SC Administrative Law Court Decisions

This matter comes before me pursuant to Petitioner John Henderson's request for a contested case hearing to challenge the setoff of his South Carolina Income Tax Return at the request of the Department of Mental Health ("Department") to defray costs of services provided to Henderson in December 1999. The Administrative Law Judge Division (ALJD) has jurisdiction over this matter pursuant to S.C. Code Ann. §§ 1-23-600 (B) (Supp. 2001); S.C. Code Ann. § 1-23-310, et seq. (1986 & Supp. 2001); and S.C. Code Ann. § 12-56-65 (Rev. 2000). A hearing was conducted on July 12, 2002, at the Administrative Law Judge Division in Columbia, South Carolina.

Having carefully considered the testimony and the arguments of both sides, and taking into account the credibility of the evidence and witnesses, I find the following by a preponderance of the evidence:

• Notice of the time, date, place and subject matter of the hearing was given to all parties in a timely manner.
• In December 1999, Petitioner sought and received inpatient treatment services at Patrick B. Harris Psychiatric Hospital ("Harris"), one of the Department's facilities. At the time of his involuntary admission, Petitioner was suicidal as a result of his drug addiction. He was treated at Harris on an inpatient basis from December 8 to December 23, 1999. Computed at $200 per day, as set by the Commission of Mental Health, the charges stemming from Petitioner's hospitalization total $3000.00.
• During the relevant period, Petitioner had health insurance coverage that provided inpatient benefits for covered treatment after the payment of a $200 co-payment by the insured. At the time of his admission, the insurer had "pre-certified" two days' inpatient treatment. However, the insurer initially denied coverage for the remainder of treatment provided to Petitioner at Harris. The Department appealed the insurer's decision on behalf of Petitioner. In addition, Petitioner and his parents repeatedly contacted both Harris and the insurer in an attempt to gain coverage for the treatment. The insurer denied Petitioner's appeal of its denial of coverage on December 26, 2000. The insurer ultimately sent a check to the Department for $90.00, its portion of the two days it had pre-certified. After crediting Petitioner's account with the insurance payment, Petitioner's balance was $2910.00.
• After first learning that the insurer was denying coverage for his treatment, Petitioner questioned Dr. Ross regarding his obligations to pay for the treatment. Petitioner alleges that Dr. Ross told him that if Petitioner's insurance would not pay, the hospital would take care of it. However, Dr. Ross was not presented as a witness. Consequently, any hearsay testimony attributed to Dr. Ross as offered by Petitioner will not be considered probative evidence.
• In September 2001, the Department sent a letter to Petitioner notifying him of its intent to submit his debt of $2910.00 to the South Carolina Department of Revenue ("DOR") pursuant to the Setoff Debt Collection Act. Subsequently, the Department collected $591.00 from DOR. At some point, the Department agreed to refund the $591.00 it received from DOR based on hardship. Petitioner then protested and was given a hearing on March 12, 2002. However, the remaining $25.00, retained by DOR as an administrative cost pursuant to the Setoff Debt Collection Act, has not been refunded to Petitioner.
• It is this $25.00 that is the subject of the contested case. Petitioner claims he is entitled to it because he is not obligated to pay for the treatment he received in December 1999. The Department, on the other hand, argues that, based on the Setoff Debt Collection Act, it is not obligated to pay Petitioner the $25.00 retained by DOR. The Department maintains that Petitioner owes it $2910.00, that it is entitled to the $591.00 setoff it received from DOR, but that the Department refunded the money it collected from DOR because of the hardship it would cause Petitioner.

CONCLUSIONS OF LAW

Based upon these Findings of Fact, I conclude as a matter of law:

• The Administrative Law Judge Division has subject matter jurisdiction over this case pursuant to S.C. Code Ann. § 1-23-600 (B) (Supp. 2001)and S.C. Code Ann. §§ 1-23-310, et seq. (1986 & Supp. 2001).
• The Department is authorized to charge its patients for the maintenance and medical care those patients receive. S.C. Code Ann. § 44-23-1110 (Supp. 2001). The maintenance and care of the mentally ill "is not unconditional charity but is based upon expectations of future reimbursement if the circumstances should thereafter permit." Minter v. State Dept. of Mental Health, 258 S.C. 186, 187 S.E.2d 890 (1972).
• Pursuant to the Setoff Debt Collection Act, a state agency may collect a delinquent debt by submitting a claim to the South Carolina Department of Revenue for the debtor's tax refund. S.C. Code Ann. § 12-56-60(A) (Supp. 2001). The Act allows DOR to retain $25.00 of the claimed refund to offset the administrative expenses. S.C. Code Ann. § 12-56-60(B). Therefore, an agency claiming setoff may receive no more than the amount of the refund less $25.00.
• The debtor may protest the setoff. § 12-56-65 (Supp. 2001). However, the setoff can proceed during the pendency of the protest. § 12-56-65(B). If a setoff is made, and "the claimant agency is found to be entitled to no part of the amount set off, it shall refund the entire amount plus the administrative fee retained by [DOR]." § 12-56-65(D). Because the Department has already refunded all of the setoff it received, the only issue is whether it must now refund the $25.00 retained by DOR.
• I find that the Department is not required to refund the $25.00 retained by DOR because the Department was entitled to, at the very least, the co-payment owed by Petitioner at the time of admission. ⁽¹⁾ Petitioner would owe that co-payment regardless of whether his insurer covered his entire hospital stay instead of only the first two days of his stay.

ORDER

IT IS HEREBY ORDERED that the Department of Mental Health is not required to refund to Petitioner John Henderson the $25.00 retained by the Department of Revenue for administrative expenses associated with the setoff.

AND IT IS SO ORDERED.

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C. DUKES SCOTT

ADMINISTRATIVE LAW JUDGE

July 12, 2002

Columbia, South Carolina

1. This tribunal makes no finding, as none is necessary for the disposition of this matter, regarding the total debt owed by Petitioner to the Department.