Powell's Med. Facil. v N.C. Dep

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An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure. NO. COA13-166 NORTH CAROLINA COURT OF APPEALS Filed: 5 November 2013 POWELL S MEDICAL FACILITY and EDDIE N. POWELL, M.D., Petitioners v. Sampson County No. 12 CVS 572 NORTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES, DIVISION OF MEDICAL ASSISTANCE, Respondent Appeal by petitioners from order entered 18 September 2012 by Judge William R. Pittman in Sampson County Superior Court. Heard in the Court of Appeals 15 August 2013. The Charleston Group, by R. Jonathan Charleston, Michael R. Porter and Jose A. Coker, for petitioner-appellants. Attorney General Roy Cooper, by Special Deputy General Belinda A. Smith, for respondent-appellee. Attorney CALABRIA, Judge. Powell s Medical Facility ( PMF ) and Eddie N. Powell, M.D. ( Dr. Powell ) (collectively order upholding the Human Services North ( DHHS ), petitioners ), Carolina Division Department of appeal of Medical from Health an and Assistance s -2( DMA ) (collectively ( FAD ) that terminated. Dr. respondent ), Powell s Medicaid Final Agency enrollment Decision was properly We affirm. I. Background Dr. Powell was licensed as a physician in North Carolina in 1979 and has been a Medicaid provider since 1980. DHHS is the agency that administers the State s Medicaid program, while DMA, a division of DHHS, enrolls and monitors Medicaid providers. Computer Sciences Corporation ( CSC ), a DMA contractor, verifies the providers credentials. In 1991, Dr. Powell was convicted of the felonies of incest and taking indecent liberties with a minor after his stepdaughter accused him of having sexual relations with her. This Court upheld his convictions on appeal on 7 September 1993. Dr. Powell s license to practice medicine was revoked from 27 September 1993 through 15 October 1993, after which he resumed practicing Medicaid retract Carolina medicine provider. her and Although accusations governor was to and subsequently his stepdaughter petitioned overturn remains a convicted sex offender. reinstated his at as attempted least convictions, one Dr. a to North Powell -3In 2009, CSC began to re-verify all current Medicaid providers to ensure that they met the criteria for participation in the program. In August 2009, Dr. Powell submitted a verification packet and later he and a partner submitted a new application seeking a group practice number. Both Participation Agreements included clauses regarding the agency s authority to terminate Dr. Powell s program enrollment without 30 days written notice for convictions of certain offenses, including crimes of moral turpitude. Margaret Enrollment Kimberly Supervisor, Carter reviewed ( Carter ), a the of results DMA Dr. Provider Powell s background check and discovered Dr. Powell did not disclose his criminal history. She conferred with her manager and suggested termination, a recommendation that he approved. As a result, DMA terminated all billing numbers associated with Dr. Powell, effectively ending his participation in the Medicaid program. DMA notified Dr. Powell of the results of the background check and his termination in two letters, both dated 23 November 2010. The letters were identical except for the provider numbers. Both letters explained to Dr. Powell the grounds for terminating a provider who failed to meet the conditions of participation. Specifically, if a provider was convicted of a criminal offense -4or made any misstatement ... or omission while submitting the provider application, DMA had the authority to terminate a provider without notice. Petitioners sought a Reconsideration decision, but the decision was upheld. Review of DMA s On 10 February 2011, petitioners filed a contested case hearing with the Office of Administrative Hearings. After a hearing, Administrative Law Judge Donald W. Overby ( ALJ ) found that Dr. Powell had an affirmative duty to disclose his convictions and that he failed to do so. The ALJ also found that DMA s decision to terminate Dr. Powell s enrollment was arbitrary and capricious. The ALJ ordered Dr. Powell suspended from the Medicaid program for a period of one year for his failure to disclose the convictions. The case was returned to respondent and the FAD held that Dr. Powell s Medicaid enrollment was properly terminated. Petitioners sought judicial review of the FAD in Sampson County Superior Court. The trial court denied the petition and upheld respondent s FAD. Petitioners appeal. II. Standard of Review A party to a review proceeding in a superior court may appeal to the appellate division from the final judgment of the superior court .... N.C. Gen. Stat. § 150B-52 (2011). An -5appellate court's review proceeds in two steps: (1) examining whether the trial court applied the correct standard of review and (2) whether the trial court's review was proper. City of Rockingham v. N.C. Dep t of Env't and Natural Res., Div. of Water Quality, __ N.C. App. __, __, 736 S.E.2d 764, 767 (2012). When a court reviews a final agency decision, in which an administrative law judge made a decision ... and the agency does not adopt the administrative law judge's decision, the court shall review the official record, de novo, and .... shall not give deference to any prior decision made in the case[.] Gen. Stat. § 150B-51(c)(2009).1 N.C. In conducting its review, the trial court may adopt the [ALJ s] decision; may adopt, reverse, or modify the agency s decision; may remand the case to the agency ... and may take any other action allowed by law. Id. In the instant case, the agency did not adopt the ALJ s decision, therefore the trial court was required to conduct a de novo review 51(c)(2009). 1 of As the the evidence. order N.C. reflects, Gen. Stat. [b]ecause § 150B- respondent We note that N.C. Gen. Stat. § 150B 51 was modified by Session Law in 2011. See 2011 N.C. Sess. Laws ch. 398, sec. 27 (2011). However, the modifications became effective 1 January 2012 and only apply to contested cases commenced on or after that date. Since petitioners commenced their contested case on 9 February 2011, the trial court's review is governed by the 2009 version of N.C. Gen. Stat. § 150B 51. See N.C. Gen. Stat. § 150B 23 (2011). -6declined to adopt [the ALJ s] decision in full, the [c]ourt reviews the final decision of the agency de novo. Therefore, we must determine whether the trial court properly applied this standard. City of Rockingham, __ N.C. App. at __, 736 S.E.2d at 767. III. Findings of Fact Petitioners argue that several of the trial court s findings of fact were not supported by substantial evidence. We disagree. In cases reviewed under G.S. 150B-51(c), the court's findings of fact shall be upheld if supported by substantial evidence. N.C. Gen. Stat. § 150B-52 (2011). Substantial evidence is relevant evidence a reasonable mind might accept as adequate to support a conclusion. Stark v. N.C. Dep t of Env t and Natural Res., Div. of Land Res., __ N.C. App. __, __, 736 S.E.2d 553, 558 (2012) (citation omitted). In findings the of instant fact by case, the petitioners trial court contend were not the following supported substantial evidence: 11) Petitioner did not provide any information on the August 2009 verification submission to CSC concerning his criminal history. by -712) Dr. Powell submitted a second verification application in September 2010 which also contained no admission of his prior convictions. ... 16) Petitioner presented no evidence at the hearing below to demonstrate that he disclosed his convictions to the North Carolina Medicaid program at any time. 17) Prior to the 2009 background check, the only documentation concerning Petitioner s criminal history in his DMA provider enrollment record is a computer printout which refers only to the action taken by the Medical Board, and contains a handwritten notation dated April 29, 1994 that unspecified charges were dropped. 18) The first time Respondent became aware of Petitioner s criminal convictions was when CSC performed the criminal background check in response to the P&S Med application. 19) As a result of the discovery of Petitioner s convictions, his failures to disclose and his false representations, Respondent terminated all billing numbers associated with Petitioner. Petitioners believe the reason findings eleven and twelve are not supported by substantial evidence is because they are based upon the premise that Dr. information to DMA .... Powell was asked to provide this Petitioners do not argue that Dr. Powell actually provided this information, only that he was not -8required to do so. findings were Since petitioners did not claim that the factually incorrect, this argument is without merit. The reason petitioners argue findings sixteen, seventeen and eighteen because are Carter not supported testified that by DMA substantial had been evidence aware of Powell s convictions since as far back as 1993 or 1994. statement is only partially accurate. earlier testimony and testified is Dr. This Carter later amended her that DMA had only been previously aware of Dr. Powell s charges, not his convictions. Thus, the trial court s findings of fact are supported by the evidence. Petitioners contend finding of fact nineteen is not supported by the evidence because [t]he only evidence below was that the sole basis for DMA s decision to terminate Dr. Powell s participation in Medicaid is the mere existence of Dr. Powell s criminal conviction. Petitioners are mistaken. Carter affirmed on recross examination that Dr. Powell s termination was based on the failure to disclose that conviction in the P&S Med application, as well as the conviction itself[.] In addition, the DMA letters to Dr. Powell terminating his Medicaid participation indicated the reason for his termination was his -9failure to disclose his convictions on both applications that he submitted. Therefore, despite petitioners contentions, there was substantial evidence in the record supporting the trial court s finding that Dr. Powell s failure to disclose, as well as the conviction itself, gave DMA the authority to terminate his participation as a Medicaid provider without the requisite written notice. Since there was substantial evidence to support all the trial court s findings, we uphold these findings. Stat. § 150B-52 (2012). N.C. Gen. Petitioners arguments are without merit. IV. Conclusions of Law Petitioners entering also conclusions through fifteen. argue of that law the three trial through court ten erred and by thirteen Specifically, petitioners claim that the trial court s conclusions of law were in error because there was not substantial evidence to support the findings of fact, and thus the findings could not have supported the conclusions. since we have determined that the findings of However, fact were supported by substantial evidence, petitioners argument fails. V. Exercise of Discretion -10Petitioners also argue that the trial court erred by upholding the FAD since DMA was required to exercise discretion, but failed to do so when Dr. Powell s Medicaid participation was terminated. We disagree. A party may commence a contested case by paying a fee ... and by filing a Hearings .... petition with the Office of Administrative N.C. Gen. Stat. § 150B-23(a) (2011). If the petition is filed by a party other than an agency, [it] shall state facts tending to establish that the agency named as the respondent has deprived the petitioner of property ... or has otherwise substantially prejudiced the petitioner's rights and that the agency: (1) (2) Acted erroneously; (3) Failed to use proper procedure; (4) Acted arbitrarily or capriciously; or (5) Id. Exceeded its authority or jurisdiction; Failed rule. to act as required by law or When a petitioner challenges an agency s decision, this Court has petitioner. held that the burden of proof rests on the Overcash v. N.C. Dep t of Env t and Natural Res., Div. of Waste Mgmt., 179 N.C. App. 697, 704, 635 S.E.2d 442, 447 (2006). -11In the instant case, according to the language in the Medicaid Participation Agreement: the Department may summarily terminate without giving 30 days written notice . . . [when the provider] has been turpitude[.] convicted After CSC of [a] informed . . DMA . crime of Dr. of moral Powell s convictions, and his failure to disclose those convictions, his Medicaid participation was terminated. Petitioners challenged the agency s decision and the ALJ found, inter alia, that DMA was required, but failed, to exercise discretion when terminating Dr. Powell s Medicaid participation. DMA adopted in part and rejected in part the ALJ s decision and issued a FAD. DMA held, inter alia, that petitioners failed to show that Respondent did not exercise any discretion in making the decision to terminate Petitioner s participation in the North Carolina Medicaid program due felony convictions and failure to disclose. to Petitioner s Specifically, the FAD recognized that petitioners had the burden of proof in the hearing, that they only offered one witness, Carter, and that Carter was incapable of testifying about the type or level of review that was conducted requested judicial review. and upheld the FAD. by her supervisor. Petitioners The trial court denied the petition -12The trial court concluded that [t]here is ample evidence in the record to support the agency s position on the enumerated findings of fact and conclusions of law and that Carter s testimony constitutes substantial evidence to support the final agency decision. We agree. Carter testified that after discovering Dr. Powell s convictions, she made a recommendation regarding his termination. Carter s testimony supported the FAD s finding that petitioners did not present any evidence that Ms. Carter s supervisor failed to review the file or give it due consideration.... Carter also testified regarding DMA s discretion when making the decision. Petitioners are correct that Carter s testimony indicated that she and others at her level did not have the discretion to make exceptions and permit a participant conviction to continue in the program. who had a felony Carter s testimony also indicated that decision makers above her had discretion to make exceptions and permit participation for some individuals. However, petitioners had the burden of proof at the hearing. Carter s testimony provides evidence to support the FAD s findings and conclusions that petitioners failed to meet their burden of proving that DMA did not exercise any discretion in making the decision to terminate Dr. Powell s participation in -13the Medicaid program. concluding the Therefore, the trial court did not err by FAD was based upon substantial admissible evidence of record, [wa]s supported by the preponderance of the admissible evidence in view of the entire record, and ha[d] a rational basis in the evidence. VI. Judicial Admission Petitioners also argue that DMA judicially admitted that DMA improperly delegated its decision making authority to a private corporation because in a Motion to Quash filed with the court below, DMA indicated petitioners contract. that CSC actually terminated We disagree. It is well established in North Carolina that a judicial admission is a formal concession made by a party (usually through counsel) in the course of litigation for the purpose of withdrawing a particular fact from the realm of dispute.... Such an admission is not evidence, but rather removes the admitted fact from the field of evidence by formally conceding its existence. It is binding in every sense. Jones v. Durham Anesthesia Assocs., P.A., 185 N.C. App. 504, 509, 648 S.E.2d 531, 535 (2007) (citation omitted). [W]ithdrawn pleadings in the same case ... do not amount to judicial admission contained therein. which are conclusive as to the matters Outer Banks Contr rs, Inc. v. Forbes, 302 -14N.C. 599, 606, 276 S.E.2d 375, 380 (1981). Rather, [s]uch pleadings may be utilized by a party to litigation as evidential admissions in precisely the same way as if it had been embodied in some other form. Id. In the instant case, a Motion to Quash the petitioners subpoena of the contradictory DMA statements. Director In filed one by section respondent of the had motion, respondent indicated that CSC made the decision to terminate Dr. Powell s Medicaid participation. In another section of the motion, the DMA Director did not participate in the routine decision by the DMA Provider Enrollment section to terminate a provider based on a conviction for a crime of moral turpitude. Subsequently, the Motion to Quash was withdrawn. Considering that the document itself is contradictory, it is clear that respondent s statement was not for the purpose of withdrawing a particular fact from the realm of Jones, 185 N.C. App. at 509, 648 S.E.2d at 535. dispute[.] Furthermore, respondent s Motion to Quash was withdrawn, and therefore does not amount to a judicial admission. 606, 276 S.E.2d at 380. Outer Banks, 302 N.C. at Therefore, petitioners argument is without merit. VII. Property Right -15Petitioners further argue that the trial court erred by concluding that Dr. Powell s enrollment in the Medicaid program was terminable at will. Specifically, Dr. Powell contends that he had a property interest in the contract, and therefore, DMA was required to exercise discretion in terminate his Medicaid participation. deciding whether to Even assuming, arguendo, that Dr. Powell s enrollment was not terminable at will, we have already determined support the before terminating FAD that there holding that Dr. was substantial respondent Powell s evidence exercised Medicaid to discretion participation. Therefore, it is unnecessary to reach the merits of petitioners argument. VIII. Conclusion The trial court s findings of fact were supported substantial evidence. Therefore, they will be upheld. Gen. (2012). Stat. conclusions § 150B-52 of law. Those Furthermore, findings the trial N.C. supported court by the properly concluded that there was substantial evidence to support the FAD s holding terminating addition, Dr. that respondent Powell s respondent s Medicaid misstatement exercised discretion participation in a withdrawn in number. In Motion to Quash does not amount to a judicial admission. Ultimately, we -16conclude that the trial court applied the correct standard of review and its review was proper. Therefore, we affirm the trial court s decision. City of Rockingham, __ N.C. App. at __, 736 S.E.2d at 767. Affirmed. Judges STROUD and DILLON concur. Report per Rule 30(e).

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