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Excelth, Inc. v. State

Court of Appeals of Louisiana, First Circuit

December 19, 2017

EXCELTH, INC.
v.
STATE OF LOUISIANA, THROUGH THE DEPARTMENT OF HEALTH AND HOSPITALS

         On Appeal from the Nineteenth Judicial District Court In and for the Parish of East Baton Rouge State of Louisiana Trial Court No. 626, 633 The Honorable Timothy E. Kelly, Judge Presiding

          Douglas L. Cade Baton Rouge, Louisiana Attorney for Appellant, State of Louisiana, through the Department of Health and Hospitals

          Carroll Devillier, Jr. Emily Black Grey Baton Rouge, Louisiana Attorneys for Appellee, EXCELth, Inc.

          BEFORE: HIGGINBOTHAM, HOLDRIDGE, AND PENZATO, JJ.

          PENZATO, J.

         This is an appeal by Appellant, the State of Louisiana, through the Department of Health and Hospitals (LDH), [1] of a judgment reversing LDH's decision to recoup funds from Appellee, EXCELth, Inc. (EXCELth). For the reasons set forth below, we affirm the district court.

         FACTS

         EXCELth is a non-profit, federally qualified health provider located in New Orleans, Louisiana, which has been in operation since 1991 providing health and behavioral services to indigent patients in the area. Following Hurricane Katrina, the Centers for Medicare and Medicaid Services (CMS) established the Greater New Orleans Community Health Connection (GNOCHC), a Medicaid Demonstration Waiver Program[2] under Section 1115(A) of the Social Security Act, for the purpose of providing health care services to the uninsured population that was not otherwise eligible for Medicaid programs. 42 USCA § 1315(a). The CMS distributed grant money to provide those health care services, and LDH implemented the program. The GNOCHC Waiver was set up as a 39 month program spanning four fiscal years, October 1, 2010, through December 31, 2013. Demonstration Years One, Two, and Three were limited to $30 million per year, and Demonstration Year Four was limited to $7.5 million.

         EXCELth was a participant in the GNOCHC program and had two different facilities, one located in Gentilly and one in Algiers. In Demonstration Year One, October 1, 2010 through September 30, 2011, EXCELth received a total of $815, 157.00 in advance payments. Advanced payments were made for Demonstration Year One with the understanding that there would be a reconciliation in the first year based on the actual clients served by the provider and the actual services provided. CMS required participating providers to submit all Demonstration Year One claims on an electronic claims system, referred to as the Electronic Data Interchange (EDI), by November 14, 2011. November 2011 was the first year that the GNOCHC program began using electronic submission of claims. The electronic claims system required the provider to submit claims to a billing agent, which communicated with one of several clearinghouses approved by LDH.[3] The clearinghouse then transmitted information to Molina Medicaid Solutions (Molina), LDH's fiscal intermediary, who handled claims processing. LDH was responsible for processing the GNOCHC claims via Molina and then provided the funds for paying the claims.

         On October 14, 2011, all GNOCHC providers were notified that Molina would begin accepting "encounter claims" on October 17, 2011, for dates of service from October 1, 2010 through September 30, 2011. When EXCELth began preparing for electronic submission, it encountered problems with the electronic claims system and contacted Michael Magee, an LDH employee who was the program monitor for the GNOCHC program, for assistance.

         EXCELth timely submitted claims for Demonstration Year One, but 1, 190 of those claims were never processed by Molina. Instead, Molina put those claims in a "9999999" file (interchangeably referred to as a "999 file" or as "dropped claims"), and neither approved nor denied them. If information was missing or invalid, the GNOCHC program required Molina to return the unprocessed claims to the provider with a rejection letter listing the reasons for the return or denial of the claim. It is undisputed that Molina did not return the claims to EXCELth with a rejection letter nor did it deny the claims through the system.

         All claims were required to be submitted with a National Provider Identifier (NPI) number, a unique identifier assigned to each provider by a separate and distinct entity operated by the federal government, and a Medicaid provider number (provider number). Marisa Naquin, a former LDH employee who was the program manager for GNOCHC, testified that Molina had the incorrect NPI number for EXCELth and Molina had the responsibility to update its provider files. As a result of this error, 1, 190 of EXCELth's claims were placed in the 999 file and never processed.

         Molina determined there was a problem and notified LDH that it would reprocess the dropped claims. However, Molina never reprocessed those claims of EXCELth. Therefore, Molina approved encounter claims of EXCELth for Demonstration Year One in the amount of $164, 036.96. Since LDH had paid EXCELth an advance payment of $815, 517.00, it determined that EXCELth was overpaid by $651, 120.04. LDH emailed a copy of the final reconciliation for Demonstration Year One to each GNOCHC provider on March 14, 2012. EXCELth did not contact LDH after receiving the reconciliation prior to March 31, 2012, the date the reconciliation was to be submitted to CMS. On April 13, 2012, EXCELth sent LDH a detailed listing of its claims that were never processed by Molina.

         On April 18, 2012, LDH notified Michael Andry, the chief executive officer of EXCELth, that the overpayment to EXCELth identified in the final reconciliation report would be offset against EXCELth's supplemental payment in accordance with GNOCHC guidelines. Accordingly, LDH retained $651, 120.04 against EXCELth's original grant of $815, 157.00 based on the approved encounter claims of $164, 036.96. As a result, EXCELth received a net payment of $255, 587.51 for Demonstration Year One because LDH determined that EXCELth was entitled to a supplemental payment of $906, 707.55 less the offset of $651, 120.04.

         PROCEDURAL HISTORY

         After an informal hearing, LDH reaffirmed its decision to recoup the $651, 120.04. EXCELth appealed the recoupment to the Division of Administrative Law (DAL) and the matter was assigned to Administrative Law Judge (ALJ) Gregory Toney. LDH filed a motion for summary judgment, which ALJ Toney denied and issued a recommended order.

         Pursuant to La. R.S. 49;992(D)(2)(b)(iii)(aa), which allows the head of the agency to approve, reject, or modify the recommended decision, the recommended order was sent to the LDH Administrative Review Unit to prepare the final administrative decision on behalf of the Office of the Secretary of LDH. On November 6, 2013, the LDH Administrative Review Unit issued the final administrative decision and reversed the recommended order of ALJ Toney.

         On December 5, 2013, EXCELth filed a Petition for Judicial Review in the Nineteenth Judicial District Court. The district court held a hearing and reversed the LDH Administrative Review Unit's grant of summary judgment and remanded the case to the DAL for further proceedings.

         Following the remand to the DAL, both LDH and EXCELth filed motions for summary judgment. LDH withdrew its motion before the hearing, and EXCELth's motion was denied. Thereafter, the case proceeded to trial before ALJ Karla Coreil. On December 17, 2015, ALJ Coreil issued a recommended order and decision stating that LDH incorrectly decided to recoup $651, 120.04 from EXCELth and that LDH's decision be reversed.

         The recommended order was sent to the LDH Administrative Review Unit to prepare a final administrative decision on behalf of the Office of the Secretary of LDH. On February 22, 2016, the LDH Administrative Review Unit issued the final administrative decision reversing the recommended .decision and order of ALJ Coreil and upheld the recovery of $651, 120.04 from EXCELth.

         On March 22, 2016, EXCELth filed a Petition for Judicial Review in the Nineteenth Judicial District Court, seeking to reinstate ALJ Coreil's recommended decision and order to reverse the recovery of $651, 120.04 from EXCELth and seeking recovery of reasonable litigation expenses pursuant to La. R.S. 49:965.1. After a hearing on November 21, 2016, the district court ruled that LDH's decision was not supported by a preponderance of the evidence, reversed LDH's decision, and reinstated ALJ's Coreil's recommended decision and order, which the district court found was based on the evidence. The district court also ordered LDH to pay $7, 500.00 in litigation costs and expenses in accordance with La. R.S. 49:965.1, as well as judicial interest from September 6, 2012. A judgment was signed in accordance therewith on December 16, 2016.

         LDH appealed the December 16, 2016 judgment, and this court issued a rule to show cause, noting that the trial court's judgment appeared to lack decretal language with regards to a money judgment. In response, the trial court issued an amended judgment signed October 6, 2017, clarifying the original judgment. The October 6, 2017 amended judgment satisfies the requirements for a final judgment. See La. C.C.P. art. 1918. Thus, we find that the amended ...


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