GAB Decision 445
Docket No. 83-3
June 30, 1983
New York State Department of Social Services;
Ford, Cecilia; Settle, Norval Teitz, Alexander
The New York State Department of Social Services (State) appealed the
decision by the Acting Regional Administrator, Health Care Financing
Administration (Agency) disallowing $140,559 in federal financial
participation (FFP) for expenditures under the Medical Assistance
Program (Medicaid), Title XIX of the Social Security Act.
The letter of November 23, 1982 (Toby to Webb) containing the
disallowance of $140,559 also informed the State that an additional
$321,581 FFP in the State's original claim of $512,500 FFP could not be
paid because of statutory funding restrictions. However, as will be
explained below, this amount is no longer in issue in this case, which
now concerns only the $140,559 disallowance.
The State originally claimed the $512,500 for a retroactive
increasing adjustment for Nassau County and several other social service
districts in New York State. The claim was on the revised Quarterly
Statement of Expenditures for the Medicaid Program (HCFA-64, referred to
as a QER) for the quarter ended December 31, 1980.
The Agency originally deferred the entire amount because
documentation in support of the claim was stated to be insufficient to
support its allowability, and requested the State to make available all
related documents and materials necessary to determine the allowability
of the claim. Upon review of the documentation provided, the Agency
disallowed the sum of $140,559 because documentation to support it "was
not provided or made available." (Letter from Toby to Webb, November 23,
1982, p. 1)
The Agency refused to examine the documentation submitted with the
State's appeal file in this case, and claimed by the State to support
the amount disallowed, because the documentation was not furnished
during the deferral process.
(2) For reasons discussed below, we conclude that, in the particular
facts of this case, the Agency was unreasonable in refusing to examine
this documentation. Accordingly, this case is remanded to the Agency.
This decision is based on the written submissions of the parties as well
as telephone conference calls.
BACKGROUND
As indicated above, the State claimed $512,500 FFP on the revised QER
for the Medicaid program for the quarter ended December 31, 1980.
Exhibit C attached to respondent's brief indicates the general nature of
at least part of the original claim. New York has a form of general
public assistance, entirely state funded, known as Home Relief. The
State claimed that many of these cases could have been eligible for the
federal SSI (Supplementary Security Income) program by virtue of
disability, or eligible for AFDC (Aid to Families with Dependent
Children), and therefore eligible for Medicaid.
The Agency deferred the total claim of $512,500, under 45 CFR 201.15,
because documentation in support of the claim was insufficient to
support its allowability. The Agency requested the State, as provided
by 45 CFR 201.15(c)(2), to make available all related documents and
materials necessary to determine the allowability of the claim. The
State requested and received an extension of the time provided for in 45
CFR 201.15 to submit the documentation.
Finally, on November 23, 1982, the Agency ruled on the material
submitted. It found that $371,941 of the $512,500 was for allowable
Medicaid expenditures. However, statutory funding restrictions
prevented payment for expenditures of $321,581 FFP made by the State
prior to October 1, 1978, where the claim was not filed within one year
after the fishcal year in which the expenditures were made. Claims for
$50,360 for expenditures in fiscal year 1979 were timely filed, and
would be paid by increasing the State's next grant award in that amount.
The remaining $140,559 was disallowed because documentation necessary to
support it "was not provided or made available."
The State treated the refusal to pay the $321,581 because of funding
restrictions as equivalent to a disallowance, and appealed the entire
$512,500 to the Board. Eventually we granted the State leave to
withdraw without prejudice from this case the portion of the appeal
pertaining to the suspended payments based on appropriation
restrictions, poending resolution of related federal court litigation.
(3) We are therefore left with an appeal from a disallowance of
$140,559 FFP for Medicaid claims. The State submitted no documentation
for this amount during the deferral process specifically earmarked for
the claims at issue, but did submit a package of documentation as part
of its appeal file. (Exhibit V, attachment to State's brief) The State
admitted in a telephone conference that this documentation was the same
as that submitted in Board Docket Nos. 82-131 and 82-164. See, New York
State Department of Social Services, Decision No. 433, May 31, 1983. It
consisted in part of three adjustment schedules for amounts totalling
$203,835,887, for $101,917,728 FFP, each of which included the following
description in the heading:
As a result of the HR-AD Audit, it has been calculated that New York
State could have categorized disabled individuals in receipt of Home
relief as eligible for Federally funded Medical Assistance.
Also included in this package were a great many schedules headed
"Monthly Statement of Expenditures and Claims for Federal and State Aid
(RF-2)" for various counties, as well as several forms headed
"Adjustment Schedule" for counties. /1/ The Agency refused to look
at
any of this documentation because it was not submitted during the
deferral process.
The State first asked to consolidate this appeal with 82-131, 82-159,
and 82-164. However, since the Agency objected, the request was denied.
(Ruling, May 4, 1983)
DISCUSSION
I. This case is not controlled by Decision No. 433.
The claim of New York in this appeal could be for expenditures in the
same period as the claim in Decision No. 433, even though on (4) a
different QER, since it is for increasing retroactive adjustments and
not for expenditures during the quarter covered by the QER. However,
the claim here is for a different amount than in Decision No. 433, and
there is no definitive indication that the claims overlap.
The position of the Agency is entirely different in the two cases.
In Decision No. 433 the Agency took the position that it was not
required to review some of the documentation submitted by the State
during the appeal process in November 1982 "on the ground that it was
not related either in subject matter or in amount to the claims made by
the State on its original and revised QERs.... " (Decision No. 433, p.
4)
Here the Agency made no contention as to the substantive value of the
documentation, but as a procedural matter insisted it did not have to
consider the documentation because it came too late.
Therefore, Decision No. 433 is no precedent as such for the Agency's
position in this case. In commenting on Decision No. 433 in New York
State Department of Social Services, Decision No. 439, June 17, 1983, we
stated that it was not unreasonable for the Agency to refuse to consider
additional documentation "where the State had been afforded ample
opportunity both during the deferral procedure... and during the initial
stages of the appeal before the Board to submit documentation for the
claims." (Decision No. 439, p. 3, Emphasis added) Here the Agency seeks
to deny the State the opportunity to submit documentation during the
appeal process.
II. This case is not controlled by Decision No. 345.
The Agency claims that under the decision of this Board in
Massachusetts Department of Public Welfare, Decision No. 345, September
29, 1982, an appellant has no right to submit before the Board any
documentation which was not submitted during the deferral process. The
Agency may consider it, but need not do so.
Massachusetts was an entirely different case. Not only had the State
not submitted some of the necessary documentation during the deferral
process, but it did not have it ready during the Board appeal process.
The State was actually asking for more time to obtain its documentation.
The decision in Massachusetts is certainly no precedent for the
Agency's position. We sustained the disallowance in the amount (5) for
which the appellant had not offered any documentation during the appeal
process; at the same time we remanded to the Agency for a determination
of allowability "based on the documentation offered during this appeals
process by the appellant." Decision No. 345, pp. 1, 8-9.
The Agency points to the following language in Massachusetts as
supporting its position here:
Once the respondent has properly deferred and disallowed a claim for
lack of documentation, it is within the respondent's discretion to allow
additional time to the appellant to document the claim. (p. 8)
This language, in the context in which it was used in Massachusetts,
applies only to documentation which was not submitted by the appellant
in the normal course of the appeal process before the Board. Although
the language appears to be broad, it was not intended to apply to
documentation submitted with appellant's appeal file because the Board
remanded a part of the disallowance to the Agency "so that it can
examine the documentation offered by the appellant during this appeal.
(p. 9, Emphasis supplied)
It was only the documentation not submitted during either the
deferral or appeal process that the Board considered the Agency had no
obligation to review. The decision in Massachusetts held that under the
particular facts the Agency was reasonable in not agreeing to review
future documentation.
III. The Agency was not reasonable in refusing to consider
documentation offered during the appeal process in this case.
The agency points to the preamble to the final deferral regulation as
supporting its position. This stated that the time frame provided by
the deferral process (60 days plus an additional 60 days, if requested,
for furnishing documentation) was designed to assure adequate time for
handling the most complex claims. 41 Fed. Reg. 7103, February 17, 1976;
see, Massachusetts, p. 8.
This language is apparently intended to limit the time the Agency
must wait for documentation to be furnished during the deferral process.
No one questions the right--and, in fact, the duty--of the Agency to
disallow a claim if supporting material is not furnished during the
course of the deferral process.
(6) Language in the premable to the deferral regulation when it was
proposed indicates that the regulation was not intended to foreclose the
State from furnishing documentation during the appeal process.
The regulations specify that it is the obligation of the State to
establish the claim's allowability. Should the State fail to carry its
burden at this stage (deferral), and the claim consequently be
disallowed, the State will be afforded an opportunity to participate in
a reconsideration proceeding pursuant to 45 CFR 201.14 at which time it
will be afforded an additional opportunity in the context of a more
formalized procedure, to establish the allowability of the claim.
(Emphasis supplied)
40 Fed. Reg. 34138, August 14, 1975.
The reconsideration regulation is even more specific on this point:
within 60 days from the date of the Administrator's transmittal to
the State..., the State shall submit in writing to the Administrator any
new relevant evidence, documentation, or argument.... (Emphasis
supplied)
45 CFR 201.14(d)(4)
The transfer of the reconsideration functions from the Administrator
of the various public assistance programs to the Departmental Grant
Appeals Board did not in and of itself change this ability of the State
to submit new material during the appeal, since there is nothing in 45
CFR Part 16 which contradicts this provision.
While it is thus clear that material submitted during the deferral
process may be supplemented--even very substantially--during the appeal,
it is not clear that a State may purposely ignore the deferral process
and wait until the appeal process to submit, for the first time, all of
its evidence. But we need not decide the latter issue here, because
other factors persuade us that the Agency, in this particular case,
unreasonably refused to examine the evidence. Here the State did submit
documentation during the deferral process. This was sufficient to
persuade the Agency that $371,941 of the total claim for $512,500 FFP
originally claimed was allowable. The State in its reply brief stated
that documentation to support the remaining $140,559 FFP did exist at
(7) the time the QER was filed. However, said the State, it could not
organize and present it during the deferral process "because of the
complexity of the claiming process and then-recently imposed time
limits." (Reply brief, p. 2)
To determine whether the Agency was unreasonable in refusing even to
look at the documentation in this case, it is necessary to consider the
similarities between this appeal and Docket Nos. 82-131 and 82-164 in
Decision No. 433.
In both instances the State claim was for an increasing retroactive
adjustment for Medicaid services. In both instances the original claim
was for a substantially larger amount than the amount in issue before
this Board. In both instances documentation introduced during the
deferral process reduced the amount of the original disallowance, but
the State offered no documentation on the remaining amount.
In the telephone conference of June 9, 1983, the Agency first argued
that the two appeals were different. Its contention was that in this
appeal the State offered no documentation at all during the deferral
process on the amount remaining in issue, while in 82-131 and 82-164 the
State offered some documentation during the deferral process. The
Presiding Board Member in 82-131 and 82-164, who participated in the
telephone conference in this case, pointed out that there were certain
discrete components of the claim in 82-131 and 82-164 where the State
offered no documentation at all during the deferral process.
In the record which resulted in Decision No. 433, there is a
confirmation of a telephone conference held on October 14, 1982
(confirmation dated October 29, 1982), which refers to a portion of the
appeals, as the "$10.8 million for which no documentation has been
submitted." (page 2, par. C, emphasis supplied) The confirmation letter
points out that the Agency stated its position as follows:
In cases where documentation has not been submitted with the State's
brief pursuant to 45 CFR 16.8(a), the Health Care Financing
Administration will not consider documentation submitted at a later
date....
The Agency went on to say that since the State did not have notice of
this policy, the Agency would consider documentation submitted up to 30
days after the telephone conference.
(8) There is a clear inference that it was Agency policy that
documentation submitted with the appeal brief pursuant to 45 CFR 16.8(
a) would be routinely considered. /2/
The significant point is that in 82-131 and 82-164 not only did the
Agency agree to examine the documentation offered during the appeal
process, but the documentation is the very same offered in this case
before the Board. Furthermore, this documentation was not submitted
until well along in the appeal process in 82-131 and 82-164. The appeal
in 82-131 was filed on July 27, 1982, but the documentation in question
was not submitted until November 15, 1982, after the Board had agreed to
set a deadline suggested by the Agency for submission of additional
documentation.
In this case (83-3) the State submitted the very same documentation
with its brief and appeal file. This was on February 15, 1983 and the
Agency already had the identical documentation before it in 82-131 and
82-164 since November, 1982.
We therefore find that the refusal of the Agency to at least look at
the documentation submitted with the appeal brief in this case in order
to determine whether it might support the amount in dispute was not
reasonable under the circumstances. We therefore remand to the Agency
so that it can examine that documentation.
The State, of course, will have to show that the documentation is
related both in subject matter and in amount to the claims made in the
State's QER. It is the State's burden to show where particular
documentation supports the particular claim. It is not enough for the
State to offer adjustment schedules and other schedules and forms for
some $102 million in FFP, and then say (9) to the Agency that somewhere
in that material you will find support for our claim. The State cannot
just say that even if the documentation is not enough for the millions
claimed in 82-131 and 82-164, it has to be at least enough for the
$140,559 disallowed here. In commenting on the way New York submits
documentation without identification as to its relation to particular
amounts of a claim, we said in Decision No. 433:
What the State has done is tantamount to a taxpayer's giving the
Internal Revenue Service voluminous financial records in order to
support a particular deduction, when he should have supplied only those
records pertaining to the deduction... p. 6.
If the examination of the documentation as indicated above results in
a new disallowance decision, the appellant may then appeal that decision
to this Board. /1/ The latter schedules and forms, which represented
expenditures totalling $1,151,351 ($576,675.50 FFP), were also submitted
in support of the claims in Docket Nos. 82-131 and 82-164.In those
cases, the Agency agreed to examine this documentation and issue a
determination concerning what portion of the claimed FFP was allowable.
See, New York, Decision No. 433, p. 3, n. 1. /2/ In a telephone
conference on June 29, 1983, the Agency was given the opportunity to
comment on the confirmation of the telephone conference in the prior New
York cases, pursuant to 45 CFR 16.21. The Agency persisted in claiming
that there were factual differences between the cases: namely, in 83-3
there was no documentation of the amount disallowed submitted during the
deferral process while in 82-131 and 82-164 there was some documentation
which was expanded during the appeal process. An examination of the
records does not support this position. There was no reason to head the
paragraph in question "$10.8 million for which no documentation was
offered" if the Agency's position was correct.
JULY 07, 1984