Smart v. State, Department of Health & Social Services

Summary

The Alaska Supreme Court held that the Department of Health and Social Services provided defective due process notice concerning its Medicaid overpayment recoupment decision because the notice did not timely state the recoupment amount, explain the statistical methodology, or adequately inform the provider of her right to administrative review. The court remanded for DHSS to provide Keirsten Smart 30 days to request administrative review. The court also affirmed that DHSS's audit protocol was not a regulation requiring promulgation under the Alaska Administrative Procedure Act.

Holdings

1. Smart's failure to appeal did not bar her claims because DHSS failed to provide adequate notice before the administrative appeal period expired. The notice therefore did not commence the period for seeking administrative review, and Smart must be given a new opportunity to request review.
2. DHSS's notice violated due process because it did not timely and clearly state the amount DHSS intended to recoup, identify that the amount was based on statistical extrapolation, explain the methodology sufficiently to permit a challenge, or provide that information before the administrative appeal period expired.
3. DHSS's audit protocol was not a regulation requiring promulgation under the APA. The properly promulgated regulation authorizing statistically valid sampling methodologies was sufficient.

Questions Presented

1. Whether Smart's due process claims were barred by her failure to exhaust administrative remedies when DHSS's notice did not adequately identify the recoupment decision, the amount sought, or the basis for the calculation before the appeal period expired.
2. Whether due process required DHSS's notice of Medicaid recoupment to include the factual and legal basis for the recoupment, the amount sought, the relevant methodology, and notice of the right to administrative review.
3. Whether DHSS's audit protocol constituted a regulation that had to be promulgated under the Alaska Administrative Procedure Act.

Disposition

reversed_and_remanded