v.
N.C. Dep't of Health & Human Servs.
IN THE SUPREME COURT OF NORTH CAROLINA
No. 144A18
Filed 1 February 2019
CARLOS PACHAS, by his attorney in fact, JULISSA PACHAS, Petitioner v. NORTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES, Respondent
Appeal pursuant to N.C.G.S. § 7A-30(2) from the decision of a divided panel of the Court of Appeals, ___ N.C. App. ___, 814 S.E.2d 136 (2018), affirming an order entered on 21 April 2017 by Judge W. Robert Bell in Superior Court, Mecklenburg County. Heard in the Supreme Court on 1 October 2018. Charlotte Center for Legal Advocacy, by Douglas Stuart Sea and Cassidy Estes- Rogers, for petitioner-appellant. Joshua H. Stein, Attorney General, by Lee J. Miller, Assistant Attorney General, for respondent-appellee. John R. Rittelmeyer for Disability Rights North Carolina, amicus curiae. HUDSON, Justice This case comes to us by way of petitioner’s notice of appeal based on a dissenting opinion in the Court of Appeals. We now review “whether the Court of Appeals erred as a matter of law in ruling that the superior court lacked jurisdiction to decide whether its previous order was being violated by a state agency on the PACHAS V. N.C. DEP’T OF HEALTH & HUMAN SERVS. Opinion of the Court grounds that petitioner failed to exhaust administrative remedies before moving to enforce the court’s order.” Because we conclude that the superior court had jurisdiction to enforce its previous order, we vacate the Court of Appeals’ decision. Pachas v. N.C. Dep’t of Health & Human Servs., ___ N.C. App. ___, ___, 814 S.E.2d 136, 137 (2018). Accordingly, we remand this case to the Court of Appeals to address the merits of respondent’s argument that the North Carolina Department of Health and Human Services (DHHS) did not violate the 17 March 2016 order. I. Factual and Procedural Background Petitioner Carlos Pachas, a resident of Mecklenburg County, and a Medicaid recipient, was left completely disabled and requiring twenty-four hour care as result of a stroke and a brain tumor in 2014. At the time, petitioner lived with his wife, their two minor children, and his wife’s elderly parents. All members of the household were dependent on petitioner for their financial support. In January 2015, he began receiving Social Security Disability benefits, and thereafter applied for re- enrollment in Medicaid. On 5 May 2015, the Mecklenburg County Department of Social Services (DSS) sent petitioner a notice that his currently ongoing Medicaid benefits would be terminated starting on 1 June 2015, and that he would need to meet a deductible of $6642 during the period of 1 May through 31 October 2015 to regain eligibility for Medicaid benefits. The DSS decision was based on the agency’s determination that petitioner, because of his monthly Social Security Disability benefits of $1369 that PACHAS V. N.C. DEP’T OF HEALTH & HUMAN SERVS.
[*2]Opinion of the Court
began in January 2015, exceeded the income limit for an individual to qualify for Medicaid as “Categorically Needy”—the income limit being one hundred percent of the federal poverty level1—and that petitioner now qualified for Medicaid as “Medically Needy” under DSS regulations. Under these regulations, “Categorically Needy” Medicaid recipients are not charged a deductible, but “Medically Needy” recipients are. Medicaid Eligibility Unit, Div. of Med. Assistance, N.C. Dep’t of Health & Human Servs., Aged Blind and Disabled Medicaid Manual, MA-2360 ¶ I (Nov. 1, 2011). Petitioner requested a hearing before DSS concerning the termination of his Medicaid benefits, and the hearing was held on 8 May 2015. On 13 May 2015, DSS sent petitioner a Notice of Decision affirming the termination of his Medicaid benefits. The Notice of Decision instructed petitioner that he could appeal the matter to DHHS. On the same day, petitioner filed a written request to appeal the decision, and the appeal was heard on 16 June. DHHS affirmed DSS’s decision requiring Pachas to meet a $6642 deductible in a Notice of Decision dated 10 August 2015. On 13 August, Pachas as petitioner appealed the unfavorable decision to DHHS, and he submitted his written appeal on 27 August 2015. In his appeal, petitioner maintained that DHHS erred in affirming the DSS decision to discontinue 1This income limit was established by the Current Operations and Capital Improvements Appropriations Act of 2013, sec. 12H.10.(a)-(b)(1), 2013 N.C. Sess. Laws 2013-360 (Regular Sess.) 995, 1180-81.
[*3]PACHAS V. N.C. DEP’T OF HEALTH & HUMAN SERVS.
Opinion of the Court
his Medicaid benefits arguing that DSS’s method of calculating his income eligibility for Medicaid “violate[s] the plain language of the federal Medicaid statute and controlling North Carolina case law.” First, petitioner argued that DSS’s policy violates the plain language of the controlling federal Medicaid statute, 42 U.S.C. § 1396a(m). Petitioner stated that the General Assembly elected to provide Medicaid to aged, blind, and disabled persons with incomes under one hundred percent of the federal poverty level. Petitioner noted that beneficiaries who meet these criteria are considered to be “Categorically Needy,” and their eligibility for Medicaid is governed by 42 U.S.C. § 1396a(m). Petitioner then pointed to § 1396a(m)(2)(A), which states that a beneficiary’s income level is determined by considering “a family of the size involved.” Petitioner contended that this language required DSS to determine whether his monthly income from Social Security Disability payments was more than one hundred percent of the federal poverty line if used not just to support himself, but to support all six members of his family as dependents. Second, petitioner argued that the North Carolina Court of Appeals’ decision in Martin v. North Carolina Department of Health and Human Services, 194 N.C. App. 716, 670 S.E.2d 629, disc. rev. denied, 363 N.C. 374, 678 S.E.2d 665 (2009), required DSS to determine whether petitioner’s income exceeded one hundred percent of the federal poverty guideline if used to support all six members of his family. According to petitioner, Martin involved a parallel Medicaid eligibility PACHAS V. N.C. DEP’T OF HEALTH & HUMAN SERVS.
[*4]Opinion of the Court
category, Medicaid for Qualified Medicare Beneficiaries (MQB-B), which contained the same “family of the size involved” language. Petitioner further noted that the court in Martin held that “a family of the size involved” meant “a group consisting of parents and their children; a group of persons who live together and have a shared commitment to a domestic relationship.” 194 N.C. App. at 722, 670 S.E.2d at 634. As a result, Pachas argued that Martin directed DHHS to consider his entire family when calculating whether his income rose above one hundred percent of the federal poverty level. Finally, petitioner pointed to a decision of the Superior Court in Mecklenburg County that he viewed as applying the reasoning in Martin to “all individuals who receive Medicaid benefits on the basis of disability.” See Cody v. N.C. Dep’t of Health & Human Servs., No. 13 CVS 19625 (N.C. Super. Ct. Mecklenburg County Mar. 11, 2014). Additionally, petitioner argued that “failure to consider his wife, children and dependent parents as part of his family leads to absurd results and violates the purpose of the Medicaid Act.” In its Final Decision, dated 1 October 2015, DHHS affirmed that petitioner must meet a deductible in order to regain eligibility for Medicaid given that his income exceeded one hundred percent of the federal poverty guideline for a single individual. On 16 October 2015, petitioner sought judicial review of the DHHS Final Decision in the Superior Court in Mecklenburg County. Petitioner requested that the court grant the following relief: (1) reverse the final agency decision and declare PACHAS V. N.C. DEP’T OF HEALTH & HUMAN SERVS.
[*5]Opinion of the Court
DHHS’s interpretation of the law illegal; (2) order DHHS to reinstate petitioner’s Medicaid benefits without requiring a deductible effective 1 June 2015; and (3) award petitioner costs and a reasonable attorney’s fee. In support of this request for relief, petitioner claimed, in pertinent part, that DHHS erred by “concluding that the Medicaid income limit applicable to Petitioner was the limit for a single individual in violation of 42 U.S.C. § 1396a(m), under which the applicable income limit is 100% of the federal poverty line for a ‘family of the size involved.’ ” On 17 March 2016,2 the Superior Court in Mecklenburg County signed an order reversing the final decision of DHHS. The superior court reached this determination because it concluded that: PACHAS V. N.C. DEP’T OF HEALTH & HUMAN SERVS.
[*6]Opinion of the Court
disabled individual is considered to be part of the household unit used for determining the applicable income limit for MABD-CN. The only exceptions in this rule are where the spouse of the individual is also aged, blind or disabled, or where the spouse has income that is deemed available to the aged, blind or disabled individual, in which case the household size is two. .... 6. Pursuant to the challenged DHHS rule, Mecklenburg County DSS determined that Mr. Pachas’ Social Security income of $1396 per month was greater than $981 per month, which is the current federal poverty limit for a household size of one person. .... 8. The plain language of the controlling federal statutory provision, 42 U.S.C. § 1396a(m), states that the applicable Medicaid income limit for the MA[BD]-CN category must be based on a “family of the size involved.” Because the official poverty line published annually by the federal government varies by family size, the determination of family size determines the applicable income limit under the language of this statute. [9]. The Federal Medicare and Medicaid agency has interpreted the language “a family of the size involved” to include “the applicant, the spouse who is living in the same household, if any, and the number of individuals who are related to the applicant or applicants, who are living in the same household and who are dependent on the applicant or the applicant’s spouse for at least one-half of their financial support.” 42 C.F.R. § 423.772 (2005). 10. There is no dispute in the record or the briefing that Petitioner is providing over half of the financial support for his wife, their two minor children and his wife’s elderly parents, all of whom live with Petitioner.
[*7]PACHAS V. N.C. DEP’T OF HEALTH & HUMAN SERVS.
Opinion of the Court
11. In Martin v. North Carolina Department of Health and Human Services, the North Carolina Court of Appeals interpreted the identical phrase, “family of the size involved,” applied to similar facts, in reviewing a parallel provision of the federal Medicaid statute for the MQB category of benefits. The Court of Appeals held that the DHHS interpretation of “family of the size involved” for the MQB program violated the federal Medicaid statute and was therefore invalid. 12. Following the Martin decision, DHHS updated its Medicaid state plan and manual provisions to clarify that MQB eligibility must be based upon “family size” which includes “the [applicant/beneficiary], the spouse if there is one, and any dependent children under age 18 living in the home.” However, DHHS did not change its rule as to the MABD-CN category. 13. The provisions of the Federal Medicaid statute at issue in Martin and in this case contain precisely the same language regarding both the determination of family size and the countable income for Medicaid beneficiaries. 14. DHHS conceded at oral argument that prior to the Martin ruling, the same methodology for determining eligibility was used for both the MA[BD]-CN and MQB programs. (second alteration in original). While reversing the DHHS final decision on these grounds, the superior court ordered, in pertinent part, that DHHS “promptly reinstate Medicaid benefits to Petitioner effective June 1, 2015 and [ ] continue providing Medicaid to Petitioner until determined ineligible under the rules as modified according to this decision.”
[*8]PACHAS V. N.C. DEP’T OF HEALTH & HUMAN SERVS.
Opinion of the Court
Following the superior court’s reversal of the DHHS final decision, on 13 April 2016, DHHS instructed Mecklenburg County DSS to reinstate petitioner’s Medicaid benefits. Thereafter, following a hospital stay, Pachas entered a nursing facility on 6 May 2016, and his Medicaid benefits continued the entire time he was in the nursing home; on 14 February 2017, he was discharged from the nursing facility and returned home to live with his family. Pachas suffered from anxiety as well as his physical conditions while being away from his family. Pachas was to receive at-home care under Medicaid’s Community Alternative Program for Disabled Adults (CAP- DA). On the same day Pachas left the nursing facility and his care under CAP-DA was set to begin, Mecklenburg County DSS mailed him a notice that his benefits would be changed and, effective 1 March 2017, he would be required to meet a monthly deductible of $1113 for his CAP-DA care. In the notice DSS stated that the change in benefits was required by state regulations found in “MA 2280.” The notice also advised Pachas that he had sixty days to request an agency hearing if he disagreed with the decision. Instead of requesting an agency hearing, Pachas filed a motion in the cause to enforce the court’s order and a petition for writ of mandamus in the Superior Court in Mecklenburg County on 15 February 2017. In the motion and petition, Pachas requested the following relief pertinent to this appeal: (1) entry of an order enforcing the court’s 17 March 2016 order and directing North Carolina DHHS “to immediately PACHAS V. N.C. DEP’T OF HEALTH & HUMAN SERVS.
[*9]Opinion of the Court
reinstate his Medicaid benefits, including his CAP-DA services,” and ordering that the benefits be continued without his having to first meet a deductible; (2) issuance of a writ of mandamus ordering DHHS to reinstate his benefits effective 14 February 2017; and (3) entry of an order requiring Mecklenburg County DSS to reinstate his benefits if DHHS failed to do so within ten days of the court’s forthcoming order. On 6 March 2017, DHHS moved to dismiss petitioner’s motion and petition. DHHS argued, in pertinent part, that the motion and petition should be dismissed for these reasons: (1) the superior court did not have jurisdiction over the matter, because petitioner had not exhausted his administrative remedies; (2) with regard to the petition for writ of mandamus specifically, that petitioner had another adequate remedy at law through the agency appeal process; and (3) petitioner’s eligibility for the CAP-DA program did not fall within the 17 March 2016 order, because the CAP- DA program, which has its own eligibility and income limit rules under 42 U.S.C. § 1396n, is a “Waiver” program that is separate from the “State Plan” that was the subject of the previous order. In support of his motion in the cause seeking enforcement of the 17 March 2016 order and petition for writ of mandamus, petitioner argued that: (1) DHHS’s termination of all of petitioner’s Medicaid benefits on 14 February 2017 violated the 17 March 2016 order which required DHHS to immediately reinstate petitioner’s Medicaid benefits and continue to provide them until petitioner is “determined ineligible under the rules as modified according to [the order]”; (2) under the terms of PACHAS V. N.C. DEP’T OF HEALTH & HUMAN SERVS.
[*10]Opinion of the Court
DHHS’s waiver application for CAP-DA, and as stated in its own instruction manuals, individuals who qualify for Medicaid under the “Categorically Needy” eligibility group, the very category under which the 17 March 2016 order determined that petitioner’s benefits were to be reinstated and to continue, are eligible for CAP- DA without a deductible; (3) the CAP-DA waiver provision in 42 U.S.C. § 1396n(c) does not contain any “language waiving the requirement in § 1396a(m) to use ‘family size’ budgeting”; (4) DHHS’s own budgeting rules which state that “the income of a spouse cannot be counted in determining the CAP-DA applicant’s Medicaid eligibility” do not apply to “Categorically Needy” Medicaid recipients and are inconsistent with the 17 March 2016 order; and (5) petitioner fully exhausted his administrative remedies previously and he should not be required to do so again now because the superior court has sole jurisdiction to enforce its own order and exhaustion would be an inadequate or futile remedy. DHHS responded to petitioner’s arguments by asserting that the motion and petition should be dismissed on the following grounds: (1) the superior court’s 17 March 2016 order “does not apply because it only contemplated Petitioner’s eligibility for State Plan services and does not address Petitioner’s Medicaid eligibility through the CAP/DA waiver,” which is governed by separate federal rules and regulations; (2) petitioner remains eligible for State Plan Medicaid benefits and therefore DHHS did not violate the 17 March 2016 order; (3) petitioner failed to exhaust his available administrative remedies; and (4) petitioner has failed to demonstrate how exhaustion PACHAS V. N.C. DEP’T OF HEALTH & HUMAN SERVS.
[*11]Opinion of the Court
of his administrative remedies would be futile when the administrative remedy provides “relief more or less commensurate with the claim.” Huang v. N.C. State. Univ., 107 N.C. App. 710, 715, 421 S.E.2d 812, 815 (1992). The superior court dismissed petitioner’s motion in the cause to enforce the court’s order and his petition for writ of mandamus on 21 April 2017. In so doing, the court found that DHHS “has not violated the Order signed on March 17, 2016.” The court reached this decision for the following reasons: PACHAS V. N.C. DEP’T OF HEALTH & HUMAN SERVS.
[*12]Opinion of the Court PACHAS V. N.C. DEP’T OF HEALTH & HUMAN SERVS.
[*13]Opinion of the Court PACHAS V. N.C. DEP’T OF HEALTH & HUMAN SERVS.
[*14]Opinion of the Court PACHAS V. N.C. DEP’T OF HEALTH & HUMAN SERVS.
[*15]Opinion of the Court PACHAS V. N.C. DEP’T OF HEALTH & HUMAN SERVS.
[*16]Opinion of the Court PACHAS V. N.C. DEP’T OF HEALTH & HUMAN SERVS.
[*17]Opinion of the Court PACHAS V. N.C. DEP’T OF HEALTH & HUMAN SERVS.
[*18]Opinion of the Court PACHAS V. N.C. DEP’T OF HEALTH & HUMAN SERVS.
[*19]Opinion of the Court PACHAS V. N.C. DEP’T OF HEALTH & HUMAN SERVS.
[*20]Opinion of the Court PACHAS V. N.C. DEP’T OF HEALTH & HUMAN SERVS.
[*21]Opinion of the Court PACHAS V. N.C. DEP’T OF HEALTH & HUMAN SERVS.
[*22]Opinion of the Court PACHAS V. N.C. DEP’T OF HEALTH & HUMAN SERVS.
[*23]Opinion of the Court PACHAS V. N.C. DEP’T OF HEALTH & HUMAN SERVS.
[*24]Opinion of the Court PACHAS V. N.C. DEP’T OF HEALTH & HUMAN SERVS.
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