Albert S. v. Department of Health & Mental Hygiene

HOLLANDER, J. This case is rooted in an application submitted by Albert S., appellant, on October 1, 2002, to obtain Medical Assistance benefits based on a disability. 1 After a State Review Team (“SRT”) determined that Mr. S. was not disabled, the Department of Health and Mental Hygiene, Baltimore County Department of Social Services (“BCDSS”), appellee, denied Mr. S.’s application. Thereafter, an administrative law judge (“ALJ”) held an evidentiary “fair hearing” to review the matter. Instead of resolving the case on the merits, however, the ALJ remanded the matter to the SRT for reconsideration in light of the additional medical evidence presented at the fair hearing. Unhappy with that disposition, appellant took an appeal to the Board of Review (the “Board”) of the Department of Mental Health and Hygiene (the “Department”), which affirmed the ALJ.

Mr. S. then sought judicial review in the Circuit Court for Baltimore County. On December 6, 2004, that court dismissed the appeal as moot because, in the interim, appellant had reapplied for Medical Assistance benefits and was found eligible as of October 1, 2003. On appeal, Mr. S. poses one question: ⁷²⁹ Was it error for the Administrative Law Judge to fail to make a Medical Assistance eligibility determination, based upon the testimony and evidence submitted at the hearing, and instead remand the case to the local agency? Appellee concedes that the ALJ erred.

However, BCDSS has moved to dismiss this appeal on the grounds of mootness. 2 For the reasons that follow, we shall deny the motion to dismiss and reverse the circuit court. REGULATORY FRAMEWORK To understand the issue presented in this case, it is helpful to begin with a brief review of the Medical Assistance program. Medicaid, also known as Medical Assistance, 3 is jointly funded by the federal and state governments, and provides medical services to low income persons who cannot afford to pay for their own medical care. 42 U.S.C. § 1396 ; Md.Code (2005 RepLVol.), § 15-103(a)(2) of the Health-General Article (“H.G.”). The program in Maryland is administered by the Department.

See Dept. of Health & Mental Hygiene v. Campbell, 364 Md. 108, 112 , 771 A.2d 1051 (2001). However, an applicant who seeks benefits must apply through a local department of social services, such as BCDSS. See Code of Maryland Regulations (“COMAR”) 10.09.24.02B(29) & ,04F(1). The Department has delegated to its local departments, under the supervision of the Maryland Department of Human ⁷³⁰ Resources (“DHR”), the authority to determine eligibility for Medicaid benefits.

COMAR 10.09.24.02B(29) & .04A. To qualify, an applicant must satisfy the criteria for an eligibility category, such as “Aged, Blind and Disabled” or “Family and Children.” COMAR 10.09.24.04M(3), .06 & .06B. An individual who applies for Medicaid based on a disability must satisfy the disability standard set forth in the federal Supplemental Security Income Program. COMAR 10.09.24.05E (2)(b),(c); CO-MAR 10.09.24.04M(3). “Disabled” is defined as “the inability to do any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.” 42 Code of Federal Regulations (“C.F.R.”) § 416.905(a); see COMAR 10.09.24.02B(19).

When an applicant for Medicaid benefits alleges a disability, the Family Investment Administration (“FIA”) of DHR employs physicians and disability specialists, known as the State Review Team, to assist local departments in determining eligibility. COMAR 10.09.24.05E (2); COMAR 07.03.05.02B(21). In addition, an applicant must satisfy strict income requirements to qualify for disability-related Medicaid. 4 If an application is denied, the applicant has a right to request a fair hearing. 42 C.F.R. §§ 431.200 (a) & 431.220(a)(1); COMAR 10.01.04.02A & 10.09.24.12A. The Department has delegated to the Office of Administrative Hearings (“OAH”) the authority to hold “fair hearing” appeals under the Medicaid program.

See COMAR 10.01.04.04A. 5 The hearing is governed by the contested case provisions of the ⁷³¹ Administrative Procedure Act, Md.Code (2004 RepLVol.), State Government Article (“S.G.”) § 10-222; see COMAR 10.09.24.13A(l)(a); 10.01.04.02A. Accordingly, the parties may present and cross-examine witnesses, introduce documentary evidence, and argue their respective positions. 42 C.F.R. § 431.242 ; COMAR 10.01.04.06. In turn, the ALJ’s decision is based “exclusively” on the evidence presented at the hearing. 42 C.F.R. § 431.244 (a); COMAR 10.01.04.08A. Notably, the ALJ’s decision is final and binding on the Department.

COMAR 10.01.04.08C(1). A person who is found ineligible for Medicaid benefits after a fair hearing may seek further administrative review by the Board. H.G. § 2-207(a); COMAR 10.01.04.080(1). The Board hears cases based on the record of the fair hearing, supplemented with argument of the parties.

COMAR 10.01.05.06A & ,09A(1). The Board’s decision constitutes the Department’s final decision for purposes of judicial review under the Administrative Procedure Act. See S.G. § 10-222; H.G. §§ 2-207(f)(2), 2 — 207(h); Leatherbury v. Gaylord Fuel Corp., 276 Md. 367, 374 , 347 A.2d 826 (1975). FACTUAL AND PROCEDURAL SUMMARY Mr. S. was born in 1956.

He suffers from a variety of health problems, including an injury to his right ankle, a burn to his left hand, hypertension, diabetes, arthritis, and depression. Mr. S. is also unable to use his left hand due to a condition called “contracture,” which renders his hand immobile. In January 2001, appellant left his employment because of the burn to his hand. In November 2001, Mr. S. broke his ankle and again left the workforce.

Lacking health insurance or any income stream, Mr. S. was unable to obtain physical therapy for his ankle and hand, nor could he pay for medical care needed for his diabetes and hypertension. On October 1, 2002, Mr. S. applied for Medicaid under the Aged, Disabled and Blind category as a household of one. To complete his application, Mr. S. submitted to BCDSS a Medi ⁷³² cal Report Form 402B and a Medical Assistance Program Vocational, Educational and Social Data Form 4204. Form 402B was completed on February 20, 2003, by Dr. Deepak Seth, Mr. S.’s treating physician since August 2001.

Dr. Seth diagnosed Mr. S. with “hypertension,” “contracture flexion of [the] hand,” and “peripheral neuropathy.” The Form 402B indicated that Mr. S. was taking blood pressure medication that caused “weakness” and “dizziness.” With regard to “the patient’s ability to perform during an 8-hour workday with normal breaks,” Dr. Seth indicated the following physical limitations: Mr. S. could sit for four hours; stand for one hour; walk for one hour; and could “never” climb, carry, bend, or squat. In response to the query whether Mr. S. could use his hands “for repetitive action,” Dr. Seth checked the “No” column on the form for each of the three specified hand actions: “simple grasping,” “pushing and fine,” or “manipulation.” The form also asked: “Based on your evaluation has your patient’s medical condition lasted or can it be expected to last at least 12 months?” Dr. Seth checked the “Yes” box. Notably, Dr. Seth also checked the “Yes” box in answer to the following inquiry: “Does the patient’s medical condition prevent them from working?” He specified the duration of Mr. S’s inability to work as lasting from February 21, 2003, to February 20, 2004. On or about May 5, 2003, BCDSS notified Mr. S. that the SRT found him ineligible for Medicaid benefits, because it determined that he did not have a disability.

According to the SRT, appellant was capable of employment as an appointment clerk, telephone operator, or receptionist. Mr. S. filed an appeal on June 23, 2003, which led to the evidentiary fair hearing conducted by the ALJ on August 19, 2003. At the hearing, Mr. S. testified regarding his ankle fracture, hypertension, hand injury, peripheral nerve problems, diabetes, and severe pain that interferes with his sleep and activities. He also testified that, because of his ankle injury, he is only able to walk a few steps at a time and sometimes uses a walker.

He introduced his Form 402B and Form 4204, as well ⁷³³ as medical records documenting his clinical depression. A representative of BCDSS testified that the agency had received updated information and that the SRT was reconsidering Mr. S.’s eligibility. However, BCDSS did not offer any medical evidence to contradict Mr. S.’s claim of disability. On September 22, 2003, the ALJ issued his decision, in which he made general findings of fact but failed to make any findings of fact regarding the import of the medical evidence.

The ALJ noted, in part: The Appellant has provided additional information to the local department which has not yet been considered by the SRT, including: (a) updated medical report forms (Form 402B); (b) updated vocational, educational and social data (Form 4204); (c) medical progress notes from July 8, 2003 through August 18, 2003; and (d) emergency room records from July 18, 2003. According to the ALJ, the SRT has the statutory authority to review and consider the updated medical evidence. Instead of resolving the question of appellant’s eligibility for Medicaid based on a disability, the ALJ remanded the case to enable SRT to consider the medical evidence submitted at the hearing. The ALJ reasoned that “[t]he members of the SRT are the proper persons to make disability determinations, and they must be given an opportunity to review all medical information submitted by an applicant.” Further, the ALJ said: These COMAR regulations provide that the SRT shall review “the medical report and other evidence” and determine whether an individual is disabled.

(Emphasis added [by ALJ]). This review shall be conducted by a team “composed of a medical or psychological consultant and other individual who is qualified to interpret and evaluate medical reports and other evidence relating to the individual’s physical or mental impairments ...” (Emphasis added [by ALJ]). This scheme clearly anticipates that a SRT team comprised of qualified individuals review the medical records of a person applying for [medical assistance]. ⁷³⁴ The medical records submitted to the local department by the Appellant at the hearing have not been reviewed by the SRT. The regulations mandate that a SRT team members [sic] be given the opportunity to “interpret and evaluate” those records as required by the above-cited COMAR regulation.

COMAR 10.09.24.05E(2)(c). Testimony was also allowed regarding the Appellant’s limitations, but these limitations are best considered by the SRT, which is charged with making a disability decision in this case. This is particularly true when the SRT has not been given all of the data from which a decision can be made. ... In his closing argument, the local department’s representative argued that the case be remanded to the SRT for review of the new information presented.

After reviewing the law in this case, I agree with the local department that this matter must be remanded to the SRT. On or about September 30, 2003, the SRT found that Mr. S. was not disabled. According to appellant, he “was without access to critical medical care from October 2002 to October 2003.” On October 2, 2003, Mr. S. noted his appeal of the ALJ’s decision to the Board. In the meantime, on October 23, 2003, Mr. S. also submitted a new application for Medicaid.

In December of 2003, BCDSS notified Mr. S. that he was found eligible for benefits, retroactive to October 1, 2003. The record indicates that appellant has continued to receive Medicaid benefits since October of 2003. Although appellant’s benefits were not made retroactive to the date of his first application for Medicaid, his unpaid bills apparently were “written off as charity care____” With regard to the initial denial of Medicaid benefits, the Board held a hearing on February 26, 2004. Mr. S. argued that the ALJ’s remand to the SRT violated federal law.

On March 9, 2004, the Board ordered: That the decision of the Administrative Law Judge of the Office of Administrative Hearings to Remand be AFFIRMED and the Board hereby recommends that the case ⁷³⁵ be remanded to the SRT consistent with the Administrative Law Judge’s decision. On April 7, 2004, Mr. S. sought judicial review in the Circuit Court for Baltimore County. At the hearing on September 14, 2004, the agency agreed with appellant that the ALJ erred by failing to decide the merits of whether appellant was disabled and by remanding to the SRT. However, appellee claimed that, given the subsequent award of benefits to Mr. S., the matter had become moot.

Mr. S. disagreed. The following exchange is pertinent: [COUNSEL FOR APPELLANT]: ... Your honor, this case involves an issue of great public importance which affects many people in Maryland. Because of the prolonged appeal procedure involved in this kind of case this problem of case review is unlikely to reach the court as a live case, a ease in which needed Medical Assistance benefits have not been granted.

Albert [S.] is before this court because he suffered a number of disabling conditions without access to needed medical care. For over a year after the date that he applied for Medical Assistance he was unable to receive the medical treatment that he desperately needed and was forced to wait additional months in getting access to the needed insurance to treat his diabetes, hypertension, contracted left hand and injured right ankle because the administrative law judge failed to make a final decision in his Medical Assistance appeal. This hearing took place over a year ago. We are now in court over a year later on an appeal of this particular case.

The Department has argued, what is there to be gained at this point because, after all, my client has Medical Assistance, and it doesn’t matter at this point. I suggest to you, Your Honor, that this case is of extreme importance because it is a situation that is repeated time and time again, and it is one that is of great public importance and does meet the criteria set forth in the Maryland ⁷³⁶ Court of Appeals case that sets forth factors that one can look to to overcome the mootness issue. ... Your Honor, at this time I’m asking that the court acknowledge that, first of all, federal law requires that the administrative law judge render a decision on Mr. [S.’s] application rather than remand the case for a new eligibility determination. Number two, I’m asking that Your Honor find that Mary-land is required to comply with federal law in administering the Medical Assistance program.

Federal provisions assure a public benefits applicant a final decision resulting from a fair hearing. I’m also asking that Your Honor find that there was sufficient evidence before the administrative law judge to render a decision on Mr. [S.’s] application, and, finally, because of the important public interest at stake and the likelihood of reoccurrence, the court should rule on the merits of this case even though Mr. Mr. S. was eventually granted Medical Assistance benefits. * * * ... Both the federal regulations and COMAR state that there must be a final decision within 90 days of the appeal, and a final decision is not a remand to the State Review Team or any other body for a review of the initial application. [THE COURT]: What authority do you have for that? [COUNSEL FOR APPELLANT]: 42 C.F.R. 431.244(a).... It requires a hearing decision to be based exclusively on evidence introduced at the hearing.

Also, 42 C.F.R. 431.232(c). There is a Maryland decision which states that an ALJ should not simply review the decision of the local department, and that is found at Halle Company ⁷³⁷ [Com,panies] v. Crofton Civic Association, 339 Md. 131 [ 661 A.2d 682 ]. These are all cites from Page Seven of my initial memorandum. [THE COURT]: Okay. [COUNSEL FOR APPELLANT]: In that case there is a holding that de novo appeals are wholly original proceedings; not a review of the action of the lower decision maker. I think that one of the most important forms of guidance comes from the State Medicaid Manual....

The State Medicaid Manual guides the procedures that Maryland must follow as it administers this partnership program between the federal government and the state government. It specifies, quote, remanding the case to a local unit for further consideration is not a substitute for definitive and final administrative action. And, Your Honor, it’s my position that the case cannot be remanded for a decision. Counsel for appellant conceded that there are limited circumstances when a remand to SRT would be appropriate.

He asserted: The only circumstances which we would concede might require a remand is if the Administrative Law Judge found that there was contradictory medical evidence or insufficient medical evidence and there needed to be further development of medical evidence. It is certainly possible that the Administrative Law Judge might want to remand a case for a consultative examination, if that is warranted, and I believe that is a position that the Department agrees with. There are some limited circumstances in which you might remand a case for that specific development. However, that was not the case in Mr. [S.’s] presentation, There was no evidence or no indication throughout the course of the hearing or anything reflected in the decision of the administrative law judge that the reason that the case was remanded was for further medical development.

The ALJ took the position that he didn’t have the authority to ⁷³⁸ make a decision, and that the State Review Team would have to review the information. The following exchange helps to illuminate the issues: [THE COURT]: Let me interrupt you one second. When was the first application? When did Mr. [S.] file the first application for benefits? [COUNSEL FOR APPELLANT]: His first application that I’m aware of was made on October the 1st, 2002. [THE COURT]: The second one was October 23rd, '03? [COUNSEL FOR APPELLANT]: That’s correct. [THE COURT]: So, when he was approved the second time, that’s not retroactive, I guess. [COUNSEL FOR APPELLANT]: No, it is not, although it is my understanding in talking to my client recently that the bill that was in question, the Bayview bill, has either been written off as charity care or is not being pursued. [THE COURT]: He isn’t on the hook for anything in the intervening period of time? [COUNSEL FOR APPELLANT]: Not to my knowledge, but the reason I’m here today though, Your Honor, is because I have a very large Medical Assistance practice, and we find time and time again that the administrative law judges do not take a fresh look.

Do not provide the de novo review which federal law requires. They are simply remanding the cases back to the State Review Team for a redetermination, and this causes great delay, usually, a month or two or more and then the client is faced with the possibility of having to appeal once again, which is usually another several months. So you’re talking about a five month delay potentially in a case that is remanded to the State Review Team. Administrative law judges are in a position to review medical evidence.

It’s simply a question of looking at the medical evidence, applying the facts of the situation to the standard which they should be familiar with. It’s the Social Security Sequential Evaluation Standard. Lawyers and ⁷³⁹ paralegals do this all the time. It does not require a doctor to review medical evidence. * * * And, clearly, the Administrative Law Judge in this instance, if he had listened to the testimony and been willing to consider it and to go through that five step sequential evaluation, which is described in my memorandum, he should have come to the conclusion that my client was disabled, and, as a result, my client would have been able to receive Medical Assistance for his problem. [THE COURT]: Okay.

All right. I think I get the gist of your argument. Let me ask you a question. You’re asking me to remand it back to the ALJ? [COUNSEL FOR APPELLANT]: No, Your Honor.

Actually, I’m asking you to find that based on the record that he is disabled. He was disabled for that period of time of October 2002 through September of 2003. [THE COURT]: If I find he’s disabled, that really doesn’t get to your main issue, which is whether the ALJ can do what he or she did. [COUNSEL FOR APPELLANT]: You’re correct. The most important, I believe, decision to be 'made by Your Honor is whether or not an ALJ must make a final decision — go through a de novo review where evidence is considered by the administrative law judge and a final decision made by that individual. The most important issue here is the federal and state obligation of the administrative law judge to consider the evidence before him or her. [THE COURT]: In other words, you want me to rule that the ALJ should have made a final decision and then I should make a final decision— [COUNSEL FOR APPELLANT]: Yes, Your Honor. [THE COURT]: — as to disability? [COUNSEL FOR APPELLANT]: Yes.

Although I realize this is not controlling, I would let Your Honor know that ⁷⁴⁰ this is a very common problem, the failure of the administrative law judge. * * * [COUNSEL FOR APPELLANT]: [A] finding that, in fact, the administrative law judge had to make that final decision and should not have