Positive Choices Counseling Services, Inc. VS State of Louisiana Department of Health & Hospitals
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STATE OF LOUISIANA COURT OF APPEAL FIRST CIRCUIT 2011 CA 0391 POSITIVE CHOICES COUNSELING SERVICES INC VERSUS STATE OF LOUISIANA DEPARTMENT OF HEALTH AND HOSPITALS On Appeal from the 19th Judicial District Court Parish of East Baton Rouge Louisiana Docket No 586 Section 22 973 Honorable Timothy E Kelley Judge Presiding Derrick D Carson j L Ferriday LA Attorney for Plaintiff Appellant Positive Choices Counseling Services Inc Neal R Elliott Jr Baton Rouge LA Attorney for Defendant Appellee Louisiana Department of Health and Hospitals BEFORE CARTER C PARRO AND HIGGINBOTHAM JJ J Judgment rendered CT O 2 8 2011 PARRO J Positive Choices Counseling Services Inc Positive Choices appeals a district court judgment affirming the decision of an administrative law judge ALJ who upheld the administrative sanction of the Louisiana Department of Health and Hospitals the Department which terminated for one year Positive Choices certification as a mental health rehabilitation MHR services provider For the following reasons we affirm the judgment FACTUAL AND PROCEDURAL BACKGROUND Positive Choices is a Louisiana non profit corporation which has been enrolled in the Department Medicaid Mental Health Rehabilitation program since 1999 s As a services provider in that program it is required to undergo an annual recertification Process to ensure that it continues to meet the standards of the program In July 2009 Positive Choices submitted its application for recertification to the Department and received approval in a letter from the Department on July 23 2009 However after checking some of the information provided by Positive Choices the Department learned that Positive Choices had lost its accreditation status from the Joint Commission on Accreditation of Healthcare Organizations JCAHO effective August 14 2008 due to non payment of fees The Department immediately sent Positive Choices a Notice of Sanction letter advising that it was rescinding its recertification approval and was terminating Positive Choices contract as an MHR services provider effective August 12 2009 The letter also stated that Positive Choices could not reapply for MHR enrollment for one year from the effective date of termination The reasons given for this action were Positive Choices loss of accreditation status and its failure to report that loss of status to the Department As soon as it received this letter and learned of its non accredited status Positive Choices paid the pastdue fees and brought its account current with JCAHO In a letter dated August 19 2009 JCAHO acknowledged receipt of all outstanding survey and annual fees in full and stated that Positive Choices was on track for an accreditation 2 survey later this year Positive Choices asked the Department for an informal review to have the Department reconsider the administrative sanction it had imposed The informal review was held on September 3 2009 and the Department reaffirmed its decision to terminate Positive Choices as an MHR services provider for one year Positive Choices then requested an administrative appeal of the Department sdecision A hearing was held before an AU on December 8 2009 after which the Department s decision was again upheld Having exhausted its administrative remedies on February 3 2010 Positive Choices filed a petition for judicial review of the AU decision s district court reviewed the briefs of the administrative proceeding parties and the entire record The of the Following a hearing on November 8 2010 during which both parties argued their positions the court signed a judgment on December 7 2010 decreeing that he T decision of the administrative law judge upholding the Department of Health and Hospital rescission of the July 23 2009 Recertification s Approval Letter termination of Positive Choices Counseling Services Inc from participation as a provider of Mental Health Rehabilitation services in the Mental Health Rehabilitation program for one year from the effective date of termination and termination of Positive Choices Counseling Services Inc provider contract s is hereby affirmed at plaintiffappellant scosts Positive Choices then appealed that judgment to this court In this appeal Positive Choices asserts the district court and AU erred in upholding the Department s decision to terminate its participation as an MHR services provider despite evidence that Positive Choices was not notified by JCAHO of the revocation of its accreditation APPLICABLE LAW The Louisiana Administrative Procedure Act LAPA governs the judicial review of an agency adjudication Specifically LSA R 49 states that a person who is S 964 A aggrieved by a final decision or order in an adjudication proceeding is entitled to judicial review See Women and Children Hosp v State Dept of Health and Hospitals 08 s s 0946 La 1 2 So 397 401 02 The review is to be conducted by the court 09 21 3d without a jury and is confined to the record If there are allegations of procedural irregularities before the agency that are not shown on the record the court may receive 3 proof concerning those irregularities receive written briefs The court may also hear oral argument and See LSAR 49 According to LSA R 49 the S 964 F S 964 G court may affirm the agency decision or remand the case for further proceedings The s court may reverse or modify the decision if substantial rights of the appellant have been prejudiced because the administrative findings inferences conclusions or decisions are 1 In violation of constitutional or statutory provisions 2 In excess of the statutory authority of the agency 3 Made upon unlawful procedure 4 Affected by other error of law 5 Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion or 6 Not supported and sustainable by a preponderance of evidence as determined by the reviewing court In the application of this rule the court shall make its own determination and conclusions of fact by a preponderance of evidence based upon its own evaluation of the record reviewed in its entirety upon judicial review In the application of the rule where the agency has the opportunity to judge the credibility of witnesses by first hand observation of demeanor on the witness stand and the reviewing court does not due regard shall be given to the agency s determination of credibility issues LSA R 49 S 964 G The general principle governing judicial review is that where some evidence as reasonably interpreted supports the regulatory body determination the orders of s regulatory bodies exercising discretionary authority are accorded great weight and will not be overturned by the courts in the absence of a clear showing that the administrative action is arbitrary and capricious Baton Roue Water Works Co v Louisiana Pub Serv Comm 342 So 609 612 La 1977 cert denied 434 U 2d S 827 98 S 105 54 L 86 1977 The test for determining whether an action Ct 2d Ed was arbitrary or capricious is whether the action taken was without reason League for Environmental Action Now V Thompson 931978 La App Calcasieu 1st Cir 95 14 7 661 So 143 150 writ denied 952495 La 12 664 So 459 2d 95 15 2d The rules governing the Mental Health Rehabilitation program have been developed to satisfy certain mandatory requirements that states must follow in order to qualify for federal financial assistance from the Medicaid See Program LAC B 101 XV 50 In order to be certified or recertified as an MHR services provider under the program an applicant must provide certain documentation to the Department including proof of accreditation with an approved national accrediting body and proof of payment to the accrediting body See LAC 50 B and C A 703 XV 5 providers must apply for recertification annually LAC 50 B 709 XV Certified If an MHR services provider fails to meet all requirements for recertification it will receive a written notice identifying the deficiencies The MHR provider must correct these deficiencies within 60 days from the date of the notice of the deficiencies If the deficiencies are not corrected within this 60day period the provider certification may s be terminated LAC 50 If the applicant fails to meet any recertification C 709 XV requirements and recertification is denied the provider may be terminated and may not reapply for one year from the date of the notice of termination LAC 50 B 707 XV There may be an immediate loss of certification if at any time the enrolled MHR provider fails to maintain program requirements or accreditation status The provider may not reapply for certification for one year following the effective date of termination LAC 50 All enrolled providers of MHR services shall maintain accreditation C 707 XV status Denial or loss of accreditation status or any negative change in accreditation status shall be reported to the Department in writing within five working days of receiving the notice from the national accreditation organization LAC 50 If B 719 XV at any time an MHR provider loses accreditation an automatic loss of certification may occur The applicant may not reapply for one year from the effective date of the termination LAC 50 Failure to notify the Department of accreditation C 719 XV denial loss of accreditation status or any negative change in accreditation status may result in sanctions to the MHR agency LAC 50 D 719 XV 1 JCAHO is one of the approved accrediting bodies See LAC 50 719 XV W1 ANALYSIS It is obvious Administrative from Code a simple reading of the regulations concerning MHR services providers that in the Louisiana maintenance of accreditation status is a key requirement This requirement and the possible penalty of an automatic loss of certification for one year is repeated in several regulations The sheer redundancy of these statements in the regulations emphasizes the importance of maintaining accreditation status In addition the failure to notify the Department of a loss of accreditation status within five days of being notified by the accrediting organization of that loss is a basis for sanctions It is this second requirement that Positive Choices has identified in this appeal as error on the part of the Department and the district court It claims that JCAHO did not notify it that its accreditation status had been withdrawn due to non payment of fees Since Positive Choices allegedly did not know of this problem it could not notify the Department within five days of notification as required by LAC 50 B 719 XV Positive Choices also points out that as soon as it learned of its non accreditation status it paid all outstanding fees and brought its account with JCAHO current response Regardless of this Positive Choices claims that the Department failed to consider these mitigating circumstances and imposed a sanction that will cause irreparable damage to Positive Choices Therefore it contends the Department sdecision to terminate its certification for one year was arbitrary capricious and an abuse of discretion If this were the only regulation for which the one year termination of certification could be imposed we might be tempted to agree with this argument The administrative record does not contain any evidence that JCAHO notified Positive Choices in August 2008 of its loss of accreditation The information concerning this change in status was communicated to the Department by JCAHO by an email on July 31 2009 and a letter on August 3 2009 when the Department was investigating Positive Choices application for recertification Edward Brown the ownerdirector of Positive Choices testified that JCAHO had not notified it of the loss of accreditation and C his first knowledge of this situation was when the Department rescinded its approval of Positive Choices recertification in a Notice of Sanction letter dated August 12 2009 The record does contain an acknowledgment letter from JCAHO dated August 19 2009 confirming that Positive Choices had applied for accreditation had paid the application deposit had paid in full all outstanding survey and annual fees and was on track for an accreditation survey later this year Therefore Positive Choices argument on this issue could possibly be considered to have some merit However Positive Choices ignores the other more basic problem for which this sanction could be imposed namely the loss of accreditation Positive Choices does not contest the fact that JCAHO did indeed deny accreditation status to Positive Choices effective August 14 2008 due to non payment of fees Whether Positive Choices knew about this loss of status at the time does not alter the reality of the situation The regulations could not be more emphatic in stating that the loss of accreditation was grounds for immediate termination of Positive Choices position as an MHR services provider We recognize that the regulations consistently state that a loss of accreditation may be grounds for this sanction Therefore the Department was not required by law to impose this particular sanction Nevertheless the decision made by the Department after considering the evidence was not an unreasonable one The record in the administrative proceeding contains a letter written to the Department by Mr Brown on July recertification 9 2009 before submitting Positive Choices application for In this letter he admits that Positive Choices had fallen behind in its payments to JCAHO resulting in a delay of the site visit required by the accrediting agency Mr Brown requested an extension to the recertification deadline in order to accommodate this problem While Mr Brown may not have realized that falling behind in the payments to JCAHO had already resulted in the loss of accreditation status he obviously knew that there was a problem that might interfere with Positive Choices recertification Yet there was no mention of any problem in the application for 7 recertification and the Department did not learn of the loss of accreditation until it undertook its own research of the information provided by Positive Choices Under these circumstances we conclude that the Department was not arbitrary or capricious in imposing the administrative sanction of terminating Positive Choices certification as an MHR services provider for one year Nor did the administrative law judge or the district court err in affirming this decision of the Department Finding no error this court must affirm the judgment of the district court IW AC0 1 KGT1l Based on the above we affirm the judgment of December 7 2010 and assess all costs of this appeal to Positive Choices Counseling Services Inc AFFIRMED
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