SC Administrative Law Court Decisions

The Administrative Law Judge Division ("Division) has jurisdiction to hear this matter pursuant to S.C. Code Ann. § 44-6-190 (Supp. 1996). This is an appeal from an Order of Dismissal of the South Carolina Department of Health and Human Services ("Department") Division of Appeals and Hearings dated October 18, 1996. A Hearing Officer dismissed the case contesting the termination of Appellant's Medicaid benefits on the ground that the request for a fair hearing was not timely filed within 30 days of the agency action or decision. A hearing was conducted on April 1, 1997, at which time oral arguments were heard on the merits of the appeal. For the reasons stated in this Order, the decision of the Hearing Officer is reversed.

The Department administers the Medicaid program in South Carolina. As part of this program, the Department has entered into a contract with the Department of Social Services ("DSS") whereby DSS acts as the Department's agent for processing applications for Medicaid eligibility and rendering eligibility determinations. Any applicant who disagrees with an eligibility determination may request a fair hearing which is conducted by the Department's Division of Appeals and Hearings.

Appellant first applied for Medicaid benefits with DSS in the fall of 1992. Initially, she was approved for benefits which paid for her care for more than a year. Subsequently, it was determined that Appellant's health insurance benefits with CHAMPUS provided for custodial care. CHAMPUS began to provide benefits and reimbursed the Department for expenses previously paid by Medicaid. The Aiken DSS closed Appellant's case in April of 1994. Appellant's Medicaid eligibility was terminated on July 11, 1994, effective August 1, 1994, as a result of excess assets.

Appellant has a history of multiple sclerosis and has residual debilitating disabilities as a result of a stroke. Appellant is blind, a quadriplegic, and requires total care. Appellant is incompetent. Appellant was admitted to Pepper Hill Nursing Center in Aiken, South Carolina in May of 1993. Notice of termination of Medicaid benefits was sent to Appellant at Pepper Hill Nursing Center on July 11, 1994. It is not disputed that notice of the termination was never given to Robert Fielding, Appellant's husband, representative party, and signatory of the original application for benefits.

CHAMPUS benefits were terminated in late November or early December, 1994. At this time, Mr. Fielding reapplied for Medicaid benefits. Mr. Fielding subsequently withdrew the application when CHAMPUS indicated that it intended to continue to pay benefits. CHAMPUS paid benefits until April of 1995, when it issued a notice denying benefits. Another application for Medicaid eligibility was filed in December, 1995, which was approved by the Department retroactive to September 1, 1995. The Department is currently providing Medicaid benefits.

By letter dated July 11, 1996, Mr. Fielding appealed the 1994 termination of Appellant's Medicaid eligibility. On August 27, 1996, the Department moved to have the matter dismissed on the ground that it was not timely instituted. By Order of the Hearing Officer of the Division of Appeals and Hearings, dated October 18, 1996, the Department's Motion to Dismiss was granted. This appeal followed, dated November 15, 1996.

Whether the Department's Hearing Officer appropriately dismissed the action as a result of finding that the appeal had not been timely filed?

STANDARD OF REVIEW

In reviewing the factual findings of an agency, the Administrative Law Judge Division is limited to determining whether substantial rights of the Appellant have been prejudiced because the administrative findings, inferences, conclusions, or decisions are clearly erroneous in view of the reliable, probative and substantial evidence on the whole record. S.C. Code Ann. § 1-23-380 (A)(6)(e) (Supp. 1996). In accordance with the foregoing provision, the Hearing Officer's decision may only be set aside if unsupported by "substantial evidence." " 'Substantial evidence' is not a mere scintilla of evidence nor the evidence viewed blindly from one side of the case, but is evidence which, considering the record as a whole, would allow reasonable minds to reach the conclusion that the administrative agency reached or must have reached in order to justify its action." Lark v. Bi-Lo, Inc., 276 S.C. 130, 134, 276 S.E.2d 304, 306 (1981).

In this case, the Hearing Officer made a factual finding that the Department notified Appellant on July 11, 1994 that her Medicaid benefits would be terminated effective August 1, 1994. The notice included a statement which advised Appellant of her right to request a fair hearing in writing within thirty (30) days of the date of the notice. The Hearing Officer determined that Appellant's appeal of the termination, dated July 11, 1996, was not timely filed. I find that this determination is not supported by the substantial evidence in the record. The decision of the Hearing Officer is based solely on the dates notice was given and appeal taken, without consideration of the adequacy of notice or deference to Appellant's undisputed incompetency and inability to represent her own interests relating to the determination.

Appellant's legal counsel contends that Appellant did not receive adequate notice of the July 1994 action because her disability rendered her incompetent and she was therefore unable to respond. The Department concedes that notice of the termination was improper, if the notice sent to Appellant at Pepper Hill Nursing Center was the only notice Appellant received. However, the Department asserts that subsequent events give rise to an opportunity for notice or at least a duty of inquiry. The Department maintains that the termination of Medicaid eligibility effective August 1, 1994 is deemed to be final and is not subject to appeal.

Pursuant to 27 S.C. Code Regs. 126-152 (1976), the requisite notice of appeal must be filed within thirty (30) days of the agency's written notice of the action giving rise to the appeal, otherwise the agency action is rendered final. No notice of appeal was filed within the required thirty (30) days from July 11, 1994, the date of notice of termination.

As provided by 27 S.C. Code Regs. 126-380 (1976), whenever an individual's Medicaid benefits are denied, discontinued, or changed, the individual shall receive notice which includes an explanation of the individual's right to a fair hearing, the method to obtain a hearing and the right to representation. (emphasis added.) One purpose of the administrative requirement of notice and hearing prior to any state action resulting in suspension, reduction, or termination of benefits is to protect the interests of the recipients. Bracco v. Lackner, 462 F.Supp. 436 (N.D. Cal. 1978). Furthermore, the right of notice exists independent of any right to a hearing. Budnicki v. Beal, 450 F. Supp. 546 (E.D. Pa. 1978).

The Department failed to give adequate notice because notice to a person known to be incompetent is insufficient under federal constitutional requirements. Covey v. The Town of Somers, 351 U.S. 141 (1956). Moreover, the Department failed to give Appellant's representative notice. The United States Supreme Court, in Covey, dealt with the issue of notice to an incompetent person. The Court stated:

An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections . . . [W]hen notice is a person's due, process which is a mere gesture is not due process. The means employed must be such as one desirous of actually informing the absentee [sic] might reasonably adopt to accomplish it. (emphasis added).

Id. at 146. The Court went on to say that notice to a person known to be an incompetent person who is without the protection of a guardian does not measure up to the due process requirement. Appellant here, like the individual in Covey, is wholly unable to understand the nature of the Department's action. The Department knew of Appellant's incompetence, and knew that Mr. Fielding made application for benefits on Appellant's behalf. Adequate notice would have included forwarding legal documents to Mr. Fielding, which the Department admits it did not do.

The Department asserts that Mr. Fielding knew of the termination of benefits when he filed another application for Medicaid benefits in December of 1994. Even if Mr. Fielding acquired knowledge of the termination of benefits in December of 1994, the Department, nonetheless, failed to supply him with notice which complies with Regulation 126-380. This provision requires an explanation of the individual's right to a fair hearing, the method to obtain a hearing, and the right to representation. The Department failed to give adequate notice to Appellant or any individual who could protect her interests, thus violating her rights to due process. Therefore, the Department inappropriately dismissed the action.

Based upon the record and the applicable law, the Order of the Hearing Officer is reversed and this case is remanded to the Hearing Officer of the Division of Appeals and Hearings to conduct a hearing on the merits.

AND IT IS SO ORDERED.

____________________________

John D. Geathers

Administrative Law Judge

Post Office Box 11667

Columbia, South Carolina 29211-1667

April 24, 1997

Columbia, South Carolina