DEPARTMENTAL APPEALS BOARD
Department of Health and Human Services
SUBJECT: California Department
DATE: December 6, 1989
Health Services Docket No. 89-241
Audit Control No.A-09-89-00085
Decision No. 1119
DECISION
The California Department of Health Services (State) appealed a
determination by the Health Care Financing Administration (HCFA)
disallowing $10,233,580 in federal financial participation (FFP) claimed
by the State under Title XIX (Medicaid) of the Social Security Act
(Act). The disallowance represented the federal share of Medicaid
expenditures claimed by the State for services provided to "undocumented
aliens" (i.e., individuals who lacked documentation of the required
alienage under the program) in Los Angeles County during the periods
April 1, 1981 through September 30, 1982, and April 1, 1983 through
December 31, 1985.
Arguing for a reversal of the disallowance, the State disagreed with
HCFA's position that federal law precluded the State from claiming FFP
for expenditures made on behalf of otherwise eligible aliens pending
receipt of verification of status from the Immigration and
Naturalization Service (INS). The State asserted that, during the
periods covered by the disallowance, eligibility of aliens for Medicaid
under the optionally categorically needy and medically needy provisions
of the Act were not governed by statute but only by a HCFA regulation,
42 C.F.R. 435.402. The State maintained that this regulation is void
and unenforceable because it exceeds the authority granted the Secretary
by Congress. Further, the State argued that HCFA's audit failed to take
into account that INS does not recognize a class of aliens who are
"permanently residing under color of law" ("PRUCOL"), while
HCFA's
regulation provides that aliens who have "PRUCOL" status are eligible
for Medicaid. Finally, the State asserted that the audit was based on
the inappropriate assumption that aliens who did not appear for a
scheduled interview with INS were neither lawful, permanent residents
nor PRUCOL, and that the audit failed to take into account that INS did
not promptly process requests for verification of immigration status.
The State acknowledged that these identical issues were previously
raised and addressed in California Dept. of Health Services, DAB No.
1095 (1989). In California, the Board found that the State could not
claim FFP for the aliens in question since their eligibility was never
ultimately established by the verification process employed by the
State. The Board determined that the State chose to provide Medicaid
benefits at its own risk, even in situations that were not emergency
cases, and the State must, therefore, bear the entire financial
responsibility if the individual's eligibility could not subsequently be
established. The State requested that the Board issue a summary
decision consistent with the findings and determinations we made in DAB
No. 1095. HCFA agreed to this course of action.
We therefore sustain the disallowance of $10,233,580 based on the
reasons and analysis in DAB No. 1095, which we incorporate here in full.
Cecilia Sparks Ford
Norval D. (John) Settle
Donald F. Garrett Presiding Board