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Sanford Healthcare Accessories, LLC v. North Dakota Department of Human Services

Supreme Court of North Dakota

February 1, 2018

Sanford HealthCare Accessories, LLC, Appellee
v.
North Dakota Department of Human Services and Christopher D. Jones, in his capacity as Executive Director of North Dakota Department of Human Services, Appellants

         Appeal from the District Court of Burleigh County, South Central Judicial District, the Honorable David E. Reich, Judge.

          Monte L. Rogneby (argued) and Justin J. Hagel (appeared), Bismarck, ND, for appellee.

          James E. Nicolai (argued) and Elizabeth Fischer (appeared), Bismarck, ND, for appellants.

          OPINION

          VandeWalle, Chief Justice.

         [¶ 1] The North Dakota Department of Human Services appealed from a district court judgment reversing the Department's order deciding Sanford HealthCare Accessories received overpayments for medical equipment supplied to Medicaid recipients and ordering recoupment. We reverse and remand, concluding the district court erred in deciding the Department's failure to comply with the statutory time requirement for issuing its final order precluded the Department from acting.

         I

         [¶ 2] Sanford is enrolled as a Medicaid Durable Medical Equipment and Supply Provider, providing medical equipment and services to North Dakota Medicaid recipients. Sanford bills the Department for the equipment, supplies, and services by submitting Medicaid claims to the Department. The Department pays Sanford under the Medicaid program. The Department has published its documentation requirements and procedures for billing Medicaid claims in a Manual for Durable Medical Equipment, Orthotics, Prosthetics and Supplies.

         [¶ 3] The Patient Protection and Affordable Care Act, 42 U.S.C. § 18001 et seq. (2010), and related federal regulations require states to establish a Medicaid Recovery Audit Contractor Program to audit past payments to ensure the state's Medicaid billing procedures and policies were followed by providers who requested payment of Medicaid claims. The Department contracted with an audit contractor, Cognosante, to review provider submitted Medicaid claims to evaluate whether the claims satisfied the state's Medicaid billing procedures.

         [¶ 4] Cognosante audited Sanford's claims for services provided between January 1, 2011, through December 31, 2013, and identified various claims that had been paid but did not meet billing procedures. Cognosante determined those claims were overpayments and the Department was entitled to seek recoupment. It determined the Department was entitled to recoup $251, 916.26 from Sanford for various billing errors, omissions, and irregularities.

         [¶ 5] On September 15, 2015, Sanford appealed to the Department numerous claims worth $164, 809.96 under N.D.C.C. § 50-24.1-24, requesting reversal of the audit findings. Sanford did not appeal 111 claims worth $85, 164.00. Sanford provided documents and other information supporting its request for review.

         [¶ 6] On April 27, 2016, the Department issued an order, finding Sanford did not comply with billing procedures, overpayment was made in the amount of $109, 747.89 on the claims Sanford appealed, and recoupment was proper. The Department also ordered Sanford to remit payment of $85, 164.00 for the claims Cognosante found were overpaid but Sanford did not appeal to the Department. The Department ordered Sanford pay a total of $194, 911.89.

         [¶ 7] Sanford appealed to the district court. Sanford argued the Department's decision was not in accordance with the law because the Department did not comply with statutory requirements.

         [¶ 8] The district court reversed the Department's decision, concluding the decision was not in accordance with the law because the Department failed to comply with the statutory time requirement for issuing its decision under N.D.C.C. § 50-24.1-24(5). The court ruled the statute requires the Department to issue its final decision within seventy-five days of receipt of the notice of request for review, the legislature intended the Department issue its decision within a reasonable time frame, and the seventy-five day time limit may be extended for a reasonable amount of time upon a showing of good cause. The court explained the Department far exceeded the seventy-five days allowed by statute and it was not persuaded by the Department's arguments that the decision was delayed because the documents Sanford submitted were a "disorganized mess" and that Sanford was not prejudiced by the delay.

         II

         [¶ 9] We exercise limited appellate review of an administrative agency's decision under the standards set out in N.D.C.C. § 28-32-46. Coon v. N.D. Dep't of Health, 2017 ND 215, ¶ 7, 901 N.W.2d 718. The agency's decision will be affirmed unless:

1. The order is not in accordance with the law.
2. The order is in violation of the constitutional rights of ...

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