Nitta v. Department of Human Services.

Citation: Not availableDocket: SCWC-17-0000432

Court: Hawaii Supreme Court; November 4, 2022; Hawaii; State Supreme Court

Original Court Document: View Document

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Frederick Nitta, M.D. is involved in a legal dispute with the Department of Human Services (DHS) of the State of Hawai‘i regarding the recovery of over $200,000 in Medicaid payments he received through the Medicaid Primary Care Physician Program, established under the Affordable Care Act. Dr. Nitta, a board-certified OB/GYN, was deemed ineligible for the Program in 2015 due to not meeting federal specialty requirements. This determination was based on 42 C.F.R. § 447.400, which DHS cited to demand repayment. After exhausting administrative appeals, Dr. Nitta appealed to the Intermediate Court of Appeals (ICA) while the Court of Appeals for the Sixth Circuit invalidated the Rule that DHS relied upon. The ICA adopted the Sixth Circuit's reasoning, leading to a remand to DHS for further proceedings, as the invalidated Rule was a basis for the repayment order. On certiorari, DHS does not contest the invalidation but argues that Dr. Nitta remains ineligible under the original statute and that the circuit court's ruling was based on this statute. The ICA did not resolve whether Dr. Nitta qualified under the statute, focusing instead on the invalidated Rule.

Dr. Nitta’s eligibility for the Medicaid Program under the Statute is acknowledged as a relevant issue. The court agrees with the Sixth Circuit and the ICA that the Rule, which invalidates Dr. Nitta's eligibility, contradicts the Statute. It asserts that Dr. Nitta is entitled to enhanced payments under the Statute, countering DHS’s claim that the circuit court deemed him ineligible based on the Statute. Instead, the circuit court relied solely on the invalid Rule for its decision. Additionally, the court dismisses DHS's argument regarding the recoupment of overpayments due to lack of appropriated funds, stating it was not raised previously and is therefore waived. The court vacates the ICA’s March 23, 2022 judgment that remanded the case for further proceedings but affirms the remainder of the ICA’s judgment. 

The factual background outlines that Medicaid, a joint federal and state program providing medical assistance, was affected by the ACA enacted in 2010, which temporarily increased payments to certain primary-care physicians in 2013 and 2014. The Statute mandates that states provide enhanced payment rates for qualifying physicians. CMS defined eligibility through the Rule, requiring board certification or a minimum billing threshold for physicians specializing in family medicine, internal medicine, or pediatrics. The Rule specifies that eligible physicians must attest to their certification status or billing practices to qualify for these enhanced payments.

The Statute permits increased payments to physicians designated in family medicine, general internal medicine, or pediatric medicine. However, the Rule mandates that physicians self-attest to their specialty, confirm board certification in one of these areas (or a recognized subspecialty), or demonstrate that at least sixty percent of their billings are for primary care physician (PCP) services. Subspecialties for each category are detailed, including those in family medicine, internal medicine, and pediatric medicine. In Hawai‘i, the Department of Human Services (DHS) requires physicians claiming enhanced payments to complete a self-attestation form online, which must be filled out by the physicians themselves.

Dr. Nitta, a board-certified OB/GYN since the early 1990s, has primarily treated Medicaid and Medicare patients, acting as a PCP despite his specialty. In 2013, he was enrolled in the Program on the advice of an AlohaCare representative. Although he was attested to having a relevant specialty designation, he was later notified by DHS on July 7, 2015, that he was ineligible for enhanced payments, leading to a demand for repayment of $205,940.13 on November 6, 2015. Following this, Dr. Nitta requested an administrative hearing, which took place on March 18, 2016. On June 16, 2016, the hearing officer ruled in favor of DHS, stating that Dr. Nitta's OB/GYN certification did not meet the specialty requirements and that he failed to satisfy the sixty percent billing criterion outlined in the Rule.

On July 25, 2016, DHS Deputy Director Pankaj Bhanot issued a final decision regarding Dr. Nitta’s administrative appeal, largely affirming the hearing officer's conclusions. The decision recognized Dr. Nitta as a primary care physician (PCP) with an OB/GYN specialization, as identified by HMSA, UnitedHealthcare, AlohaCare, and Hilo Medical Center. Despite this, DHS ordered Dr. Nitta to repay funds due to his failure to meet specific program requirements. 

Dr. Nitta then appealed to the circuit court, which ruled on April 12, 2017, that he did not satisfy the self-attestation requirement since a staff member completed it for him. The court also determined he lacked a recognized specialty designation and concluded that there was no need to address DHS’s billing threshold calculations. It found Dr. Nitta owed $205,338.88 in overpayments, affirming the DHS decision on May 9, 2017.

On May 19, 2017, Dr. Nitta appealed to the ICA, reiterating previous arguments. The Hawaiʻi Medical Association (HMA) and the American Medical Association (AMA) submitted an amicus brief emphasizing Hawaii's critical physician shortage, particularly in primary care for Medicaid patients. They highlighted long wait times for appointments and the financial burden of emergency room visits, attributing the shortage to an aging workforce, high living costs, and insufficient funding for physicians. The brief noted that Dr. Nitta provides essential services in East Hawaiʻi, a designated Health Professional Shortage Area.

DHS's recoupment actions against Dr. Nitta threaten his ability to practice, potentially exacerbating the shortage of primary care physicians (PCPs) in the region. Amici argued that the payments received by Dr. Nitta aligned with the Affordable Care Act's aim to support physicians serving the Medicaid population. They contended that DHS improperly relied on medical directory listings as the primary measure of a physician's practice characteristics and criticized DHS for having excessive discretion in determining physician eligibility. They referenced CMS's guidance, which provided various methods for states to verify a physician's practice characteristics, noting that Dr. Nitta had substantial evidence of his PCP status, including community recognition, acceptance by insurers, and extensive supporting testimonies.

Amici highlighted that DHS's formula for assessing the sixty-percent threshold for PCP services disregarded actual medical practice, as it based its determination solely on paid billing codes without considering the managed care context. They pointed out that CMS allowed physicians to self-attest their PCP service percentage, emphasizing that ancillary services billed under a physician's supervision could distort the ratio of PCP services to total services reported by DHS.

In related legal developments, while the appeal was ongoing, the Sixth Circuit invalidated a similar DHS rule in the Averett case, which involved Tennessee's Medicaid agency attempting to recoup significant funds from family medicine physicians who allegedly failed to meet the sixty-percent billing requirement. The court found that the term "primary specialty designation" used in the statute was clear, emphasizing that it pertains to a physician's main area of practice without necessitating board certification or a strict billing percentage requirement.

CMS interpreted the term "a physician with a primary specialty designation" differently for Medicare than for Medicaid, leading to a ruling by the Sixth Circuit that favored the latter interpretation as it aligned with the Statute's language. The court invalidated a CMS Rule that conflicted with this definition. Subsequently, the ICA ordered supplemental briefs regarding the implications of the Averett case on Dr. Nitta's appeal. Dr. Nitta argued for enhanced payments similar to those granted in Averett, while DHS contended that the Rule's invalidation did not affect the Statute's requirements for primary specialty designation, which DHS claimed Dr. Nitta did not meet according to his applications where he designated OB/GYN as his specialty. 

On February 11, 2022, the ICA affirmed the invalidation of the Rule and DHS’s self-attestation form, concluding that both were inconsistent with the Statute. The ICA vacated previous decisions by DHS and the circuit court and remanded the case for further proceedings. On May 23, 2022, DHS sought a writ of certiorari, arguing Dr. Nitta’s ineligibility based on the Statute and the need to recoup any overpayments. The standards of review for judicial oversight of administrative cases are outlined in HRS § 91-14(g), detailing conditions under which an agency's decisions may be affirmed, remanded, or reversed based on legal or procedural errors.

Dr. Nitta is deemed eligible for the Program under the relevant Statute, despite the Department of Homeland Security's (DHS) assertion of ineligibility based on his primary specialty designation as OB/GYN. DHS argues that this designation, established in both his 1993 Medicaid application and 2006 National Provider Identifier (NPI) specialty designation, precludes him from self-designating a different primary specialty. The discussion clarifies that a physician can hold multiple specialty classifications and that administrative designations, like the NPI, cannot contradict statutory definitions. The statutes in question, specifically 42 U.S.C. § 1396a(a)(13)(C) and § 1395l(x), acknowledge the ability for a health care provider to have multiple specialties. Additionally, under 42 U.S.C. § 1320d-2(b), it is recognized that a health care provider can possess multiple specialty classifications, reinforcing the conclusion that Dr. Nitta is eligible for the Program.

An individual physician qualifies as a "provider of medical or other health care services" under 42 U.S.C. § 1395x(s), which includes "physicians' services." As such, Dr. Nitta's initial designation as an OB/GYN does not preclude him from holding another primary specialty classification during the relevant time. For eligibility under the Program, he was required to designate a primary specialty in family medicine, general internal medicine, or pediatric medicine. It was determined that the Rule introducing inconsistent requirements was invalidated. Therefore, Dr. Nitta’s self-designation of either family medicine, general internal medicine, or pediatric medicine suffices for eligibility, as his lack of personal submission of the online application is deemed immaterial given that he ratified the actions of his staff. His self-attestation aligned with the recognition from various health organizations and community professionals of his role as a primary care provider (PCP). Consequently, Dr. Nitta is found eligible for enhanced payments under the Statute, aligning with Congressional intent to increase primary care incentives and addressing the disparity between Medicaid and Medicare reimbursement rates for similar services.

Congress identified the need for enhanced Medicaid payment rates to encourage physician participation, improve access for Medicaid beneficiaries, and attract new professionals to primary care, addressing a shortage in many regions. The legislative history clarifies that these enhancements should apply broadly to all participating physicians and health professionals providing primary care services. Consequently, Dr. Nitta qualifies for these enhanced payments under the Statute.

Regarding the circuit court's ruling on Dr. Nitta's eligibility, it was determined that the court relied solely on an invalidated Rule, rather than the Statute, which would have been incorrect. Additionally, the Department of Human Services (DHS) raised a new argument about the lack of appropriation for Dr. Nitta’s payments, which was not previously presented and thus waived on appeal. 

In conclusion, Dr. Nitta is deemed eligible for enhanced payments, leading to the vacating of the ICA’s judgment that remanded the case for further proceedings, while affirming the remainder of the judgment.