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Pachas v. North Carolina Department of Health and Human Services

Court of Appeals of North Carolina

April 17, 2018

CARLOS PACHAS, by his attorney in fact, JULISSA PACHAS, Petitioner,
v.
NORTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES, Respondent.

          Heard in the Court of Appeals 10 January 2018.

          Appeal by petitioner from order entered 21 April 2017 by Judge W. Robert Bell in Mecklenburg County No. 15 CVS 19217 Superior Court.

          Legal Services of Southern Piedmont, by Madison Hardee and Douglas Stuart Sea, for petitioner-appellant.

          Attorney General Joshua H. Stein, by Assistant Attorney General Lee J. Miller, for respondent-appellee.

          DIETZ, Judge.

         Carlos Pachas was a Medicaid recipient. In 2016, he challenged the deductible applied to his Medicaid coverage. After losing throughout the administrative process, Pachas ultimately prevailed on judicial review in the trial court. The court held that the applicable Medicaid statute required the State to use the federal poverty level for a family, not an individual, to calculate Pachas's income limit.

          Later, Pachas qualified for an alternative Medicaid program subject to at least some different rules than traditional Medicaid. After the State again imposed a deductible based on the federal poverty level for individuals, Pachas skipped the administrative review process and returned directly to the trial court with a motion to enforce the court's previous order and petition for writ of mandamus. The trial court dismissed the motion for lack of jurisdiction.

         As explained below, we affirm. Although a trial court, sitting as an appellate court to review an agency decision, has jurisdiction to enforce an existing order, it lacks jurisdiction to apply a previous order to new facts and legal arguments not at issue in the previous ruling. Here, the new Medicaid program in which Pachas enrolled permits the State to request, and the federal government to grant, waivers from various Medicaid provisions. The State contends that the federal government waived the income limit rules for this alternative Medicaid program. This argument involves questions of law and fact not addressed in the first judicial review proceeding, which concerned standard Medicaid coverage.

         Our holding today does not mean we agree with the State on the underlying Medicaid issue. We hold only that Pachas cannot bypass the agency review process and take this new issue directly to the trial court. Accordingly, we affirm the trial court's dismissal of Pachas's motion and petition for lack of jurisdiction.

          Facts and Procedural History

         In 2014, Petitioner Carlos Pachas began receiving Medicaid coverage after a stroke and a brain tumor left him confined to a wheelchair and in need of nursing care. Pachas was the primary provider for his wife, his two minor children, and his wife's elderly parents.

         In early 2015, Pachas began receiving Social Security disability benefits. The Mecklenburg County Department of Social Services determined that, based on his Social Security disability payment of $1, 369 per month, Pachas's income was above the federal poverty level and thus required him to pay a deductible on his Medicaid benefits. DSS informed Pachas that it would not provide further Medicaid coverage until Pachas paid a 6-month deductible of $6, 642.

         DSS calculated this deductible based on the federal poverty level for an individual, rather than the poverty level for a family. Had DSS applied the federal poverty level for a family, Pachas would have been eligible for Medicaid benefits without having to pay a deductible.

         Pachas appealed DSS's decision through the administrative process but did not prevail. He then petitioned for judicial review in superior court. Pachas argued that the applicable federal statute, 42 U.S.C. § 1396a(m), required the agency to determine his Medicaid eligibility based on the federal poverty level for a "family of the size involved." Because Pachas was the primary provider for his wife, children, and elderly in-laws, he contended that the agency should have used the federal poverty level for a family of either four or six people.

         Pachas prevailed in superior court. The court reversed the agency decision and ordered the agency to reinstate Pachas's Medicaid benefits. The court held that the agency improperly applied the income limit because "[t]he plain language of the controlling federal statutory provision, 42 U.S.C. § 1396a(m), states that the applicable Medicaid income limit . . . must be based on a 'family of the size involved.'"

         In February 2017, Pachas left the nursing facility that had been caring for him and returned home under a special Medicaid program known as the Community Alternative Program for Disabled Adults, or CAP/DA. The CAP/DA program offers the State the option of providing Medicaid coverage to adults who wish to receive support services at their own homes, rather than in a nursing home.

         The State has discretion to define the scope of its CAP/DA program by requesting a waiver of various Medicaid provisions from the federal government. See 42 U.S.C. § 1396n(c). The State contends that it requested, and received, a waiver from the requirement that it calculate CAP/DA income limits using a "family of the size involved" under 42 U.S.C. § 1396a(m).

         Based on this purported waiver, when Pachas enrolled in the CAP/DA program and began receiving in-home support services, the State calculated his income limit for CAP/DA coverage using the individual federal poverty level, not the family poverty level. As a result, the State required him to pay a deductible before receiving CAP/DA coverage.

         The trial court, in its initial order on judicial review, did not address the CAP/DA program or the factual and legal issues concerning the State's request for a waiver of various Medicaid provisions through CAP/DA. Indeed, the CAP/DA program was not even at issue in the initial administrative challenge because, at the time, Pachas was receiving only standard Medicaid coverage. As a result, the administrative record from the initial proceeding does not include any documents addressing either CAP/DA coverage generally or whether the federal government approved the State's purported request to waive the requirements of 42 U.S.C. § 1396a(m).

         After learning that the State would require a deductible for CAP/DA coverage, Pachas bypassed the administrative review process and filed in superior court a motion to enforce the court's previous order and a petition for a writ of mandamus. Following a hearing, the trial court dismissed the motion and petition for lack of jurisdiction.

         The trial court ruled that its initial order "does not apply to Petitioner's Medicaid eligibility under the CAP/DA waiver" because the CAP/DA program is "governed by [a] separate federal statute, 42 U.S.C. § 1396n(c)" which permits the federal government "to waive the State Plan requirements for income and resource rules . . . that the Court considered in the March 17, 2016 Order." The trial court therefore held that "Petitioner must resort to the administrative process governed by N.C. G.S. § 108A-79 to appeal" the State's decision to require a deductible for CAP/DA coverage. Pachas appealed the trial court's ruling to this Court.

         Sadly, Pachas passed away during this litigation. His wife, Julissa Pachas, was substituted as petitioner in her capacity as administrator of Pachas's estate.

         Analysis

         Pachas challenges the trial court's dismissal of his motion to enforce the court's previous order, and the corresponding petition for a writ of mandamus. We begin our analysis by discussing the trial court's authority to consider these filings.

         Ordinarily, trial courts lack jurisdiction to directly review a decision by a county department of social services with respect to Medicaid coverage. The General Assembly created an administrative review process for these claims, and courts have jurisdiction to hear these disputes only when they arrive through a petition for judicial review after exhaustion of this administrative review. See N.C. Gen. Stat. §§ 108A-79, 150B-43.

         But as in other legal proceedings, trial courts reviewing administrative decisions have jurisdiction to enforce their own orders. See N.C. R. Civ. P. 70; Bryan v. BellSouth Commc'ns, Inc., 492 F.3d 231, 236 (4th Cir. 2007). Thus, when a trial court on judicial review orders an agency to take action, the court retains jurisdiction to ensure its order is carried out. Consequently, when a trial court interprets a statute and orders the agency to apply that interpretation-as happened here-the agency must do so. If the agency ignores the trial court's instructions, the court retains the power to take further action to ensure compliance.

         There are limits to this supervisory authority, however. The trial court's authority to supervise the agency's actions extends only to issues "actually presented and necessarily involved in determining the case." Tennessee-Carolina Transp., Inc. v. Strick Corp., 286 N.C. 235, 239, 210 S.E.2d 181, 183 (1974). In other words, the trial court's continuing jurisdiction applies to issues involving "the same facts and the same questions, which were determined in the previous appeal." Id.

         Here, the trial court properly concluded that the agency's determination of Pachas's CAP/DA program eligibility involved different facts and legal issues than the traditional Medicaid benefits at issue in its first order. As the trial court observed, its first order instructed the State "to reinstate Petitioner's Medicaid eligibility through the North Carolina Medicaid State Plan pursuant to the controlling federal statutory provision, 42 U.S.C. § 1396a(m)."

         The court then observed that Pachas later "voluntarily applied for Medicaid eligibility through the Community Alternative Program for Disabled Adults . . . which is governed by [a] separate federal statute, 42 U.S.C. § 1396n(c)." Unlike the traditional Medicaid program at issue in the court's first order, the CAP/DA program permits the State to seek waivers from various provisions of the Medicaid statutes. 42 U.S.C. § 1396n(c). The State contends that it requested, and received, a waiver from the requirement that it calculate CAP/DA income limits based on a "family of the size involved" under 42 U.S.C. § 1396a(m).

         The scope of this waiver provision, and whether the State in fact applied for and received a waiver of the income limits provision, involve facts and legal questions that were not "actually presented and necessarily involved" in the trial court's order addressing traditional Medicaid coverage. Tennessee-Carolina Transp., Inc., 286 N.C. at 239, 210 S.E.2d at 183. Indeed, these issues could not have been addressed in the court's first order because, as the parties concede, with respect to traditional Medicaid coverage, the statutory income limit requirements cannot be waived.

         As a result, the trial court correctly held that "the Order signed on March 17, 2016 does not apply to Petitioner's Medicaid eligibility under the CAP/DA waiver" and that "Petitioner must resort to the administrative process governed by N.C. G.S. § 108A-79 to appeal the February 14, 2017 decision issued by the Mecklenburg County DSS." The trial court lacks jurisdiction to review the legal and factual issues raised in this appeal until they reach the court through exhaustion of the administrative review process and a petition for judicial review.

         We recognize that this is a frustrating result for the Pachas family, who already fought one lengthy administrative battle with the agency and must now do so again. And we agree with our dissenting colleague that requiring a "dying indigent" to slog through this pointless bureaucracy before presenting his legal arguments to a court of law feels "unjust and wrong." But it is what the law requires. Although the agency seems convinced of its legal position, that does not make the administrative review process "futile" or "inadequate" as those terms are defined by law. See Huang v. North Carolina State Univ., 107 N.C.App. 710, 715, 421 S.E.2d 812, 815-16 (1992). ...


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