Texas Health and Human Services Commission v. Jessica Lukefahr

Opinion

ACCEPTED 03-15-00325-CV 7295935 THIRD COURT OF APPEALS AUSTIN, TEXAS 10/8/2015 3:39:28 PM JEFFREY D. KYLE CLERK No. 03-15-00325-CV _________________________________ FILED IN IN THE 3rd COURT OF APPEALS AUSTIN, TEXAS THIRD COURT OF APPEALS 10/8/2015 3:39:28 PM AUSTIN, TEXAS JEFFREY D. KYLE _________________________________ Clerk

TEXAS HEALTH AND HUMAN SERVICES COMMISSION, Appellant,

v.

JESSICA LUKEFAHR, Appellee. _________________________________

On Appeal From The 345th Judicial District Court of Travis County, Texas Trial Court Case No. D-1-GN-14-002158 The Honorable Judge Stephen Yelenosky _________________________________

BRIEF OF APPELLEE _________________________________

MAUREEN O’CONNELL Texas Bar No. 00795949 SOUTHERN DISABILITY LAW CENTER 1307 Payne Avenue Austin, Texas 78757 T: 512.458.5800 F: 512.458.5850 moconnell458@gmail.com Attorney for Appellee

ORAL ARGUMENT REQUESTED TABLE OF CONTENTS

TABLE OF CONTENTS ............................................................................................i

TABLE OF AUTHORITIES .................................................................................... ii

ISSUE PRESENTED ................................................................................................vi

LEGAL FRAMEWORK OF THE MEDICAID PROGRAM .................................. 2

STATEMENT OF FACTS ........................................................................................ 5

SUMMARY OF ARGUMENT ............................................................................... 14

ARGUMENT ........................................................................................................... 16

I. The District Court Correctly Determined that Jessica Lukefahr is Entitled to Medicaid Authorization of a Custom Power Wheelchair with Integrated Standing Feature because HHSC’s Administrative Decision Denying this Durable Medical Equipment is Unsupported by Substantial Evidence and is Arbitrary and Capricious ..................................................................... 16

A. HHSC Failed to Meet its Burden of Proof at the Fair Hearing ................................................................................................... 17

B. The Hearing Officer’s Findings of Fact Do Not Support HHSC’s Final Decision ......................................................................... 30

II. HHSC’s Administrative Review Does Not Comport with Agency Requirements.................................................................................... 35

CONCLUSION AND PRAYER ............................................................................. 37

CERTIFICATE OF COMPLIANCE ....................................................................... 38

CERTIFICATE OF SERVICE ................................................................................ 39

i TABLE OF AUTHORITIES

CASES

Beal v. Doe, 432 U.S. 438 (1977) ............................................................................................ 29

City of El Paso v. Public Util. Comm’n of Texas, 883 S.W.2d 179 (Tex. 1994) .............................................................................. 35

City of Waco v. Texas Comm’n on Envtl. Quality, 346 S.W.3d 781 (Tex. App.—Austin 2011, pet. denied) ................................... 35

DeSario v. Thomas, 139 F.3d 80 (2d Cir. 1998) ................................................................................... 3

Goldberg v. Kelly, 397 U.S. 254 (1970) ............................................................................................ 18

Gray Panthers v. Schweiker, 652 F. 2d 146 (D.C. Cir. 1980) ........................................................................... 18

Heritage on San Gabriel Homeowners Ass’n v. Texas Comm’n on Envtl. Quality, 393 S.W.3d 417 (Tex. App. 2012) ............................................................. 35

Johnson v. Minn. Dept. of Human Serv., 565 N.W.2d 453 (Minn. App. 1997) .................................................................. 28

Kessler v. Blum, 591 F. Supp. 1013 (S.D.N.Y. 1984) ..................................................................... 4

Ladd v. Thomas, 14 F. Supp. 2d 222 (D. Conn. 1998)..................................................................... 4

McMahon v. Minter, No. 3251 (Sup.Ct. Mass., Feb. 24, 1975) ............................................................. 4

Moore v. Reese, 637 F.3d 1220 (11th Cir. 2011) .......................................................................... 29

ii Pinneke v. Preisser, 623 F.2d 546 (8th Cir. 1980) .............................................................................. 28

Shakhnes v. Berlin, 689 F.3d 244 (2d Cir. 2012) ............................................................................... 36

Shakhnes ex rel. Shakhnes v. Eggleston, 740 F. Supp.2d 602 (S.D.N.Y. 2010) ................................................................. 36

Slekis v. Thomas, 525 U.S. 1098 (1999) ............................................................................................ 3

Starr Cnty. v. Starr Indus. Servs., Inc., 584 S.W.2d 352 (Tex. Civ. App.—Austin 1979, writ ref’d n.r.e.)..................... 37

Texas Health Facilities Comm’n v. Charter Med.-Dalles, Inc., 665 S.W.2d 446 (Tex. 1984) .............................................................................. 30

Texas Medical Assn. v. Mathews, 408 F. Supp. 303 (W.D. Tex. 1976) ................................................................... 37

Texas Rivers Prot. Ass’n v. Texas Natural Res. Conservation Comm’n, 910 S.W.2d 147 (Tex. App. 1995)...................................................................... 30

Weaver v. Reagan, 886 F. 2d 194 (8th Cir. 1989) ............................................................................. 27

Wilder v. Virginia Hospital Association, 496 U.S. 498 (1990) .............................................................................................. 2

REGULATIONS

1 TEX. ADMIN. CODE § 354.1031(b)(12).................................................................... 4

1 TEX. ADMIN. CODE § 354.1039(a)(4)(D) ..............................................4, 10, 15, 17

1 TEX. ADMIN. CODE § 354.1040 ............................................................................. 16

1 TEX. ADMIN. CODE § 354.1040(b)(3)...................................................................... 5 iii 1 TEX. ADMIN. CODE § 354.1040(c)(1-4) ................................................................ 20

1 TEX. ADMIN. CODE § 357.9 .............................................................................10, 17

1 TEX. ADMIN. CODE § 357.23(a) ............................................................................ 10

1 TEX. ADMIN. CODE § 357.703 ............................................................................... 14

1 TEX. ADMIN. CODE § 357.703(b)(3)...................................................................... 36

42 C.F.R. § 431.10(e)(1) ............................................................................................ 3

42 C.F.R. § 431.210(b) ............................................................................................ 18

42 C.F.R. § 431.210(c)............................................................................................. 18

42 C.F.R. § 431.244(f) ............................................................................................. 36

42 C.F.R. § 435.930 ................................................................................................... 4

42 C.F.R. § 440.70(b)(3) ............................................................................................ 3

42 C.F.R. § 440.230(b) .............................................................................................. 3

42 C.F.R. § 440.230(c)............................................................................................... 3

STATUTES

42 U.S.C. § 1396 ........................................................................................................ 2

42 U.S.C. § 1396a(a)(3) ........................................................................................... 18

42 U.S.C. § 1396a(a)(5) ............................................................................................. 2

42 U.S.C. § 1396a(a)(8) ............................................................................................. 4

42 U.S.C. § 1396a(a)(17) ........................................................................................... 3

iv 42 U.S.C. § 1396d(a)(7) ............................................................................................. 3

42 U.S.C. § 1396w2 ................................................................................................... 2

42 U.S.C. § 1396-1..................................................................................................... 2

TEX. GOV’T CODE § 531.019(c) ................................................................................. 2

TEX. GOV’T CODE § 531.021(a) ................................................................................. 2

TEX. GOV’T CODE § 2001.171.................................................................................... 2

TEX. GOV’T CODE § 2001.174(2) ............................................................................. 16

TEX. GOV’T CODE § 2001.174(2)(E) ........................................................................ 30

TEX. HUM. RES. CODE § 32.0425 ............................................................................. 16

TEX. HUM. RES. CODE § 32.0425(a)(1) ...................................................................... 5

OTHER AUTHORITIES

RESNA Position on the Application of Wheelchair Standing Devices, Assistive Technology, 2009 ...................................................................................... 26

Sprigle S., Mauer C., Sorenblum S. Load Distribution in Variable Position Wheelchairs in People with Spinal Cord Injury. Journal of Spinal Cord Medicine, February 2010 ..................................................................... 25

TMPPM DME Handbook §2.2.2 ............................................................................... 4

2013 TMPPM DME Handbook §2.2.15.26 ............................................................. 16

v ISSUE PRESENTED

Whether the district court correctly determined that Jessica Lukefahr is entitled to Medicaid authorization of a custom power wheelchair with integrated standing feature because HHSC’s administrative decision denying this durable medical equipment is unsupported by substantial evidence and is arbitrary and capricious?

vi No. 03-15-00325-CV _________________________________

IN THE THIRD COURT OF APPEALS AUSTIN, TEXAS _________________________________

JESSICA LUKEFAHR, Appellee. _________________________________

On Appeal From The 345th Judicial District Court of Travis County, Texas Trial Court Case No. D-1-GN-14-002158 The Honorable Judge Stephen Yelenosky _________________________________

To the Honorable Third Court of Appeals:

This appeal arises out of a Medicaid hearing decision issued by the Texas

Health and Human Services Commission (HHSC) denying Jessica Lukefahr’s

request for Medicaid prior authorization of a custom power wheelchair with

integrated standing feature. HHSC App. B and C.1 Ms. Lukefahr filed a Petition

for Judicial Review in the Travis County District Court to challenge this denial.

1 Citations to the record are shown as: Court Record (CR) plus page number; Administrative Record (AR) plus page number; Hearing Recording (HR) plus time notations when testimony occurs; or Appendix (App.) plus page number, where applicable. 1 pursuant to TEX. GOV’T CODE §§ 531.019(c) and 2001.171 et seq. CR 3-37. The

trial court correctly reversed the agency’s decision, finding that “THHSC violated

the due process rights of Ms. Lukefahr and the decision denying Plaintiff a custom

power wheelchair with integrated standing feature is not supported by substantial

evidence and is arbitrary and capricious.” CR 226; HHSC App. A. The trial

court’s decision should be affirmed.

LEGAL FRAMEWORK OF THE MEDICAID PROGRAM

In 1965, Congress enacted Title XIX of the Social Security Act to establish

Medicaid, a federal-state program designed to provide medically necessary health

care to low income families and individuals with disabilities. 42 U.S.C. §§ 1396-

1396w2. The purpose of the Medicaid program is to enable states “to

furnish…rehabilitation and other services to help such families and individuals

attain or retain the capability for independence or self-care.” 42 U.S.C. § 1396-1.

State participation in Medicaid is optional, however, “once a state chooses to join,

it must follow the requirements set forth in the Medicaid Act and its implementing

regulations.” Wilder v. Virginia Hospital Association, 496 U.S. 498, 502 (1990).

The Centers for Medicare and Medicaid Services (CMS) provide federal

oversight of state Medicaid programs; however, each state must designate a single

state agency to administer its Medicaid program. 42 U.S.C. § 1396a(a)(5). HHSC

is the designated Medicaid agency in Texas. TEX. GOV’T CODE § 531.021(a). As

2 such, HHSC must comply with all federal Medicaid requirements when

promulgating rules or establishing policy and cannot delegate its authority on

program matters to its contracted entities. 42 C.F.R. § 431.10(e)(1). These

contracted entities, including the Texas Medicaid and Healthcare Partnership

(TMHP), must comply with all Medicaid requirements when approving or denying

health care services requested by eligible beneficiaries.

At issue in this case is the medical equipment benefit, a required component

of Medicaid’s home health category of service. 42 U.S.C. § 1396d(a)(7); 42 C.F.R.

§ 440.70(b)(3). While federal law does not presently define the term durable

medical equipment (DME), the Health Care Financing Administration (now CMS)

has issued official guidance concerning this mandatory Medicaid benefit. HHSC

App. H. Known as the DeSario Letter, this 1998 guidance clarified that state

Medicaid programs must comply with the Medicaid Act’s reasonable standards

requirement, 42 U.S.C. § 1396a(a)(17), and amount duration, and scope rule, 42

C.F.R. § 440.230(b-c), in administering their DME benefit.2 To do so, states must

establish a reasonable and meaningful procedure within the DME request and

appeal process for beneficiaries to seek exceptions to a State’s pre-approved list of

2 This policy guidance was issued in response to the Second Circuit’s erroneous decision in DeSario v. Thomas, which upheld Connecticut Medicaid’s categorical exclusions of certain items of DME. The Supreme Court vacated this decision stating: “[P]etition for certiorari granted. Judgment vacated, and case remanded to the United States Court of Appeals for the Second Circuit for further consideration in light of the interpretive guidance issued by the Health Care Financing Administration on September 4, 1998.” (emphasis added). Slekis v. Thomas, 525 U.S. 1098 (1999), vacating and remanding, DeSario v. Thomas, 139 F.3d 80 (2d Cir. 1998). 3 DME. This process must: (1) allow for individualized coverage decisions in

accordance with the state’s DME definition; (2) be timely and employ reasonable

and specific criteria by which an individual item of [DME] will be judged for

coverage under the home health services benefit; (3) be available to beneficiaries

and the public; and (4) include a fair hearing process that determines whether a

denial of DME is contrary to federal Medicaid requirements.

In 2013, CMS reaffirmed the continuing application of this federal policy

when it wrote to HHSC’s Medicaid Director to explain that Texas Medicaid must

provide DME when the requested item: (1) is a covered benefit; and (2) is

medically necessary for the individual requesting it. Lukefahr App. A; AR 515-

516. Once these criteria - coverage3 and medical necessity4 - are met by an eligible

beneficiary, HHSC or its contracted entity must prior authorize the requested item

of DME with reasonable promptness.5 42 U.S.C. § 1396a(a)(8); 42 C.F.R. §

435.930.

3 Medical equipment is covered by Medicaid if the item meets HHSC’s DME definitions. 1 TEX. ADMIN. CODE § 354.1031(b)(12), AR 523-524; TMPPM DME Handbook 2.2.2., AR 525-528. 4 DME is medically necessary when “required to correct or ameliorate the individual’s disability, medical condition, or illness,”or in exceptional circumstances, found to “serve a specific medical purpose.” TMPPM DME Handbook 2.2.2, AR 525. 1 TEX. ADMIN. CODE § 354.1039(a)(4)(D). HHSC App. D. 5 Several courts have established “reasonable” timeframes for Medicaid prior authorization procedures. See Ladd v. Thomas, 14 F. Supp. 2d 222, 225 (D. Conn. 1998) (approving 20 working days for DME prior authorization determinations); Kessler v. Blum, 591 F.Supp. 1013, 1031–32 (S.D.N.Y.1984) (imposing 21 day time limit); McMahon v. Minter, No. 3251 (Sup.Ct. Mass., Feb. 24, 1975) (approving consent decree establishing 15 day limit). 4 STATEMENT OF FACTS

Jessica Lukefahr was born with cerebral palsy and has spastic quadriplegia

with dystonia. AR 76; 82-89; 109-115; 571; 588, HHSC App. B, FOF No. 1. She

is 28 years old and lives on her own. She requires a custom power wheelchair for

all mobility and receives physical assistance with activities of daily living from

care providers several hours per day. AR 82; 571; 588, HHSC App. B, FOF No. 1.

In January 2013, Jessica was evaluated for a new custom power wheelchair

as her current chair is old and in disrepair.6 This assessment and supporting

documentation provided extensive information concerning Jessica’s physical

disability and the medical conditions she experiences as a result. AR 76; 79; 82-

89; 109-115. As explained, Jessica suffers from dystonia, a neurological condition

causing involuntary muscle contractions that result in ongoing back and lower leg

pain. She has osteopenia and is at increased risk for further loss of bone density

due to her lack of weight-bearing. Her respiratory system is compromised and she

experiences chronic constipation and urinary tract infections. Jessica is at increased

risk for pressure sores due to prolonged sitting in her wheelchair each day. This

6 Jessica’s wheelchair assessment was conducted by Michele Hays, PT and David Russell, ATP. Ms. Hays has been licensed to practice physical therapy in Texas for 30 years and is specifically certified to work with individuals who have cerebral palsy. HR 3:21:17-3:21:19; HR 3:22:09- 3:22:23. Mr. Russell is a certified Assistive Technology Professional (ATP) and a Qualified Rehabilitation Professional (QRP), as defined in TEX. HUM. RES. CODE § 32.0425(a)(1) and 1 TEX. ADMIN. CODE § 354.1040(b)(3). HR 6:15-6:48 (second day). 5 prolonged sitting also exacerbates her severe dysmenorrhea and menorrhagia,

causing excessive bleeding and blood clots during menstruation.

Jessica’s health care providers recommended she receive a custom power

wheelchair with integrated standing feature to:

allow[ ] weight bearing multiple times a day, which is essential to reducing osteoporosis, reducing the risk of joint contractures, facilitating normal bone growth and joint development…removes pressure from the scapulae, sacrum, coccyx, and ischial tuberosities [and] assists with digestion, respiration, and bowel/bladder management.

AR 82-89; 110. Her treating physician approved this evaluation and twice attested

to her medical need for a power wheelchair with integrated standing feature. AR

79-80; 377-378.

On March 18, 2013, Jessica’s DME supplier initiated HHSC’s DME request

process by submitting Jessica’s prior authorization request to TMHP.7 AR 376-

399; 571; 588, FOF No. 2. TMHP denied this request on March 21, 2013,

claiming that “Texas Medicaid does not cover mobile standers.” AR 571 and 588,

FOF No. 4; AR 367-372; AR 367-369. TMHP did not consider whether the

requested wheelchair was medically necessary for Jessica, but instead, informed

Jessica’s DME supplier this denial could be “appealed for exceptional

circumstances.” AR 55, Note 03/21/2013; 374-375. That same day, the supplier

7 HHSC’s two-step DME request process took more than six months to complete in Jessica’s case. 6 asked TMHP to reconsider this denial because TMHP had approved the same

wheelchair as a covered home health benefit for other clients. AR 364. HR 9:31-

10:00; 11:03-11:18(second day). In response, TMHP claimed that no DME

request form had been submitted and requested a copy of this document. AR 362.

Although this form had been submitted to TMHP on March 18th, AR 376-378, the

DME supplier resubmitted the entire prior authorization request on March 25,

2013, with a statement explaining why TMHP’s earlier denial was incorrect. AR

336-361. Despite TMHP’s request for resubmission of these documents, they

returned them on March 28, 2013, stating “TMHP considers this submission a

duplicate request.” AR 309.

On April 16, 2013, the DME supplier again wrote to TMHP explaining this

was not a duplicate request and their claim that “Medicaid does not offer funding

for standing power wheelchairs” was contradicted by previous authorizations he

had received for this same wheelchair. AR 277. Additional information from the

physical therapist supporting Jessica’s medical and functional need for the

recommended wheelchair was also provided. AR 288-293. TMHP responded on

April 19, 2013, and repeated their claim that this submission was a duplicate

request. AR 242.

Jessica’s DME supplier filed an exceptional circumstances appeal on June 3,

2013, and submitted all requested documentation, including an addendum to the

7 initial letter of medical necessity explaining in detail the reasons a custom power

wheelchair with standing feature was recommended for Jessica. This explanation

included Jessica’s diagnoses and current functional status, the secondary medical

conditions she faces as a result of prolonged sitting in her wheelchair each day, her

medical need to stand multiple times each day at home and in the community, and

the underlying rationale for ruling out alternative items of DME. AR 174-207;

208-241; 571; 589, HHSC App. B., FOF No. 7. Specifically, Jessica’s physical

therapist and physician explained why Jessica cannot use a separate stander to

address her medical and functional need to stand. AR 145, ¶2-4.

TMHP returned Jessica’s exceptional circumstances appeal on June 6, 2013,

claiming they had not received all required information. AR 173. The DME

supplier agreed to resubmit the documentation previously provided to TMHP and

did so on June 13, 2013. AR 120-172. On June 18, 2013, TMHP voided the

appeal, informing the DME supplier that Jessica’s request form was now more than

90 days old and could not be processed until a new form was provided. AR 55,

Note #2, 06/18/2013. On June 27, 2013, the DME supplier submitted Jessica’s

exceptional circumstances appeal to TMHP for a third time. AR 71-126. TMHP

confirmed that all information had been received and was “in review” on July 2,

2013. AR 69-70.

8 On July 5, 2013, a pediatrician working for TMHP recommended that

HHSC deny Jessica’s wheelchair request. AR 56, Note #1, 07/05/2013. More than

six weeks passed before TMHP forwarded this appeal to HHSC’s Office of

Medical Director (OMD) for a final determination of Jessica’s eligibility for the

recommended wheelchair.8 AR 483-484. HHSC denied the appeal on September

11, 2013, and subsequently notified TMHP of this decision. AR 491-493.

On September 12, 2013, TMHP issued a second denial notice and identified

four reasons for this adverse action. HHSC App. F, AR 58-60; 66-67; 571; 589;

HHSC App. B, FOF No. 10. First, TMHP claimed that “the main reason for

requesting a standing power was not for treatment of your medical condition” . . .

the “main reason for requesting a standing power wheelchair was to help you

progress at work.” Next, TMHP asserted that the “papers did not show you can

tolerate standing for longer periods of time, which limits your ability to benefit

from a standing program.” TMHP then claimed the “papers did not show you can

perform tasks over and over again using your arms against gravity.” Finally,

TMHP maintained that “the papers did not state why a static stander that you could

transfer into and out of would not meet your medical needs.” AR 59 ¶ 4. The

notice further stated that “[b]ecause the standing feature on the power wheelchair

would not serve a specific medical purpose for you, it could not be approved under

8 Jessica’s attorney wrote to HHSC on September 3, 2013, to inquire about the status of her exceptional circumstances appeal. AR 485-486. HHSC denied the appeal shortly thereafter. 9 the exceptional circumstances provision of 1 TEX. ADMIN. CODE §

354.1039(a)(4)(D).” AR 59 ¶5.

Jessica requested a Medicaid fair hearing on September 20, 2013, and waited

nearly six months for the hearing to be held.9 At the hearing, HHSC offered the

testimony of two nurses.10 The first witness, Donna Claeys, is an HHSC employee

who did not deny Jessica's wheelchair request, but who, nonetheless, appeared at

the hearing to explain this denial. Ms. Claeys testified that neither HHSC nor

TMHP have any written criteria for determining whether a wheelchair with

integrated standing feature will “serve a specific medical purpose,” HR 1:14:04-

1:14:43, and further admitted she did not know what medical necessity standard

was applied in Jessica’s case or what research was relied upon in reaching the

decision to deny her request. HR 1:13:30-1:13:43; 1:12:57-1:13:10. She also

testified that none of the medical purposes for which Jessica’s medical

professionals recommended a standing wheelchair - - the alleviation of chronic

pain, the reduction of bone density loss, the reduction of spasticity and attendant

contractures, improved respiratory function, the reduction of chronic constipation,

9 HHSC’s rule requires Medicaid hearing decisions to be issued within 90 days from the date the appeal request is received. 1 TEX. ADMIN. CODE § 357.23(a). In the present case, more than nine months elasped between Jessica’s hearing request and the date of HHSC’s hearing decision. 10 At the hearing, HHSC had the burden to prove by a preponderance of the evidence that the four reasons for denial identified in TMHP’s notice of adverse action were factually accurate and fully supported the agency’s decision that no medical purpose would be served for Jessica by a custom power wheelchair with integrated standing feature. 1 TEX. ADMIN. CODE § 357.9; 1 TEX. ADMIN. CODE § 354.1039(a)(4)(D). HHSC App. D. 10 and a decrease in the risk of skin breakdown - - justified approval of a wheelchair

with integrated stander. HR 1:14:45-1:17:14. When asked to identify a medical

purpose that could justify such approval, HHSC’s nurse stated “I have not

researched that to be able to answer” HR 1:19:30-1:19:35, and “I would need to get

that from [HHSC’s physician].” HR 1:17:16-1:17:29. Importantly, this witness

agreed that Jessica’s documentation established she has a medical need to stand.

However, she also claimed this same documentation “did not speak to the specific

component and the need for the stander to be part of a wheelchair.” HR 1:02:11-

1:02:34.

HHSC’s second witness, Patricia Cannizzaro, is an employee of TMHP and

offered testimony similar to that of HHSC’s nurse.11 She agreed there are no

written criteria for determining whether a wheelchair with integrated stander is

medically necessary and stated she did not know what criteria were applied to deny

Jessica’s wheelchair request. HR 2:59:31- 3:06:02; HR 2:58:37 - 2:58:42. She also

claimed “there was no documentation in the information that was submitted that

ruled out why a static stander could not meet her needs.”12 HR 3:11:53-3:12:08.

As with HHSC’s first witness, the TMHP witness did not acknowledge that

Jessica’s wheelchair evaluation and the letter of medical necessity provided by her

11 Like Ms. Claeys, TMHP’s nurse did not make the decision to deny Jessica’s wheelchair request. HR 2:58:27-2:58:31. 12 The terms “static stander” and “separate stander” are used interchangeably throughout this brief. 11 physician and physical therapist explained that “[n]either a posture control walker

nor a static stander can provide the ongoing access to standing that Jessica requires

to avoid the secondary medical complications that result from prolonged

wheelchair sitting.” AR 145, ¶2-4.

Both Jessica’s physical therapist and the QRP testified at the hearing

concerning Jessica’s numerous medical conditions and her medical and functional

need for the recommended wheelchair. For example, the therapist described how

Jessica’s dystonia “creeps up her legs, it reaches her trunk and causes spasticity of

the diaphragm and all of the respiratory muscles making it very difficult for her to

breathe at times.” HR 3:25:40-3:25:59. In explaining her professional opinion that

the recommended wheelchair will ameliorate or lessen the effects of Jessica’s

dystonia, the physical therapist testified that if Jessica can stand whenever the

dystonia starts, she can “stop it in its tracks. And by stopping it, she also stops the

back pain that comes with it, respiratory compromise and so forth.” HR 3:30:05-

3:31:20.

As to Jessica’s bone loss, the therapist testified that “bones respond to the

stresses applied to them so a lack of standing, lack of walking means that the bones

become weaker, softer, they are more susceptible to fractures.” HR 3:26:05-

3:26:19. She further explained that frequent daily standing will reduce ongoing

bone loss and help Jessica avoid pathologic fractures. HR 3:32:00-3:32:19. The

12 same is true for Jessica’s chronic constipation, urinary tract infections,

dysmenorrhea and menorrhagia, and the development of contractures, as all of

these conditions can be ameliorated by frequent daily standing, which she can only

achieve with the recommended wheelchair. HR 3:26:27-3:26:47; HR 3:26:58-

3:27:17; HR 3:27:39-3:28:18; HR 3:28:25-3:28:37.

Jessica’s physical therapist also offered further explanation as to why a

separate stander would be ineffective in addressing Jessica’s medical conditions:

[T[he static stander stays in one location and Jessica travels in her day-to-day activities, and she doesn't know when the dystonia if going to kick in because of fatigue or because she’s driven across a rough terrain in her power wheelchair. She doesn’t know when it is going to kick in. And by having the integrated stander, when she feels it kick in, to start, she can immediately change into a standing posture and alleviate the dystonia or any back pain or respiratory compromise that is going on. HR 3:37:56-3:38:50.

On May 13, 2014, HHSC issued its decision sustaining TMHP’s denial of

the recommended wheelchair. HHSC App. B, AR 563-574. This decision contains

twelve Findings of Fact, none of which address the reasons for denial identified in

TMHP’s September 12th notice of adverse action.13 AR 58-60. The hearing

officer’s single Conclusion of Law states that:

Because mobile standers, power standing systems on a wheeled mobility device are not a benefit of Home Health Services and

13 While acknowledging Jessica’s medical need to stand, this decision did not address the central question whether HHSC had offered probative medical evidence refuting the professional opinions of Jessica’s treating health care providers that a wheelchair with integrated standing feature would serve numerous medical purposes for her. 13 exceptional circumstances for DME were not met, the decision by TMHP to deny Appellant a Permobil C500 VS power wheelchair with integrated standing feature and seat elevation system WAS in accordance with applicable law and policy, therefore the agency’s action is SUSTAINED. (emphasis in original) HHSC App. B.

A timely request for administrative review was filed pursuant to 1 TEX.

ADMIN. CODE § 357.703. AR 592-594. HHSC’s final decision was issued on June

17, 2014, and contained the same twelve Findings of Fact and single Conclusion of

Law issued by its hearing officer. HHSC App. C, AR 580-591. The reviewing

attorney did not address the legal issues raised by Jessica, including the protracted

nature of HHSC’s benefit request procedures and untimely hearing process.

Jessica filed a Petition for Judicial Review in the Travis County District

Court on July 14, 2015, challenging HHSC’s hearing decision. CR 3-37. The

district court reversed the agency’s decision, finding that “the decision denying

Plaintiff a custom power wheelchair with integrated standing feature is not

supported by substantial evidence and is arbitrary and capricious.” CR 226; HHSC

App. A. HHSC subsequently filed this appeal.

SUMMARY OF ARGUMENT

The district court’s decision reversing HHSC's denial of Jessica’s request for

Medicaid authorization of a custom power wheelchair with integrated standing

feature is correct and should be affirmed. As the district court determined,

HHSC’s administrative decision is not supported by substantial evidence and is

14 arbitrary and capricious. At the Medicaid fair hearing, HHSC had the burden to

prove by a preponderance of the evidence that its reasons for denying Jessica’s

wheelchair request, as identified in TMHP’s notice of adverse action, were

factually accurate and that these reasons supported the agency’s determination that

the recommended custom power wheelchair with integrated standing feature would

not serve a medical purpose for her. 1 TEX. ADMIN. CODE § 354.1039(a)(4)(D).

HHSC failed to meet this burden as its witnesses offered no probative medical

evidence refuting the professional opinions of Jessica’s treating health care

providers as to the numerous medical purposes served by the recommended

wheelchair and their opinion that no alternative item of DME would meet Jessica's

medical need to stand throughout the day, at home and in the community.

HHSC’s hearing decision is also arbitrary and capricious in that it is not

grounded in any factual evidence within the administrative record. Not one of the

agency’s twelve Findings of Fact in the hearing decision identifies any evidence

provided by HHSC that refutes the professional opinion of Jessica’s medical

providers that she requires a custom power wheelchair with integrated standing

feature to meet her medical and functional need to stand numerous times

throughout the day at home and in the community. HHSC’s hearing decision

cannot stand in the absence of such evidence. State law requires that an agency

decision be reversed when substantial rights of the appellant have been prejudiced

15 by the agency’s administrative findings, inferences, conclusions or decision. TEX.

GOV’T CODE §2001.174(2). The district court’s reversal of HHSC’s administrative

decision was correct and should be affirmed.

ARGUMENT

I. The District Court Correctly Determined that Jessica Lukefahr is Entitled to Medicaid Authorization of a Custom Power Wheelchair with Integrated Standing Feature because HHSC’s Administrative Decision Denying this Durable Medical Equipment is Unsupported by Substantial Evidence and is Arbitrary and Capricious.

The district court correctly concluded that HHSC’s hearing decision denying

Jessica’s request for a custom power wheelchair with integrated standing feature

“is not supported by substantial evidence and is arbitrary and capricious.” HHSC

App. A. The reason for the court’s decision is clear - - the single conclusion of law

sustaining HHSC’s denial of exceptional circumstances finds no support in the

administrative record.14 As explained by the court:

The twelve findings do not provide any underlying facts to support the conclusory statement that “[b]ased on the findings of fact and applicable authority…the exceptional circumstances were not met.” HHSC App. A, p. 3.

14 In the district court, Jessica also argued that HHSC’s conclusion that an integrated standing feature is not a benefit of home health was erroneous as the hearing officer failed to apply the correct test for DME coverage, as explained by CMS in its 2013 letter to the Texas Medicaid Director. Lukefahr App. A. This issue need not be resolved to affirm the district court’s decision and is not repeated herein. Suffice it to say, by statute and rule, Texas Medicaid covers custom wheelchairs with “specialized or complex components.” TEX. HUM. RES. CODE § 32.0425; 1 TEX. ADMIN. CODE § 354.1040. It is only TMHP policy that conflicts with state law and excludes integrated standing features from Medicaid coverage. 2013 TMPPM DME Handbook, §2.2.15.26. AR 468. 16 HHSC’s claim that “properly supported findings of fact support the

decision” is erroneous. HHSC’s Brief, p. 18. No such findings of fact were made

by HHSC’s hearing officer as the administrative record contains no probative

medical evidence supporting the agency’s decision.15 HHSC’s further claim that

“Ms. Lukefahr was unable to ‘medically substantiate’ that an integrated stander

‘would serve a specific medical purpose’ in her individual case…” is erroneous.

HHSC's Brief, p.3. To the contrary, this is precisely what Jessica’s medical

evidence established and HHSC wholly failed to refute this evidence.

A. HHSC Failed to Meet its Burden of Proof at the Fair Hearing.

At the hearing, HHSC had the burden to prove by a preponderance of the

evidence that its reasons for denying Jessica’s wheelchair request, as identified in

TMHP’s notice of adverse action, were factually accurate and that these reasons

supported the agency’s determination that the recommended custom power

wheelchair with integrated standing feature would not serve a medical purpose for

her. 1 TEX. ADMIN. CODE § 357.9; 1 TEX. ADMIN. CODE § 354.1039(a)(4)(D).

This connection between the agency’s denial notice and its final

administrative decision is grounded in the basic due process protections afforded

Medicaid beneficiaries. Due process dictates that HHSC provide legally sufficient

notice, which includes “the reasons for the intended action” when denying a

15 References to the hearing officer’s decision include the decision of the reviewing attorney as they are essentially the same. HHSC App. B and App. C. 17 beneficiary’s request for health care services. 42. U.S.C. § 1396a(a)(3); 42 C.F.R

§§ 431.210(b) and (c). The reason for this detailed notice was explained in Gray

Panthers v. Schweiker, 652 F. 2d 146, 158 (D.C. Cir. 1980):

It is universally agreed that adequate notice lies at the heart of due process. Unless a person is adequately informed of the reasons for denial of a legal interest, a hearing serves no purpose and resembles more of a scene from Kafka than a constitutional process. Without notice of the specific reasons for denial, a claimant is reduced to guessing what evidence can or should be submitted in response and is driven to responding to every possible argument against denial at the risk of missing the critical one altogether.

It necessarily follows that TMHP’s denial notice established the framework

for the hearing and administrative review decisions. As the district court correctly

noted, HHSC’s reasons for denying Jessica’s wheelchair request form the

“common thread that runs through [each stage of this case] - the fair hearing, the

administrative review, and judicial review.” CR 221; HHSC App. G, p. 1. The

court did not “elevate” the due process required in this case as HHSC contends.16

HHSC Brief p. 6, n. 2; p. 26, n. 12 The court simply acknowledged Jessica’s due

process right to legally adequate notice and held the agency accountable for its

failure to prove the reasons for denial identified in this notice. AR 58-60.

16 HHSC cites no case law or other authority to support its claim that the “informal nature” of a Medicaid fair hearing somehow alters the due process that must be afforded Medicaid beneficiaries. HHSC Brief, p. 26, n.12. The same is true regarding HHSC’s suggestion that “traditional due process” allows for a hearing decision that is not tied to the denial notice. HHSC Brief, p. 6, n.2. To the contrary, the district court’s “common thread” statement is entirely consistent with “traditional” due process. See Goldberg v. Kelly, 397 U.S. 254 (1970); 42 U.S.C. § 1396a(a)(3); 42 C.F.R §§ 431.210(b) and (c). 18 As explained above, TMHP identified four reasons for denying Jessica’s

exceptional circumstances appeal. See pp.9-10 above. Three of these four reasons

- that the wheelchair was requested to help Jessica progress at work, that she is

unable to tolerate a standing program, and that she cannot move her arms against

gravity - were abandoned early in the hearing when HHSC’s first witness agreed

that Jessica has a medical need to stand.17 According to her sworn testimony, “a

standing program is important to address the concerns that have been presented

today. All of that documentation justifies standing…”18 HR 1:26:55 - 1:27:12. As

the district court correctly noted, HHSC’s concession of Jessica’s medical need to

stand “narrow[ed] the question to whether a static stander suffices, or instead, only

a mobile stander meets medical necessity.” CR 222; HHSC App. G, p. 2.

HHSC offered no evidence at the fair hearing to refute the professional

opinion of Jessica’s treating medical providers on this salient point. Notably,

neither of HHSC’s witness testified that a wheelchair with integrated standing

feature is not medically necessary as neither is qualified under Texas Medicaid’s

requirements to determine Jessica’s clinical need for a power wheelchair with

17 TMHP identified these three reasons as support for its initial determination that Jessica does not have a medical or functional need to stand. HHSC abandoned this claim at the fair hearing. 18 From the outset, this case has been about Jessica’s medical need to stand. The agency now suggests that Jessica’s medical need is to “change position frequently” which, they claim, can be accomplished with non-standing wheelchair components. HHSC Brief p. 23. This assertion has no support in the administrative record and contradicts the testimony of HHSC's witness who affirmed Jessica's medical need to stand. 19 custom components.19 HHSC’s claim that Ms. Claeys offered such testimony is

incorrect. HHSC’s Brief, p.8. Instead, she erroneously testified that Jessica’s

documentation “did not speak to the specific component and the need for the

stander to be part of a wheelchair.” HR 1:02.11-1:02.34.

TMHP’s employee also erroneously testified “there was no documentation

in the information that was submitted that ruled out why a static stander could not

meet her needs.”20 HR 2:59:31-3:60:02. However, Jessica’s documentation

readily disproves the testimony of HHSC’s witnesses. The wheelchair evaluation

and letter of medical necessity provided by Jessica’s physician and physical

therapist specifically explained why a separate stander would not meet Jessica’s

medical and functional need to stand:

It is important to note that Jessica requires moderate assistance from a care provider to use a posture control walker or static stander and she does not have continuous access to care providers to provide the assistance she needs to use these separate devices. In contrast, the recommended wheelchair with standing feature will enable Jessica to independently stand in any location in her home or when she is in the community. . .

19 By rule, HHSC requires that a licensed physical or occupational therapist, in conjunction with a qualified rehabilitation professional (QRP) conduct a clinical assessment of a beneficiary seeking a custom wheelchair from Texas Medicaid. 1 TEX. ADMIN. CODE § 354.1040(c)(1-4). AR 109-115. 20 HHSC suggests there is some significance to the fact that “no prior authorization request for a static stander has been submitted to Texas Medicaid.” HHSC Brief p.9. While this fact is true, it is also irrelevant. There also was no prior authorization request for a postural walker as Jessica’s medical professionals determined that both of these items of DME will not meet her medical and functional need to stand. And as the district court correctly noted, this point was not identified as a reason for the denial in TMHP’s notice to Jessica. CR 222, HHSC App.G, p. 2, n. 3. 20 There is no alternative item or combination of items of DME that will address all of Jessica’s medical and functional needs and promote her health and well-being. Neither a posture control walker nor a static stander can provide the ongoing access to standing that Jessica requires to avoid the secondary medical complications that result from prolonged wheelchair sitting. Nor do these devices afford Jessica the ability to stand where she can perform activities of daily living or accomplish other functional tasks. AR 145, ¶2-4.

This documentation also disproves HHSC’s current suggestion that Jessica’s

physician stated she could independently transfer to a separate stander. HHSC’s

Brief, p.7, n.4. As noted above, both Jessica’s physical therapist and physician

were clear that Jessica requires caregiver assistance to transfer to a separate

standing device. AR 145. Her limited ability to transfer to and from her

wheelchair with use of the chair’s transfer bars does not alter the fact that she

cannot transfer into a separate stander as the point of entry is different for these

two items of equipment, as is the transfer process. Moreover, Jessica testified

under oath that she cannot self-transfer into a separate stander and would require

assistance from a personal care provider to use this device.21 HR 35:17-35:32

(second day). She further testified that a separate stander would not meet her

needs because “it cannot be moved and it cannot go with you.” HR 35:57-35:60.

HHSC offered no evidence at the fair hearing that refuted Jessica’s testimony or

that of her physician and physical therapist on this point.

21 Jessica also testified about transfer injuries she has experienced in the past, including a broken metatarsal in her right foot that required surgery to correct. HR 36:01-36:28 (second day). 21 Jessica’s physical therapist also testified at the fair hearing and again

explained why a separate stander would be ineffective in addressing her medical

conditions:

[T[he static stander stays in one location and Jessica travels in her day-to-day activities, and she doesn’t know when the dystonia if going to kick in because of fatigue or because she’s driven across a rough terrain in her power wheelchair. She doesn’t know when it is going to kick in. And by having the integrated stander, when she feels it kick in, to start, she can immediately change into a standing posture and alleviate the dystonia or any back pain or respiratory compromise that is going on. HR 3:37.56- 3:38.50.

She further testified that a separate stander would not address Jessica’s

functional need to stand. In response to the question whether a wheelchair with an

integrated standing feature and a separate stander would be equally effective in

helping Jessica perform activities of daily living, Jessica’s therapist responded:

No. It’s the functional component, the static stander stays in one location. If it’s in the living room, it stays in the exact two foot square. The power wheelchair with integrated stander is able to move to the different parts of the apartment where she can use the standing at the bathroom mirror to get herself ready for work, to reach into the cabinet to get her medicines, to take them at the appropriate time. To be able to stand safely and cook a meal, reach into her cupboards in the kitchen, those were the things I’ve tried to paint a picture of in the documentation. HR 3:40.56-3:41-22.

I think it will help her certainly to cook on a stovetop. Currently from her power wheelchair, she’s not able to see into a low pot to see, you know, whether it's boiling or not. She’s at greater risk of sustaining burns because the pot is going to tip over onto her. She can perform oral hygiene, address her hair, all of those things far better in a standing position at the bathroom counter than in a seated position.

22 Upper body dressing can be made easier in a standing position.22 HR 3:44.18-3:45.12.

HHSC’s claim that the TMHP nurse testified that Jessica “has a medical need

to stand for one hour a day, five days per week to strengthen her muscles” is also

incorrect. HHSC Brief, p. 8. This was not her testimony as she has never seen

Jessica and is not qualified to prescribe a standing regimen for her. In fact, her

testimony was limited to explaining her understanding of certain research studies

addressing the positive effect of standing on bone density.23 Importantly, this

witness failed to refute the professional opinion of Jessica’s treating health care

providers that a static stander will not meet Jessica’s medical or functional need to

stand numerous times throughout the day to address her many medical conditions,

22 Jessica also testified she could perform activities of daily living with the recommended wheelchair: Well, I could reach my cabinets for things such as kitchen utensils and pots and pans. I could actually use my oven to cook because in my current chair, I am only in the seated position so I am not able to open and close the oven door or operate the oven. I also have a top-loading washer and dryer for my laundry and I cannot operate those by myself because I cannot reach them. Also, I could get into and out of my pantry and my medicine cabinet and access mirrors and that sort of thing that I cannot access at this time, with my current chair. HR 31:54-32:31 (second day) 23 The nurse's actual testimony was: And the literature that’s out there shows that it does help with preventing - - the static standers help with - - preventing loss of bone density and that the - - - - usually it’s like approximately an hour a day or more, at least five times a week is the level that is considered to meet a therapeutic need. 23 including the dystonia that can occur anywhere, at any time, but can be “stop[ped]

in its tracks” by standing.24 HR 3:36.56-3.37:03.HR 2:07.02-2:07.31.

Nor did the TMHP witness testify that the features on Jessica’s current

wheelchair will meet her medical needs as HHSC now claims. HHSC Brief, p. 23.

As previously explained, TMHP's nurse is not qualified to identify alternative

treatment for Jessica’s numerous medical conditions as she is not a physical

therapist or physician and has never even seen Jessica. And, as found by the

district court, HHSC’s concession that standing is medically necessary for Jessica

negates any argument that other non-standing wheelchair features, like tilt and

recline, will suffice.25 CR 222; HHSC App. G, p.2.

In the absence of any probative testimony from qualified medical providers

rebutting the opinions of Jessica’s health care professionals, HHSC seeks support

for the agency’s decision in Ms. Cannizzaro’s interpretation of the medical

literature included in Jessica’s exceptional circumstances appeal.26 HHSC’s Brief,

p. 10. This testimony is of no consequence for two reasons. First, as this witness

acknowledged at the hearing, TMHP did not identify any perceived deficiency in

the medical literature as a basis for the denial in its notice of adverse action to

24 Jessica also addressed the unpredictability of the onset of her dystonia and her need to address the resulting pain while away from home. HR 31:10-31:34 (second day). 25 At the fair hearing, Ms. Cannizzaro conceded that TMHP’s conclusion that Jessica is unable to benefit from a standing program was “a little incorrect.” HR 3:08:54-3:09:20. 26 HHSC’s hearing officer did not identify any medical literature as a basis for his decision. HHSC App. B. 24 Jessica. HR 2:24:28-2:24:44. Second, her interpretation of the literature was

patently incorrect. Specifically, she testified that a research study entitled Load

Distribution in Variable Position Wheelchairs in People with Spinal Cord Injury,

“concludes that standing in a static stander or the use of tilt and recline features can

prevent skin breakdown…and did not indicate that both were needed.”27 HHSC’s

Brief, p. 10. This is inaccurate as this study investigated the effectiveness of three

wheelchair positioning features - tilt, recline, and standing - in reducing pressure on

the user’s seat and back. Use of a separate stander was not part of the study or its

findings. Importantly, the researchers determined that wheelchair “standing was the

only configuration that decreased loads off of the seat and backrest

simultaneously… .” They did not conclude that these wheelchair components offer

the same benefits as HHSC now contends. HHSC Brief, p.24. Regardless of Ms.

Cannizzaro’s erroneous testimony about this research study, HHSC failed to

provide any medical evidence that a wheelchair with a tilt/recline feature will

alleviate Jessica’s dystonia and resulting pain and respiratory compromise, reduce

the risk of contractures, stop the further loss of bone density, decrease constipation,

or address the pain associated with severe dysmenorrhea and menorrhagia.

27 See Sprigle S, Mauer C, Sorenblum S. Load redistribution in Variable Position Wheelchairs in People with Spinal Cord Injury. Journal of Spinal Cord Medicine, February 2010; 33(1):58-64. AR 197-203.

25 TMHP’s testimony concerning an article entitled RESNA Position on the

Application of Wheelchair Standing Devices was also erroneous. Dismissing this

report as an “opinion paper,” HHSC's witness failed to acknowledge that it was

published in the peer-reviewed journal Assistive Technology, 21;161-168 (2009),

and is based upon a review of more than 40 relevant studies concerning the medical

effects of standing for individuals with severe mobility disabilities. In fact, this

review describes “evidence from the literature supporting the use of wheelchair

standers” and explains that “wheelchair standing devices are often medically

necessary, as they enable certain individuals to: …maintain vital organ

capacity…maintain bone mineral density…reduce abnormal muscle tone and

spasticity, reduce the occurrence of pressure sores…and skeletal deformities.”28

AR 90-91.

On appeal, HHSC repeatedly claims that “the evidence showed that a static

stander would meet [Jessica’s] medical needs” but completely fails to identify any

probative evidence in the record on this point. For example, HHSC cites TMHP’s

denial notice as support for this claim, but a denial notice is not proof of the

assertions made therein. HHSC’s Brief, pp. 19, 20. Rather, it identifies the

reasons for denial that HHSC must establish at the hearing in order to meet its

burden of proof.

28 Contrary to HHSC’s claim, its nurse did not directly address either of these articles in her testimony. HHSC Brief. p. 10. 26 Moreover, HHSC claims that its witnesses testified that a separate stander

would meet Jessica’s medical need to stand, HHSC Brief, p.19, but this is not what

their testimony states. As explained above, both witnesses erroneously testified

that Jessica’s documentation did not rule out why a static stander could not meet

her needs. But, in fact, Jessica’s documentary evidence and the sworn testimony

offered by her medical providers did exactly that and HHSC’s witnesses failed to

rebut this evidence.

Importantly, HHSC’s hearing officer cannot simply ignore the medical

evidence provided by Jessica’s treating medical providers and the agency’s failure

to refute this evidence. A longstanding principle of the Medicaid program holds

that treating medical providers must play a central role in determining the medical

necessity of requested services. As stated in the legislative history of the Medicaid

Act:

The committee’s bill provides that the physician is to be the key figure in determining utilization of health services - and provides that it is a physician who is to decide upon admission to a hospital, order tests, drugs and treatments, and determine the length of stay. For this reason the bill would require that payment could be made only if a physician certifies to the medical necessity of the services furnished.

S.Rep. No. 404, 89th Cong., 1St Sess., reprinted in 1965 U.S.C.C.A.N. 1943. See

also Weaver v. Reagan, 886 F.2d 194, 200 (8th Cir. 1989) (finding that “[t]he

Medicaid statute and regulatory scheme create a presumption in favor of the

medical judgment of the attending physician in determining the medical necessity 27 of treatment.”); Pinneke v. Preisser, 623 F.2d 546, 550 (8th Cir. 1980) (stating that

“[t]he decision whether or not certain treatment or a particular type of surgery is

‘medically necessary’ rests with the individual recipient’s physician and not with

clerical personnel or governmental officials.”)

The professional opinion of Jessica’s medical providers that a wheelchair

with integrated standing feature will serve numerous medical purposes for her is

controlling in light of HHSC’s failure to rebut this evidence. In Johnson v. Minn.

Dept. of Human Servs., 565 N.W. 2d 453,458 (Minn. App. 1997), the court

rejected the state Medicaid agency’s claim that a separate stander was adequate to

meet a Medicaid beneficiary’s medical needs in lieu of a wheelchair with

integrated standing feature. There, the plaintiff was unable to access a separate

stander without caregiver assistance and was at risk of transfer injuries each time

he was moved in and out of his wheelchair. Given these facts, the court found that

a wheelchair with integrated standing feature was medically necessary for him.

The same is true in the present case. A separate stander will not meet

Jessica’s medical need to stand to alleviate pain or to address the numerous other

medical conditions she experiences. HR 3:42.18-3:42.40. As the district court

correctly noted, “[t]here is no evidence rebutting [Jessica’s] treating physician’s

statement that she would need assistance from a care provider to use a static

28 stander or the fact that she does not have a care provider throughout the day.” 29

CR 224; HHSC App. G, p. 4. Nor is there any explanation how a separate stander

would provide relief when Jessica cannot access this device away from home.

The Eleventh Circuit’s decision in Moore v. Reese, 637 F.3d 1220 (11th Cir.

2011), provides no support for HHSC’s failure to refute Jessica’s medical evidence

in this case.30 In Moore, the court examined the respective roles of a beneficiary’s

treating health care provider and the state in determining medical necessity for

Medicaid services. Rejecting the state’s claim that it should have the last word on

medical necessity, the Court noted that “[w]hile Congress could have conferred the

‘final arbiter’ role to the state, it did not.” Id at 1259. Here, too, HHSC cannot be

the final arbiter of Jessica’s medical need for a custom power wheelchair with

integrated standing feature in the absence of any credible medical evidence

refuting the professional opinions of her treating health care providers.

The district court’s decision concerning the evidence in this case was not a

close call. As explained, “the question for the court then is reduced to whether

there is substantial evidence to support THHSC’s claim that a static stander can

meet [Jessica’s] medical needs or to support its claim that she is physically

29 In contrast, Jessica was able to independently stand using a Permobil C500 VS during the evaluation, AR 571; HHSC App. B, FOF No. 6, and to perform numerous activities of daily living with this wheelchair. 30 Nor does Beal v. Doe, 432 U.S. 438 (1977), support HHSC’s position. To the contrary, the Court specifically noted that “[s]erious statutory questions might be presented if a state Medicaid plan excluded necessary medical treatment from its coverage…” Id. at 444. Yet, this is precisely what HHSC has done concerning custom wheelchairs with integrated standing features. 29 incapable of benefitting from a mobile stander.” HHSC App. G, p. 4. “The

‘substantial evidence’ test provides that a court reviewing an agency action shall

reverse and remand the cause to the agency when substantial rights of the appellant

have been prejudiced and the agency’s findings are not reasonably supported by

substantial evidence considering the reliable evidence in the record as a whole. Id.

at § 2001.174(2)(E). Texas Rivers Prot. Ass’n v. Texas Natural Res. Conservation

Comm’n, 910 S.W.2d 147, 154 (Tex. App. 1995), writ denied (Apr. 12, 1996).

This is precisely what the district court did in this case when it determined that

HHSC failed to rebut the evidence of Jessica’s treating medical providers

concerning her medical need to stand numerous times throughout the day with the

use of a wheelchair with integrated standing feature. The district court’s

determination that HHSC’s hearing decision is not supported by substantial

evidence is correct and should be affirmed.

B. The Hearing Officer’s Findings of Fact Do Not Support HHSC’s Final Decision.

Proper findings of fact, which are more than a “mere conclusion or a recital

of evidence” are required to support HHSC’s administrative decision. Texas

Health Facilities Comm’n v. Charter Med.-Dallas, Inc., 665 S.W.2d 446, 451

(Tex. 1984) (citations omitted). The agency’s hearing officer issued twelve

Findings of Fact to explain his ultimate conclusion that “exceptional circumstances

were not met” in this case. However, not one of these twelve Findings identifies 30 any evidence provided by HHSC that refutes the professional opinion of Jessica’s

medical providers that she requires a custom power wheelchair with integrated

standing feature to meet her medical and functional need to stand numerous times

throughout the day at home and in the community. HHSC’s claim that “[t]he

district court erred in finding that the hearing officer failed to make findings of

fact” is itself erroneous as this is not what the court said. HHSC Brief p. 28.

Rather, the district court explained the agency’s Findings this way:

Of the twelve Findings of Fact, six merely recite the procedural history of the case. Of the remaining six, one references the absence of a prior authorization evaluation that was not required or related to medical necessity. Two others identify Ms. Lukefahr’s current wheelchair and the inseparability of the standing feature on the wheelchair requested, both of which are immaterial. (Ms. Lukefahr has not requested a wheelchair without a mobile stander.) Two support Ms. Lukefahr’s position. The first concedes that a static stander is a medical necessity for Ms. Lukefahr, which negates any argument that a tilt/recline, a posture control walker, or other non-standing features will suffice. It narrows the question to whether a static stander suffices or, instead, only a mobile stander meets medical necessity. The second favors Ms. Lukefahr by conceding she can fully operate the requested wheelchair. The final Finding recites the conclusion of THHSC’s OMD that the requested chair was not medically necessary. This is not a factual finding arising from the hearing; it is a pre- existing fact and the reason for the hearing. (emphasis in original).

Ultimately, the district court determined that “[t]he twelve Findings do not provide

any underlying fact to support the conclusory statement that ‘based on the finding

of fact and applicable authority…the exceptional circumstances was not met.’” CR

223; HHSC App. G, p. 3.

31 HHSC now attempts to salvage the agency’s decision by claiming it is

supported by two of the twelve Findings. This is incorrect. Finding of Fact No. 5

simply acknowledges that Jessica “does not currently have a static stander and was

not evaluated for prior authorization of one.”31 This finding does not provide any

support for the hearing officer’s determination that “exceptional circumstances

were not met.” TMHP’s exceptional circumstances policy required Jessica’s

treating medical providers to submit a letter of medical necessity documenting

alternative DME items that had been tried or ruled out and an explanation of why

these items were ruled out. AR 518. This letter is precisely what Jessica’s medical

providers submitted to TMHP and was further supported by their testimony at the

fair hearing. HHSC’s claim that Jessica’s “failure to rule out the use of a static

stander in accordance exceptional circumstances review policy” completely

ignores the medical evidence submitted on Jessica’s behalf. HHSC Brief, p. 21.

The unrefuted testimony of Jessica’s medical providers is that a wheelchair with

integrated standing feature will serve numerous medical purposes for Jessica and a

static stander will not.

Finding of Fact No. 12 also provides no support for the hearing officer’s

decision as this finding merely acknowledges that TMHP did not dispute that

Jessica “met medical necessity for a static stander or that these items meet DME

31 Contrary to HHSC’s suggestion, there is no requirement that there be a “prior authorization evaluation” for each DME item that is ruled out. HHSC App. E. 32 criteria.”32 The question here is whether HHSC offered any probative evidence to

refute the professional opinion of Jessica’s health care providers that a wheelchair

with integrated standing feature is medically necessary for her. HHSC’s failure to

provide such evidence does not allow the hearing officer to sidestep this question

and ignore the specific medical equipment that Jessica’s treating medical providers

recommended for her, but this is exactly what Finding No. 12 does.

One additional point about Finding No. 12 bears mention. While HHSC

agrees that Jessica has a medical need to stand, the agency continues to

erroneously claim that Jessica’s medical needs can be met through the use of non-

standing wheelchair functions including tilt and recline, seat elevation and leg

elevation functions. HHSC Brief p.23. And although HHSC states there is no

dispute concerning these wheelchair features, the agency simply ignores the fact

that the hearing officer also denied Jessica a seat elevation system, a wheelchair

component that Medicaid approved on her current wheelchair more than six years

ago. HHSC Brief, p.7. Compare HHSC App B, FOF No. 3. and Conclusion of

Law.33

32 On appeal, HHSC misinterprets Finding No. 12 to say that “Ms. Lukefahr met DME criteria for a power wheelchair and static stander.” HHSC Brief, p. 19, n.9. This is incorrect. The point the hearing officer was attempting to make was that wheelchairs and static standers meet DME criteria, not that Jessica meets these criteria. 33 The hearing officer’s denial of a seat elevation system makes no sense in light of Finding of Fact No. 3. HHSC App. B. 33 Other errors in the hearing officer’s Findings exist as well. Finding No. 9

states, in part that:

[t]he HHSC Office of the Medical Director (OMD) reviewed [Jessica’s] clinical information and determined that the client’s condition did not meet the clinical criteria for the Exceptional Circumstances provision for a Permobil C500 VS power wheelchair with integrated standing feature.

As to this Finding, the district court correctly noted that it simply “recites the

conclusion of THHSC’s OMD that the requested chair was not medically

necessary” and represents “the reason for the hearing.” CR 222; HHSC App. G.

p. 2. Additionally, however, this recitation of OMD’s statement illustrates a

critical defect in HHSC’s case as both HHSC witnesses testified without

reservation that neither HHSC nor TMHP have any clinical criteria for determining

whether an integrated standing feature will serve a specific medical purpose.

HR1:15.30-1:15.45. The hearing officer ignored this obvious contradiction

between the OMD’s written statement and the testimony of its witnesses.

HHSC suggests that the hearing officer’s statement that he “has carefully

considered the evidence contained in the hearing record and makes findings of fact

and conclusions of law based on the weight of the evidence…” was sufficient to

“fulfill his duty” in the case. HHSC Brief, p. 28. Again, this is incorrect. The

hearing officer’s use of boilerplate language typically recited in HHSC's Medicaid

hearing decisions does not change the undeniable fact that none of his findings

34 establish the accuracy of the reasons given for denial in TMHP’s notice of adverse

action or even suggest that HHSC refuted the professional opinions of Jessica’s

medical providers that a wheelchair with integrated standing feature will serve

numerous medical purposes for her and that no other item of DME will suffice.

“An agency acts arbitrarily if it makes a decision without regard for the

facts, if it relies on fact findings that are not supported by any evidence, or if there

does not appear to be a rational connection between the facts and the decision.”

Heritage on San Gabriel Homeowners Ass’n v. Texas Comm’n on Envtl. Quality,

393 S.W.3d 417, 423 (Tex. App. 2012), review denied (Mar. 29, 2013), citing City

of Waco v. Texas Comm’n on Envtl. Quality, 346 S.W.3d 781, 819–20 (Tex.

App.—Austin 2011, pet. denied). See also City of El Paso v. Public Util. Comm’n

of Tex., 883 S.W. 2d 179, 184 (Tex. 1994). Here, all three fatal defects are present

in HHSC’s decision. As such, there is no reasonable basis for HHSC’s decision.

The district court’s determination that HHSC’s decision is arbitrary and capricious

should be affirmed.

II. HHSC’s Administrative Review Does Not Comport with Agency Requirements.

In its final argument, HHSC seeks to defend the administrative review that

was conducted in this case by claiming it afforded Jessica all of the due process to

which she was entitled. This argument misses the mark. The district court reversed

the agency’s decision because it is not supported by substantial evidence and is 35 arbitrary and capricious. The deficiencies in the administrative review process are

just another example of why the district court's reversal of the agency decision is

correct. HHSC’s reviewing attorney did not conduct a “review of the hearing

decision and the record upon which it is based for errors of law and errors of

fact…” as required by 1 TEX. ADMIN. CODE § 357.703(b)(3).34 (emphasis added)

Instead, he merely repeated the twelve Findings of Fact and single Conclusion of

Law issued by the hearing officer, despite the fact that none of the Findings

provide any support for the agency’s decision that a custom power wheelchair with

integrated stander would serve no medical purpose for Jessica. Contrary to

HHSC’s claim, it was not enough for the agency attorney to simply review the

hearing officer’s decision and notify Jessica of the result. HHSC’s Brief, p. 29.

He was required to review the decision for errors of law, including the procedural

errors raised by Jessica concerning the protracted nature of HHSC’s benefit request

process and the agency’s failure to provide a timely hearing as required by federal

and state Medicaid rules.35 This did not happen.

34 The resolution of legal issues in an administrative review is particularly important because Medicaid hearings are conducted by non-attorneys. Moreover, federal guidance on DME coverage is clear that the fair hearing process must determine whether a decision denying DME is contrary to federal Medicaid requirements. HHSC App. H. 35 The nine month delay between Jessica's hearing request and decision also violates federal Medicaid requirements for a timely hearing. 42 C.F.R. § 431.244(f). See Shakhnes ex rel. Shakhnes v. Eggleston, 740 F. Supp. 2d 602, 616 (S.D.N.Y. 2010) aff'd in part, vacated in part sub nom. Shakhnes v. Berlin, 689 F.3d 244 (2d Cir. 2012) (noting that “[t]he regulation demands that ‘final administrative action’ be taken ‘ordinarily, within 90 days’ after a request for a fair hearing.”) 36 Moreover, as the district court correctly observed, the reviewing attorney

appeared to conflate two different standards of review, referring both to the

“preponderance of the evidence” and “substantial evidence” in reaching his

decision. It is not enough for HHSC to come behind this decision and claim that

the words the attorney used are not what he meant. HHSC’s administrative review

was nothing more than a rubber stamp of the erroneous decision issued by the

agency’s hearing officer and further demonstrates the agency did not “genuinely

engage[] in reasoned decision-making” in this case. Starr Cnty. v. Starr Indus.

Servs., Inc., 584 S.W.2d 352, 356 (Tex. Civ. App.—Austin 1979, writ ref’d n.r.e.)

quoting Texas Medical Assn. v. Mathews, 408 F. Supp. 303, 305 (W.D. Tex. 1976.)

CONCLUSION AND PRAYER

For the reasons described above, Appellee Jessica Lukefahr respectfully

requests this Court to affirm the district court’s decision reversing HHSC’s denial

of her request for a custom power wheelchair with integrated standing feature so

that Jessica can finally obtain Medicaid approval of the wheelchair recommended

by her treating medical professionals.

37 Respectfully submitted, /s/ Maureen O’Connell MAUREEN O’CONNELL Texas Bar No. 00795949 SOUTHERN DISABILITY LAW CENTER 1307 Payne Avenue Austin, Texas 78757 (512) 458-4800 (Phone) (512) 458-5850 (Fax) moconnell458@gmail.com Attorney for Appellee

CERTIFICATE OF COMPLIANCE

1. This brief complies with the type-volume limitation of Tex. R. App.

P. 9.4(i)(2)(B) because it contains 9,679 words, excluding the parts of the brief

exempted by Tex. R. App. P. 9.4(i)(1).

2. This brief complies with the typeface requirements of Tex. R. App. P.

9.4(e) because it has been prepared in a proportionally spaced typeface using

Microsoft Word in 14 point Times New Roman.

/s/ Maureen O’Connell MAUREEN O’CONNELL

38 CERTIFICATE OF SERVICE

I hereby certify that on this 8th day of October, 2015, a true and correct copy

of the foregoing document was electronically filed, and that a true and correct copy

of the foregoing document was served by electronic mail on the same date to:

Kara Holsinger Assistant Attorney General Office of the Attorney General P.O. Box 12548 Austin, Texas 78711

39 No. 03-15-00325-CV _________________________________

IN THE THIRD COURT OF APPEALS AUSTIN, TEXAS _________________________________

JESSICA LUKEFAHR, Appellee. _________________________________

On Appeal From The 345th Judicial District Court of Travis County, Texas Trial Court Case No. D-1-GN-14-002158 The Honorable Judge Stephen Yelenosky _________________________________

APPELLEE’S APPENDIX _________________________________

MAUREEN O’CONNELL Texas Bar No. 00795949 SOUTHERN DISABILITY LAW CENTER 1307 Payne Avenue Austin, Texas 78757 T: 512.458.5800 F: 512.458.5850 moconnell458@gmail.com Attorney for Appellee APPENDIX INDEX

CMS Letter to Texas Medicaid, May 21, 2013 .................................................Tab A TAB A DEPARTMENT OF HEALTH & HUMA.t."J SERVICES Centers for Medicare & Medicaid Services 7500 Security Boulevard, Mail Stop 52-14-26 Baltimore, Mary.land 21244-1850

Center for Medicaid and CHJP Services Disabled and Elderly H ealth Programs Group (DEHPG)

1v1ay 21, 2013

Kay Ghahremani State Medicaid Director Texas Health and Human Services Commission Brown-Heatly Building 4900 N. Lamar Blvd. Austin, TX 78751-2316

Dear Ms. Ghahremani:

The Centers for Medicare & Medicaid Services (CMS) is writing to clarify our policy on the medical supplies, equipment and appliances (often referred to as Durable Medical Equipment, or DME) that will receive Federal reimbursement.

DME is a compommt of the home health benefit, which is a mandatory service within the ~ Medicaid program. AB such, items of DME meeting the state's definition of such coverage is to be provided to individuals (of any age) meeting the State's medical nec~ity criteria. In addition, CMS issued a letter to State Medicaid Directors on September 4, 1998 (see attached) interpreting state responsibilities in providing medical equipment in response to the DeSario court decision. Tb.is guidance requires states to have a reasonable process for beneficiaries to request items ofDME not on a pre-approved list, and the ability for a beneficiary to request a fair hearing to a:ppeal negative determinations.

We understand that the State of Texas is not approving requests for ceiling lifts providoo to adult Medicaid beneficiaries, due to prior CMS guidance indicating that Federal reimbursement is not available. We are clarifying here, in a way that supersedes prior CMS guidance on this topic, that coverage of ceiling lifts under the medical equipment benefit is an issue that states must detennine consistent with the process described in the September 4, 1998 guidance, and that federal reimbursement is available to the state to the extent that the item is determined to be covered. This means that medically necessary ceiling lifts will be reimbursed. by CMS as part of the Texas home health benefit if these lifts meet the state's definition of DME.

In addition, we would like to make sure you're aware of a Notice of Proposed Rulemak.ing issued July 12, 2011. That regulation proposed changes to the home health benefit to not only codify face-to-face encounters required at section 6407 of the Affordable Care Act, but lo also propose definitions of a medical supply, equipment and appliance. Also included was a proposal that any item meeting any of those definitions must be covered under the state plan, and may not be reserved for coverage under a 1915 (c) home and community based services waiver. We are working now to issue a final regulation. We encourage you to familiarize yourself with the provisions of that proposed rule_

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Page 2 - Ms. Kay Ghahremani

We hope this alleviates any confusion. Don' t hesitate to contact me with any questions.

Sincerely,

Isl

Melissa Hanis Director Division of Benefits and Coverage

Cc: Billy Bob Farrell, Dallas Regional Office

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