Jacobus v. Dept. of PATH

Annotate this Case
Jacobus v. Dept. of PATH (2003-220); 177 Vt. 496; 857 A.2d 785

2004 VT 70

[Filed 29-Jul-2004]
                                 ENTRY ORDER

                                 2004 VT 70

                      SUPREME COURT DOCKET NO. 2003-220

                             JANUARY TERM, 2004

  Christina Jacobus, Lindsey Turgeon   }	APPEALED FROM:
  and  Megan Woods	               }
       v.	                       }	Human Services Board
  Department of PATH	               }
                                       }	DOCKET NOS. 17,070 17,490 17,522

             In the above-entitled cause, the Clerk will enter:

       ¶  1.  In these consolidated cases, petitioners Lindsey Turgeon and
  Megan Woods appeal the Secretary of Human Services' (Secretary) denial of
  their request for coverage of interceptive orthodontic treatment under
  Medicaid's Early and Periodic Screening, Diagnosis, and Treatment (EPSDT)
  program. (FN1)  Originally, the Human Services Board granted coverage on
  grounds that, although petitioners do not meet the State's listed criteria
  for medically necessary orthodontic treatment, they have at least the same
  medical need for treatment as children whose conditions are on the list. 
  The Secretary rejected certain of the board's factual findings and reversed
  its decision.  Because the Secretary's order violates federal law, we

       ¶  2.  At the time of the proceedings below, petitioners were
  nine-year-old medicaid eligible girls. Megan had persistent pain in her
  teeth, particularly when eating.  Lindsey had chronic pain in her jaw and
  speech difficulties.  The girls' family dentists referred them for
  orthodontic treatment and they saw the same orthodontist, Dr. Fred
  Salvatoriello.  Dr. Salvatoriello diagnosed various multiple malocclusions
  in each girl and recommended interceptive orthodontic treatment in each

       ¶  3.  The Department of Prevention, Assistance, Transition and Health
  Access (PATH) denied petitioners request for Medicaid coverage on grounds
  that interceptive treatment was not "medically necessary" for either child. 
  PATH regulations provide two means by which treatment can qualify as
  medically necessary.  Under the first method, PATH requires that a child
  have either one major or two minor malocclusions, which are defined
  according to diagnostic criteria established by PATH's dental consultants. 
  Medicaid Manual § M622.4,  5 Code of Vermont Rules 13 170 008-233 (2001).
  (FN2)  In Megan's case, she met the criteria for one minor condition
  (blocked cuspids) but fell just below the criteria for two others (anterior
  open bite and crowding per arch).  In Lindsey's case, none of her four
  diagnosed malocclusions (blocked cuspids, anterior open bite, anterior
  crossbite and crowding) met the listed criteria.  Alternatively, PATH also
  provides for coverage of orthodontic treatment "if otherwise necessary
  under EPSDT found at M100."  Id.   It is undisputed that PATH did not
  review either girl's condition to determine whether treatment was
  "otherwise necessary."
       ¶  4.  In consolidated appeals to the board, petitioners argued that
  by limiting interceptive orthodontic coverage to the exact conditions
  described in the listed criteria, without conducting an individualized
  review of each child's medical need, PATH violated its own regulations as
  well as federal statutes and regulations governing the EPSDT program. 
  Petitioners further argued that the State's denial of coverage violated
  their right to equal treatment under the Vermont and federal constitutions. 
  After a de novo fair hearing, the board approved coverage under the
  individualized review prong of the state regulations, holding that each
  child's condition was at least as severe in terms of functional compromise
  as conditions preapproved by the State for coverage.

       ¶  5.  On review pursuant to 3 V.S.A. § 3091(h)(2), the Secretary
  overturned the board's decision.  First, the Secretary reversed without
  explanation the board's findings that each girl's multiple malocclusions,
  considered cumulatively, were at least as severe as any listed conditions.
  Second, the Secretary held that "even assuming for argument's sake that
  they did have such an 'equivalent' condition to those described in our
  criteria," that is not enough.  Instead, the Secretary held that state
  regulations require coverage of orthodontic treatment only where a child
  has a "handicapping malocclusion."  Petitioners timely appealed the
  Secretary's order to this Court pursuant to 3 V.S.A. § 3091(h)(3).

       ¶  6.  Petitioners first challenge the Secretary's rejection of
  board findings thirty-nine and forty-six, which determined that the net
  effect of each child's combined dental impairments was at least as severe
  "in terms of functional compromise" (Lindsey), or "in terms of present
  functioning" (Megan) as the conditions listed by the state.  

       ¶  7.  The Secretary may reverse or modify factual findings in a
  board decision only if "the board's findings of fact lack any support in
  the record."  3 V.S.A. § 3091(h)(1)(A) (emphasis added).  This is identical
  to the clearly erroneous standard that this Court applies when reviewing
  the board's findings of fact.  See, e.g.,  In re Potter, 2003 VT 101, ¶
  10, 838 A.2d 105.  The Secretary, therefore, must uphold the board's
  findings "if the record contains any credible evidence that fairly and
  reasonably supports its findings."  Id. (citing Hall v. Dep't of Social
  Welfare, 153 Vt. 479, 486?87, 572 A.2d 1342, 1346 (1990)).  

       ¶  8.  The record here provides ample evidence to support these
  findings.  In Megan's case (finding forty-six), Dr. Salvatoriello provided
  written testimony that Megan had three malocclusions: 2 blocked cuspids,
  which met the minor criteria; crowding which met the criteria in her upper
  arch and was barely below the criteria in her lower arch; and an anterior
  open bite, which measured below the State's criteria.  Dr. Salvatoriello
  testified that these conditions are interrelated, that in combination they
  are at least as serious as any two of the State's minor criteria, and that
  if left untreated there was "a virtual certainty that full orthodontic
  treatment will be necessary" including extraction of permanent teeth.  

       ¶  9.  In Lindsey's case (finding thirty-nine), Dr. Salvatoriello
  testified that although all four of her malocclusions fell below the
  State's minor criteria, there was no medically significant difference
  between Lindsey's anterior openbite and anterior crossbite and the State's
  criteria for those conditions; that the combined effect of her impairments
  was at least as serious as having a condition that met any two of the
  State's minor criteria; and that orthodontic treatment was necessary to
  correct current conditions and to prevent the malocclusions from worsening
  into a significantly greater and more expensive problem that could possibly
  require corrective maxillofacial surgery. 

       ¶  10.  Although the State contends that Dr. Salvatoriello's
  testimony is not credible, our review of the record reveals it to be
  credible and reasonable.  The State's primary argument appears to be that
  findings thirty-nine and forty-six are inconsistent with the board's
  simultaneous findings that neither Lindsey nor Megan have a current or
  likely functional deficit.  We see no inconsistency.  As PATH admitted and
  as the board also found, "ninety percent of children who meet [the State's
  criteria] do not actually have 'handicapping malocclusions.'"  Rather, the
  State's criteria were "purposefully drawn at a low level of impediment for
  the safety of the children."  

       ¶  11.  Similarly, we agree with the board that Dr. Salvatoriello's
  testimony regarding the severity of the girls' cumulative conditions was
  uncontroverted.  The State's dental consultant, Dr. Kevin Risko, never
  personally examined either girl, nor did he analyze the cumulative impact
  of their multiple malocclusions.  Rather, he contended only that the girls
  did not meet the criteria and that "the Department's criteria must be given
  deference."  Simply reapplying the listed criteria is not an individualized
  review.  Nothing in Dr. Risko's testimony counters the weight of Dr.
  Salvatoriello's testimony on the issue of cumulative impact.  Therefore,
  pursuant to 3 V.S.A. § 3091(h)(1)(A), findings thirty-nine and forty-six
  must be reinstated. 
       ¶  12.  Petitioners also argue that the Secretary wrongly rejected
  board finding number nine, that PATH's written regulations do not contain
  the definition of "severe malocclusion" offered by the Department's
  experts.  Given our conclusion below, we do not reach this issue.

       ¶  13.  Petitioners next challenge the Secretary's conclusion that
  the board's decision erroneously interpreted PATH's Medicaid regulations. 
  See 3 V.S.A. § 3091(h)(1)(B) (Secretary may modify or reverse a board
  decision if it "implicates the validity or applicability of any agency
  policy or rule").  The board determined that § M622.4 established a de
  facto level of medical severity for EPSDT coverage of orthodontic
  treatment, and that any child with conditions of equal or greater severity
  qualified for coverage.  The Secretary disagreed, holding that PATH
  developed its criteria and designed its orthodontics program solely "to
  identify and treat serious handicapping malocclusions - those malocclusions
  that carry with them real functional deficit." Thus, he concluded treatment
  is "medically necessary" under § M622.4 only if the child meets the State's
  criteria or has a "real functional  deficit." 

       ¶  14.  The parties spend much of their time on appeal disputing
  whether the Secretary's interpretation of § M622.4 complies with the
  minimum federal treatment standard.  See 42 U.S.C. § 1396d(r)(3)(B) (EPSDT
  dental services "shall at a minimum include relief of pain and infections,
  restoration of teeth, and maintenance of dental health").  We decline to
  reach this question since, even assuming, arguendo, that the Secretary's
  definition of the treatment standard is valid, we conclude that the State
  is in violation of the Medicaid Act's comparability provisions as described

       ¶  15.  State participation in the federal Medicaid program is
  optional.  But once a state elects to participate, in return for federal
  dollars it must comply with federal statutory and regulatory requirements. 
  Cushion v. Dep't of PATH, 174 Vt. 475, 477, 807 A.2d 425, 428 (2002)
  (mem.).  Under 1989 amendments to the Medicaid Act, dental screening and
  treatment for children under the age of twenty-one is mandatory.  See 42
  U.S.C. § 1396d(r)(3) (setting minimum dental screening and treatment
  requirements); id. § 1396d(r)(5) (requiring "other necessary health care,
  diagnostic services, treatment and other measures . . . to correct or
  ameliorate defects and physical and mental illnesses and conditions
  discovered by the screening services, whether or not such services are
  covered under the State plan).  

       ¶  16.  As with all Medicaid services, states "may place appropriate
  limits on [ESPDT services] based on such criteria as medical necessity or
  on utilization control procedures."  42 C.F.R. § 440.230(d); see also H.R.
  Rep. No. 101-247 at 398-400 (1989), reprinted in 1989 U.S.C.C.A.N. 1906,
  2125 ("While States may use prior authorization and other utilization
  controls to ensure that treatment services are medically necessary, these
  controls must be consistent with the preventive thrust of the EPSDT
  benefit.").  However, standards for determining eligibility for and extent
  of EPSDT medical assistance "shall be comparable for all groups."  42
  U.S.C. § 1396a(a)(17).  Furthermore,  "medical assistance made available to
  any individual . . . shall not be less in amount, duration, or scope than
  the medical assistance made available to any other such individual." 42
  U.S.C. § 1396a(a)(10)(B)(i).  See also 42 C.F.R. § 440.240(b) (state
  Medicaid plans "must provide that the services available to any individual
  in [qualified] groups are equal in amount, duration, and scope for all
  recipients within the group"); 42 C.F.R. § 440.230(c) ("The Medicaid agency
  may not arbitrarily deny or reduce the amount, duration, or scope of a
  required service . . .  solely because of the diagnosis, type of illness,
  or condition."). 
       ¶  17.  Here, PATH's regulations provide for orthodontic treatment
  for EPSDT-eligible children in two situations: (1) if the patient's
  conditions meet the listed criteria for either interceptive or
  comprehensive treatment, or (2) if PATH determines, upon individualized
  review, that treatment is "otherwise necessary under EPSDT at M100." 
  Medicaid Manual § M622.4, 5 Code of Vermont Rules 13 170 008-233.  The 
  definition of EPSDT at § M100 is simply a quotation of the federal
  statutory standard at 42 U.S.C. § 1396d(r)(5) that states provide "such
  other necessary health care . . . to correct or ameliorate defects and
  physical and mental illnesses and conditions discovered by the [EPSDT]
  screening services, whether or not such services are covered under the
  State [Medicaid] plan."  Medicaid Manual § M100, 5 Code of Vermont Rules 13
  170 008-4-5 (1999). 

       ¶  18.  The Secretary's order would establish two quite different
  standards for each of these provisions.  Under the first prong of § M622.4,
  anyone who meets the criteria on the State's published interceptive or
  comprehensive authorization forms would be preapproved for coverage.  As
  the Secretary stated in his order, the standard of severity established by
  the criteria is lenient: "Of necessity,  in trying to identify those with
  truly handicapping malocclusions, the treatment of whom is required under
  federal law/EPSDT, the diagnostic criteria used by the Department also
  sweep in children who may have less severe problems."  In contrast, under
  the second prong of § M622.4, the Secretary would allow coverage only if
  the applicant has a "handicapping malocclusion" - which his order defined
  as "those malocclusions that carry with them real functional deficit." 
  This is a far stricter standard.  As we noted above, PATH's own dental
  consultants estimate that ninety percent of children who are approved under
  the criteria for orthodontic treatment do not actually have "handicapping
  malocclusions."  The Secretary's order, therefore, violates federal
  Medicaid requirements.  See Simpson v. Wilson, 480 F. Supp. 97, 103 (D. Vt.
  1979) (denial of coverage based on etiology, where applicant had equal
  medical need as persons with covered conditions, violates Medicaid Act's
  prohibition against denying or reducing service "solely because of
  diagnosis, type of illness, or condition"); cf. Cushion, 174 Vt. at 478,
  807 A.2d  at 428-29 (state may not deny Medicaid coverage based on type of
  treatment required where applicant has "at least as great" a need as
  persons whose treatment is covered).  
       ¶  19.  The State attempts to evade the comparability problem by
  arguing that the criteria do not discriminate by condition, but rather
  represent a consensus determination by a committee of some of the State's
  leading orthodontists as to when interceptive treatment is "medically
  necessary."  See 42 C.F.R. § 440.230(d) (authorizing states to limit
  services by medical necessity).  This argument, however, merely verifies
  that the State has established separate and unequal standards of medical
  necessity.  Vermont's ESPDT orthodontic program offers both comprehensive
  treatment, which is defined as treatment of "a malocclusion which already
  exists," and interceptive treatment, which is defined as prevention of  "a
  developing malocclusion due to harmful habits."  Thus, under the
  Secretary's medically necessary treatment standard - a "real functional
  deficit" - interceptive (i.e. preventative) orthodontic treatment is never
  medically necessary.  The State's dental committee, in contrast, has
  defined certain conditions where preventative care is considered medically
  necessary.  Once the State offers interceptive orthodontic treatment in
  some cases, it must do so equitably and may not discriminate by "diagnosis,
  type of illness, or condition."  42 C.F.R. § 440.230(c).  See also Cushion,
  174 Vt. at 477, 807 A.2d  at 428 (even optional Medicaid services must
  comply with applicable Medicaid statutes and regulations).  Thus, the State
  must also cover preventative orthodontic treatment where it is of equal or
  greater severity as conditions covered by the State's criteria.

       ¶  20.  The State also defends its criteria on grounds that a "line
  must be drawn at some point to identify when treatment is medically
  necessary for a particular condition."  The criteria used here, the State
  contends, are based on factors related to medical necessity - such as the
  number of teeth affected and the degree of crowding or bite problems - and
  directly correlate to the degree of severity of the malocclusion.  Thus,
  the State argues, its criteria do not discriminate by condition.  Rather,
  petitioners are disqualified "because their conditions are not severe
  enough to meet the criteria." 

       ¶  21.  The assessment of medical need for treatment of a given
  condition, however, cannot be limited to a predefined list of criteria.  As
  the Secretary concedes, "under both the clear language of PATH's own
  regulation and under the federal Medicaid Act" petitioners are entitled to
  individualized review of their specific conditions.   See Chappell v.
  Bradley, 834 F. Supp. 1030, 1035 (N.D. Ill. 1993) (clarified by 1993 WL
  496700 (N.D. Ill. 1993)) (determination of medical need for ESPDT-mandated
  orthodontic treatment cannot be made by use of index alone, but requires
  "exercise of professional judgment of an orthodontist"); see also 42 U.S.C.
  § 1396a(a)(19) (standards limiting Medicaid services must be applied "in a
  manner consistent with simplicity of administration and the best interests
  of the recipients"); S. Rep. No. 404, at 24 (1965), reprinted in 1965
  U.S.C.C.A.N. 1943, 1965 (Medicaid Act "specifically prohibits the Federal
  Government from exercising supervision or control over the practice of
  medicine, the manner in which medical services are provided, and the
  administration or operation of medical facilities"); id. at 46, 1965
  U.S.C.C.A.N. at 1986 ("the physician is to be the key figure in determining
  utilization of health services" under Medicaid Act). 

       ¶  22.  Here, PATH did not provide petitioners with an individualized
  review as required by the Medicaid Act or its own regulations.  See
  Medicaid Manual § M622.4, 5 Code of Vermont Rules 13 170 008-233 (treatment
  required if found to be "otherwise necessary"); see also id. § M107, 5 Code
  of Vermont Rule 13 170 008-21 ("Additionally, for EPSDT-eligible
  beneficiaries, medically necessary includes a determination that a service
  is needed to achieve proper growth and development or prevent the onset or
  worsening of a health condition.").  Nor did PATH offer any evidence at the
  fair hearing to rebut the professional opinion of petitioners' treating
  orthodontist that petitioners' conditions were at least as severe as
  conditions covered by the State's criteria.  Rather, PATH's dental
  consultant simply reasserted that petitioners did not meet the State's
  criteria, and that the "State's criteria must be given deference." 
  Reapplying individual criteria, without any analysis of cumulative impact,
  is not a consideration of all the factors relevant to a patient's
  condition.  Thus, the State is without any evidentiary support and cannot
  argue now that petitioners' conditions were not severe enough to warrant
       ¶  23.  Generally, we grant deference to the Secretary, as the head
  of the Department of PATH, regarding interpretations of the department's
  governing statutes and regulations, and will not disturb the Secretary's
  interpretations absent a compelling indication of error.  In re Cent.
  Vermont Med. Ctr., 174 Vt. 607, 608, 816 A.2d 531, 535 (2002) (mem.).  The
  Court does not defer, however, to the Secretary's interpretation of federal
  law and regulations.  See Brisson v. Dep't of Social Welfare, 167 Vt. 148,
  152, 702 A.2d 405, 408 (1997).  In this case, the Secretary's
  interpretation of § M622.4 would violate federal Medicaid statutes and
  regulations and, therefore, is error. 

       ¶  24.  Because we must construe state statutes or regulations in a
  way that complies with with federal law, Cushion, 174 Vt. at 479, 807 A.2d 
  at 430, we hold that PATH must provide EPSDT Medicaid coverage of
  interceptive orthodontic treatment whenever an eligible beneficiary's
  conditions meet the State's listed diagnostic treatment criteria or when
  the evidence shows they have conditions of equal or greater severity.  The
  evidence here showed that petitioners' medical need for treatment was "at
  least as severe" as persons with conditions that are preapproved by the
  State for Medicaid coverage.  Therefore, PATH must provide them coverage.  


                                       BY THE COURT:

                                       Jeffrey L. Amestoy, Chief Justice

                                       Denise R. Johnson, Associate Justice

                                       Marilyn S. Skoglund, Associate Justice

                                       Paul L. Reiber, Associate Justice

                                       Ernest W. Gibson III, Associate Justice 
                                       (Ret.), Specially Assigned


FN1.  After this appeal was filed, PATH agreed to provide coverage to
  petitioner Christina Jacobus and, therefore, her appeal is moot.

FN2.  PATH applies separate criteria for interceptive and comprehensive
  orthodontic treatment. According to the board's findings, interceptive
  treatment "prevents a developing malocclusion due to harmful habits," while
  comprehensive treatment targets "a malocclusion which already exists." The
  criteria for interceptive treatment are:

    Major Criteria: Cleft palate, Severe skeletal Class III, Posterior
    crossbite (3+ teeth), Other severe cranio-facial anomaly; 

    Minor Criteria: Impacted cuspid, 2 Blocked cuspids per arch
    (deficient by at least 1/3 of needed space), 3 Congenitally
    missing teeth per arch (excluding third molars), Anterior open
    bite 3 or more teeth (4+ mm), Crowding per arch (10+ mm), Anterior
    crossbite (3+ teeth), Traumatic deep bite impinging on palate,
    Overjet 10+ mm (measured from labial to labial).