Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: Montana Department of Social and Rehabilitation Services
DATE: March 24, 1994
Docket No. A-94-8
Decision No. 1471
DECISION
The Montana Department of Social and Rehabilitation Services (Montana)
appealed the disallowance by the Health Care Financing Administration
(HCFA) of $261,757 in federal financial participation (FFP) claimed
under Title XIX (Medicaid) of the Social Security Act (Act) for the
fiscal year ending (FYE) June 30, 1990. HCFA disallowed Montana's
claims on the grounds that they were filed beyond the two-year deadline
specified in the Act and in applicable regulations.
Montana did not dispute that the claims were not timely filed, but
argued that it should have been granted a waiver of the timely filing
requirement based on good cause. For the reasons explained below, we
sustain the entire disallowance.
Relevant Statutory and Regulatory Provisions
Section 1132(a) of the Act prohibits the payment of FFP for any
expenditure that has not been claimed within two years of the end of the
calendar quarter in which the expenditure was incurred. In enacting the
two-year filing limitation, Congress' intent was to facilitate federal
budget planning for programs under the Act by controlling states'
ability to make delayed claims. See Connecticut v. Schweiker, 684 F.2d
979, 982 (D.C. Cir. 1982), cert. denied, 459 U.S. 1207 (1983).
The statutory provisions are implemented by 45 C.F.R. Part 95, Subpart
A. The regulations provide several exceptions to the two-year limit for
filing claims. The exceptions include claims which are adjustments to
prior year costs, claims resulting from audit exceptions and
court-ordered retroactive payments, and any claim for which the
Secretary of the Department of Health and Human Services decides there
was "good cause" for late filing. 45 C.F.R. 95.19.
The regulations define "good cause" as circumstances beyond the state's
control, and provide, as examples, acts of God and documented action or
inaction by the federal government. 45 C.F.R. 95.22(a), (b). The
regulations also provide that circumstances beyond the state's control
do not include neglect or administrative inadequacy on the part of the
state, state agencies, the state legislature or any of their offices,
officers or employees. 45 C.F.R. 95.22(c).
The regulations further instruct that a state should request a waiver of
the filing deadline as soon as it recognizes that it will be unable to
submit a claim within the appropriate time limit. 45 C.F.R. 95.25.
The state's request for a waiver must include a specific explanation,
justification or documentation of why the claim is or will be late, and
must establish that the lateness is for good cause as defined in 45
C.F.R. 95.22, and is not due to neglect or administrative
inadequacy. 45 C.F.R. 95.28.
Montana's arguments
The Medicaid claims at issue here, for FYE June 30, 1990, were for
payments of Medicare premiums for Medicaid recipients who were also
Qualified Medicare Beneficiaries (QMBs). The claims were made in a
Quarterly Expenditure Report dated August 7, 1992. Montana did not deny
that its claims for QMB expenditures were filed beyond the two-year
deadline specified in the Act and regulations. Instead, Montana argued
that the claims were filed late as a result of circumstances beyond its
control, and that it was thus entitled to a waiver of the filing
deadline for good cause.
Montana reported that these payments were required beginning July 1,
1989 by the Medicare Catastrophic Coverage Act of 1988. Montana
asserted that it was not aware until November 1991, when it was in the
process of switching to a new eligibility tracking system, that some
Medicaid recipients eligible for QMB payments (Montana described these
recipients as "dually eligible for Medical Assistance Only (MAO) and QMB
assistance") had not been identified by its older system. Upon making
this discovery, Montana reported, it began what it described as the
laborious process of identifying these dually-eligible recipients.
According to Montana, this process took until August 1992, at which time
Montana filed the claims at issue here.
In addition to the problems with its eligibility tracking system,
Montana cited other grounds as good cause for the untimely claims
filing. Montana argued that it was given very little time to implement
the QMB program. Montana also asserted that HCFA failed to provide
appropriate training needed to enable its staff to operate the QMB
program efficiently. Although HCFA provided initial training in 1989,
Montana reported, it did not provide further training again until
September 1993, despite repeated requests.
HCFA informed Montana that the claims were untimely in a letter dated
December 22, 1992. Montana requested a waiver of the two-year time
limit in a letter dated February 3, 1993, and HCFA denied the request in
a letter dated April 5, 1993, on the basis that the request for a waiver
was untimely and that Montana had failed to show good cause for the late
filing.
Analysis
Montana conceded that its claims were filed beyond the statutory
deadline, but asserted that HCFA wrongly denied its request for a waiver
of the deadline based on good cause. As HCFA noted, the Board has not
directly addressed the issue of whether it may properly review HCFA's
exercise of discretion in denying a state's request for a good-cause
waiver. 1/ The Board has referred to this as an unresolved issue.
Alaska Dept. of Health and Social Services, DAB No. 1154 (1990).
Similarly, in Hawaii Dept. of Social Services and Housing, DAB No. 662
(1985), we noted that it was unclear if we had "jurisdiction to pass on
the correctness of the Agency's exercise of discretion in denying a
waiver." Hawaii at 4. We have not reached the question before and we
need not reach it now since, as explained below, HCFA was clearly not
arbitrary or capricious in denying the waiver. Accordingly, we decline
to disturb HCFA's determination denying Montana's waiver request.
1. Montana has not established that "good cause" existed for not
timely filing its claims.
The regulation providing for waiver of the two-year time limit on the
basis of good cause requires that late filing be due to circumstances
beyond the control of the state. The primary reason for the late filing
that Montana cited -- the failure of its computer system to identify
Medicaid recipients eligible for QMB payments -- was within the control
of no other party than Montana. Montana also made no showing that it
could not have discovered the problem identifying these recipients
earlier than it did. Furthermore, the difficulties identifying eligible
recipients cited by Montana may reasonably be considered an
administrative inadequacy, which is specifically excluded from the
definition of good cause. On this basis alone, we would find that
Montana failed to establish the existence of good cause as defined at 45
C.F.R. 95.22.
Montana also argued that the short lead time it was given to implement
the QMB program constituted good cause for the late filing. However,
Montana itself reported that QMB payments were required beginning in
July 1989, and thus Montana had a full two-year period following the end
of the quarter beginning July 1, 1989 to identify the QMB payments for
the first quarter at issue and an additional amount of time for
subsequent quarters. Thus, Montana's assertion that this was a
circumstance beyond its control is not credible. Additionally, Montana
failed to establish a causal connection between the timing of the
implementation of the QMB program and the late filing. Montana has also
not shown how HCFA's alleged failure to provide training resulted in its
problem identifying the QMB cases.
2. Montana did not timely request a waiver of the two- year filing
deadline.
The regulations provide that a state should request a waiver of the time
limit for claiming FFP as soon as it recognizes that it will be unable
to submit a claim within the appropriate time limit. 45 C.F.R. 95.25.
Here, Montana admitted that it first became aware of its problem
identifying the eligible QMB cases during November 1991. Montana argued
that at that point it had "only an inkling of the problem and had not
identified any specific QMB cases for which it knew claims could not be
timely filed." Montana Brief at 5. However, although Montana admitted
that it completed its computation of claims in June 1992 (Montana
Exhibit 1, 4), it did not make its request for a waiver until February
3, 1993. While Montana may not have completed the process of identifying
the QMB cases needed to submit its claims, it was still aware that there
was a problem which would affect its ability to claim payments for these
cases within the two-year time limit. See Michigan Dept. of Social
Services, DAB No. 1162 (1990) (untimely filing not due to circumstances
beyond the State's control, waiver request not made as soon as the State
recognized it would be unable to submit its claim within the appropriate
time limits). As in Michigan, we find that the request for a waiver for
good cause was not made as soon as Montana recognized it would be unable
to submit its claims within the appropriate time limits, and was thus
properly denied by HCFA.
Montana also argued that it did not request a waiver for good cause
earlier than it did because it originally thought that the late claims
would comprise an adjustment to prior year costs exempt from the timely
filing requirement under 45 C.F.R. 95.19. However, the regulations
define an adjustment to prior year costs as "an adjustment in the amount
of a particular item that was previously claimed under an interim rate
concept and for which it is later determined that the cost is greater or
less than that originally claimed." 45 C.F.R. 95.4. Here, there has
been no suggestion by Montana that the costs at issue had been
previously claimed under an interim rate concept. We also note that in
its appeal before the Board, Montana did not advance the argument that
its claims fell within the scope of this exception. We thus find that
under the plain language of the definition in section 95.4, Montana's
claims could not reasonably be considered an adjustment to prior year
costs, and that Montana's mistaken impression that it qualified for this
exception to the filing deadline did not excuse its failure to request a
waiver earlier. In any event, Montana's mistaken interpretation of the
clear language of the regulation would not be a circumstance beyond its
control, as would be required for a showing of good cause for late
filing. Accordingly, we find that Montana failed to timely request a
waiver of the two-year time limit for filing claims.
Conclusion
For the reasons explained above, we sustain the entire disallowance of
$261,757. We do not reach the question of whether we can review the
denial of a good cause waiver since the facts show that HCFA's denial of
Montana's request for a waiver was not arbitrary and was supported by
the record.
Donald F. Garrett
Norval D. (John) Settle
M. Terry Johnson Presiding Board Member
1. The Board has no authority to consider a state's initial request
for a waiver, however, since the regulations provide for the submission
of a waiver request directly to the affected program agency. See 45
C.F.R.