DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
SUBJECT: New York State Department of
Social Services
Docket No. 86-174
Decision No. 828
DATE: January 20, 1987
DECISION
The New York State Department of Social Services (State) appealed
the
determination of the Health Care Financing Administration
(Agency)
disallowing $13,768,061 in federal financial participation (FFP)
claimed
under title XIX of the Social Security Act (Act). The Agency
had
previously disallowed a claim totalling $22,500,000 FFP which
included
this amount on the grounds that the claim was an estimate and that
no
documentation in readily reviewable form was produced within
the
deferral period. In New York State Department of Social
Services,
Decision No. 537, May 30, 1984, the Board
found that the claim was
not the kind of estimate reasonably prohibited by
Agency guidelines and
that the State had made documentation available to the
Agency during the
deferral period which the Agency failed to review.
The Board remanded
the case to the Agency to review documentation allegedly
supporting
$13,887,381 of the claim. 1/ The decision cautioned,
however, that the
State would have to show that the documentation was related
in subject
matter to the claim as originally filed by the State. In a
new
disallowance issued pursuant to its review of the documentation,
the
Agency disallowed all but $119,320 of the $13,887,381 on the ground
that
the documentation was not in fact related to the claim. It cited
in
support of its determination the Board's finding in Decision No.
537
that the cases included in the claim "were originally classified as
Home
Relief . . . and subsequently accepted under the Supplemental
Security
Income program (SSI), which made them eligible for Medicaid and
hence
for FFP." (Disallowance letter dated July 30, 1986, p. 2, quoting
from
Decision No. 537, p. 15) The Agency found that documentation
supporting
only $119,320 was related to Home Relief (HR) cases reclassified
to SSI.
2/
We reverse the disallowance on the ground stated by the Agency, that
the
documentation was not related to the claim, because we find that
the
documentation reviewed by the Agency was related in subject matter
to
the claim originally filed.
Parties' Arguments
On appeal to the Board from this new disallowance, the State disputed
the
Agency's finding that the documentation was not related to the
claim.
The State argued that Decision No. 537 did not directly involve
the issue of
what expenditures comprised the claim, and that therefore
the decision's
description of the claim was not binding here. In
addition, the State
argued that the Board had misinterpreted the
testimony of the State witness
on which the decision's description of
the claim was based. The State
noted that its witness had testified
that the underlying $22.5 million claim
was "primarily" composed of
expenditures reclassified from the HR to the SSI
category, and submitted
an affidavit from this individual confirming that he
did not intend to
exclude expenditures eligible for FFP under title XIX on a
basis other
than SSI eligibility. (State's appeal file, Ex. 3) The
State also noted
that the $22.5 million claim was developed as a result of a
continuing
series of audit projects designed to identify
federally
non-participating expenditures for which FFP should have been
claimed,
and asserted that the Agency's regional office and on-site audit
staff
were aware that such audit projects were not limited to HR to
SSI
expenditures.
The Agency took the position that the issue of what expenditures
comprised
the underlying claim was fundamental to the issue directly
presented in
Decision No. 537 of whether there was an acceptable
estimate. It argued
that the principle of collateral estoppel therefore
applied here to preclude
the relitigation of the former issue.
Discussion
In its opening brief the State anticipated that the Agency would rely
on
the doctrine of collateral estoppel. The State admitted that
collateral
estoppel bars "relitigation of issues actually litigated and
necessarily
determined" by either a court or an administrative tribunal
acting in a
quasi-judicial capacity, citing Montana v. United States, 440
U.S. 147,
153 (1979). (Brief of Appellant Claimant, p. 5) The State
went on to
say, however, that collateral estoppel would apply to
preclude
relitigation of fact issues only if certain listed conditions
are
present, namely:
(1) there is identity of parties . . . ;
(2) there is identity of issues;
(3) the parties had an adequate
opportunity to litigate
the
issues
in the prior administrative proceeding;
(4) the issues to be estopped were
actually litigated
and
determined in the earlier proceeding; and
(5) the findings on the issue to
be estopped were necessary
to
the
administrative decision. 3/
We are not persuaded that the issue of what expenditures comprised
the
underlying claim was properly before the Board in Decision No.
537.
Therefore, as discussed below, the finding on the issue claimed to
be
estopped was not necessary to the administrative decision, and the
State
is not precluded from questioning the description of the claim by us
in
Decision No. 537. The Board's description in Decision No. 537
of the
cases which comprised the claim appears in the context of a
discussion
of whether the claim was an unallowable estimate. It follows
general
guidance by the Board to the effect that a figure which was merely
a
guess, "with no plausible explanation of where it came from,"
would
clearly be unallowable. The decision then refers to the testimony
of
the aforementioned witness, stating that "[s]alient parts of
his
testimony show where the 22.5 million dollar figure on the QER came
from
and why it was substantially more than a mere guess." (Decision
No.
537, p. 15) Some of the testimony noted by the Board, in addition to
the
description of the cases comprising the claim, was that the claim
was
arrived at through a computerized audit process designed to
identify
Medicaid claims, that the amount of the claim was based on
actual
expenditures for medical care eligible for FFP, and that there
were
several types of documentation available at the time the claim
was
submitted. The decision then states:
Taking . . . [the] testimony as a whole,
we believe that the
disallowance cannot
be upheld on the ground that the figure
on
the QER was an "estimate," because
the record supports the
State's position
that its figure, while not as finally
definitive
as would be desirable, was
considerably more than just a guess.
. .
. We cannot conclude that the claim itself is deficient
where
the amount is determined by a
systematic analysis of expenditures
designed to identify those appropriately claimed for FFP.
(Decision No. 537, p. 16) In this context, the nature of the
cases
comprising the claim was really not significant. Had the
witness
identified the claims differently, it is unlikely that the
Board's
conclusion that the claim was "determined by a systematic analysis
of
expenditures" would have been affected, as long as the State's
position
was that it was calculating FFP claims for a particular type
of
expenditure. Since the Board's description of the claim was
not
necessary to the Board's decision, 4/ the State is not bound by
that
description.
The question then becomes whether the documentation reviewed by the
Agency
fell within the scope of the claim as described in the quarterly
expenditure
report (QER) on which the claim was made or any other
description of the
claim subsequently furnished by the State. We note
at the outset that
there is no burden of proof issue here. The Board
stated in Decision
No. 537 that the State would have to show that the
documentation was related
to the claim, citing its statement in a prior
decision that "[i]t is the
State's burden to show where particular
documentation supports the particular
claim." (New York State
Department of Social Services, Decision No.
445, p. 8) Decision No. 445
involved a situation where the State
offered documentation representing
$102 million FFP in support of a $140,559
disallowance. The Board's
point there was that it was the State's
burden to specifically identify
that part of the documentation which
supported the disallowed costs.
Here, however, the amount of the claim
exceeded that represented by the
available documentation, so that there was
no need to identify the
relevant documentation. Accordingly, the State does
not have any burden
here to show that the documentation was related to the
claim in the
sense intended in Decision No. 445. We see no need to
assign either
party the burden of proof where the question is whether
documentation
already examined by the Agency 5/ is related to various
descriptions of
the claim already in the record.
The State's QER for the quarter ended September 30, 1981 described
the
claim as a "Retroactive Adjustment of MA [Medical Assistance]
claims
submitted for the period October-December 1979." (State's appeal
file,
Ex. 2) The Agency did not argue here that the documentation did
not
fall within this description; indeed, it pointed out that the Board
had
stated in Decision No. 537 that "almost anything in the way
of
documentation could support such a claim." (Decision No. 537, p. 11)
6/
Thus, the documentation is clearly related to the claim based on
the
primary claiming document, the QER.
The State's description of the claim during the deferral process was
also
very broad. In a letter to the Agency requesting additional time
to
submit documentation of the claim, the State described the $22.5
million
claim as "relate[ed] to a change from FNP to the FP category."
(State's
appeal file, Ex. 1.f., at Ex. A, Attachment 2) This
description
was repeated in a subsequent letter to the Agency stating
that the State had
provided the Agency's on-site staff with relevant
documentation.
(State's appeal file, Ex. 1.h., at Attachment E) The
State's memorandum
advising the on-site staff where the documentation
could be found described
the claim as representing "Medical Assistance
Payments." (State's
appeal file, Ex. 1.h., at Attachment C) These
descriptions clearly cover the
documentation reviewed by the Agency
pursuant to Decision No. 537. 7/
The State's next description of the claim in question was in the
testimony
on which the Board based its description of the claim in
Decision No.
537. The State is correct that this testimony does not in
fact indicate
that the claim was comprised exclusively of HR to SSI
cases.
On direct examination, the witness testified in part:
We had primarily been processing cases
that were originally
classified as Home
Relief, which is New York State's
general
assistance category, which does
not have any Federal
participation and
subsequently were accepted under the
Supplemental Security Income program, SSI. By being accepted
to
the SSI program, there would be
Federal participation in the
Medicaid
expenditures.
* * *
Up to that point in time, we had
processed, again, primarily HR
and SSI
cases in the neighborhood of approximately 75 to
90
million dollars' worth of claims.
That was the original basis for
-- I
used that as the initial basis for computing the 22
1/2
million dollars.
(State's appeal file, Ex. 1.i., Transcript of March 9, 1984 hearing
in
Docket No. 83-186, pp. 86-87) On cross-examination, the
witness
responded "Yes" to the opposing counsel's statement "You testified
that
most of this information -- most of the claims involved
characterization
from the Home Relief category to the SSI eligibility
category." (Id.,
p. 94)
This testimony clearly indicates that there were cases other than HR
to
SSI cases covered by the claim. The testimony is somewhat
troubling,
however, in that the words "primarily" and "most," used by the
witness
to describe the proportion of the claim consisting of HR to SSI
cases,
while inexact, are generally considered to refer to more than
half.
(See Webster's Ninth New Collegiate Dictionary, defining "most" as
"the
greatest number or part" and "primarily" as "for the most part"
or
"chiefly.") Assuming that the $8,612,619 for which the State
submitted
no documentation for the record in Decision No. 537 consisted
entirely
of HR to SSI cases, and accepting the results of the Agency's review
of
the documentation supporting the remainder of the claim, 8/ that
would
mean that less than half the cases covered by the original claim
of
$22,500,000 were HR to SSI cases. However, we are unwilling to
conclude
on this basis that the documentation reviewed by the Agency
was
unrelated to the claim as described by this witness. The witness
had no
reason to be prepared to testify as to the precise amount of the
claim
represented by HR to SSI cases, since that was not an issue in the
case.
Under these circumstances, it is not fair to hold the State to
his
description to the extent that he identified the relative proportion
of
HR to SSI cases. Accordingly, as long as the documentation included
a
significant amount of HR to SSI cases, we cannot conclude that it
was
unrelated to the claim. 9/ The witness also made more oblique
references
to other bases for the claim, testifying in part:
Up to that point in time, we had
processed, again, primarily HR
and SSI
cases. . . . I used that as a starting point and
I
factored in several
considerations.
(State's appeal file, Ex. 1.i., Transcript of March 8, 1984 hearing,
pp.
86-87) In response to opposing counsel's inquiry regarding
whether
there was an adjustment schedule totalling $22.5 million, the
witness
stated:
I do not know. See, all those
adjustment schedules that were put
in
and all these processes involved pieces; they involved HR
and
SSI cases. I also testified
that, as we were going through this
process, other projects came about and, as a result of
those
other projects, claims were
submitted and identified
individually. So the total of many different types of
adjustment
schedules may equal 22 1/2
million dollars. . . .
(Id., pp. 97-98) Although the witness did not provide any detail as
to
what the "other projects" to which he referred were, or what part of
the
claim they supported, this testimony further indicates that the
claim
was not comprised solely of HR to SSI cases.
The State's last description of the claim appears in an affidavit of
the
aforementioned witness, prepared in connection with the State's
appeal
of the disallowance in this case, in which he stated in part:
The HR to SSI description was a generic
title given to various
project(s) and
was used as a general description of all
disability related projects. However, by using it, I did
not
intend to exclude any cases or
claims which were concurrently
identified as being eligible for Federal funding for
reasons
other than disability.
This fact is brought out by my testimony
to the extent that I indicated other types of expenditures
were
involved.
(State's appeal file, Ex. 2, p. 2) The Agency argued that the
affidavit
should be disregarded since it was inconsistent with the
individual's
testimony at the hearing and was tailored to the case now before
the
Board. However, as is evident from our earlier discussion, we find
the
affidavit to be consistent with the individual's testimony at
the
hearing. Moreover, while we recognize that an affidavit prepared
under
the circumstances present here might be self-serving, any temptation
to
alter the facts is arguably counterbalanced by the fact that
an
affidavit is a sworn statement. Thus, while we would not find
the
affidavit an independent basis for concluding that the documentation
was
related to the claim, the fact that the individual came forward
to
confirm his earlier testimony does support this conclusion.
In view of our conclusion that the documentation was related to
the
State's claim, we need not address the State's contention that
audit
projects such as the one used to develop this claim typically
involved
the reclassification of expenditures on more than one basis.
We note,
however, that although the Agency did not respond to this
contention
here, it did dispute the State's contention in another case
pending
before the Board (Docket No. 85-105) that the claims disallowed
there,
which were based on similar audit projects, involved more than one
type
of reclassification.
The Agency also asserted that over 90% of the documentation provided
by
the State was the result of an audit project involving
a
reclassification of expenditures identified as HR to MA only
with
medical expenses over $5,000, and noted that the State had made
an
estimated claim based on this audit project in December 1982.
Merely
because the State made a later claim for the same type of
expenditures
does not mean that the State could not have made an earlier
claim on
such a basis as well, however.
Conclusion
For the foregoing reasons, we conclude that the documentation reviewed
by
the Agency pursuant to Decision No. 537 was related to the claim,
and,
accordingly, reverse the disallowance based on a contrary finding
by
the Agency. Our decision does not preclude the Agency from
disallowing
the costs on other bases such as the ones indicated in its July
30, 1986
disallowance letter.
_________________________ Cecilia
Sparks
Ford
_________________________ Norval D.
(John)
Settle
_________________________ Alexander
G.
Teitz Presiding Board Member
1. This documentation was submitted with the State's
appeal file.
The documentation made available to the Agency during the
deferral
process, which presumably corresponded to the full amount of the
claim,
had since been disassembled by the State. Since there was
no
documentation to support the remaining $8,612,619 of the claim,
the
Board sustained the disallowance of that amount.
2. The Agency did not, however, allow the $119,320,
but stated that
it was under review.
3. The citation gives by the State for this listing
is United States
v. Utah Construction and Mining Co., 384 U.S. 394, 421-422
(1966).
Actually it is this case which held that the general principles of
res
judicata applied to decisions of administrative agencies acting in
a
judicial capacity, rather than Montana v. United States, supra.
It is
immaterial where the listing came from, or whether the principle we
are
dealing with is properly called res judicata (claim preclusion)
or
collateral estoppel (issue preclusion). The Agency admitted that
the
grounds on which preclusion is applied were "set out in New York's
brief
at pages 5-6 and need not be repeated." (Agency brief, p. 5)
4. This may explain why the Board's description of
the claim was not
as accurate as it could have been, as discussed below.
5. The disallowance letter specifically identifies
amounts
reclassified as Medicaid expenditures on various bases, including
SSI
eligibility.
6. The Board implicitly rejected any argument that
this description
was overbroad by its holding in Decision No. 537 that the
claim was an
acceptable estimate.
7. The record also includes an internal State
memorandum (which the
Agency stated was provided to it during the deferral
period) referring
to "Medical Assistance claims." (State's appeal file,
Ex. 1.h., at
Attachment A) However, it is not clear that this refers to
the $22.5
million claim submitted on the QER for the quarter ended September
30,
1981. Similarly, a table (which the Agency apparently received
during
the deferral period) identifies "Adjustment Schedules . . . Usable
as
Documentation for the . . . MA Estimates on the 7-9/81 QER,"
although
this does not clearly pertain to the claim in question here.
(State's
appeal file, Ex. 1.h., at Attachment E)
8. The State alleged that the Agency's review was
inadequate,
contending that "a considerably larger amount" than $119,230
represented
HR to SSI cases. (State's reply brief, p. 7) However, we
need not reach
this question in view of our conclusion that, even as
characterized by
the Agency, the documentation was related to the claim.
9. In New York State Department of Social Services,
Decision No.
433, May 31, 1983, the Board upheld a determination by the
Agency
disallowing retroactive claims made under title XIX of the Act on
the
ground that they were inadequately documented. In contrast to
the
circumstances here, the State had submitted documentation, consisting
of
three adjustment schedules, which far exceeded the amount at issue
and
which had no reasonable relationship to the State's descriptions of
the
audit projects underlying the disputed