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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Hidden Heights Assisted Living, Inc. v. State, Dept. of Health & Social Services, Division of Health Care Services (12/31/2009) sp-6445

Hidden Heights Assisted Living, Inc. v. State, Dept. of Health & Social Services, Division of Health Care Services (12/31/2009) sp-6445

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,


) Supreme Court No. S- 13029
) Superior Court No. 3AN-05- 11125 CI
v. )
) O P I N I O N
DEPARTMENT OF HEALTH AND ) No. 6445 December 31, 2009
          Appeal  from the Superior Court of the  State
          of    Alaska,   Third   Judicial    District,
          Anchorage, Mark Rindner, Judge.

          Appearances:  John C. Pharr, Law  Offices  of
          John  C.  Pharr,  Anchorage,  for  Appellant.
          Jonathan   P.  Clement,  Assistant   Attorney
          General,  Anchorage, and  Talis  J.  Colberg,
          Attorney General, Juneau, for Appellee.
          Before:    Fabe,  Chief  Justice,   Eastaugh,
          Carpeneti, Winfree, and Christen, Justices.

          CHRISTEN, Justice.
          I.   Medicaid provider Ernest Reeves, doing business as
Hidden  Heights  Assisted Living, Inc.  (Hidden  Heights  or  the
facility),  appeals  the  finding  that  the  facility   received
$47,686.79  in  Medicaid overpayments.  We conclude  that  Hidden
Heights  cannot  invoke  the doctrine of  equitable  estoppel  to
prevent the Department of Health and Social Services (DHSS)  from
enforcing  the  applicable record-keeping and audit  regulations.
But  because  DHSS agreed to give Hidden Heights  an  evidentiary
hearing,  we  conclude it was an abuse of discretion  to  exclude
documentary  evidence Hidden Heights offered  to  prove  that  it
provided  compensable services.  We remand for  consideration  of
this evidence.
     A.   Facts
          Reeves  owns and operates Hidden Heights, a residential
facility  for  elderly male adults.  Reeves and a  few  employees
provide care to five residents.  The facility is certified  as  a
home and community-based waiver provider; it has been enrolled as
a Medicaid provider since 1999.1
          Hidden  Heights appeals the results of a ruling  issued
after  DHSS  conducted record and field audits  of  documentation
supporting  Hidden  Heightss  bills  for  services.   Because  an
overview  of  federal  and state Medicaid  law  is  necessary  to
address  Hidden  Heightss  appeal, we  first  discuss  applicable
federal and state law.
          1.   Medicaid audits and record-keeping requirements
          The  Medicaid  program  is a cooperative  federal-state
partnership  under which participating states provide  federally-
funded   medical  services  to  needy  individuals.2   A   states
participation in the Medicaid program is voluntary,  but  once  a
state  decides  to  participate,  it  must  comply  with  federal
statutory  and regulatory requirements.3  Alaska participates  in
the  Medicaid  program,  and DHSS promulgated  regulations  in  7
Alaska  Administrative Code (AAC) 43 to implement and  administer
               a.   Applicable federal law
          The federal Medicaid Act requires that states establish
record-keeping  requirements for providers.5   It  also  requires
that states audit provider records to monitor the use of Medicaid
funds.6  States must establish Medicaid provider agreements under
which  a  provider agrees to (1) [k]eep any records necessary  to
disclose  the  extent  of  services  the  provider  furnishes  to
recipients,  and (2) provide this information,  as  well  as  any
information  regarding  payments  claimed  by  the  provider  for
furnishing  services  under the plan, to a Medicaid  agency  upon
request.7   Additionally,  under  42  U.S.C.   1396a(a)(42),  [a]
State  plan  for medical assistance must . . . provide  that  the
records  of  any entity participating in the plan  and  providing
services reimbursable on a cost-related basis will be audited  as
the  Secretary determines to be necessary to insure  that  proper
payments are made under the plan.8
          One  purpose  of record audits is to identify  improper
payments,9  such  as overpayments.10  Under 42  C.F.R.   433.304,
[o]verpayment means the amount paid . . . to a provider which  is
in  excess of the amount that is allowable for services furnished
under  section  1902  of  the Act and which  is  required  to  be
refunded  under section 1903 of the Act.  When a state identifies
an  overpayment, it must seek recoupment.11  And the states share
of  federal Medicaid funds is reduced . . . to the extent of  any
               b.   Applicable Alaska law
          Under  Alaskas Medicaid program, providers like  Hidden
Heights  may  seek  payment  for  medical  services  rendered  to
Medicaid recipients,13 but not for room and board.14  Providers in
Alaska are not required to submit supporting documentation at the
time  payment  is  requested, but they are required  to  maintain
records  of the services they provide15 and to submit  to  record
audits.16   7  AAC  43.065 requires that  providers  comply  with
applicable  state  and  federal Medicaid  law  and  cooperate  in
reports, surveys, reviews, or audits conducted by the department.17
7 AAC 43.065 also states:
          The  provider shall retain records  necessary
          to  disclose fully to the division the extent
          of    services    provided   to   recipients.
          Information  regarding any  payment  must  be
          made available, upon request, to division and
          federal personnel.[18]
          Since  1997,  7  AAC 43.030 has required that  Medicaid
providers maintain records to support requests for payment.19  It
          A provider shall maintain accurate financial,
          clinical,  and  other  records  necessary  to
          support  the  care  and  services  for  which
          payment   is  requested.   The  provider   is
          responsible  to  assure  that  the  providers
          designated  billing service, or other  entity
          responsible for the maintenance of financial,
          clinical,   and  other  records,  meets   the
          requirements of this section.[20]
The  regulation also defines what provider records must  contain:
they  must  identify patient information including (1)  recipient
receiving  treatment; (2) specific services provided; (3)  extent
of  each  service  provided; (4) date on which  each  service  is
provided; and (5) individual who provided each service.21
          Alaskas  Medicaid regulations have provided  for  post-
payment  audits of provider records since 1997.22  Former  7  AAC
43.067,  which  was in effect when Hidden Heights  submitted  the
billing records at issue, stated, in relevant part, that DHSS may
conduct  a  desk review, field audit, or audit of a  provider  to
determine the providers compliance with the requirements of 7 AAC
43.030  and  with  other requirements of this chapter.23   7  AAC
43.032(d)  authorized DHSS to identify overpayments on the  basis
of  a providers failure to provide documentation in an audit  and
to seek recoupment for such overpayments.24
          The   Alaska   Legislature  made  post-payment   audits
mandatory  in  2003,  when  it  passed  AS    Under
subsection  (a) of that statute, DHSS must annually contract  for
independent   audits  of  a  statewide  sample  of  all   medical
assistance  providers  in  order  to  identify  overpayments  and
violations of criminal statutes.26  Under the 2003 law, compliance
with  audits  is  a  condition of receiving payment  for  medical
services.  Alaska Statute 47.05.200(d) states, in pertinent part:
          As  a condition of obtaining payment under AS
          47.07  and  AS  47.08 . . . a provider  shall
          allow (1) the department reasonable access to
          the  records of medical assistance recipients
          and  providers; and (2) audit and  inspection
          of the records by state and federal agencies.
          7  AAC 43.081(a) defines an overpayment as, among other
things,  a  reimbursement in excess of the amount due because  of
the   billing  practices  of  the  provider.27   Alaska   Statute
47.05.200(b) addresses recoupment of overpayments.   It  requires
that  DHSS  use administrative procedures to recoup  overpayments
identified in the audits.28  Alaskas Medicaid regulations require
that  providers must refund to the division any reimbursed  claim
that  the  division finds, after a post-payment review, does  not
meet the requirements of this chapter.29
          Alaskas  regulations  provide for appeals  from  record
audits.   The  regulation  in effect  when  DHSS  audited  Hidden
Heights, 7 AAC 43.085(i), stated:
          The   appeal   must  be  submitted   to   the
          commissioner   within  30  days   after   the
          provider   receives  the  results  and   must
          (1)  a  clear  description of  the  issue  or
          decision being appealed;
          (2) the reason for the appeal; and
          (3)  all  information and materials that  the
          provider   requests   the   commissioner   to
          consider in resolving the appeal.[30]
          2.   The Hidden Heights audit
          In  2004  DHSS  hired Myers and Stauffer,  a  certified
public  accounting  firm  (the auditor), to  conduct  independent
audits  of Medicaid providers under AS 47.05.200(a) and former  7
AAC  43.067.  The auditor conducted a desk review audit of fifty-
three  of  the  seventy-four Medicaid claims that Hidden  Heights
submitted for payment between April 1, 2002 and March 31, 2003.31
Because  the  auditor  deemed the first set of  documents  Hidden
Heights  submitted  insufficient,  it  made  additional  document
requests, with which Hidden Heights complied.
          On  June  24, 2004, the auditor notified Hidden Heights
that  it  would  be  the subject of an on-site  field  audit  and
requested more documents.  Tracy Allan Hansen, who conducted  the
audits  and  testified  as an expert on Medicaid  audits  in  the
evidentiary  hearing, testified that Hidden Heights was  selected
for   an  on-site  field  audit  because  the  desk  review   had
left  .  .  . a number of concerns relating to the . . .  quality
and  .  .  . breadth of documentation . . . .  He testified  that
Hidden Heights had not submitted documentation for every day that
was being covered in the claims in the sample.
          Hansen  and  a registered nurse conducted  the  on-site
audit  at  Hidden  Heightss office, which is located  in  Reevess
home,  some  miles away from the facility. Hansen testified  that
          Hidden Heights provided its documents in a highly disorganized
manner  that  did  not include, for example,  filing  by  patient
name, . . . filing in . . . chronological order and in . . . many
cases  documents were vague as to what specific date  they  might
apply  to.32   Hansen testified that he was informed that  Hidden
Heights had presented him with all of the documents available for
the audited time period.
          The auditor sent Hidden Heights a notice of preliminary
findings,  explaining  the  audit revealed  no  documentation  to
support  twenty-seven  of  the fifty-three  claims  reviewed  and
giving the facility twenty-one days to send additional documents.
Hidden  Heights provided no additional documentation.   Based  on
the   preliminary  findings  of  twenty-seven  overpayments,  the
auditors initial report found the total extrapolated overpayments
for  the period between April 1, 2002 and March 31, 2003 amounted
to $104,900.83.
          The  auditor  also found that documents  for  recording
whether  compensable  services  had  been  performed  were  often
completed  by  the caregiver initialing once and drawing  a  line
through all of the boxes on the form, rather than initialing each
daily [service] individually, but the auditor made no overpayment
findings on this basis.  The report expressed disapproval of  the
facilitys  failure  to  update  financial  information  (such  as
patient   accounts  receivables).   But  Hansen  testified   that
overpayment findings were not based on the adequacy of  financial
records.   Overpayments  were found  only  where  Hidden  Heights
submitted  no  documentation  for  the  day  or  where  the  only
documentation  it  submitted failed  to  show  who  provided  the
services in question.
          DHSS gave Hidden Heights the opportunity to appeal  the
audit  results under former 7 AAC 43.085(i), which Hidden Heights
did  in March 2005, submitting additional documentation.  The new
documentation  consisted of documents showing  compensable  daily
services  (service records).  The service records list nutrition,
dressing,  bathing,  hygiene,  toileting,  skin  care,  grooming,
administration of medication, laundry, and chores in  a  vertical
column  on the left.  A horizontal column across the top  of  the
page lists the days of the month.  A staff members initials or  a
defined  symbol  appeared under each date,  with  a  handwritten,
vertical  line seeming to indicate that all compensable  services
were  performed for that day.33  Some of the service records  had
undefined stars drawn next to various activities rather than  the
specific  initials of the care provider.34  Hidden  Heights  also
provided  medication  supervision records showing  each  patients
medications  and  the dates on which a staff member  administered
          The  auditor  accepted  the supplemental  records  that
documented the services provided by a line drawn down the  column
of  activities.   But  the  auditor did  not  reduce  overpayment
findings  based  on newly produced records that:  (1)  failed  to
identify  who provided the services, or (2) only identified  that
medication  was  administered without indicating that  any  other
reimbursable services were provided.35  In April 2005 the auditor
revised  the  overpayment findings to total  $45,093.57  for  the
          sample time period, extrapolated to $62,960.83 for the entire
audited time period.  The facility appealed this finding in  June
2005  and submitted still more documents. Hidden Heightss  second
appeal  resulted in a reduced overpayment finding  of  $39,111.02
for  the  sample time period, extrapolated to $54,607.84 for  the
entire audited time period.
          After  Hidden  Heightss second appeal, the commissioner
of  DHSS sent Hidden Heights a compromise settlement offer.   The
commissioner  offered to accept a reduced payment in satisfaction
of  the  auditors overpayment finding.  Alternatively, if  Hidden
Heights   rejected  the  compromise  monetary   settlement,   the
commissioner  gave  Hidden Heights the option  of  requesting  an
evidentiary hearing or pursuing an appeal in the superior court.
          Hidden  Heights  requested an evidentiary  hearing  and
simultaneously  filed a notice of administrative  appeal  in  the
superior court.  The superior court stayed the appeal pending the
outcome of the evidentiary hearing.
     B.   Proceedings
          1.   Pre-hearing events, the evidentiary hearing, and the agency
          In  pre-hearing memoranda, Hidden Heights  argued  that
DHSS  should  be equitably estopped from enforcing 7  AAC  43.030
because  DHSS  did  not  require providers  to  keep  records  of
specific reimbursable services before 2004.36  Hidden Heights also
argued that it could prove that residents were physically present
at  the  facility on the dates of the overpayments and  impliedly
argued  that proof of the residents physical presence  should  be
accepted  as  proof  that  the  residents  received  reimbursable
services on those dates.  Hidden Heights offered Exhibit D, a set
of daily activity logs, to support this argument.
          In a pre-hearing ruling, the hearing examiner described
the documents she would consider at the evidentiary hearing:
               I  will  only consider documents  Hidden
          Heights presented to the Departments auditing
          team  prior  to my assignment to  this  case.
          Therefore,  the Department will have  had  an
          opportunity  to  receive,  disseminate,   and
          consider the evidence long before the hearing
          date.   This restriction will ensure I remain
          part  of the appellate process and not become
          an independent auditor.
          The  parties  did not agree about which documents  were
made  available to the auditor.  The hearing officer decided that
she  would rule on the admissibility of Exhibit D at the hearing,
where she could assess the credibility of the witnesses.
          The evidentiary hearing was held from March 28 to March
30,  2006.  Hansen testified that Hidden Heightss documents  were
inconsistent  but  that he did not make overpayment  findings  if
some  identifiable  mark, such as initials or a  defined  symbol,
indicated  a staff person provided all or most of the  necessary,
reimbursable services.  He testified that he applied  a  standard
of  leniency in the extreme to Hidden Heightss documents, finding
          overpayments only where there was absolutely no documentation or
documentation for only one service, such as the administration of
          Reeves testified that DHSS had not enforced any record-
keeping requirements on Hidden Heights before 2004.  But he  also
admitted  that he had agreed Hidden Heights would comply  with  7
AAC  43.030s  record-keeping requirements  when  he  applied  for
certification as a Medicaid provider, and that by enrolling as  a
Medicaid  provider he agreed to keep records necessary  to  fully
disclose the extent of the services provided to recipients  under
the Medicaid program.
          Reeves    testified   that   his   facility   performed
reimbursable  services  on  the dates  for  which  there  was  no
documentation.  He testified Hidden Heights did not bill for  any
days  on which it had not provided reimbursable services.  Hidden
Heights  sought to admit Exhibit D, daily activity logs, to  show
that residents were present at the facility on the days for which
Hidden  Heights billed.  After hearing testimony that the auditor
had  never seen Exhibit D, the hearing examiner refused to  admit
the  logs  because she believed the purpose of  the  hearing  was
appellate review of the audits and audit appeals and she believed
she  could  only  consider  documentary  evidence  given  to  the
auditor.   But the hearing examiner allowed Reeves to testify  on
the  content of each daily activity log and to read each log into
the record.
          The  facility also offered Exhibit E, a service  record
with  a  row of green stars.  The green stars are defined on  the
document  as  equating  to  the initials  of  a  particular  care
provider.   Exhibit E also has a row of black stars.   The  black
stars  are  undefined.   Reeves  testified  that  he  knew  which
employee  used stars instead of initials to demonstrate  services
performed.  He explained a particular employee used a green  felt
tip  marker to draw some of the stars and to write a key defining
them.    He testified that the green ink did not show up  on  the
photocopied  document  Hidden Heights gave  the  auditor.   Other
stars  appear to have been written in ball-point pen.  The  stars
written in ball-point pen are visible on the photocopied records,
but they do not have a corresponding key identifying the maker of
the stars.  The hearing examiner permitted Reevess  testimony and
admitted the original document with the green stars into evidence
as Exhibit E.  Reeves did not offer the testimony of the employee
who used stars instead of initials.
          The only witness that Reeves presented or attempted  to
present  was  Sherry Mettler, his accountant.  Mettler  testified
that   assisted  living  facilities  were  confused  as  to  what
documentation  DHSS wanted them to maintain.  She also  testified
she  was  at  Reevess office during the on-site  audit  and  that
neither she nor Reeves understood what kind of documentation  the
auditors wanted.
          The hearing examiner issued a revised proposed decision
in  August  2006,  which the commissioner of DHSS  adopted.   The
examiner concluded that Hidden Heights could not establish  three
of  the  four  elements of equitable estoppel.  Interpreting  the
hearing as an appeal of the audit, she implicitly accepted  DHSSs
decision to find overpayments where the documentation that Hidden
Heights  gave to the auditor inadequately documented the services
provided.  In response to Hidden Heightss challenge to the use of
7  AAC 43.030(b) as the standard for determining the adequacy  of
documentation,   the  hearing  examiner  found  the   regulations
requirements  clear  and  ruled that  Hidden  Heights  failed  to
document the services it billed the Department for.  The examiner
emphasized  [t]here  were very few dates  the  auditors  did  not
accept  as valid, specifically, only those in which the  [service
records]  did not indicate services were provided, or  those  for
which  the only documents submitted were medication logs  showing
only one reimbursable service was provided.
          The hearing examiner explained that admitting Exhibit D
would  not  have  changed  her decision because  Exhibit  D  only
documented  whether a resident was present at the facility  on  a
given day, not whether the patient received reimbursable services
on  that day.  The hearing examiner stated: Hidden Heights wishes
this  hearing  examiner to assume that if a  patient  is  at  the
facility, he is receiving services.  Payment of claims cannot  be
made   on   assumptions.   She  further  wrote:   It   would   be
unconscionable for the Department to pay for services  under  the
assumption that if a person is present in a facility,  then  that
facility must be providing all the services required.
          The  hearing examiner also addressed the service record
documented  with green stars, Exhibit E.  Although she  initially
admitted  Exhibit E into evidence, the hearing examiner  reversed
herself  in her final decision, reasoning since the auditors  did
not  have an opportunity to review this during the audit process,
the  evidence was not admitted.  She then found that because  the
photocopy of the document that the auditor reviewed did not  have
a   key  defining  the  green  stars,  and  because  without   an
explanation  for  the green or black stars, the document  neither
showed  that  reimbursable services were provided nor  identified
who  provided them, the document was insufficient to refute DHSSs
overpayment findings.
          Finally,  the  examiner concluded DHSS  is  correct  in
recouping  the  amount Hidden Heights received for  services  not
supported  by  documentation  and for non-reimbursable  services,
such as room and board.
          2.   The superior court appeal and decision
          Hidden  Heights  appealed the agencys decision  to  the
superior  court.   Hidden Heights challenged the  denial  of  its
equitable estoppel argument and raised the same arguments it made
in the evidentiary hearing.  It also argued that Exhibit D should
have  been  admitted  and that the hearing  examiner  erred  with
respect   to   the   document  with  green  stars,   Exhibit   E.
Additionally,  Hidden  Heights argued  that  post-payment  audits
violate due process.
          The  superior court rejected Hidden Heightss  equitable
estoppel  claim,  concluded  the  hearing  examiner  should  have
admitted  Exhibit D but agreed that admitting this exhibit  would
not  have  changed  the  outcome,  and   found  that  substantial
evidence supported DHSSs overpayment findings.37
          Hidden Heights appeals.

          I.   In an administrative appeal where the superior court acts as
an  intermediate appellate court, we directly review  the  agency
action  in question.38  In reviewing agency decisions, we  review
factual   issues  under  the  substantial  evidence   standard.39
Substantial  evidence is such relevant evidence as  a  reasonable
mind might accept as adequate to support a conclusion40 based  on
the  record  as  a whole.41  We apply the deferential  reasonable
basis  test  to  legal  issues  involving  agency  expertise   or
fundamental policy formation,42 including questions of  [w]hether
the  agency  correctly interpreted its own regulations.43   Under
this  standard,  we defer to the agency unless the interpretation
is plainly erroneous and inconsistent with the regulation. 44  We
use  the  substitution of judgment standard when reviewing  legal
determinations not involving agency expertise.45
     A.   DHSS  Is Not Equitably Estopped from Enforcing Medicaid
          Record-keeping Requirements.
          Hidden  Heights argues that the hearing examiner should
have  equitably  estopped DHSS from enforcing  7  AAC  43.030(b)s
record-keeping  requirements.  It  reasons  DHSS  never  notified
Medicaid   providers  it  would  require  compliance   with   the
regulation  and  did  not  enforce  the  regulation   until   the
legislature  passed  AS  47.05.200 in  2003.   Whether  equitable
estoppel  applies  is  a  legal  question  not  involving  agency
expertise, so we review it with our independent judgment.46
          A   party  invoking  equitable  estoppel  against   the
government  must show four elements: (1) the division asserted  a
position by conduct or words; (2) [the party] acted in reasonable
reliance  on  the  divisions assertion; (3) [the party]  suffered
resulting  prejudice; and (4) estopping the division from  acting
against [the partys interests] serves the interest of justice  so
as  to  limit  public injury.47  If we determine that  the  party
cannot meet the first element, our analysis ends.48
          The  hearing examiner rejected Hidden Heightss argument
that  DHSS  asserted a position that it would not enforce  7  AAC
43.030(b) or require strict compliance with it.  She found that 7
AAC  43.030  has long required providers to maintain records  and
explicitly  states what the providers records must include.   The
hearing examiner seems to have concluded that Hidden Heights  was
on  notice of these requirements from the time Reeves signed  the
Medicaid enrollment form in 1999 stating he would abide  by  this
regulation.  We agree.
          7  AAC 43.030s record-keeping requirements have been in
effect  since 1997.49  The regulation contains a straight-forward
list  of  the  specific information the records  must  include.50
Reeves knew he had to keep such documentation; he testified  that
in  obtaining  his  provider license he agreed  to  keep  medical
records   necessary  to  disclose  the  extent  of  the  services
provided.  Since 1997, regulations have authorized DHSS to  audit
providers  like Hidden Heights for compliance with 7 AAC  43.030s
          record-keeping requirements and to seek  recoupment  of
overpayments  based  on  the  results  of  such  audits.51    The
enrollment form Reeves signed included agreements to comply  with
review   and  audit  regulations  and  regulations  relating   to
recoupment/recovery of overpayment.
          Reeves  knew  or  should have known about  the  record-
keeping requirements of 7 AAC 43.030(b), that Hidden Heights  was
subject  to  auditing  by DHSS, and that DHSS  had  authority  to
recoup  overpayments the audits revealed.  The states failure  to
inform   Hidden   Heights  separately  that  the   record-keeping
regulations  might  one day be enforced does not  constitute  the
assertion  of  a  position that the regulations  would  never  be
enforced.52   Because Hidden Heights failed  to  show  that  DHSS
asserted a position contrary to enforcement of 7 AAC 43.030(b) or
recoupment proceedings, its equitable estoppel argument fails.
     B.   7 AAC 43.030(b)s Record-keeping Requirements Are Clear and
          DHSSs Interpretation of the Regulation Had a Reasonable Basis.
          Hidden Heights argues that 7AAC 43.030(b) is ambiguous.
We  disagree.   7  AAC 43.030(b) requires that  provider  records
identify:   (1)  recipient  receiving  treatment;  (2)   specific
services provided; (3) extent of each service provided; (4)  date
on  which  each  service  is provided;  and  (5)  individual  who
provided  the  service.53   This  clear  regulation  provided   a
reasonable  basis  for  DHSS  to interpret  7  AAC  43.030(b)  as
requiring  that  Hidden Heightss documents  record  the  services
provided and who provided them.
     C.   Because DHSS Offered Hidden Heights an Evidentiary Hearing,
          It Was an Abuse of Discretion To Consider Only the Documentary
          Evidence Given to the Auditor.
          Hidden  Heights  challenges two  evidentiary  decisions
made  by the hearing examiner: one regarding Exhibit D, the daily
logs  in which Hidden Heightss staff noted the residents activity
levels,  and  another regarding the service record  on  which  an
employee  used  green stars instead of initials to document  that
reimbursable services had been provided, Exhibit E.  The  hearing
examiner  refused  to admit Exhibit D into evidence  because  she
believed  her  role was limited to appellate review  and  because
Hidden  Heights had not presented the daily logs to the  auditor.
The  examiner  did admit Exhibit E into evidence, but  she  later
reversed  this ruling, deciding that Exhibit E was not admissible
for the same reason as Exhibit D.
          Hidden  Heights argues that the hearing examiner abused
her  discretion  by excluding both Exhibits D  and  E.   It  also
argues  that  the  hearing  examiner  erred  by  concluding  that
consideration of Exhibit D would not have changed the result.  We
review  the  hearing examiners decision to exclude  evidence  for
abuse of discretion.54
          Former 7 AAC 43.085(i) allowed Hidden Heights to appeal
the  auditors findings, but neither that regulation nor any other
applicable  Medicaid  regulation entitled Hidden  Heights  to  an
evidentiary hearing at the administrative level.55  Hidden Heights
received an evidentiary hearing because the commissioner of  DHSS
offered it as part of a compromise.  DHSS had never held such  an
          evidentiary hearing for a Medicaid provider before.  This
explains why the hearing examiner understood her purpose  at  the
hearing was to provide appellate review of the audit and the  two
audit appeals that Hidden Heights had already received.  It  also
explains  why  the hearing examiner thought she could  not  admit
documentary  evidence Hidden Heights had not  given  the  auditor
during  the  audit  or  audit  appeals.   The  hearing  examiners
confusion  is  understandable because there are  no  statutes  or
regulations providing an evidentiary hearing for Medicaid billers
challenging audit results.  But because the commissioner of  DHSS
agreed  to give Hidden Heights an evidentiary hearing, it was  an
abuse  of  discretion  to limit the documentary  evidence  Hidden
Heights could present to the documents it gave the auditor in the
audit or audit appeals process.
          The  only evidence Hidden Heights offered that was  not
admitted was Exhibit D, patient activity logs, and Exhibit  E,  a
single service record.  But the hearing officer allowed Reeves to
read  Exhibit D into the record, she heard testimony interpreting
Exhibit E, and she heard Mettlers testimony.56
          Based  on Reevess testimony, the hearing examiner found
that   Exhibit  D  failed  to  show  reimbursable  services  were
provided; the logs only show that a resident was present  at  the
facility  on a given day and  the residents activity level.   For
example,  one activity log shows that a resident rested all  day;
another  shows  that a resident smoked a lot of cigarettes  on  a
particular day.  Medicaid does not reimburse for room and board57
and as the hearing examiner concluded, a log showing only that  a
resident was present does not support a finding that reimbursable
services  were provided.  Because the hearing examiner  permitted
Reeves  to  read the contents of Exhibit D into the  record,  and
because substantial evidence supports her finding that Exhibit  D
did  not  document  the  provision of  compensable  services,  we
conclude the failure to admit Exhibit D was harmless error.
          We  reach a different result with respect to Exhibit E,
the document with green stars instead of an employees initials.58
Reeves testified that an employee used a green felt tip marker to
draw  stars  instead of her initials and to write a key  defining
the stars.  According to Reeves, the green ink did not show up on
the  photocopy  Reeves made for the auditor, and Reeves  did  not
show  the  auditor  the original document.  The hearing  examiner
initially  admitted Exhibit E but reversed herself in  her  final
decision.  It is unclear whether she considered Reevess testimony
explaining Exhibit E.
          We  conclude the exclusion of Exhibit E requires remand
because  we cannot say that the hearing examiners decision  would
have  been  the same if she had considered Exhibit E  or  Reevess
testimony interpreting it.  On remand, the hearing examiner  must
consider  Exhibit  E  and the credibility  of  Reevess  testimony
interpreting the meaning of the green stars and key.59
          In  reaching this conclusion, we do not imply that  the
statutory  and  regulatory  scheme  at  issue  entitles  Medicaid
providers  in  Hidden Heightss position to evidentiary  hearings.
That  question is not before us.  Here, DHSS agreed  to  give  an
evidentiary  hearing to Hidden Heights, so  it  was  required  to
          consider Hidden Heightss evidence.   If on remand any overpayment
findings  are refuted, the total amount of overpayments  must  be
reduced accordingly.60
          We  AFFIRM  the hearing examiners conclusion that  DHSS
was not equitably estopped from enforcing Medicaid record-keeping
regulations  and  from auditing Hidden Heights.   We  AFFIRM  the
hearing examiners conclusion that 7 AAC 43.030(b)s record-keeping
requirements are not ambiguous.  The failure to admit  Exhibit  D
was  harmless error, but we REVERSE the hearing officers decision
with  respect to the admissibility of Exhibit E and consideration
of  Reevess  testimony  regarding that exhibit.   We  REMAND  for
proceedings consistent with this opinion.
     1     The  home and community-based waiver program offers  a
choice  between  home  and community-based  waiver  services  and
institutional  care in a nursing facility . . . to  aged,  blind,
physically  or  developmentally disabled,  or  mentally  retarded
individuals  who meet [certain] eligibility criteria.   7  Alaska
Administrative Code (AAC) 43.1000 (2008).

     2     Garner v. State, Dept of Health & Soc. Servs., Div. of
Med.  Assistance, 63 P.3d 264, 268 (Alaska 2003).  Title  XIX  of
the  Social Security Act established the Medicaid program.   Id.;
42 U.S.C.  1396 (2006).

     3     Garner, 63 P.3d at 268; see also AS 47.05.010 (listing
DHSSs duties).

     4    See Garner, 63 P.3d at 268 (citing AS 47.07.040); 7 AAC
43.005-.1990 (2008).

     5    See 42 U.S.C.  1396a(a)(27).

     6     See  id.   1396a(a)(42) (requiring states  to  conduct
audits to insure that proper payments are made under the plan).

     7     42  C.F.R.   431.107(b) (2008);  see  also  42  U.S.C.
1396a(a)(27) (providing the same).

     8     42  U.S.C.  1396a(a)(42); see also 42 C.F.R.   447.202
(The Medicaid agency must assure appropriate audit of records  if
payment  is based on costs of services or on a fee plus  cost  of

     9    See 42 U.S.C.  1396a(a)(42).

     10    See 42 C.F.R.  433.304 (defining overpayment).

     11     42 C.F.R.  433.316(b) (Unless [the state] chooses  to
initiate  a  formal recoupment action against a provider  without
first giving written notification of its intent, [the state] must
notify   the   provider  in  writing  of   any   overpayment   it
discovers  . . . and must take reasonable actions to  attempt  to
recover  the  overpayment.); cf. id.   433.312  (requiring  state
governments  to  refund, to the federal government,  the  Federal
share  of any overpayments within sixty days of their discovery).
Agencies  must  report  identified overpayments  to  the  federal
government quarterly.  See id.  433.320(a).

          Federal  law  also requires each state to  establish  a
Medicaid  fraud  and  abuse control unit for the  collection,  or
referral for collection to a single State agency, of overpayments
that  are  made  under  the State plan  .  .  .  to  health  care
facilities  and  that are discovered by [the Medicaid  fraud  and
abuse  control unit] in carrying out its activities.   42  U.S.C.
1396a(a)(61), 1396b(q)(5).

     12    Id.  1396b(d)(2)(A).

     13     7  AAC  43.005(a) & (b)(35) (2008); see  also  7  AAC
43.035(a)(18) (listing home and community-based service providers
as  types of providers eligible to enroll with the department and
bill directly for services rendered).

     14    7 AAC 43.1044(c)(2)(A).

     15     See 7 AAC 43.065(c) (2001); 7 AAC 43.030 (2008).   We
cite  the  version  of  7 AAC 43.065 in effect  when  DHSS  began
auditing  Hidden Heights in 2004, not the current version,  which
was amended in 2007.  (Applying the 2007 version would not change
the  result, as subsection (c) was not affected by the amendment.
Compare 7 AAC 43.065 (2001), with 7 AAC 43.065 (2007).)

     16     AS  47.05.200(d); see also former 7 AAC 43.067 (1998)
(providing for audits at DHSSs discretion) (repealed in 2006  and
replaced  by regulations implementing AS 47.05.200s new mandatory
audits);  7  AAC 43.065(b)(3) (requiring providers  to  cooperate
with audits); cf. 7 AAC 43.032(a) (requiring providers to produce
records  to  state officials on request, implicitly for  auditing

     17    7 AAC 43.065(b)(2)-(3).

          The entirety of 7 AAC 43.065(b) (2001) follows:

          Providing    medical   or   medically-related
          services   to   recipients  or  billing   the
          division   for  those  services   constitutes
          agreement by the provider
               (1)  to follow procedures that  are
               consistent  with  guidance  in  the
               applicable Alaska Medicaid Provider
               Billing Manual as of July 14, 2000;
               (2) to comply with applicable state
               and federal Medicaid law; and
               (3)   to   cooperate  in   reports,
               surveys,    reviews,   or    audits
               conducted by the department.
     18    7 AAC 43.065(c).

     19    See 7 AAC 43.030(a) (2008) (am. 1997, eff. 1997).

     20    Id.

     21    7 AAC 43.030(b)(1)-(5).

     22     See  former 7 AAC 43.067 (eff. 1997) (repealed  2006)
(providing  for discretionary audits); 7 AAC 43.1440 (eff.  2006)
(providing for mandatory audits).

     23     Former  7  AAC 43.067(a) (1998).  7  AAC  43.067  was
amended in June 2004 and repealed in December 2006.  See former 7
AAC  43.067  (am.  2004)  (repealed  2006).  The  regulation  was
replaced  by  7 AAC 43.1440, which made annual audits  mandatory.
See  7  AAC  43.1440  (eff. 2006).  Because DHSS  began  auditing
Hidden Heights in March 2004, before the June 2004 amendments  or
the  December  2006  repeal, the 1998 version  of  7  AAC  43.067

          Under  former 7 AAC 43.067, a desk review was an  audit
of  a providers records without a visit to the providers place of
business  or  site  at  which  the  provider  maintains  business
records, and a field audit was an audit of a providers records at
the  providers  place of business or site at which  the  provider
maintains business records.  Former 7 AAC 43.067(e)(2)-(3).

     24    7 AAC 43.032(d) (eff. 1997).

     25    See ch. 66,  3, SLA 2003.

     26     AS  47.05.200(a).  DHSS may use standard  statistical
sampling  methods to select claims for review  or  audit  and  to
calculate overpayments to providers.  Former 7 AAC 43.068 (1998);
see also 7 AAC 43.1470 (2008) (eff. 2006) (providing the same).

     27     7 AAC 43.081(a)(13) (1998).  We cite the 1998 version
of 7 AAC 43.081 because the regulation was amended in 2006, after
DHSS  audited Hidden Heights. Applying the current version  would
not  change the result, as the 2006 amendment did not change  the
definition of overpayment.  Compare 7 AAC 43.081 (1998),  with  7
AAC 43.081 (2008).

     28     AS  47.05.200(b);  see also 7  AAC  43.065(h)  (2001)
(Providing medical or medically-related services to recipients or
billing  the division for those services constitutes an agreement
by  the  provider that the division may take action under  7  AAC
43.081 to recover an overpayment.).

     29    7 AAC 43.065(g).

     30    Former 7 AAC 43.085(i)(1)-(3) (2004).

     31    The total Medicaid payments Hidden Heights received for
the seventy-four claims it submitted in this time period amounted
to  $284,344.41.  The fifty-three claims reviewed  in  the  audit
amounted to a total of $202,754.64.

     32     He  further  testified: The best  way  that  I  could
characterize  the way the documentation was presented  to  us  is
that  it  was  piled in stacks on . . . a table  and  that  these
stacks  were  highly  disorganized.  Reeves and  his  accountant,
Sherry Mettler, testified the documents were disorganized and  in
stacks  and  boxes in part because Reeves was in the  process  of
moving  Hidden Heightss office from Reevess mothers house to  his

     33     We  use defined symbol to refer to a symbol  that  is
explained  in a key on the document.  For example,  some  of  the
defined  symbols are identified in a key as [symbol] =  [initials
of a particular provider].

     34    We use undefined star to mean a star in a document with
no key to explain the stars meaning.

     35    Mary Francis Arseneau, testifying as an Alaska Medicaid
expert, explained that Medicaid pays assisted-living providers an
all-inclusive  per-diem  rate but does  not  pay  for  individual
services.   She testified that this is why a record showing  that
only  one  service  was  provided on a given  day,  such  as  the
administration  of  medication,  may  result  in  an  overpayment
finding for that day.

     36    To invoke equitable estoppel against the government  a
party  must show: (1) the division asserted a position by conduct
or  words;  (2) [the party] acted in reasonable reliance  on  the
divisions   assertion;   (3)  [the  party]   suffered   resulting
prejudice;  and  (4) estopping the division from  acting  against
[the  partys interest] serves the interest of justice  so  as  to
limit public injury.  State, Dept of Commerce & Econ. Dev.,  Div.
of Ins. v. Schnell, 8 P.3d 351, 356 (Alaska 2000).

     37     The  court also rejected Hidden Heightss due  process
challenge as inadequately briefed.

     38    Garner v. State, Dept of Health & Soc. Servs., Div. of
Med. Assistance, 63 P.3d 264, 267 (Alaska 2003) (citing Matanuska
Elec. Assn v. Chugach Elec. Assn, 53 P.3d 578, 583 (Alaska 2002))
(internal quotation marks omitted).

     39     Bauder  v.  Alaska Airlines, Inc., 52 P.3d  166,  174
(Alaska  2002) (quoting Peninsula Corr. Health Care  v.  Dept  of
Corr., 924 P.2d 425, 426 (Alaska 1996)).

     40    Id. (quoting Thompson v. United Parcel Serv., 975 P.2d
684, 688 (Alaska 1999)) (internal quotation marks omitted).

     41     Municipality of Anchorage, Police & Fire Ret. Bd.  v.
Coffey, 893 P.2d 722, 726 (Alaska 1995).

     42     Bauder, 52 P.3d at 174 (quoting Thompson, 975 P.2d at
688) (internal quotation marks omitted).

     43     Garner,  63  P.3d at 267 (citing  Cleaver  v.  State,
Commercial  Fisheries  Entry Commn,  48  P.3d  464,  467  (Alaska
2002)); see also May v. State, Commercial Fisheries Entry  Commn,
175 P.3d 1211, 1215-16 (Alaska 2007).

     44     May,  175  P.3d  at 1216 (quoting Simpson  v.  State,
Commercial  Fisheries  Entry Commn, 101  P.3d  605,  609  (Alaska
2004)) (internal quotation marks omitted).  We have explained the
reasonable  basis standard another way, stating that  under  that
standard  we  defer[] to the agency decision as  long  as  it  is
reasonable and supported by the evidence. Bauder, 52 P.3d at  174
(citing Thompson, 975 P.2d at 688).

     45     Bauder, 52 P.3d at 174 (quoting Thompson, 975 P.2d at
688) (internal quotation marks omitted).

     46    See State, Dept of Commerce & Econ. Dev., Div. of Ins.
v. Schnell, 8 P.3d 351, 355 (Alaska 2000).

     47     Id. at 356 (citing Wassink v. Hawkins, 763 P.2d  971,
975 (Alaska 1988)).

     48    See id. at 358 (Because the first element necessary for
equitable  estoppel  is absent, we need not  consider  the  other
three elements.).

     49    See 7 AAC 43.030 (am. 1997).

     50    See 7 AAC 43.030(b).

     51     See  former 7 AAC 43.067 (eff. 1997) (repealed  2006)
(authorizing DHSS to audit providers for compliance  with  7  AAC
43.030); 7 AAC 43.032(d) (2008) (eff. 1997) (authorizing DHSS  to
find  overpayments  based  on  a  providers  failure  to  provide
adequate records during an audit and to seek recoupment  of  such
overpayments).   7  AAC  43.032(d) has  never  been  amended  and
remains valid today.

     52    Cf. State, Dept of Commerce & Econ. Dev., 8 P.3d at 356-

     53    7 AAC 43.030(b).

     54     Cf. Lopez v. Admr, Pub. Employees Ret. Sys., 20  P.3d
568,  571  (Alaska  2001)  (reviewing exclusion  of  evidence  by
administrative boards for abuse of discretion).

     55    Former 7 AAC 43.085(i) (2004); see also 7 AAC 43.005 et
seq. (2008).

     56     DHSS  argues  that  in  a  Medicaid  provider  audit,
documentation  is  the only evidence [a provider  can  offer]  of
medical  assistance actually provided.  We need  not  reach  that
issue.   Because  DHSS  agreed  to  provide  Hidden  Heights   an
evidentiary   hearing,  the  evidence  Hidden  Heights   offered,
Exhibits D and E and the testimony of two witnesses, should  have
been admitted and considered by the hearing officer.

     57    See 7 AAC 43.1044(c)(2)(A).

     58     Exhibit  E  is the single service record  with  green
stars.   The  record  contains similar  but  photocopied  service
records for the same month with black stars apparently written in
ball-point  pen.  These black stars do not have a key  explaining
who  made  them.   It  is unclear from the testimony  and  record
whether  Reeves offered Exhibit E to serve as a key for  all  the
undefined  stars  for that month or whether Exhibit  E  was  only
intended to serve as documentation for one day.

     59     If  Hidden  Heights offered Exhibit E  as  a  key  to
interpret  the  stars written in ball-point pen on other  service
records  disallowed by the auditor, those service records  should
also be considered on remand.

     60    Hidden Heights also argued that DHSS is not required to
seek   recoupment  of  overpayments  and  that  DHSS  could  seek
sanctions  instead.  We disagree.  If DHSSs overpayment  findings
are adequately supported, the applicable statutes and regulations
require DHSS to seek recoupment.  See AS 47.05.200(b) (Within  90
days  after  receiving each audit report from an audit  conducted
under  this  section,  the department shall begin  administrative
procedures to recoup overpayments identified in the audits.);  42
C.F.R.  433.316(b).

          Finally,  to  the extent Hidden Heights  raises  a  due
process challenge on appeal, we consider it waived for inadequate
briefing  and  failure to raise the issue  in  the  statement  of
points  on  appeal.  See A.H. v. W.P., 896 P.2d 240, 243  (Alaska
1995)  ([W]here  a point is given only cursory statement  in  the
argument portion of a brief, the point will not be considered  on
appeal.  (quoting Adamson v. Univ. of Alaska, 819 P.2d  886,  889
n.3 (Alaska 1991))); Wren v. State, 577 P.2d 235, 237 n.2 (Alaska
1978)  (stating  we  will not address issues not  listed  in  the
statement of points on appeal or not adequately briefed).

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