Texas Health and Human Services Commission v. Jessica Lukefahr

Opinion

ACCEPTED 03-15-00325-CV 7686768 THIRD COURT OF APPEALS AUSTIN, TEXAS 11/4/2015 3:53:12 PM JEFFREY D. KYLE CLERK No. 03-15-00325-CV _________________________________ FILED IN IN THE 3rd COURT OF APPEALS AUSTIN, TEXAS THIRD COURT OF APPEALS 11/4/2015 3:53:12 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 Stephen Yelenosky, Presiding _________________________________

APPELLEE’S SUR-REPLY _________________________________

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 TABLE OF CONTENTS

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

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

ARGUMENT ............................................................................................................. 1

A. The Applicable Standard of Review in this Case is not in Dispute .......................................................................................................... 1

B. HHSC’s Interpretation of TMHP’s Denial Notice does not Support Reversal of the District Court’s Decision ....................................... 4

C. The Administrative Record Contains No Probative Evidence Supporting HHSC’s Assertion that a Separate Stander will Meet Jessica Lukefahr’s Medical Need to Stand .......................................... 6

D. HHSC Failed to Follow its Own Procedures and those Required by Federal Medicaid Policy ........................................................................ 13

CONCLUSION AND PRAYER ............................................................................. 14

CERTIFICATE OF COMPLIANCE ....................................................................... 15

CERTIFICATE OF SERVICE ................................................................................ 16

i TABLE OF AUTHORITIES

CASES

City of El Paso v.Public Util. Comm’n of Tex., 883 S.W. 2d 179 (Tex. 1994) ............................................................................... 4

City of Waco v. Texas Comm’n on Envtl. Quality, 46 S.W.3d 781 (Tex. App.—Austin 2011, pet. denied) ................................... 3, 4

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

Goldberg v. Kelly, 397 U.S. 254 (1970) .............................................................................................. 4

Moore v. Reese, 637 F.3d 1220 (11th Cir. 2011) ........................................................................ 8, 9

REGULATIONS

1 TEX. ADMIN. CODE § 354.1039(a)(4)(D) ................................................................ 5

1 TEX. ADMIN. CODE § 357.11(a)(1) .......................................................................... 4

1 TEX. ADMIN. CODE § 357.703(b)(3) ...................................................................... 14

42 C.F.R. § 431.210(b) .............................................................................................. 4

42 C.F.R. § 431.210(c)............................................................................................... 4

STATUTES

TEX. GOV’T CODE § 2001.174.................................................................................... 2

TEX. GOV’T CODE § 2001.174(2) ............................................................................... 1

ii OTHER AUTHORITIES

Texas Medicaid Provider’s Procedure Manual §2.2.15.12.4................................... 10

Texas Medicaid Provider’s Procedure Manual §2.2.15.12.5................................... 10

iii 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 Stephen Yelenosky, Presiding _________________________________

TO THE HONORABLE COURT OF APPEAL:

Appellee, Jessica Lukefahr, respectfully files this Sur-Reply to address several

factual and legal errors contained in Appellant’s Reply Brief.

ARGUMENT

A. The Applicable Standard of Review in this Case is not in Dispute. There is no dispute concerning the applicable standard of review in this case.

TEX. GOV’T CODE § 2001.174(2) states that a court “shall reverse or remand the case

for further proceedings if substantial rights of the appellant have been prejudiced

1 because the administrative findings, inferences, conclusions, or decisions are…(E)

not reasonably supported by substantial evidence considering the reliable and

probative evidence in the record as a whole; or (F) arbitrary or capricious…” The

district court correctly applied this standard of review when it reversed HHSC’s

administrative decision in this case.1 CR 226.

Jessica Lukefahr has not attempted “to shift the standard of review” as HHSC

contends. Appellant’s Reply Brief, pp. 2-3. Nor has she conflated the agency’s

burden of proof at the fair hearing with the standard of review applied by the courts.

To the contrary, the district court specifically noted it was HHSC’s reviewing

attorney who “conflate[d] [these] two different standards of review” in reaching the

agency’s final decision. CR 223. HHSC’s claim concerning this issue has no merit.

Also without merit is HHSC’s continued assertion that the agency’s order “is

clearly supported by substantial evidence.” Appellant’s Reply Brief, p. 3. The

district court correctly determined that “[o]f the reasons given for denial in the denial

letter, THHSC has abandoned some and Ms. Lukefahr has demonstrated that there

is no substantial evidence to support those remaining.” CR 223. In this Court, as in

the district court, Jessica has identified the reliable and probative evidence in the

administrative record demonstrating that she has a medical need to stand throughout

1 TEX. GOV’T CODE § 2001.174 sets out six distinct bases for reversal of an administrative decision. The district court correctly relied upon two of the six in reversing HHSC’s hearing decision. 2 the day, while at home and in the community, and that she cannot use a separate

(static) stander to meet this need.2 Testimony drawn from the record establishes that

HHSC conceded Jessica’s medical need to stand and failed to refute the professional

opinion of her treating medical providers that a separate stander will not meet this

medical need. See Appellee’s Brief, pp. 16-34 and Section C. below. There is no

reliable and probative evidence supporting the agency’s decision.

Moreover, the district court correctly concluded that “in the absence of a

reasoned decision” HHSC’s order is arbitrary and capricious. CR 223, 226.

According to the court, “[t]he twelve Findings do not provide any underlying facts

to support the [agency’s] conclusory statement that ‘[b]ased on the findings of fact

and applicable authority…the exceptional circumstances were not met.’” CR 223.

And, as previously noted, “[a]n 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). The district court’s

2 The terms “separate stander” and “static stander” are used interchangeably throughout this brief. 3 determination that HHSC’s decision is unsupported by substantial evidence and is

arbitrary and capricious is correct and should be affirmed.

B. HHSC’s Interpretation of TMHP’s Denial Notice does not Support Reversal of the District Court’s Decision.

HHSC acknowledges that constitutional due process requires the agency to

provide “adequate notice detailing the reasons for a proposed termination.”

Goldberg v. Kelly, 397 U.S. 254, 267-268 (1970). (emphasis added) Appellant’s

Reply Brief, p. 14. The Medicaid Act’s due process protections are in accord.

Specifically, 42 C.F.R. § 431.210 (b-c) requires that a Medicaid denial notice contain

“[t]he reasons for the intended action” and the specific regulations that support…the

action.”3 Accordingly, HHSC was obliged to clearly state its reasons for denying

Jessica’s wheelchair request in its notice of adverse action and to prove the accuracy

and adequacy of these reasons at the fair hearing. As explained by the district court,

“unless the letter [denial notice] constrains, it is no more than notice to the Medicaid

clients that she has lost, with an explanation to follow in the hearing.” CR 222.

HHSC’s claim that Jessica Lukefahr “artificially limit[ed]” the agency’s

reasons for denying her wheelchair request is incorrect. To be clear, TMHP’s denial

notice did not “enumerate” the reasons for its adverse action. It is only by examining

3 HHSC’s reference to this federal regulation omits the requirement that adequate notice must also include the legal basis for denial. Contrary to HHSC’s contention, it is the Centers for Medicare and Medicaid Services (CMS) that require this level of detail, not Jessica Lukefahr. See HHSC Reply Brief, p. 8, n. 2. HHSC’s own rules are in accord. See 1 TEX. ADMIN. CODE § 357.11(a)(1). 4 each sentence of the letter can one attempt to decipher the agency’s asserted bases

for denial. Through this process, four specific reasons underlying HHSC’s denial of

Jessica’s wheelchair request were identified.4 While HHSC now suggests there are

other bases for the denial, the agency does not identify these additional reasons.

Neither did HHSC’s hearing officer or reviewing attorney.

HHSC’s further claim that Jessica mischaracterizes the agency’s denial letter

is also incorrect. Notably, the agency’s expanded interpretation of the term

“papers,” as used in TMHP’s denial notice, to include medical literature, is of no

consequence to the resolution of this case. This is true for two reasons. First,

HHSC’s rule governing exceptional circumstances appeals of DME denials does not

require the submission of “evidence-based peer reviewed literature” to establish that

a requested item of DME will "serve a specific medical purpose on an individual

case basis.” 1 TEX. ADMIN. CODE § 354.1039(a)(4)(D). Moreover, neither of

HHSC’s witnesses testified at the hearing that the statement “[t]he papers did not

state why a static stander that you could transfer into and out of would not meet your

medical needs” was based upon information contained in the medical literature.5

4 Three of the four reasons related to TMHP’s claim that Jessica has no medical need to stand and included the following: the wheelchair “was not requested for medical reasons, but rather, to help Jessica progress at work”; the papers did not show Jessica could benefit from a standing program; and the papers did not show Jessica could perform tasks “over and over again using [her] arms against gravity.” The remaining reason for the denial was the agency’s alternative contention that “the papers did not state why a static stander would not meet [Jessica’s] medical needs.” AR 59. 5 Jessica has never denied that TMHP’s notice of adverse action stated that “[t]he papers did not state why a static stander that you could transfer into and out of would not meet your medical 5 Whether an individual has the physical capacity to transfer into and out of a separate

stander is a medical judgment that is made by clinical assessment or observation of

the person. And as previously explained, the uncontroverted evidence provided by

Jessica’s treating medical professionals established that she cannot independently

transfer into a separate stander and this type of stander will not meet her medical

need to stand as this need arises while alone at home or in the community.

Appellee’s Brief, pp. 19-30.

C. The Administrative Record Contains No Probative Evidence Supporting HHSC’s Assertion that a Separate Stander will Meet Jessica Lukefahr’s Medical Need to Stand.

HHSC identifies two reasons for this Court to reverse the district court’s

decision in this case. Taken in turn, each of these reasons finds no support in law or

fact. First, HHSC claims it denied Jessica’s wheelchair request, in part, because of

her “failure to request a static stander.” Appellant’s Reply Brief, p. 8. This claim is

unfounded. All requests for DME must be accompanied by a physician’s attestation

of medical necessity. See, i.e., AR127, 128, (physician attestation for Jessica

Lukefahr). Given that Jessica’s physician and physical therapist maintain that a

separate stander will not meet Jessica’s medical needs, they could not request this

needs. AR 59. This is why her medical providers offered extensive evidence that Jessica’s access to this device would be limited to when a caregiver is present in the home and would not provide her the ability to stand as the medical need arises when she is alone at home or is in the community. See Appellee’s Brief, pp. 19-30. Nor would a separate stander enable Jessica to perform activities of daily living (ADLs) while at home and in the community. 6 item of DME on her behalf. Nor were they required to do so. HHSC asked them to

identify alternative items of equipment that were tried or ruled out and to explain

why this was so. AR 374-375. This is precisely the medical information that

Jessica’s treating health care professionals provided and HHSC’s witnesses failed to

refute. HHSC attempts to substitute its request that Jessica’s medical professionals

explain what alternative DME had been ruled out with a requirement that they first

request this alternative item of DME.6 However, as the district court correctly noted,

no such requirement exists in agency rule and policy. CR 222, n.3.

Second, HHSC continues to claim that the administrative record contains

“substantial evidence” to support it assertion that a separate stander will meet

Jessica’s medical need to stand. Neither decision issued by HHSC includes any

finding that even remotely supports this claim. In fact, the only finding concerning

Jessica’s ability to use an item of DME to stand is Finding of Fact No. 6, which

states “[a]ppellant [Jessica] was able to operate a Permobil C500 power wheelchair

and all its integrated features, including the standing feature during her wheelchair

evaluation.” AR 571, 588.

Moreover, HHSC’s claim that HHSC’s hearing officer and reviewing attorney

found the testimony of HHSC’s witnesses to be credible on this point finds no basis

6 Jessica’s medical professionals also ruled out her use of a postural control walker as a standing device. Notably, HHSC does not claim that their “failure” to request this item of DME had any bearing on the agency’s denial of Jessica’s request for a wheelchair with integrated stander. 7 in the agency’s decision. Neither one of them issued any finding that even remotely

suggests they relied upon the testimony offered by Ms. Claeys or Ms. Cannizzaro to

reach their decision in this case or found such testimony to be credible. HHSC

maintains that “Ms. Lukefahr cannot so easily dismiss the testimony of [HHSC’s

witnesses]” but ignores the fact that HHSC’s hearing officer and reviewing attorney

did just that.7 Appellant’s Reply Brief, p.10.

HHSC again defends its administrative decision by reference to the Eleventh

Circuit’s decision in Moore v. Reese, 637 F.3d 1220 (11th Cir. 2011). There is no

comparison between the two. The question in Moore was whether the state

unlawfully reduced the plaintiff’s private duty nursing from 94 to 84 hours/week.

The evidence before the Court included the testimony of the plaintiff’s treating

physician and that of the state’s physician. In his sworn testimony, the state’s doctor

identified the factors he considered in forming his opinion, including his belief that

some of plaintiff’s care needs could be met by a home health care provider rather

than a private duty nurse. Ultimately he concluded that an 85 minute/day reduction

in private duty nursing would not endanger the plaintiff’s welfare and “she would

continue to basically receive the same type of care that she received prior to [the

7 Contrary to HHSC’s claim, Jessica does not invite the Court to disregard the hearing officer’s judgment as to witness credibility or weight of the evidence as the hearing officer wholly failed to exercise such judgment. As the district court explained, none of the twelve Findings issued by the hearing officer provided any underlying facts to support his conclusion that exceptional circumstances were not met. CR 223. 8 reduction.] Id. at 1228. The testimony offered by the state in Moore is a far cry from

that provided by HHSC’s witnesses at the fair hearing.8

Jessica does not deny that HHSC has a role to play concerning the medical

necessity of Medicaid services. Having conceded Jessica’s medical need to stand at

the fair hearing, the agency’s role was to provide reliable and probative evidence

that a separate stander will meet Jessica’s medical need to stand. HHSC’s witnesses

failed to provide such evidence and any claim to the contrary finds no support in the

administrative record. For example, HHSC now asserts that “substantial evidence

showed that Ms. Lukefahr has no medical need to stand in the community.”

Appellant’s Reply Brief, p. 12. Once again, HHSC cites TMHP’s denial notice as

support for this statement, but, as explained in Appellee’s Brief, p. 26, the agency’s

notice of adverse action is not proof of the assertions made therein. If it were, a

Medicaid hearing would begin and end with admission of the denial notice into the

record. As the district court correctly noted, HHSC was required to present its

“proof” at the hearing and the denial notice simply constrains the proof that must be

provided. CR 222.

8 Jessica Lukefahr did not “invent” the standard requiring HHSC to provide reliable and probative evidence at the fair hearing. Testimony from agency representatives who did not make the decision to deny Jessica’s request, who could not identify the criteria used to deny this request, and could not name a single medical purpose that could justify approval of a wheelchair with integrated standing feature in an exceptional circumstances appeal does not qualify as reliable and probative evidence. See Appellee’s Brief, pp.10-11. 9 It is undeniable that Ms. Claeys conceded Jessica’s medical need to stand

when she testified that “a standing program is important to address the concerns that

have been presented today. All of that documentation justifies standing…”9 HR

1:26:55-:1:27:12. Neither she nor TMHP’s nurse then testified that Jessica’s

medical need to stand only arises during the period of time she has access to a

caregiver at home or even attempt to explain how this could be true. HHSC’s claim

that Jessica has no medical need to stand in the community is not supported by its

limited references to agency testimony. For example, HR 1:49 contains the opinion

of TMHP’s nurse that completion of ADLs with the requested wheelchair “would

not necessarily be considered a therapeutic purpose.” Not only does Ms.

Cannizzaro’s testimony have no bearing on the question of Jessica’s medical need

to stand while away from home, it is also wrong. TMHP’s own policies identify

performance of ADLs as one of several “prior authorization requirements” for

custom power wheelchairs. TMPPM §§2.2.15.12.4 and 2.2.15.12.5.10 The

documentation provided by Jessica’s medical professionals establishing that the

recommended wheelchair will allow her to perform ADLs is consistent with this

requirement.

9 This concession by Ms. Claeys disproves TMHP’s statement in its denial notice that “the main reason for requesting a standing power wheelchair was to help you progress at work. The main reason was not for treatment of your medical condition.” AR 59. HHSC’s attempt to renew this basis for denial in its Reply Brief has no merit. Appellant’s Reply Brief, p. 12. 10 See http://www.tmhp.com/pages/medicaid/medicaid_publications_provider_manual.aspx 10 The testimony found at H.R. 2:02 also fails to support HHSC’s contention that

Jessica has no medical need to stand while in the community. Aside from the fact

that TMHP’s nurse misinterpreted the results of the research study she was

describing,11 it is undeniable that this study addressed only one of Jessica’s

numerous medical conditions that necessitate standing, i.e. the ongoing risk of

pressure sores, and did not address any others, most notably the pain and respiratory

compromise caused by dystonia, which can occur at any time or place. The

limitation of the testimony offered by TMHP’s nurse was clearly established by

HHSC’s attorney:

Q (HHSC attorney): So this article is restricted simply to load distribution of weight to prevent skin ulcers.

A (Cannizzaro): That is correct.

Q (HHSC attorney): It does not address any of these other medical claims submitted by the petitioner.

A (Cannizzaro): No, it does not.

HR 2:01:39-2:01:49

The professional opinion of Jessica’s medical providers that she has a medical

need to stand while in the community and while at home alone is controlling in light

11 TMHP’s nurse offered her interpretation of a research study investigating the use of wheelchair standing, tilt and recline to reduce pressure sores. Her testimony that this study concluded “there’s not one system that’s necessarily any better than another” (HR 2:00:17-2:00:32) failed to acknowledge that the researchers actually determined that “standing was the only configuration that decreased loads off of the seat and backrest simultaneously...” AR 201-202. 11 of HHSC’s failure to rebut this evidence at the fair hearing. Also controlling is the

unrefuted evidence offered by Jessica’s medical providers that she cannot

independently transfer into a separate stander. TMHP’s nurse testified that use of a

separate stander requires a lateral transfer into this device. HR 1:53:13-1:53:20.

Neither she nor HHSC’s nurse offered any testimony that Jessica can independently

perform this type of transfer to be able to use a separate stander at home. Certainly,

they did not refute the professional opinion of Jessica’s treating medical providers

that she cannot.

HHSC’s contention that Jessica’s medical need to stand is limited to “about

one hour a day, five days per week” also has no support in the record.12 As

previously explained, TMHP’s nurse testified concerning her understanding of

certain research studies addressing the positive effect of standing on bone density.

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.

12 Contrary to HHSC’s suggestion, Jessica has never claimed she is entitled to “constant caregiver assistance” to meet her medical need to stand. Appellant’s Reply Brief, p. 13. Nor would constant “caregiver assistance” address Jessica’s medical need to stand while out of her home as she would not have access to a separate stander in the community. Only a custom power wheelchair with integrated standing feature will address Jessica’s medical need to stand as the need arises. The district court did not determine that “constant access to caregiver” was at issue either. CR 224. Appellant’s Brief p. 13, n.6. 12 This general statement about the medical literature addressing the impact of

standing on bone density does not refute the testimony of Jessica’s physical therapist

that:

. . . 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.

The administrative record contains no reliable and probative evidence refuting

the opinion of Jessica’s treating medical professionals that she has a medical need

to stand, whether at home or in the community, to address the significant medical

conditions she faces due to her physical disability. As such, the district court’s

decision is correct and should be affirmed.

D. HHSC Failed to Follow its Own Procedures and those Required by Federal Medicaid Policy.

HHSC’s final argument is much like the one made in the agency’s initial brief.

Appellant’s Brief, pp 26-31; Appellant’s Reply Brief, pp. 14-15. As before, HHSC

asserts that Jessica received sufficient due process in this case.13 But, as previously

noted, this argument misses the mark. See Appellee’s Brief, pp. 35-37. The district

13 HHSC’s alternative argument that “the clear solution is to remand this case and begin due process anew” asks that the agency be allowed to further protract its administrative process, which began for Jessica in March 2013. To the contrary, affirmance of the district court’s decision is the only “clear solution” to HHSC’s substantive and procedural errors in this case. 13 court correctly reversed the agency’s decision because it is not supported by

substantial evidence and is arbitrary and capricious. The deficiencies in the

administrative review process further demonstrate that the agency’s decision was

legally flawed. HHSC’s attorney did not review the hearing officer’s decision for

errors of law as required by 1 TEX. ADMIN. CODE § 357.703(b)(3). Nor did his

review comport with federal Medicaid policy that requires the state to afford a fair

hearing “to determine whether an adverse decision in contrary to [federal Medicaid]

law…” Appellant’s Brief, App. H. The hearing officer’s decision was unsupported

by substantial evidence and arbitrary and capricious. The reviewing attorney’s mere

recitation of that decision was the same. The district court correctly reversed

HHSC’s administrative decision in this case.

CONCLUSION AND PRAYER

For the reasons described in Appellee’s Brief and above, Plaintiff Jessica

Lukefahr respectfully requests this Court to affirm the decision of the district court

so that she can obtain the custom power wheelchair recommended by her treating

medical providers more than two years ago.

14 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 3,599 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

15 CERTIFICATE OF SERVICE

I hereby certify that on this 4th day of November, 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