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Oldham v. Delaware Health and Social Services

Superior Court of Delaware

January 30, 2018

MALCOLM and DOMINICA OLDHAM, as parents and legal Guardians of ASHLEE OLDHAM, and EDWARD and PAMELA PRUNCKUN, as parents and legal guardians of ROBERT PRUNCKUN, Appellants,

          Submitted: October 30, 2017

         Upon Appeal from the Delaware Department of Health and Social Services, Division of Social Services: AFFIRMED.

          Francis G.X. Pileggi, Esquire, Brian D. Ahern, Esquire, Justin M. Forcier, Esquire, Eckert Seamans Cherin & Mellot, LLC, Michael P. Flammia, Esquire, Eckert Seamans Cherin & Mellott, LLC, Two International Place, Christopher E. Torkelson, Esquire, Eckert Seamans Cherin & Mellott, LLC, Attorneys for Appellants.

          A. Ann Woolfolk, Esquire, Lauren E. Maguire, Esquire, Roopa Sabesan, Esquire, Deputy Attorneys General, Carvel State Office Building, Attorneys for Appellee.


          WHARTON, J.


         Ashlee Oldham and Robert Prunckun ("Beneficiaries"), by and through their parents and guardians ("Guardians") (collectively "Appellants"), filed a Notice of Appeal on May 20, 2016 requesting judicial review of the January 13, 2016 decision of the Medicaid Fair Hearing Officer ("Hearing Officer"). Appellants contend that the Hearing Officer erred in bifurcating the Fair Hearing and concluding that aversive treatment was no longer a "covered" service under Delaware's Medicaid waiver program, resulting in a denial of a Fair Hearing.

         In considering this appeal, the Court determines whether the Hearing Officer's conclusions are supported by substantial evidence and are free from legal error. What the Court does not address, because it cannot, in this appeal is the degree to which aversive treatments afforded the Beneficiaries have improved the quality of their lives, and whether regulations purporting to prohibit such treatments are in their best interests.[1] Based upon the pleadings before the Court and the record below, the Court finds that the Hearing Officer's conclusions are supported by substantial evidence and are free from legal error. Accordingly, the Hearing Officer's decision is AFFIRMED.


         The Beneficiaries are adult Medicaid recipients and Delaware citizens with severe behavioral, developmental, and emotional disorders and disabilities.[2] As a result of their disorders and disabilities the Beneficiaries receive aversive treatment procedures at the Judge Rotenberg Educational Center, Inc. ("JRC") in Massachusetts.[3] In October 2013, the Division of Developmental Services ("DDDS"), a division within Delaware Health and Social Services ("DHSS"), demanded the termination of aversive treatment because it violated state and federal law and was thereby no longer a Medicaid covered service.[4] The Guardians filed requests for a Medicaid Fair Hearing to contest the reduction of their sons' Medicaid services.[5] The Hearing Officer concluded that a bifurcated Fair Hearing process was proper, that the treatment was no longer a covered service, and that DDDS had the authority to terminate the treatment services.[6] The Beneficiaries, through the Guardians, appeal that decision.

         The Beneficiaries are adult males diagnosed with mental retardation and autism.[7] They have long-documented histories of self-injurious, aggressive, and destructive behavior, including: throwing chairs; destroying property; kicking and biting others; and refusing medical care.[8] As a result, they have been subjected to a multitude of treatments-positive-only programming, mechanical and chemical restraints, medications, isolation, and aversives-with varying effect.[9] Aversive treatment, however, has been the most successful and contentious.[10]

         JRC owns and operates a program in Massachusetts that houses adults and children with developmental disabilities.[11] It is one of the few facilities in the country to utilize aversive treatment procedures.[12] It is the only facility nationwide whose aversive treatment procedures include the use of a Graduated Electronic Decelerator (GED) device.[13] The GED applies an electrical shock to the patient's skin in response to targeted behaviors.[14] GED use has reduced aggressive and self-injurious behaviors, enabled patients to integrate into a community group home, and improved quality of life.[15] However, it is not without its side effects, such as: nightmares, avoidance behaviors, mistrust, depression, flashbacks of panic and rage, anger, hypervigilance, and pain.[16]

         The services rendered by JRC to the Beneficiaries, including GED, were included and covered by the Delaware Home and Community-Based Settings ("HCBS") waiver and the JRC/DDDS provider contracts.[17] The HCBS Waiver is a Medicaid option available to States that allows them to offer services and supports to individuals who are elderly or have disabilities and live in a community setting in lieu of institutionalization.[18] The termination of coverage by the DDDS HCBS waiver prompted this litigation.

         On October 8, 2013 and October 13, 2013 DDDS sent letters directing JRC to cease the use of all aversives because they were prohibited by the HCBS waiver and state law.[19] DDDS' letters were based on the Centers for Medicare and Medicaid Services ("CMS") advisory materials regarding the legality of GED use on HCBS Medicaid recipients.[20] Region I of CMS concluded that JRC's use of certain aversive treatments, including GED, violated federal rules regarding the standard of care for waiver recipients.[21] Consequently, CMS, by letter ("McGreal Letter") directed Massachusetts to immediately cease the use of such procedures on individuals enrolled in the HCBS waiver program.[22] In light of the CMS directive to the State of Massachusetts and in preparation for renewal of its own HCBS Waiver Program, DDDS directed JRC to discontinue the use of aversive treatment procedures.[23]

         The CMS advisory materials on which DDDS relied were not issued for Region III, which includes Delaware.[24] Therefore, Delaware Medicaid Director, Stephen M. Groff, sought clarification from Region III on the use of GED.[25] By letter ("Lollard Letter") dated March 10, 2015, CMS responded that JRC's administration of GED was not characteristic of HCBS and that Delaware should insure that aversive procedures were eliminated for settings in which Delaware residents received services.[26] The CMS letter, therefore, confirmed to DDDS that aversives violated federal law and were not covered services under the HCBS waiver.[27]

         Changes to HCBS "covered" services were a long time coming. In April 2011 and May 2012 CMS published a proposed regulation, the HCBS Rule, to amend the HCBS waiver program.[28] The HCBS Rule prohibited the use of coercive devices such as GED.[29] The final HCBS Rule was published as a final regulation in January 2014, became effective March 17, 2014, and was adopted soon thereafter by CMS.[30]Delaware soon followed suit. The DDDS HCBS Waiver was scheduled for renewal in 2014.[31] In anticipation, prior to the March 2014 Waiver application to CMS, DDDS gathered input from providers and advocates.[32] Much like the federal waiver, the DDDS HCBS Waiver prohibited the use of aversives such that they would no longer by covered by the waiver.[33] The Waiver renewal became effective June 2014 and CMS approved the Waiver the next month.[34]

         As a result of DDDS' letters to JRC, the Beneficiaries, through counsel, submitted a Fair Hearing request to DHSS.[35] Specifically, they requested a Fair Hearing evidentiary review with respect to DDDS' proposed termination of the use of aversive procedures in treatment rendered via the Medicaid HCBS waiver program.[36] Additionally, the Beneficiaries requested an opportunity to present evidence and witnesses as to facts and issues relevant to the legal issues and the Beneficiaries' medical needs.[37]

         JRC's provider contract expired in September 2014.[38] Immediately thereafter DHSS sought the Beneficiaries' removal from JRC and transition to another Delaware-approved provider.[39] In March and April 2015, while they remained at JRC, DHSS threatened to terminate all funding for the Beneficiaries unless their parents and guardians signed a written agreement confirming that the Beneficiaries would be removed from JRC and transferred.[40] The Beneficiaries continue to receive treatment at JRC, however DHSS has not paid any medical assistance benefits to JRC for their services since October 1, 2014.[41]

         A Fair Hearing was conducted on January 13, 2016.[42] The Hearing Officer bifurcated the Fair Hearing because she deemed Medicaid coverage and medical necessity as conceptually independent from each other.[43] According to the Hearing Officer, "consideration of whether the GED treatment services at issue are medically reasonable and necessary is a moot issue if Delaware's Medicaid program prohibits these treatment services."[44] Therefore, the Hearing Officer would first determine whether GED is a Medicaid covered service and, if GED is covered, the Hearing Officer would then entertain the issue of medical necessity.

         During the first phase of the Fair Hearing, the Hearing Officer limited evidence to the issue of Medicaid coverage. The Guardians were not permitted to introduce evidence of medical necessity.[45] The Hearing Officer concluded that electric shock treatment was not a Medicaid covered service, therefore, the Fair Hearing was limited to the first phase.[46] On April 21, 2016 the Hearing Officer issued a final decision, finding that GED is not a Medicaid covered service and affirming DHSS' decision to cease coverage of GED.[47] The Guardians filed an administrative appeal of that decision in this Court pursuant to 31 Del. C. § 520.[48]


         The Guardians contend that they were not afforded due process and, additionally, the Hearing Officer's conclusion was not supported by substantial evidence.[49] In particular, the Guardians argue that the Beneficiaries' due process rights were violated because: 1) DHSS failed to provide adequate notice of the legal and factual basis for its proposed actions and treatment mandates; 2) DHSS failed to provide a meaningful evidentiary hearing that addressed Medicaid coverage and medical necessity; and 3) DHSS used coercive, discriminatory, and prejudicial conduct to defeat due process and thwart the Fair Hearing.[50] Furthermore, the Guardians maintain that the Hearing Officer's conclusion was incorrect because: 1) necessary services have been and remain covered services;[51] 2) the conclusion is not supported by substantial evidence;[52] and 3) the conclusion sanctions violations of law by DHSS.[53]

         In response, DHSS argues that the Guardians were not denied due process.[54]They were given adequate notice as to GED's impermissibility, they had a meaningful opportunity at the Fair Hearing to contest whether aversives were covered services, and their Due Process Clause challenge of the legislative policy determination should not have warranted a Fair Hearing in the first place. DHSS further argues that the Hearing Officer's conclusion-that GED was not a covered service-was correct because: 1) GED use was prohibited by federal and state law;[55] 2) medical necessity did not determine medical coverage;[56] and 3) the GED ban does not violate the ADA or other law.[57]


         Title 31 Del. C. § 520 vests this Court with appeals from an administrative hearing decision.[58] The Hearing Officer's final decision must be affirmed so long as it is supported by substantial evidence and free from legal error.[59] Substantial evidence is that which a reasonable mind might accept as adequate to support a conclusion.[60] While a preponderance of evidence is not necessary, substantial evidence means "more than a mere scintilla."[61] In presiding over administrative Fair Hearings concerning Medicaid benefits, a Hearing Officer must generally apply "the

          State rules except to the extent they are in conflict with applicable federal regulations."[62] Applicable precedent from federal courts and Delaware state courts, in that order, are binding on the Hearing Officer.[63]

         Questions of law are reviewed de novo.[64] If the Hearing Officer's findings and conclusions are sufficiently "supported by the record and are the product of an orderly and logical deductive process, " its decision will be affirmed.[65]

         V. DISCUSSION


         A. The Hearing Officer's Bifurcated Evidentiary Fair Hearing Afforded the Guardians Due Process.

         The Hearing Officer was rightfully within her powers to bifurcate the Evidentiary Fair Hearing. According to the Delaware Social Services Manual ("DSSM") §5304.3, Hearing Officers have the authority to restrict the issues raised at the hearing.[66] Here, the Hearing Officer recognized that Medicaid coverage and medical necessity are conceptually independent - "consideration of whether the GED treatment services at issue are medically reasonable and necessary is a moot issue if

          Delaware's Medicaid program prohibits these treatment services."[67] Furthermore, necessity of treatment does not equate to Medicaid coverage.[68] For example, chiropractic and adult dental services may be necessary, but they are not required to be covered under the State's optional home and community based waiver program.[69]Consequently, the Hearing Officer was within her power, and not in error, first to determine whether GED is a Medicaid covered service, then to address medical necessity if coverage was sustained.

         In the bifurcated hearing, the Guardians took issue with the Hearing Officer's prohibition on evidence of medical necessity in the first phase. However, the parties were not limited in their ability to offer evidence regarding Medicaid coverage, including by witness testimony. The Guardians ultimately presented evidence as to the deference owed to the CMS letters and argued that GED remained covered under the interventional behavioral treatment category in the Delaware HCBS Waiver. Had the Hearing Officer determined that GED was a covered service, no doubt the Guardians would have had a full opportunity to present their case in support of medical necessity. The Guardians, therefore, were given due process; a full evidentiary Fair Hearing on the pertinent issues in what the Hearing Officer reasonably determined to be the most efficient and orderly manner.

         B. The Hearing Officer's Opinion Correctly Concluded that GED is Prohibited Under State and Federal Law and, Therefore, not a Medicaid Covered Service.

         State and federal law support the Hearing Officer's conclusion that aversives are not a Medicaid covered service. The Delaware HCBS waiver, in pertinent part, provides "[t]he use of averse conditioning, defined as the contingent application of startling, painful, or noxious stimuli is prohibited." The waiver, therefore, undoubtedly prohibits the use of GED and terminates its coverage as a Medicaid service. Moreover, the Delaware HCBS waiver carries the force and effect of law because an agency regulation that is validly promulgated pursuant to legislative authority has the force and effect of law.[70] Here, DHSS amended its waiver through the formal rulemaking process by gathering input from providers and advocates, convening public hearings and comment, and publishing notice of the waiver as a proposed and final regulation. Delaware's HCBS waiver therefore carries the force and effect of law and substantiates the Hearing Officer's conclusion-aversives are not Medicaid covered services.

         The CMS letters also substantially support the Hearing Officer's conclusion. An agency interpretation of its own regulation is entitled to mandatory judicial deference.[71] CMS is the federal entity tasked with overseeing the implementation of the HCBS Rule in all Medicaid funded community services. In the 2012 McGreal Letter, CMS, through its regional administrators, explained that GED violated the characteristics of home and community based settings. More recently, in the 2015 Lollard Letter, CMS reviewed the Delaware HCBS waiver and concluded that the waiver complied with Medicaid laws and regulations-including the ban on aversives. The CMS letters are agency interpretations of its own regulation and are therefore entitled to mandatory judicial deference.

         Federal law also dictates the result. The HCBS Rule, proposed in 2011 and published in 2014, requires assurances from States that HCBS used to serve Medicaid recipients assure an individual's right to freedom from coercion and restraint.[72] The CMS, in 2012, interpreted the freedom from coercion and restraint as prohibiting the use of aversives, such as GED, on HCBS waiver recipients. Such an interpretation is entitled to mandatory judicial deference. Therefore, according to federal law, state law, and the federal agency tasked with implementing the HCBS Rule, the Hearing Officer's conclusion that GED is not a Medicaid covered service is correct.


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