness of home health services.

TAB E

TAB F

TAB G

221 222 223 224

TAB H

DEPARTMENT OF HEALTH & HUMAN SERVICES Health Care Financing Administration Center for Medicaid and State Operations 7500 Security Boulevard Baltimore, MD 21244-1850 September 4, 1998 Dear State Medicaid Director: We have received a number of inquiries regarding coverage of medical equipment (ME) under the Medicaid program in light of the ruling of the United States Court of Appeals for the Second Circuit in DeSario v. Thomas. In that case, the court examined the circumstances under which a State may use a list to determine coverage of ME and offered its interpretation of HCFA's policies. We have concluded that it would be helpful to provide States with interpretive guidance clarifying our policies concerning ME coverage under the Medicaid program and the use of lists in making such coverage determinations. This guidance is applicable only to ME coverage policy. As you know, the mandatory home health services benefit under the Medicaid program includes coverage of medical supplies, equipment, and appliances suitable for use in the home (42 C.F.R. § 440.70(b)(3)). A State may establish reasonable standards, consistent with the objectives of the Medicaid statute, for determining the extent of such coverage (42 U.S.C. § 1396(a)(17)) based on such criteria as medical necessity or utilization control (42 C.F.R. § 440.230(d)). In doing so, a State must ensure that the amount, duration, and scope of coverage are reasonably sufficient to achieve the purpose of the service (42 C.F.R. § 440.230(b)). Furthermore, a State may not impose arbitrary limitations on mandatory services, such as home health services, based solely on diagnosis, type of illness, or condition (42 C.F.R. § 440.230(c)). A State may develop a list of pre-approved items of ME as an administrative convenience because such a list eliminates the need to administer an extensive application process for each ME request submitted. An ME policy that provides no reasonable and meaningful procedure for requesting items that do not appear on a State's pre-approved list, is inconsistent with the federal law discussed above. In evaluating a request for an item of ME, a State may not use a "Medicaid population as a whole" test, which requires a beneficiary to demonstrate that, absent coverage of the item requested, the needs of "most" Medicaid recipients will not be met. This test, in the ME context, establishes a standard that virtually no individual item of ME can meet. Requiring a beneficiary to meet this test as a criterion for determining whether an item is covered, therefore, fails to provide a meaningful opportunity for seeking modifications of or exceptions to a State's pre-approved list. Finally, the process for seeking modifications or exceptions must be made available to all beneficiaries and may not be limited to sub-classes of the population (e.g., beneficiaries under the age of 21). In light of this interpretation of the applicable statute and regulations, a State will be in compliance with federal Medicaid requirements only if, with respect to an individual applicant's request for an item of ME, the following conditions are met: ƒ The process is timely and employs reasonable and specific criteria by which an individual item of ME will be judged for coverage under the State's home health services benefit. These criteria must be sufficiently specific to permit a determination of whether an item of ME that does not appear on a State's pre-approved list has been arbitrarily excluded from coverage based solely on a diagnosis, type of illness, or condition. ƒ The State's process and criteria, as well as the State's list of pre-approved items, are made available to beneficiaries and the public. ƒ Beneficiaries are informed of their right, under 42 C.F.R. Part 431 Subpart E, to a fair hearing to determine whether an adverse decision is contrary to the law cited above. We encourage you to be cognizant of the approval decisions you make regarding items of ME that do not appear on a pre-approved list, to ensure that the item of ME is covered for all beneficiaries who are similarly situated. In addition, your list of pre-approved items of ME should be viewed as an evolving document that should be updated periodically to reflect available technology. HCFA's Regional Offices will be monitoring compliance with the statute and regulations that are the subject of this guidance. Any questions concerning this letter or the ME benefit may be referred to Mary Jean Duckett of my staff at (410) 786-3294. Sincerely, /s/ Sally K. Richardson Director cc: All HCFA Regional Administrators All HCFA Associate Regional Administrators for Medicaid and State Operations Lee Partridge American Health Services Association Joy Wilson National Conference of State Legislatures bcc: HCFA Press Office CMSO Senior Staff

TAB I

Page 1

SCOTT DETGEN, by His Next Friend, L.C. Detgen; JUANITA BARRAZA, by Her Next Friend, Yolanda Villareal; BRANDON DOYEL; JOSHUA VARGAS, Plaintiffs-Appellants, versus DR. KYLE JANEK, in His Official Capacity as Executive Commissioner, Texas Health and Human Services Commission, Defendant-Appellee.

No. 13-10396

UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

752 F.3d 627; 2014 U.S. App. LEXIS 9107

May 16, 2014, Filed

PRIOR HISTORY: [**1] Circuit Judges. Appeal from the United States District Court for the Northern OPINION BY: JERRY E. SMITH District of Texas. Detgen v. Janek, 945 F. Supp. 2d 746, OPINION 2013 U.S. Dist. LEXIS 34532 (N.D. Tex., 2013) [*629] JERRY E. SMITH, Circuit Judge:

COUNSEL: For SCOTT DETGEN, by his next The four plaintiffs are Medicaid friend, L.C. Detgen, JUANITA BARRAZA, beneficiaries with near total physical by her next friend, Yolanda Villareal, disabilities, requiring constant Brandon Doyel, Joshua Vargas, personal assistance and care. On the Plaintiffs - Appellants: Maureen A. advice of professionals, they asked O'Connell, Southern Disability Law Texas's Health and Human Services Center, Austin, TX; Lewis Alan Commission to pay for ceiling lifts, Golinker, Assistive Technology Law which are classified as durable Center, Ithaca, NY. medical equipment ("DME"). Such lifts are expensive but would allow the For DR. KYLE JANEK, in his official disabled beneficiaries to move with capacity as Executive Commissioner, straps attached to ceilings. Texas Texas Health and Human Services denied coverage under a categorical Commission, Defendant - Appellee: [**2] exclusion in the state's Jonathan F. Mitchell, Douglas D. implementing Medicaid regulations. The Geyser, Office of the Solicitor district court granted summary General, Austin, TX; Erika M. Kane, judgment for the state on the ground Office of the Attorney General, that, so long as federal monies were Austin, TX. not available to reimburse it, it did not need to provide the lifts. JUDGES: Before JONES, SMITH, and OWEN,

Page 2 752 F.3d 627, *629; 2014 U.S. App. LEXIS 9107, **2

The Center for Medicare and Ct. 1204, 182 L. Ed. 2d 101 (2012). Medicaid Services ("CMS") has since offered guidance, however, that 1 Plaintiffs rely on 42 U.S.C. federal financial participation would § 1983 for their due-process be available. In addition to appealing claims. the judgment, the plaintiffs move this court to vacate it for In light of the Court's failure in reconsideration. In the appeal, they Douglas to hold to the contrary, this maintain that the state's categorical appeal is governed by Planned exclusions are preempted by federal Parenthood of Houston & Southeast law or otherwise violate their Texas v. Sanchez ("PPHST"), 403 F.3d procedural due-process rights. Texas 324, 330-35 (5th Cir. 2005). There responds that categorical exclusions this court held that the Supremacy are not preempted and, moreover, that Clause confers an implied private a state can never violate the Medicaid cause of action to enforce all Act and that the plaintiffs do not Spending Clause legislation by have a private cause of action to bringing preemption actions.2 [**4] enforce it. The state is correct that since then, the Supreme Court has held that Under binding precedent, these certain federal statutes contain no plaintiffs have an implied private private right of action,3 but that was cause of action under the Supremacy true when PPHST was decided. See, Clause to pursue this challenge. We e.g., Sandoval, 532 U.S. at 288-93. In additionally note that the state must Sandoval, Horne, and Brunner, it comply with the requirements of the appears that the plaintiffs never made Medicaid Act, but the Act does not the alternative claim that if the preempt the state's categorical statute does not provide a cause of exclusions. We therefore affirm the action, the Supremacy Clause does.4 summary judgment and deny the motion to [**3] vacate. 2 PPHST, 403 F.3d at 333 ("While [prior cases] do not I. directly address the issue of whether a valid cause of action The plaintiffs assert that they existed [under the Supremacy have an implied cause of action to Clause], we assumed that one did. pursue their claims. Normally a cause Today we hold that one does. of action must be found in a statute: Other circuits have similarly "Like substantive federal law itself, recognized an implied cause of private rights of action to enforce action to bring preemption claims federal law must be created by seeking injunctive and Congress." Alexander v. Sandoval, 532 declaratory relief even absent an U.S. 275, 286, 121 S. Ct. 1511, 149 L. explicit statutory claim."). Ed. 2d 517 (2001). The plaintiffs' 3 See, e.g., Horne v. Flores, theory of an implied cause of action 557 U.S. 433, 456 n.6, 129 S. Ct. does not depend on any rights-creating 2579, 174 L. Ed. 2d 406 (finding language in the Medicaid Act; rather, no private cause of action to they rely on the [*630] Supremacy enforce the No Child Left Behind Clause.1 The Supreme Court recently Act); Brunner v. Ohio Republican dodged the question--incidentally in a Party, 555 U.S. 5, 6, 129 S. Ct. case involving the Medicaid 5, 172 L. Ed. 2d 4 (2008) Act--whether the Supremacy Clause (suggesting no private cause of provides a cause of action itself in action to enforce the Help the absence of a statutory private America Vote Act). cause of action. See Douglas v. Indep. 4 The Tenth Circuit has only Living Ctr. of S. Cal., Inc., 132 S. recently come to the opposite

Page 3 752 F.3d 627, *630; 2014 U.S. App. LEXIS 9107, **4

conclusion. See Planned would contradict PPHST, which held Parenthood of Kan. & Mid-Mo. v. that there is an implied private cause Moser, 12-3178, 747 F.3d 814, of action under the Supremacy Clause 2014 U.S. App. LEXIS 5467, 2014 to enforce all Spending Clause WL 1201488 (10th Cir. Mar. 25, legislation. Under the state's theory, 2014) [**5] (holding that the the holding in PPHST would have been Supremacy Clause does not provide totally unnecessary because it is a private cause of action). impossible for a state to violate a Spending Clause statute, so a private II. cause of action does plaintiffs no good. We agree that if no private The state makes the alternative cause of action existed, it would be argument that even if plaintiffs have up to the federal government to decide a cause of action, it is impossible how to enforce compliance, and it for a state to violate the Medicaid could choose to withhold funds. That, Act. The state analogizes the Act to indeed, is how at least two Supreme legislation tying highway funds to a Court Justices would interpret the certain maximum speed limit: A state Medicaid Act.5 But this court in may lawfully establish a higher limit, PPHST, 403 F.3d at 332 & n.34, but it will forgo funds. Thus, the specifically discounted those two state claims, here it may lawfully views in coming to its conclusion. pass nonconforming Medicaid Although it is quite possible, as legislation at the risk of losing Texas maintains, that no state has federal funds, but not at the risk of made such an argument, PPHST private lawsuits. It reasons that necessarily (even if implicitly) unlike other legislation that can directs that when a state violates the preempt state law, this federal law federal [**7] requirements of the does not include language such as Medicaid Act, a private plaintiff can "shall," commanding a state to perform sue the state to enforce those a certain function. requirements. The provision on which plaintiffs 5 See Pharm. Research & Mfrs. rely, however, does contain such of Am. v. Walsh, 538 U.S. 644, language: "A State plan for medical 675, 123 S. Ct. 1855, 155 L. Ed. assistance must . . . include 2d 889 (2003) (Scalia, J., reasonable standards . . . for concurring in the judgment) ("I determining eligibility . . . . " 42 would reject petitioner's U.S.C. § 1396a(a)) (emphasis added). statutory claim on the ground Additionally, several courts, that the remedy for the State's including the Supreme Court, have held failure to comply with the that once a state accepts federal obligations it has agreed to funding, it must conform to the undertake under the Medicaid Act requirements of the relevant federal is set forth in the Act itself: law, including the Medicaid Act: termination of funding by the "Although participation [**6] in the Secretary of the Department of Medicaid program is entirely optional, Health and Human Services. once a State elects to participate, it Petitioner must seek enforcement must comply with the requirements of of the Medicaid conditions by Title XIX." Harris v. McRae, 448 U.S. that authority . . . ." (internal 297, 301, 100 S. Ct. 2671, 65 L. Ed. citations omitted)); id. at 682 2d 784 (1980); see also Hope Med. Grp. (Thomas, J., concurring in the for Women v. Edwards, 63 F.3d 418, 421 judgment) ("[T]he Secretary's (5th Cir. 1995). mandate from Congress is to conduct, with greater expertise [*631] Indeed, a contrary ruling and resources than courts, the

Page 4 752 F.3d 627, *631; 2014 U.S. App. LEXIS 9107, **7

inquiry into whether [state law] prohibit categorical exclusions. upsets the balance contemplated by the Medicaid Act. Congress' As we have noted, the statute delegation to the agency to requires that "[a] State plan for perform this complex balancing medical assistance must . . . include task precludes federal-court reasonable standards . . . for intervention on the basis of determining eligibility for and the obstacle pre-emption--it does not extent of medical assistance under the bar the Secretary from performing plan." Additionally, the Medicaid Act his duty to adjudge whether [the requires a state program to cover State's law] upsets the balance "home health services," 42 U.S.C. § the Medicaid Act contemplates and 1396a(a)(10)(D), which [*632] withhold approval or funding include "[m]edical supplies, [**8] if necessary."). equipment, and appliances suitable for use in the home," 42 C.F.R. § III. 440.70(b)(3). But, as plaintiffs acknowledge, the Act does not identify Regarding the merits, the basis for the specific equipment that a state this challenge is the requirement that must offer, and the scope of offerings "[a] State plan for medical assistance is governed by the "reasonableness" must . . . include reasonable standard in the statute. Plaintiffs standards . . . for determining maintain that the categorical eligibility for and the extent of exclusion of ceiling lifts is medical assistance under the plan . . unreasonable because ceiling lifts . which are consistent with the fall within the state's definition of objectives of this subchapter," 42 DME and are medically necessary. U.S.C. § 1396a(a)(17), and the implementing regulation requiring that The state categorically excludes each provided service "must be such lifts from coverage for a number sufficient in amount, duration, and of reasons. Although the district scope to reasonably achieve its court specifically relied on the lack purpose," 42 C.F.R. § 440.230(b). The of federal financial assistance for plaintiffs rely on this statutory its ruling--a ruling that is language, an agency guidance letter, undermined by subsequent CMS guidance and precedent to contend that the to the contrary--the state [**10] state's categorical exclusion is not a also flatly excludes such lifts "reasonable standard." because they require structural modifications to residences. Texas States have broad discretion to also excludes from the definition of implement the Medicaid Act: "This DME, in the home services category, [statutory] language confers broad ramps, elevators, stair-well lifts, discretion on the States to adopt and platform lifts. Further, the state standards for determining the extent explains in its brief that it provides of medical assistance, requiring only more cost-effective alternatives such that such standards be 'reasonable' as "transfer boards, freestanding and 'consistent with the objectives' track (or 'Niklas') lifts, transfer of the Act." Beal v. Doe, 432 U.S. chair systems for use with the bath or 438, 444, 97 S. Ct. 2366, 53 L. Ed. 2d commode, and manually or 464 (1977). In combination with the electronically operated floor lifts presumption against preemption and its (also known as 'Hoyer' lifts)." The concomitant clear-statement rule, the ceiling lifts at issue here would cost discretion conferred in Doe leaves the state between $15,000 and $20,000, little doubt that we [**9] must and even the insurers Aetna and Cigna affirm the summary judgment if the deny coverage for such equipment. statutory language does not plainly

Page 5 752 F.3d 627, *632; 2014 U.S. App. LEXIS 9107, **10

It is hardly unreasonable for a [**12] law."7 state to exclude--even categorically--any medical device 7 Letter from Sally K. whose purpose can be served by a more Richardson, Director, Ctr. for cost-effective method. Not only has Medicaid and State Operations, Texas not violated the plain language Dep't of Health & Human Servs. to of the statute, but also the State Medicaid Directors (Sept. reasonableness standard in the text 4, 1998), available at likely supports its imposition of http://downloads.cms.gov/cmsgov/archived reasonable categorical exclusions. The -downloads/SMDL/downloads/SMD090498.pdf. plaintiffs' notion that it would be unreasonable for a state not to Deference to the guidance letter is provide particular equipment within not an issue, because the state has its definition of DME sounds not violated its requirements: The plausible, except that the state can letter says only that if a state has a choose by [**11] definition to pre-approved list, there must be some exclude ceiling lifts.6 Moreover, a way to prove need for items not on it. categorical exclusion based on the This letter says nothing about the availability of cost-effective possibility of a state's deciding that alternatives cannot mean that the some items shall be on a "never state has denied a medically necessary approved [*633] list," that is, that device, even if the statute did impose some items may be categorically such a standard. excluded. It would be perfectly consistent with federal law and this 6 The state defines DME at a letter to adopt a list of pre-approved high level of generality, saying devices for convenience and a list of that it includes equipment with a categorical exclusions if based on projected term of use of more reasonable grounds, such as the than one year or if the availability of more cost-effective reimbursement is over $1,000. 1 alternatives, and to permit a TEX. ADMIN. CODE § 354.1031(b)(2). beneficiary to demonstrate need for an But Texas's Medicaid Provider item on neither list. In short, Procedures Manual explains that nothing in the DeSario letter not all DME will be considered prohibits categorical exclusions, reimbursable as a home health which might even be eminently service; rather, the DME must reasonable and thus consistent with meet a list of criteria after the statutory language. which it "may" be a covered benefit. Section 2.2.14.27 of the Contrary to the plaintiffs' manual specifically excludes many assertions, no decision [**13] of DMEs, including home this court prohibits categorical modifications. exclusions, and none of the cases they cite is on point. Our decision in Rush Plaintiffs rely heavily on a 1998 v. Parham, 625 F.2d 1150, 1157 n.12 guidance letter from CMS's predecessor (5th Cir. 1980), merely stands for the (the "DeSario letter") to support proposition that a state cannot deny a their assertions. The letter explains treatment solely based on "diagnosis, that a state may "develop a list of type of illness, or condition," which pre-approved items of [medical is an explicit requirement of the Code equipment] as an administrative of Federal Regulations. As for Hope convenience," but a "policy that Medical Group, an important provides no reasonable and meaningful distinction is that there the procedure for requesting items that do treatment in question was generally not appear on a State's pre-approved available, but the state had limited list [ ] is inconsistent with federal its availability for non-medical

Page 6 752 F.3d 627, *633; 2014 U.S. App. LEXIS 9107, **13

reasons. See Hope Med. Grp., 63 F.3d also be provided to adults as at 427. That situation is thus medically necessary. On the second distinguishable from a categorical appeal, we affirmed because [**15] exclusion of an item, which might be the district court was governed by the based on a reasonable ground such as "law of the case" as established by a the availability of more previous short per curiam opinion, cost-effective alternatives. Fred C. v. Texas Health & Human Services Commission, 117 F.3d 1416 The plaintiffs rely most heavily on (5th Cir. 1997). In that first appeal Fred C. v. Texas Health & Human the court had remanded for a Services Commission, 988 F. Supp. 1032 determination of whether the plaintiff (W.D. Tex. 1997), aff'd, 167 F.3d 537 was even eligible for home services; (5th Cir. 1998). Plaintiffs aver that we implied that if that requirement that case stands for the proposition was met, he would be eligible. The that if the state's Medicaid program court never actually addressed the provides a medical service or device merits of the district court's for an individual under age age-based reasoning, and it never held twenty-one, it must also provide that (although it may have assumed) as the service, if medically necessary, to a district court did that because the person over that age. Such an [**14] device was provided for children under outcome would benefit the plaintiffs twenty-one, it must also be provided because the state provides ceiling to adults. lifts to those younger than twenty-one. Moreover, we later noted that, although a state must provide certain As the state contends here, benefits to children under twenty-one, however, even if Fred C. could be read it need not provide those same for that proposition, it would be benefits to adults: absurd: The states are required by federal law to provide any and all [*634] Further, the § services to individuals under 1396d(a)(7) category of home twenty-one if medically necessary, health care services is an "whether or not such services are optional, not a mandatory, covered under the State plan." 42 category of medical U.S.C. § 1396d(r)(5). But if states do assistance. § so and therefore must also so provide 1396a(a)(10)(A). Thus, the for anyone over twenty-one, the state was not required to special federal rule for the provision provide this category of of more expansive benefits to children care and services to would be unnecessary because the individuals over the age of standards for children and the twenty-one at all. . . . standards for adults would be CMS's approval of the collapsed into the same standard. The effective exclusion plaintiffs' reading would render indicates only that the superfluous the language "whether or exclusion may be an not such services are covered under appropriate limitation the State plan," which suggests that [**16] on the scope of the the states must be able to offer some home health care benefit as benefits to children that they do not it applies to recipients have to offer adults. over twenty-one years of age. It does not express or We need not read Fred C. as imply that CMS has approved plaintiffs wish. There the district an exclusion applicable to court had held that a device provided EPSDT benefits [for for children under twenty-one must children].

Page 7 752 F.3d 627, *634; 2014 U.S. App. LEXIS 9107, **16

construe it now. S.D. ex rel. Dickson v. Hood, 391 F.3d 581, 597 (5th Cir. 2004). Therefore, Because plaintiffs have not shown plaintiffs' reading of Fred C. is not an entitlement to the ceiling lifts, how this court has subsequently their due process claims fail as well. interpreted the law respecting The summary judgment is AFFIRMED, and Medicaid, and it is not how we the motion to vacate is DENIED.