Texas Health and Human Services Commission v. Jessica Lukefahr

ACCEPTED
03-15-00325-CV
6891639
THIRD COURT OF APPEALS
AUSTIN, TEXAS
9/11/2015 3:05:40 PM
JEFFREY D. KYLE
CLERK
No. 03-15-00325-CV
_______________________________________________________________
FILED IN
3rd COURT OF APPEALS
IN THE COURT OF APPEALS AUSTIN, TEXAS
FOR THE THIRD DISTRICT OF TEXAS 9/11/2015 3:05:40 PM
AT AUSTIN JEFFREY D. KYLE
Clerk
_______________________________________________________________

TEXAS HEALTH AND HUMAN SERVICES COMMISSION
Appellant,

v.
JESSICA LUKEFAHR
Appellee.
________________________________________________________________

On Appeal from the 345th Judicial District Court
of Travis County, Texas
Cause No. D-1-GN-14-002158
The Honorable Stephen Yelenosky Presiding
__________________________________________________________________

AMENDED APPELLANT’S BRIEF
__________________________________________________________________

KEN PAXTON KARA HOLSINGER
Attorney General of Texas Assistant Attorney General
State Bar No. 24065444
CHARLES E. ROY OFFICE OF THE ATTORNEY GENERAL
First Assistant Attorney General OF TEXAS
Administrative Law Division
JAMES E. DAVIS P.O. Box 12548, Capitol Station
Deputy Attorney General for Civil Austin, Texas 78711-2548
Litigation Telephone: (512) 475-4203
Facsimile: (512) 320-0167
DAVID A. TALBOT, JR. kara.holsinger@texasattorneygeneral.gov
Chief, Administrative Law Division
COUNSEL FOR APPELLANT
ORAL ARGUMENT REQUESTED
September 11, 2015
 IDENTITIES OF PARTIES AND COUNSEL

Defendant/Appellant: Texas Health & Human Services Commission

Counsel:

Kara Holsinger
Assistant Attorney General
State Bar No. 24065444
OFFICE OF THE ATTORNEY GENERAL OF TEXAS
Administrative Law Division
P.O. Box 12548, Capitol Station
Austin, Texas 78711-2548
Telephone: (512) 475-4203
Facsimile: (512) 320-0167
kara.holsinger@texasattorneygeneral.gov

Plaintiff/Appellee: Jessica Lukefahr

Counsel:

Maureen O’Connell
Texas Bar No. 00795949
Southern Disability Law Center
1307 Payne Avenue
Austin, Texas 78757
Phone: 512-458-5800
Fax: 512-458-5850
moconnell458@gmail.com

ii
 TABLE OF CONTENTS

Identities of Parties and Counsel............................................................................... ii

Table of Contents ..................................................................................................... iii

Table of Authorities ...................................................................................................v

Glossary of Abbreviated Terms ............................................................................. viii

Statement of the Case.................................................................................................1

Statement Regarding Oral Argument ........................................................................2

Issues Presented .........................................................................................................2

Statement of Facts ......................................................................................................3

I. Procedural History ...........................................................................................3

II. Exceptional Circumstances Review ................................................................6

Summary of the Argument.......................................................................................11

Argument and Authorities......................................................................................112

I. Standard of Review........................................................................................12

II. Applicable Law and Policy............................................................................14

III. The District Court Erred in Reversing HHSC’s Decision Affirming the
Denial of a Custom Power Wheelchair with an Integrated Standing Feature
because Substantial Evidence Showed that Covered Durable Medical
Equipment would meet Ms. Lukefahr’s Medical Needs ...............................18

A. Substantial evidence in the record showed that a static stander would
meet Ms. Lukefahr’s medical need to stand........................................18

iii
 B. Additionally, durable medical equipment that is covered by Texas
Medicaid meets Ms. Lukefahr’s other medical needs as expressed in
the exceptional circumstances request ................................................22

i. Substantial evidence in the record showed that covered durable
medical equipment would meet Ms. Lukefahr’s medical need to
change positions frequently .........................................................23

ii. Substantial evidence in the record showed that covered durable
medical equipment would meet Ms. Lukefahr’s needs in her
activities of daily living ...............................................................24

IV. The District Court Erred in Reversing HHSC’s Decision as Arbitrary and
Capricious or in Violation of Due Process because the Hearing Officer and
Reviewing Attorney Fulfilled their Duties and Provided Ms. Lukefahr with
all Required Due Process ...............................................................................26

A. The hearing officer provided all required due process, including
making findings of fact supported by the record ................................26

B. The reviewing attorney provided all required due process .................29

Prayer .......................................................................................................................31

Certificate of Compliance ........................................................................................32

Certificate of Service ...............................................................................................33

Appendices .............................................................................................................334

Index of Appendices ..............................................................................................335

iv
 TABLE OF AUTHORITIES

CASES

Bd. of Law Exam’rs v. Stevens,
868 S.W.2d 773 (Tex. 1994)....................................................................... 12, 13, 24

Bd. of Trs. of Emps. Ret. Sys. v. Benge,
942 S.W.2d 742 (Tex. App.—Austin 1997, writ denied) ..................... 13, 21, 24, 25

Beal v. Doe,
432 U.S. 438 (1977) .......................................................................................... 17, 25

City of El Paso v. Pub. Util. Comm’n,
883 S.W.2d 179 (Tex. 1994) ....................................................................................13

Deloitte & Touche LLP v. Fourteenth Court of Appeals,
951 S.W.2d 394 (Tex. 1997) ....................................................................................14

Detgen v. Janek,
752 F.3d 627 (5th Cir. 2014) ...................................................................................15

Gulf States Util. v. Pub. Util. Comm’n,
841 S.W.2d 459 (Tex. App.—Austin 1992, writ denied) ........................... 12, 13, 29

McMullen v. Emps. Ret. Sys.,
935 S.W.2d 189 (Tex. App.—Austin 1997, writ denied) ........................................13

Moore v. Reese,
637 F.3d 1220 (11th Cir. 2011) ........................................................................ 17, 25

Poole v. Karnack Indep. Sch. Dist.,
344 S.W.3d 440 (Tex. App.—Austin 2011, no pet.) ...............................................12

Rush v. Parham,
625 F.2d 1150 (5th Cir. 1980) .................................................................................17

v
State v. Pub. Util. Comm’n,
883 S.W.2d 190 (Tex. 1994) ....................................................................... 12, 13, 22

Tex. Rivers Prot. Ass’n v. Tex. Natural Res. Conservation Comm’n,
910 S.W.2d 147 (Tex. App.—Austin 1995, writ denied) ............... 13, 18, 20, 21, 28

Tex. State Bd. of Med. Exam’rs v. Birenbaum,
891 S.W.2d 333 (Tex. App.—Austin 1995, writ denied) ........................................13

United Copper Indus. v. Grissom,
17 S.W.3d 797 (Tex. App.—Austin 2000, pet. dism’d) ............................................6

TEXAS STATUTES
Tex. Gov't Code
Tex. Gov’t Code § 2001.174............................................................................. 12, 31

Tex. Gov’t Code § 531.019(c) .................................................................................29

Tex. Gov’t Code § 531.019(e)(2) ............................................................................29

Tex. Gov’t Code § 531.019(g) .................................................................................12

FEDERAL STATUTES AND REGULATIONS
42 C.F.R. § 440.230(d) ............................................................................................17

RULES

1 Tex. Admin. Code § 354.1031(12) .......................................................................14

1 Tex. Admin. Code § 354.1039(a)(4)(D) ...................................... 2, 3, 6, 15, 21, 23

1 Tex. Admin. Code § 357.1(19) ...............................................................................4

1 Tex. Admin. Code § 357.1(31) ...............................................................................3

1 Tex. Admin Code § 357.5 .....................................................................................27

vi
RULES (continued)

1 Tex. Admin. Code § 357.5(c) ...............................................................................26

1 Tex. Admin. Code § 357.5(c)(3)(A)-(D) ..............................................................27

1 Tex. Admin. Code § 357.5(c)(3)(B) .....................................................................19

1 Tex. Admin. Code § 357.703(b)(3) ......................................................................30

1 Tex. Admin. Code § 357.9 ......................................................................................6

1 Tex. Admin. Code § 357.9(1) .................................................................................4

OTHER AUTHORITIES

Texas Medicaid Provider Procedures Manual

TMPPM § 2.2.2 (2013) ............................................................................................19

TMPPM § 2.2.15.22 (2013) .......................................................................................8

vii
 GLOSSARY OF ABBREVIATED TERMS

A.R. Administrative Record

C.R. Clerk’s Record

DME Durable Medical Equipment

HHSC Health and Human Services Commission

H.R. Fair Hearing Audio Recording

OMD HHSC’s Office of the Medical Director

TMHP Texas Medicaid Healthcare Partnership

TMPPM Texas Medicaid Provider Procedures Manual

viii
 No. 03-15-00325-CV
_______________________________________________________________

IN THE COURT OF APPEALS
FOR THE THIRD DISTRICT OF TEXAS
AT AUSTIN
_______________________________________________________________

TEXAS HEALTH AND HUMAN SERVICES COMMISSION
Appellant,

v.
JESSICA LUKEFAHR
Appellee.
________________________________________________________________

On Appeal from the 345th Judicial District Court
of Travis County, Texas
Cause No. D-1-GN-14-002158
The Honorable Stephen Yelenosky Presiding
__________________________________________________________________

APPELLANT’S BRIEF
__________________________________________________________________

TO THE HONORABLE JUDGE OF SAID COURT:

NOW COMES the Texas Health and Human Services Commission

(“HHSC”), appellant in this cause, and files Appellant’s Brief.

STATEMENT OF THE CASE

HHSC appeals the district court’s final judgment reversing a fair hearing

decision that sustained HHSC’s denial of appellee Jessica Lukefahr’s (Ms.

Lukefahr’s) exceptional circumstances request for a custom power wheelchair with

an integrated standing feature. Administrative Record (A.R.) 563-74; 580-91;
Clerk’s Record (C.R.) 226; Appendix A (Final Judgment); Appendix B (Fair

Hearing Decision); Appendix C (Administrative Review of the Fair Hearing

Decision).

STATEMENT REGARDING ORAL ARGUMENT

HHSC requests oral argument to aid the Court’s understanding of HHSC’s

review of Ms. Lukefahr’s exceptional circumstances request for an item not

covered by Texas Medicaid. See 1 Tex. Admin. Code § 354.1039(a)(4)(D),

Appendix D (exceptional circumstances rule); A.R. 428-31, Appendix E (Medicaid

Program Policy Manual Exceptional Circumstances Policy).

ISSUES PRESENTED

1. Whether substantial evidence supports HHSC’s decision affirming the denial
of Ms. Lukefahr’s request for a custom power wheelchair with an integrated
standing feature on exceptional circumstances review, since the evidence
showed that Ms. Lukefahr’s medical needs could be met through the use of
equipment covered by Texas Medicaid.

2. Whether HHSC’s decision was arbitrary and capricious and a violation of
Ms. Lukefahr’s due process rights, considering that it was based on findings
of fact supported by the record and Ms. Lukefahr received all required due
process during the fair hearing and subsequent administrative review.

2
 STATEMENT OF FACTS

I. Procedural History

Ms. Lukefahr’s Durable Medical Equipment (“DME”) provider sought prior

authorization1 of a custom power wheelchair with an integrated standing feature

(also called a mobile standing feature or power stander) through the Texas

Medicaid and Healthcare Partnership (“TMHP”), which administers Texas

Medicaid on behalf of HHSC. A.R. 376-399. TMHP denied prior authorization

because integrated standers are not a covered benefit of Texas Medicaid and the

wheelchair, as requested, could not be ordered without the integrated stander. A.R.

367-369.

Ms. Lukefahr’s DME provider then submitted a request for exceptional

circumstances review for a custom power wheelchair with an integrated standing

feature. A.R. 208-241; see also A.R. 71-115, 129-207. To be eligible for the

integrated stander under exceptional circumstances review, Ms. Lukefahr was

required to show that it could “be medically substantiated as a part of the treatment

plan that such service would serve a specific medical purpose on an individual case

basis.” See 1 Tex. Admin. Code § 354.1039(a)(4)(D); Apps. D-E. However, Ms.

Lukefahr was unable to “medically substantiate” that that an integrated stander

1
Prior authorization is a “request for services that is reimbursable only if authorization or
approval for the services is obtained before services are rendered.” 1 Tex. Admin. Code
§ 357.1(31).

3
“would serve a specific medical purpose” in her individual case, and HHSC denied

her exceptional circumstances request. A.R. 58-60, Appendix F (exceptional

circumstances denial letter to Jessica Lukefahr). The denial letter stated, in part:

After reviewing and studying the clinical points of your request
and your special medical needs it was found you may have a
medical need for a power wheelchair without a standing feature
and a static standing system to meet both your medical and
mobility needs. This equipment may be considered for you through
Texas Medicaid if requested. The papers sent failed to support
medical necessity for the standing feature (and its parts as part of
the power wheelchair requested) or that the standing feature
would serve a specific medical purpose for you. Because the
standing feature on the power wheelchair would not serve a specific
medical purpose for you, it could not be approved under the
exceptional circumstances provision of 1 Texas Administrative Code
§ 354.1039(a) as requested by your provider. Because the standing
feature cannot be separated from the power wheelchair requested the
power wheelchair requested could not be approved.

Id. (emphasis added).

Ms. Lukefahr then requested a fair hearing regarding the exceptional

circumstances denial. A.R. 495-505. A fair hearing is “[a]n informal proceeding

held before an impartial HHSC hearings officer in which a client appeals an

agency action.” 1 Tex. Admin. Code § 357.1(19). At the fair hearing, HHSC had

the burden of proof by a preponderance of the evidence. 1 Tex. Admin. Code

§ 357.9(1). The hearing officer sustained HHSC’s denial of the custom power

wheelchair with integrated stander, concluding:

4
 Because mobile standers, power standing systems on a wheeled
mobility device are not a benefit of Home Health Services and
exceptional circumstances for DME were not met, the decision by
TMHP on September 12, 2013 to deny Appellant a Permobil C500 VS
power wheelchair with integrated standing feature and seat elevation
system WAS in accordance with applicable law and policy; therefore
the agency’s action is SUSTAINED.

A.R. 572 (emphasis in original); App. B. An administrative review of the fair

hearing decision followed, in which the reviewer, an HHSC attorney, upheld the

hearing officer’s decision and issued a final agency decision adopting the hearing

officer’s findings of fact and conclusion of law. A.R. 580-591; App. C.

A suit for judicial review followed in which the district court issued a final

judgment reversing HHSC’s decision and remanding the case to HHSC for further

proceedings consistent with the judgment. C.R. 226; App. A. The Court found that

HHSC “violated the due process rights of Ms. Lukefahr and the decision denying

Plaintiff a custom power wheelchair with integrated standing feature is not

supported by substantial evidence and is arbitrary and capricious.” Id. In a letter

announcing his judgment, the district court provided some of the reasons for the

decision, stating in part as follows. C.R. 221-24; Appendix G (letter from the

district court).

Due process, as embodied in state and federal Medicaid law, requires
that a denial letter provide the reasons for denial. When a denial is
challenged, the Medicaid authority has the burden to prove to the
Hearings Officer that the reasons given are supported by a
preponderance of the evidence. . . The reasons for denial must be a

5
 common thread that runs through each of these stages [of review].
Without that, the Medicaid client cannot adequately prepare for a fair
hearing, judicial review, or appeal, and there is no due process.

Id. at 221; App. G. Here, the district court reversed HHSC’s decision, finding that

none of the findings of fact in the fair hearing decision related to the reasons given

in the denial letter.2 Id. at 222; App. G. Now, HHSC appeals this final judgment.

II. Exceptional Circumstances Review

Ms. Lukefahr submitted an exceptional circumstances request for a custom

power wheelchair with an integrated standing feature. A.R. 208-241; see also A.R.

71-115, 129-207. In order to receive approval for the integrated stander under

exceptional circumstances, Ms. Lukefahr was required to show that it could “be

medically substantiated as a part of the treatment plan that such service would

serve a specific medical purpose on an individual case basis.” 1 Tex. Admin. Code

§ 354.1039(a)(4)(D); A.R. 428-31; Apps. D-E.

2
The district court elevated the due process required in a Medicaid benefits denial in stating that
a denial letter must provide reasons for denial that must be a “common thread” through each
stage of the proceedings. C.R. 221; App. G. Rather, traditional due process requirements apply,
and Ms. Lukefahr received all required due process, as is discussed herein. See United Copper
Indus. v. Grissom, 17 S.W.3d 797, 805 (Tex. App.—Austin 2000, pet. dism’d) (“Basic due
process requires that when a decision maker is called upon to make a decision grounded on
evidence, the parties involved should be provided fair notice and a meaningful opportunity to
present their evidence.”). And, in a fair hearing, the denial itself must be supported by a
preponderance of the evidence, not each reason therefore. 1 Tex. Admin. Code § 357.9. (“The
burden of proof in a fair hearing regarding a specific issue is proof by a preponderance of the
evidence.” “The agency or its designee bears the burden of proof.”).

6
 Ms. Lukefahr has been diagnosed with spastic quadriplegia, dystonia, and

cerebral palsy. A.R. 76.3 Due to her medical conditions, Ms. Lukefahr has limited

range of motion in her arms, which limits her ability to reach, and has only isolated

finger movements with deliberate thought. A.R. 166. Additionally, her muscle

strength is limited and her endurance poor, requiring frequent rest breaks. A.R. 83,

87, 166, 170.

Ms. Lukefahr lives independently in a handicapped-accessible apartment and

has assistance with her activities of daily living from an attendant. A.R. 82, 168.

She has a college degree and works four hours a day, five days per week at a

museum. A.R. 82, 168. Ms. Lukefahr can transfer independently to and from her

wheelchair using transfer bars.4 Id.; Fair Hearing Audio Recording (“H.R.”) 1:45.

Ms. Lukefahr’s prior authorization request for a custom power wheelchair included

requests for seat elevation, tilt and recline feature, leg elevation power function,

and transfer bars. A.R. 59, 84, 162-65, 367. There is no dispute that these features

are medically necessary for Ms. Lukefahr (and her current wheelchair has these

features). A.R. 59, 572; Apps. B, F. Seat elevation, tilt and recline, and leg

elevation provide many medical benefits to Ms. Lukefahr, and her physician did

3
Although additional medical conditions were noted in a letter of medical necessity, these are
not medical diagnoses as provided by her treating physician. Compare A.R. 76 with A.R. 88.
4
Despite stating that Ms. Lukefahr can transfer independently, her physician also asserted that
she would require assistance from an attendant to transfer from a wheelchair to a static stander.
Compare A.R. 82, 168 with A.R. 145.

7
not document any evidence of pressure sores or skin breakdown. A.R. 84, 167;

H.R. 3:16-3:18.

Patricia Cannizzaro, a registered nurse who reviewed the exceptional

circumstances request for TMHP, testified that Ms. Lukefahr has a medical need to

stand for one hour a day, five days per week, to strengthen her muscles. AR 145-

146, 167, 170, 427; H.R. 2:09.30. Ms. Lukefahr’s DME provider stated that she

has a postural control walker, but she is only able to use this walker for a few

minutes at a time, and it is no longer meeting her medical need to stand. A.R. 145.

But, Ms. Lukefahr’s DME provider stated that, with the use of a stander, she would

be able to stand for thirty or more minutes at a time. A.R. 170.

Donna Clayes, a registered nurse who reviewed the exceptional

circumstances request for HSHC’s Office of the Medical Director5 (“OMD”)

testified that a that a static stander,6 an item of DME that is covered by Texas

Medicaid, would meet Ms. Lukefahr’s medical need to stand, and that none of Ms.

Lukefahr’s medical conditions supported the use of an integrated standing feature

rather than a static stander. H.R. 1:16-1:28, H.R. 2:09 (Ms. Cannizzaro testifying to

5
OMD decides exceptional circumstances requests based on a review and recommendation by
TMHP and review by an OMD doctor. A.R. 423-27; H.R. 1:00.00. Ms. Clayes testified that she
reviewed Ms. Lukefahr’s exceptional circumstances request with an OMD doctor, who dictated
the findings she used in developing the response to Ms. Lukefahr’s request. H.R. 1:07.45.
6
“A stander is a device used by a client with neuromuscular conditions who is unable to stand
alone. Standers and standing programs can improve digestion, increase muscle strength, decrease
contractures, increase bone density, and minimize decalcification (this list is not all inclusive).”
TMPPM § 2.2.15.22 (2013).

8
the same); A.R. 59, App. F. Ms. Lukefahr’s DME provider and treating physician

did not try a static stander in order to determine whether a static stander would

meet Ms. Lukefahr’s medical need to stand, and no prior authorization request for

a static stander has been submitted to Texas Medicaid. A.R. 59, 145, 376-99; App.

F. Ms. Clayes and Ms. Cannizzaro testified that no documentation was provided to

support a finding that an integrated stander was necessary to treat Ms. Lukefahr’s

chronic pain or bone density loss, improve her respiratory capacity, or reduce

spasticity, contractures, constipation, or skin breakdown. A.R. 59, App. F; H.R.

1:16-1:20, 2:49-2:55. Ultimately they testified that the information submitted in

support of Ms. Lukefahr’s exceptional circumstances request did not support the

use of an integrated stander as a treatment for Ms. Lukefahr’s medical conditions.

H.R. 1:16-1:18, 2:53.

Additionally, an item requested through exceptional circumstances review

must be supported by “evidence-based medical peer-reviewed literature that

demonstrate validated, uncontested data for use of the requested equipment to treat

the client’s specific medical condition, and that the requested equipment has been

found to be safe and effective.” A.R. 429; App. E (exceptional circumstances

policy). Although Ms. Lukefahr’s DME provider submitted articles to support the

exceptional circumstances request, Ms. Cannizzaro and Ms. Clayes testified that

these were not sufficient to support the need for an integrated stander in Ms.

9
Lukefahr’s case. Ms. Cannizarro testified that the 2009 RESNA paper submitted

by Ms. Lukefahr’s DME provider is merely a position or opinion paper, which

concludes only that integrated standers are “medically beneficial” (rather than

medically necessary), but that further research is needed. A.R. 147-54; H.R. 1:55-

2:00, see also H.R. 1:24 (Ms. Clayes also testified that the articles did not rise to

the level of “peer-reviewed” literature). And Ms. Cannizarro testified that many of

the studies on which the RESNA paper is based were performed using static

standers, rather than integrated standers, and did not show that integrated standers

in particular have a proven medical benefit. H.R. 1:55-2:09. The claims in the

RESNA paper have not been substantiated by evidenced based, peer-reviewed

medical studies, and many of the reasons provided to substantiate medical

necessity in this case were taken directly from this paper. Compare A.R. 147-54

with AR 145-46; H.R. 1:55-1:59, 2:04, 2:05.50-2:06.30. Further, Ms. Cannizzaro

testified that the study “Load Redistribution in Variable Position Wheelchairs in

People with Spinal Cord Injury” submitted by Ms. Lukefahr’s DME provider

concludes that standing in a static stander or the use of tilt and recline features can

prevent skin breakdown by assisting people in wheelchairs to shift their weight,

and did not indicate that both were needed. A.R. 155-61; H.R. 2:02. There is no

dispute as to the medical necessity of a tilt and recline feature for Ms. Lukefahr.

A.R. 58-60, App. F. As such, the documentation provided in support of Ms.

10
Lukefahr’s exceptional circumstances request did not substantiate the need for an

integrated stander in her individual case. A.R. 59; App. F.

SUMMARY OF THE ARGUMENT

TMHP denied Ms. Lukefahr’s exceptional circumstances request for a

custom power wheelchair with an integrated stander. HHSC’s fair hearing decision

affirming the denial is supported by substantial evidence because TMHP and OMD

registered nurses who reviewed the exceptional circumstances request testified that

Ms. Lukefahr’s medical needs could be met through the use of DME that is

covered by Texas Medicaid.

Additionally, HHSC’s decision is not arbitrary and capricious because it is

based on findings of fact that are supported by the record. And HHSC did not

otherwise violate Ms. Lukefahr’s due process rights in denying her exceptional

circumstances request because the hearing officer and attorney conducting the

administrative review provided Ms. Lukefahr with all due process required.

Therefore, the district court erred in reversing the fair hearing decision, and this

Court should reverse the district court’s judgment and affirm HHSC’s denial of the

custom power wheelchair with an integrated stander.

11
 ARGUMENT AND AUTHORITIES

I. Standard of Review

“Judicial review of a decision made by a hearing officer for the commission

or a health and human services agency related to public assistance benefits is under

the substantial evidence rule and is instituted by filing a petition with a district

court in Travis County, as provided by Subchapter G, Chapter 2001.” Tex. Gov’t

Code § 531.019(g); see also Tex. Gov’t Code § 2001.174 (substantial evidence

review under the Administrative Procedure Act). The Court presumes the order is

supported by substantial evidence, and Ms. Lukefahr has the burden of proving

otherwise. Poole v. Karnack Indep. Sch. Dist., 344 S.W.3d 440, 443 (Tex. App.—

Austin 2011, no pet.).

It is well established that in applying the substantial evidence test to an

agency’s decision, the reviewing court is prohibited from substituting its judgment

for that of the agency as to the weight of the evidence on questions committed to

agency discretion. Bd. of Law Exam’rs v. Stevens, 868 S.W.2d 773, 778 (Tex.

1994; Gulf States Util. v. Pub. Util. Comm’n, 841 S.W.2d 459, 474 (Tex. App.—

Austin 1992, writ denied). The test for review of an agency action is not whether

the agency reached the correct conclusion, but whether some reasonable basis for

the agency’s action exists in the record. State v. Pub. Util. Comm’n, 883 S.W.2d

190, 204 (Tex. 1994). Texas courts have stated that although substantial evidence

12
is more than a mere scintilla, the evidence may actually preponderate against the

agency decision, and yet still amount to substantial evidence supporting the result

reached by the agency. Id; City of El Paso v. Pub. Util. Comm’n, 883 S.W.2d 179,

185 (Tex. 1994). The Court must uphold HHSC’s Decision in this case “on any

legal basis shown in the [administrative] record.” Bd. of Trs. of Emps. Ret. Sys. v.

Benge, 942 S.W.2d 742, 744 (Tex. App.—Austin 1997, writ denied); accord

McMullen v. Emps. Ret. Sys., 935 S.W.2d 189, 191 (Tex. App.—Austin 1997, writ

denied). As long as a properly supported finding given in the order supports an

agency’s action, a court will uphold the action despite the existence of other

findings that are irrelevant or unsupported by the record. Tex. Rivers Prot. Ass’n v.

Tex. Natural Res. Conservation Comm’n, 910 S.W.2d 147, 155 (Tex. App.—

Austin 1995, writ denied). If reasonable minds could have reached the conclusion

that HHSC reached on the record presented, then the Court must uphold HHSC’s

order. Stevens, 868 S.W.2d at 777-78; Tex. State Bd. of Med. Exam’rs v.

Birenbaum, 891 S.W.2d 333, 337 (Tex. App.—Austin 1995, writ denied).

Further, “to determine if an agency acted arbitrarily and capriciously, even

though substantial evidence supports its order or action, we look to see if the order

was based on a consideration of all relevant factors.” Gulf States Utils. Co., 841

S.W.2d at 474. An agency’s exercise of its discretion may only be reversed as

arbitrary and capricious if it constitutes a clear abuse of discretion. State v. Pub.

13
Util. Comm’n, 883 S.W.2d at 201; see also Deloitte & Touche LLP v. Fourteenth

Court of Appeals, 951 S.W.2d 394, 396 (Tex. 1997) (internal citation omitted) (an

Agency’s decision amounts to “a clear abuse of discretion” if it is “devoid of any

guiding principles of law”).

II. Applicable Law and Policy

Ms. Lukefahr’s DME provider first sought prior authorization of a custom

power wheelchair with an integrated standing feature, which is an item of durable

medical equipment.7 But, because integrated standers are not covered under Texas

Medicaid, this prior authorization request was denied. Ms. Lukefahr then submitted

an exceptional circumstances request for the wheelchair. The denial of this request

precipitated the instant case.

Pursuant to HHSC’s 2013 Texas Medicaid Provider Procedures Manual

(“TMPPM”) § 2.2.15.26 “[m]obile standers, power standing system on a wheeled

mobility device” are not a benefit of Texas Medicaid.” See also A.R. 567

(referencing TMPPM § 2.2.15.26), App. B. According to Centers for Medicare and

Medicaid Service guidance in the “DeSario Letter,” HHSC’s categorical exclusion

of integrated standers is a permissible policy: “A State may develop a list of pre-

approved items of ME [Medical Equipment] as an administrative convenience

7
See 1 Tex. Admin. Code § 354.1031(12) (“Durable medical equipment--Machinery and/or
equipment which meet one or both of the following criteria: (A) the projected term of use is
more than one year; or (B) reimbursement is made at a cost more than $1,000.”).

14
because such a list eliminates the need to administer an extensive application

process for each ME request submitted.” See A.R. 517; Appendix H (the “DeSario

letter”). The Fifth Circuit Court of Appeals recently confirmed the use of

categorical exclusions of certain items of DME from Texas Medicaid benefits in

Detgen v. Janek, noting that “the state can choose by definition to exclude” an item

of DME from Medicaid coverage. 752 F.3d 627, 632 (5th Cir. 2014) (emphasis in

original), Appendix I (Detgen opinion). According to Detgen, “[i]t is hardly

unreasonable for a state to exclude—even categorically—any medical device

whose purpose can be served by a more cost-effective method.” Id.

States must provide a “reasonable and meaningful procedure for requesting

items that do not appear on a State’s pre-approved list.” A.R. 517 (DeSario

Letter); App. H. Texas accomplishes this through exceptional circumstances

review: “Medical equipment or appliances not listed in subparagraph (C) of this

paragraph [related to covered appliances and equipment] may, in exceptional

circumstances, be considered for payment when it can be medically substantiated

as a part of the treatment plan that such service would serve a specific medical

purpose on an individual case basis.” 1 Tex. Admin. Code § 354.1039(a)(4)(D);

App. D.

HHSC’s Medicaid Program Policy Manual contains a policy for Medicaid

Exceptional Circumstances review. A.R. 428-29, App. E. According to this

15
policy, a provider requesting exceptional circumstances review must include the

following information:

Providers may invoke the Exceptional Circumstances provision upon
written notice to TMHP, provided the written notice meets all of the
following conditions. The notice must include:

3.1 A completed Home Health Services (Title XIX) DME/Medical
Supplies Physician Order Form signed and dated by the prescribing
physician;

3.2 The client’s diagnosis;

3.3 A clear, concise description of the DME requested;

3.4 Identification of the client’s specific medical needs that can only
be met by the requested equipment;

3.5 Letters of Medical Necessity (LOMN) from the client’s clinical
professionals documenting alternative measures and alternative DME
that have been tried and that have failed to meet the client’s medical
need(s), or have been ruled out, and an explanation of why it failed or
was ruled out;

3.6 A minimum of two articles from evidence-based medical peer-
reviewed literature that demonstrate validated, uncontested data for
use of the requested equipment to treat the client’s specific medical
condition, and that the requested equipment has been found to be safe
and effective.

NOTE: Marketing materials, brochures, or claims made by the
equipment manufacturer do not satisfy this requirement. The articles
provided must support the information contained within the LOMN
that indicates why the covered DME cannot meet the client’s specific
medical need(s), and

16
 3.7 Submission of either the manufacturer’s suggested retail pricing
(MSRP) for the DME requested or an invoice documenting the
provider’s cost.

Id. Ms. Lukefahr provided this information in support of her exceptional

circumstances request. A.R. 122 (table of contents of documentation submitted

with exceptional circumstances request).

Additionally, both the physician and the State have roles in determining

what medical measures are necessary, and the physician’s letter of medical

necessity is not dispositive. Moore v. Reese, 637 F.3d 1220, 1248 (11th Cir. 2011)

citing Rush v. Parham, 625 F.2d 1150, 1155 (5th Cir. 1980). Further, “a

participating state is not required to fund desirable but medically unnecessary

services requested by a Medicaid recipient’s physician and . . . the Medicaid Act

endows participating states with broad discretion to fashion standards for

determining the extent of medical assistance, so long as such standards are

reasonable and congruous with the purposes of the Act.” Moore, 637 F.3d at 1244

citing Beal v. Doe, 432 U.S. 438, 444 (1977); see also 42 C.F.R. § 440.230(d)

(under federal Medicaid regulations, the state has the right to place appropriate

limits on a service based on such criteria as medical necessity and utilization

review).

17
III. The District Court Erred in Reversing HHSC’s Decision Affirming the
Denial of a Custom Power Wheelchair with an Integrated Standing
Feature because Substantial Evidence Showed that Covered Durable
Medical Equipment would meet Ms. Lukefahr’s Medical Needs.

The district court issued a final judgment, stating, in part, that HHSC’s

decision denying Ms. Lukefahr’s exceptional circumstances request was not

supported by substantial evidence. C.R. 226; App. A. In a letter announcing the

judgment, the district court stated that there were no findings of fact supporting the

decision that were based on reasons for denial provided in the denial letter. C.R.

221-22; App. G. The court was in error, because properly supported findings of

fact support the decision. Hence, the decision is supported by substantial evidence.

Tex. Rivers Prot. Ass’n, 910 S.W.2d at 155 (As long as a properly supported

finding given in the order supports an agency’s action, a court will uphold the

action despite the existence of other findings that are irrelevant or unsupported by

the record.).

A. Substantial evidence in the record showed that a static stander
would meet Ms. Lukefahr’s medical need to stand.

HHSC affirmed the denial of Ms. Lukefahr’s exceptional circumstances

request because the evidence showed that a static stander would meet her medical

need to stand. See A.R. 59, App. F. In order to have an integrated stander approved

for Texas Medicaid coverage, Ms. Lukefahr was required to show that other,

covered, DME would not meet her medical needs. A.R. 428, App. E (exceptional

18
circumstances policy). But, registered nurses for TMHP and the OMD testified that

a static stander, covered under Texas Medicaid, would meet Ms. Lukefahr’s

medical need to stand. As such, substantial evidence in the record supports

HHSC’s decision affirming denial of the integrated stander, and the district court

erred in reversing the decision.

The hearing officer determined, and the administrative reviewer affirmed,

that “exceptional circumstances for DME were not met” and the decision to deny

the integrated stander “WAS in accordance with applicable law and policy;

therefore, the agency’s action is SUSTAINED.”8 A.R. 572, 590; Apps. B-C. This

conclusion is supported by findings of fact that a static stander would meet Ms.

Lukefahr’s medical need to stand.

FINDING OF FACT NO. 5: Appellant does not currently have a static
stander for use at her home and was not evaluated for prior
authorization of one.

...

FINDING OF FACT NO 12: TMHP did not dispute that Appellant
met medical necessity criteria for a power wheelchair and static
stander or that these items met DME criteria.9

8
In addition to other responsibilities, the hearing officer “determines whether the agency’s or its
designee’s action is in compliance with statutes, policies, or procedures.” 1 Tex. Admin. Code
§ 357.5(c)(3)(B).
9
The hearing officer’s finding of fact that Ms. Lukefahr met DME criteria for a power
wheelchair and static stander is a finding that these items would meet her medical needs, as
covered DME is only eligible for reimbursement if it is “required to correct or ameliorate a
client’s disability, condition, or illness.” TMPPM § 2.2.2 (2013); A.R. 566; App. B.

19
A.R. 571-72; App. B. Because findings of fact support the hearing officer’s

decision affirming HHSC’s denial of the exceptional circumstances request, the

district court erred in reversing this decision as not supported by substantial

evidence.10 Tex. Rivers Prot. Ass’n, 910 S.W.2d at 155 (As long as a properly

supported finding given in the order supports an agency’s action, a court will

uphold the action despite the existence of other findings that are irrelevant or

unsupported by the record.).

The findings and conclusion are supported by evidence in the record.

TMHP’s letter denying Ms. Lukefahr’s exceptional circumstances request stated:

“The papers [provided in support of the exceptional circumstances request] did not

state why a static stander that you could transfer into and out of would not meet

your medical needs.” A.R. 59; App. F. The denial letter further stated “it was found

you may have a medical need for a power wheelchair without a standing feature

and a static standing system to meet both your medical and mobility needs. . . The

papers sent failed to support medical necessity for the standing feature . . . or that

the standing feature would serve a specific medical purpose for you.” Id. Ms.

Lukefahr’s failure to try or rule out the use of a static stander in accordance with

10
Although the district court judge stated that these findings did not comport with the notice Ms.
Lukefahr received in the denial letter, Ms. Lukefahr knew that she was required to show that
covered DME, like a static stander, would not meet her medical needs because she utilized the
criteria for exceptional circumstances review in submitting materials to TMHP. See, e.g., A.R.
122, 176. Also, the denial letter clearly stated that the information provided showed that a static
stander would meet her medical needs. A.R. 59, App. F.

20
exceptional circumstances review policy was a primary reason for denial of the

exceptional circumstances request. A.R. 428-29; App. E (exceptional

circumstances review policy).

Both Ms. Clayes and Ms. Cannizarro testified that an integrated stander was

not necessary to treat Ms. Lukefahr’s medical conditions because a static stander

would meet her medical need to stand. H.R. 1:28, 2:09. Additionally, Ms. Lukefahr

was never considered or evaluated for a static stander, and Ms. Clayes and Ms.

Cannizarro testified that the information Ms. Lukefahr’s DME provider submitted

in support of her exceptional circumstances request did not show that a static

stander would not meet her medical need to stand, or that her individual

circumstances required Texas Medicaid to provide her with an integrated stander in

order to meet her medical needs. Id.; 1 Tex. Admin. Code § 354.1039(a)(4)(D),

App. D; A.R. 428, App. E (HHSC’s exceptional circumstances policy requires that

the exceptional circumstances request identify the client’s specific medical needs

that can only be met by the requested equipment, and must show why alternative

DME has been ruled out). Thus, as the hearing officer based his findings on

testimony and evidence presented at the fair hearing, substantial evidence in the

record supports HHSC’s decision. Benge, 942 S.W.2d at 744 (The Court must

uphold the agency’s decision “on any legal basis shown in the record.”); Tex.

Rivers Prot. Ass’n, 910 S.W.2d at 155.

21
 Despite some evidence in the record that access to constant standing with an

integrated stander would be convenient for Ms. Lukefahr, there is “more than a

mere scintilla” of evidence in the record to support HHSC’s order affirming the

denial of the integrated stander, which is sufficient to affirm the order on

substantial evidence review. State v. Pub. Util. Comm’n, 883 S.W.2d at 204

(Substantial evidence is more than a mere scintilla; the evidence may actually

preponderate against the agency decision, and yet still amount to substantial

evidence supporting the result reached by the agency.). Therefore, this Court

should reverse the district court’s final judgment and affirm HHSC’s decision in

this case.

B. Additionally, durable medical equipment that is covered by Texas
Medicaid meets Ms. Lukefahr’s other medical needs as expressed
in the exceptional circumstances request.

Substantial evidence in the record also showed that covered DME would

meet Ms. Lukefahr’s other medical needs. A.R. 59; App. F. The denial letter

stated: “it was found you may have a medical need for a power wheelchair without

a standing feature and a static standing system to meet both your medical and

mobility needs. This equipment may be considered for you through Texas

Medicaid if requested.” A.R. 59; App. F. The hearing officer also found that it is

undisputed “that Appellant met medical necessity criteria for a power wheelchair

and a static stander or that these items met DME criteria.” A.R. 589 (Finding of

22
Fact no 12); App. B. The record as a whole supports this conclusion. As substantial

evidence showed that covered DME would meet Ms. Lukefahr’s medical needs,

HHSC’s order should have been affirmed. 1 Tex. Admin. Code

§ 354.1039(a)(4)(D); App. D.

i. Substantial evidence in the record showed that covered
durable medical equipment would meet Ms. Lukefahr’s
medical need to change positions frequently.

Although Ms. Lukefahr’s physician stated that a static stander would not

allow Ms. Lukefahr to stand any time she needs to adjust her posture due to pain or

to relieve other secondary effects of her medical conditions, substantial evidence in

the record showed that she could meet these medical needs through the use of

covered DME, including the tilt and recline, seat elevation, and leg elevation

functions of her custom power wheelchair. A.R. 145-46; 571 (“Finding of Fact 3:

Appellant is currently operating a Permobil C300 wheelchair with a seat elevation

system, tilt/recline, and elevated leg rests features provided to her six years

earlier.”); App. B.

Ms. Cannizzaro testified that Ms. Lukefahr may use these components of her

custom power wheelchair to meet her need to frequently change position, and the

information Ms. Lukefahr provided in support of her exceptional circumstances

request also supports this conclusion. H.R. 2:02. One study submitted by Ms.

Lukefahr in the exceptional circumstances request entitled “Load Redistribution in

23
Variable Position Wheelchairs in People With Spinal Cord Injury” concludes that

the benefits of repositioning with an integrated stander can also be achieved

through tilt and recline. See A.R. 155-61. Ms. Lukefahr’s physical therapist also

noted the benefits that can be achieved through tilt and recline, seat elevation, and

elevating leg rests including, but not limited to, positioning for eating, self-care,

reaching, and repositioning, facilitating bowel/bladder management, addressing

circulatory issues and blood pressure, reducing edema, reducing respiratory

distress, and facilitating independent transfer. A.R. 84. As such, if Ms. Lukefahr

has an immediate need to change position, substantial evidence in the record shows

that other, covered, DME will meet her medical needs. Therefore, substantial

evidence in the record as a whole supports HHSC’s decision affirming denial of

the exceptional circumstances request. Benge, 942 S.W.2d at 744 (The Court must

uphold the agency’s decision “on any legal basis shown in the record.”); Stevens,

868 S.W.2d at 777-78 (if reasonable minds could have reached the conclusion that

HHSC reached on the record presented, then the Court must uphold HHSC’s

order).

ii. Substantial evidence in the record showed that covered
durable medical equipment would meet Ms. Lukefahr’s
needs in her activities of daily living.

Ms. Lukefahr’s physician also stated that an integrated stander would allow

her more independence in her activities of daily living by allowing her to cook and

24
be more independent in the kitchen and in performing personal hygiene tasks. A.R.

82, 146. But the information submitted by Ms. Lukefahr’s DME provider showed

that Ms. Lukefahr may use a seat elevator to allow more independence in the

kitchen and bathroom. A.R. 84. Further, the DME provider noted that recline

“offers the most functional positions for eating, self care, reaching, and

repositioning” and adjustable seat height offers “better positioning for reaching,

which can lead to independence in many activities, such as eating, cooking, and

hand washing.” Id. And, due to the evidence in the exceptional circumstances

request that Ms. Lukefahr has limited mobility in her arms and hands and limited

muscle strength, at least some evidence showed that integrated standing would not

allow her to be significantly more independent in her activities of daily living. A.R.

166-67. Given the evidence in the record that showed an integrated stander would

not provide Ms. Lukefahr additional benefit in her activities of daily living as

compared with covered DME, this Court should reverse the district court’s final

judgment and affirm HHSC’s decision.11 Benge, 942 S.W.2d at 744 (The Court

must uphold the agency’s decision “on any legal basis shown in the record).

11
Ms. Lukefahr’s providers also expressed that an integrated stander would help her progress at
work. A.R. 82, 145. But Ms. Lukefahr’s progress at work is unrelated to her medical needs and,
as such, is not a basis for coverage under exceptional circumstances. Moore, 637 F.3d at 1244
citing Beal, 432 U.S. at 444 (“a participating state is not required to fund desirable but medically
unnecessary services requested by a Medicaid recipient’s physician”); see also H.R. 3:16 (Ms.
Cannizzaro testified that Ms. Lukefahr’s exceptional circumstances request did not show a
medical need to stand at work).

25
IV. The District Court Erred in Reversing HHSC’s Decision as Arbitrary
and Capricious or in Violation of Due Process because the Hearing
Officer and Reviewing Attorney Fulfilled their Duties and Provided Ms.
Lukefahr with all Required Due Process.

Additionally, the district court judgment reversed HHSC’s decision as

arbitrary and capricious and in violation of Ms. Lukefahr’s due process rights. C.R.

226; App. A. The district court found that HHSC’s order lacked any findings of

fact to support the decision, and stated that the hearing officer and reviewing

attorney failed to provide adequate due process in this case.12 C.R. 222-25; App. G.

But, as discussed in part III, HHSC’s decision was supported by findings of fact.

And the hearing officer and reviewing attorney fulfilled their statutory duties,

providing all due process required. Thus, the district court erred in reversing the

decision as arbitrary and capricious and in violation of due process.

A. The hearing officer provided all required due process, including
making findings of fact supported by the record.

The district court found that HHSC’s decision was arbitrary and capricious

because it was not supported by any findings of fact. C.R. 266; App. A. The

district court noted that many of the hearing officer’s findings of fact merely recite

12
The district court again elevated due process required in a fair hearing, especially considering
the informal nature thereof. 1 Tex. Admin. Code 357.5(c) (“The hearings officer conducts the
fair hearing as an informal proceeding, not as a formal court hearing, and is not required to
follow the Texas Rules of Evidence or the Texas Rules of Civil Procedure.”). As is discussed in
this section, the district court’s concerns amount to disagreements with the wording of the fair
hearing findings of fact and the administrative review order that do not amount to a denial of due
process or render the decision arbitrary and capricious. See C.R. 223-24; App. E.

26
procedural history, and asserted that the findings of fact may not have been based

on the hearing officer’s consideration of the evidence. C.R. 223; App. G. But the

hearing officer fulfilled his duties in the fair hearing, and the decision was not

arbitrary and capricious.

The hearing officer presiding over a fair hearing has many responsibilities.

1 Tex. Admin Code § 357.5 (“Hearing Officer Responsibilities”). During the

hearing, among other responsibilities, the hearing officer “ensures consideration of

all relevant points at issue and facts pertinent to the appellant’s situation at the time

the action was taken,” “requests, receives, and makes part of the record all relevant

evidence,” and “regulates the conduct and course of the fair hearing to ensure due

process and an orderly hearing.” Id. As relevant here, the hearing officer is

responsible for the following after a fair hearing:

(3) After the hearing, the hearings officer:

(A) makes a decision based on the evidence presented at the hearing;

(B) determines if the agency’s or its designee’s action is in
compliance with statutes, policies, or procedures;

(C) allows the appellant to request and receive a copy of the recording
at no charge;

(D) except as provided in subparagraph (E) of this paragraph, issues a
timely written decision, and includes findings of fact, conclusions of
law, pertinent statutes, and a final order; . . .

1 Tex. Admin. Code § 357.5(c)(3)(A)-(D).

27
 The district court erred in finding that the hearing officer failed to make

findings of fact. As discussed fully in part III, the hearing officer made findings of

fact that were more than mere procedural recitations. A.R. 571-72. On substantial

evidence review, a decision may be affirmed on the basis of any finding of fact,

even if there are other irrelevant findings. Tex. Rivers Prot. Ass’n, 910 S.W.2d at

155 (As long as a properly supported finding given in the order supports an

agency’s action, a court will uphold the action despite the existence of other

findings that are irrelevant or unsupported by the record.). Thus, the decision was

not arbitrary and capricious for an absence of findings of fact, and the district

Court erred in reversing on this basis.

And, although the district court asserted that the hearing officer failed to

specifically state that the findings of fact represented the hearing officer’s findings

after considering the evidence, the hearing officer prefaced the findings of fact by

stating: “The hearing officer has carefully considered the evidence contained in the

hearing record and makes findings of fact and conclusions of law based on the

weight of the evidence presented and according to the burdens of proof explained

in 1 TAC 357.9.” A.R. 570; App. B. As the hearing officer clearly stated that his

findings of fact were based on a consideration of the evidence presented during the

hearing, he also fulfilled his duty in this regard, and did not violate Ms. Lukefahr’s

due process rights. Therefore, the district court erred in reversing the fair hearing

28
decision as arbitrary and capricious and for due process violations. Gulf States

Utils. Co., 841 S.W.2d at 474 (an agency’s order is not arbitrary and capricious if it

is based on a consideration of all relevant factors).

B. The reviewing attorney provided all required due process.

The district court also asserted that the reviewing attorney failed to fulfill his

duty on administrative review by failing to review the fair hearing decision for

errors of law and fact using a “preponderance of the evidence” standard. C.R. 223;

App. G. But, as the reviewing attorney also fulfilled his duties and provided Ms.

Lukefahr with all due process, the district court erred in reversing HHSC’s

decision on this basis.

“Before an applicant for or recipient of public assistance benefits may appeal

a decision of a hearing officer for the commission . . ., the applicant or recipient

must request an administrative review by an appropriate attorney for [HHSC] . . .”.

Tex. Gov’t Code § 531.019(c). The reviewing attorney has a statutory duty to

complete “an administrative review of the decision and notify the applicant or

recipient in writing of the results of that review.” Tex. Gov’t Code § 531.019(e)(2).

“The assigned attorney reviews the hearing decision and the hearings record upon

which it is based for errors of law and errors of fact using the ‘preponderance of

evidence’ standard. This standard means that the evidence as a whole shows that

29
the fact sought to be proved is more probable than not.” 1 Tex. Admin. Code

§ 357.703(b)(3).

The administrative review decision shows that the reviewing attorney

fulfilled his duty by reviewing the fair hearing decision for errors of law and fact,

providing Ms. Lukefahr with all required due process in the administrative review.

The administrative review order states:

Based on my review of the matter, I have determined that the
Hearings Officer developed the record appropriately, and the record
reflects that Appellant’s denial of the Permobil C500 VS power
wheelchair with integrated standing feature and seat elevation system
was in accordance with applicable law and policy. It is, therefore,
ORDERED that the Hearing Officer’s decision in this matter is
SUSTAINED.

A.R. 591 (emphasis in original); App. C. Thus, the order itself references

consideration of the record and the evaluation of the record in light of the

applicable law. Id.

And, as the district court noted, the reviewing attorney also states: “[b]ased

on a preponderance of the evidence presented, substantial evidence exists to

support the agency’s action, and the Hearings Officer’s conclusions and decision;

therefore, the Hearings Officer’s Decision is Sustained.” A.R. 590; App. C. Again,

the reviewing attorney states that the fair hearing decision is supported by a

preponderance of the evidence. Id. Despite the district court’s assertion that the

reviewing attorney conflated the preponderance of the evidence standard with

30
substantial evidence review, nothing in the Order supports the conclusion that the

reviewing attorney’s the reference to “substantial evidence” is tied to the meaning

of that term on judicial review under the Administrative Procedure Act. C.R. 223

note 5; Tex. Gov’t Code § 2001.174. Thus, as the reviewing attorney provided all

required due process in Ms. Lukefahr’s case, the decision should have been

affirmed. Therefore, this Court should reverse the district court’s judgment and

affirm HHSC’s order in all respects.

PRAYER

HHSC asks this Court to reverse the district court’s judgment because

HHSC’s order denying Ms. Lukefahr’s request for a custom power wheelchair

with an integrated stander is supported by substantial evidence and is not arbitrary

and capricious or in violation of Ms. Lukefahr’s due process rights.

Respectfully submitted,

KEN PAXTON
Attorney General of Texas

CHARLES E. ROY
First Assistant Attorney General

JAMES E. DAVIS
Deputy Attorney General for Civil
Litigation

DAVID A. TALBOT, JR.
Chief, Administrative Law Division

31
 /s/ Kara Holsinger
KARA HOLSINGER
Assistant Attorney General
State Bar No. 24065444
Office of the Attorney General of Texas
Administrative Law Division
P.O. Box 12548, Capitol Station
Austin, Texas 78711-2548
Telephone: (512) 475-4203
Facsimile: (512) 320-0167
kara.holsinger@texasattorneygeneral.gov
Attorneys for Appellant

CERTIFICATE OF COMPLIANCE

In compliance with Travis County Local Rule 10.5 and Texas Rule of

Appellate Procedure 9.4(i)(3) and relying on the word count function in the word

processing software used to produce this document, I certify that the number of

words in this document is 8,491 including the portions that would otherwise be

exempted by TRAP Rule 9.4(i)(1).

/s/ Kara Holsinger
KARA HOLSINGER

32
 CERTIFICATE OF SERVICE

A true and correct copy of the foregoing Appellant’s Brief was served via e-

serve and e-mail on this the 11th day of September, 2015 to the following:

Maureen O’Connell
Texas Bar No. 00795949
Southern Disability Law Center
1307 Payne Avenue
Austin, Texas 78757
Phone: 512-458-5800
Fax: 512-458-5850
moconnell458@gmail.com

Attorney for Appellee

/s/ Kara Holsinger
KARA HOLSINGER
Assistant Attorney General

33
APPENDICES
 INDEX OF APPENDICES

Final Judgment in Jessica Lukefahr v. Texas Health and Human Services
Commission, Cause No. D-1-GN-14-002158 .................................................. Tab A

Fair Hearing Decision In the Matter of Jessica Lukefahr ................................ Tab B

Administrative Review of Fair Hearing Decision In the Matter of Jessica .... Tab C
Lukefahr

1 Tex. Admin. Code § 354.1039 ...................................................................... Tab D

2013 Medicaid Program Policy Manual Exceptional Circumstances Policy .. Tab E

Texas Medicaid & Healthcare Partnership Letter to Jessica Lukefahr
Denying Exceptional Circumstances Request ................................................. Tab F

Letter from 345th District Court of April 28, 2015 ......................................... Tab G

DeSario Letter .................................................................................................. Tab H

Detgen v. Janek, 752 F.3d 627, 632 (5th Cir. 2014) ........................................ Tab I
TAB A
226
TAB B
TAB C
TAB D
 Page 1

TEXAS ADMINISTRATIVE CODE

*** This document reflects all regulations in effect as of August 31, 2015 ***

TITLE 1. ADMINISTRATION
PART 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION
CHAPTER 354. MEDICAID HEALTH SERVICES
SUBCHAPTER A. PURCHASED HEALTH SERVICES
DIVISION 3. MEDICAID HOME HEALTH SERVICES

1 TAC § 354.1039 (2015)

§ 354.1039. Home Health Services Benefits and Limitations

(a) The State determines authorization requirements and limitations for covered
home health service benefits. The home health agency is responsible for obtaining
prior authorization where specified for the healthcare service, supply, equipment,
or appliance. Home health service benefits include the following:
(1) Skilled nursing. Nursing services provided by a registered nurse (RN) who is
currently licensed by the Board of Nurse Examiners for the State of Texas and/or a
licensed vocational nurse (LVN) licensed by the Texas Board of Vocational Nurse
Examiners provided on a part-time or intermittent basis and furnished through an
enrolled home health agency are covered benefits. Billable nursing visits may also
include:
(A) nursing visits required to teach the recipient, the primary caregiver, a family
member and/or neighbor how to administer or assist in a service or activity which
is necessary to the care and/or treatment of the recipient in a home setting;
(B) RN visits for skilled nursing observation, assessment, and evaluation,
provided a physician specifically requests that a nurse visit the recipient for this
purpose.
(i) The physician's request must reflect the need for the assessment visit.
(ii) Nursing visits for the primary purpose of assessing a recipient's care needs
to develop a plan of care are considered administrative and are not billable; and
(C) RN visits for general supervision of nursing care provided by a home health
aide and/or others over whom the RN is administratively or professionally re-
sponsible.
(2) Home health aide services. Home health aide services to provide personal care
under the supervision of an RN, licensed physical therapist (PT), or occupational
therapist (OT) employed by the home health agency are covered benefits.
(A) The primary purpose of a home health aide visit must be to provide personal
care services.
(B) Duties of a home health aide include the performance of simple procedures such
as personal care, ambulation, exercise, range of motion, safe transfer, positioning,
and household services essential to health care at home, assistance with medications
that are ordinarily self-administered, reporting changes in the patient's condition
and needs, and completing appropriate records.
(C) Written instructions for home health aide services must be prepared by an RN
or therapist as appropriate.
 Page 2
1 TAC § 354.1039

(D) The requirements for home health aide supervision are as follows.
(i) When only home health aide services are being furnished to a recipient, an
RN must make a supervisory visit to the recipient's residence at least once every
60 days. These supervisory visits must occur when the aide is furnishing patient care.
(ii) When skilled nursing care, PT, or OT are also being furnished to a recipient,
an RN must make a supervisory visit to the recipient's residence at least every two
weeks.
(iii) When only PT or OT is furnished in addition to the home health aide services,
the appropriate skilled therapist may make the supervisory visits in place of an RN.
(E) Visits made primarily for performing housekeeping services are not covered
services.
(3) Medical supplies. Medical supplies are covered benefits if they meet the
following criteria.
(A) Medical supplies must be:
(i) documented in the recipient's plan of care as medically necessary and used
for medical or therapeutic purposes;
(ii) supplied through an enrolled home health agency in compliance with the
recipient's plan of care; or
(iii) supplied by an enrolled medical supplier under written, signed, and dated
physician's prescription; and
(iv) prior authorized unless otherwise specified by the department.
(B) Items which are not listed in subparagraph (C) of this paragraph may be
medically necessary for the treatment or therapy of qualified recipients. If a prior
authorization request is received for these items consideration will be given to the
request. Approval for reasonable amounts of the requested items may be given if
circumstances justify the exception and the need is documented.
(C) Covered items include, but are not limited to:
(i) colostomy and ileostomy care supplies;
(ii) urinary catheters, appliances and related supplies;
(iii) pressure pads including elbow and heel protectors;
(iv) incontinent supplies to include incontinent pads or diapers for clients over
the age of four for medical necessity as determined by the physician;
(v) crutch and cane tips;
(vi) irrigation sets;
(vii) supports and abdominal binders (not to include braces, orthotics, or
prosthetics);
(viii) medicine chest supplies not requiring a prescription (not to include
vitamins or personal care items such as soap or shampoos);
(ix) syringes, needles, IV tubing and/or IV administration setups including IV
solutions generally used for hydration or prescriptive additives;
(x) dressing supplies;
(xi) thermometers;
(xii) suction catheters;
 Page 3
1 TAC § 354.1039

(xiii) oxygen and related respiratory care supplies; or
(xiv) feeding related supplies.
(4) Durable medical equipment (DME). Durable Medical Equipment must meet the
following requirements to qualify for reimbursement under Medicaid home health
services.
(A) DME must:
(i) be medically necessary and the appropriateness of the health care service,
supply, equipment, or appliance prescribed by the physician for the treatment of the
individual recipient and delivered in his place of residence must be documented in
the plan of care and/or the request form.
(ii) be prior authorized unless otherwise specified by the department;
(iii) meet the recipient's existing medical and treatment needs;
(iv) be considered safe for use in the home;
(v) be provided through an enrolled home health agency under a current physician's
plan of care; or
(vi) be provided through an enrolled DME supplier under a written, signed and dated
physician's prescription.
(B) The department will determine whether DME will be rented, purchased, or
repaired based upon the duration and use needs of the recipient.
(i) Periodic rental payments are made only for the lesser of:
(I) the period of time the equipment is medically necessary; or
(II) when the total monthly rental payments equal the reasonable purchase cost
for the equipment.
(ii) Purchase is justified when the estimated duration of need multiplied by the
rental payments would exceed the reasonable purchase cost of the equipment or it is
otherwise more practical to purchase the equipment.
(iii) Repair of durable medical equipment and appliances will be considered based
on the age of the item and the cost to repair the item.
(I) A request for repair of durable medical equipment or appliances must include
a statement or medical information from the attending physician substantiating that
the medical appliance or equipment continues to serve a specific medical purpose and
an itemized estimated cost list of the repairs. Rental equipment may be provided to
replace purchased medical equipment or appliances for the period of time it will take
to make necessary repairs to purchased medical equipment or appliances.
(II) Repairs will not be authorized in situations where the equipment has been
abused or neglected by the patient, patient's family, or caregiver.
(III) Routine maintenance of rental equipment is the responsibility of the
provider.
(C) Covered medical appliances and equipment (rental, purchase, or repairs)
include, but are not limited to:
(i) manual or powered wheelchairs;
(I) non-customized including medically justified seating, supports and equipment;
or
 Page 4
1 TAC § 354.1039

(II) customized, specifically tailored or individualized, powered wheelchairs
including appropriate medically justified seating, supports and equipment not to
exceed an amount specified by the department.
(ii) canes, crutches, walkers, and trapeze bars;
(iii) bed pans, urinals, bedside commode chairs, elevated commode seats, bath
chairs/benches/seats;
(iv) electric and non-electric hospital beds and mattresses;
(v) air flotation or air pressure mattresses and cushions;
(vi) bed side rails and bed trays;
(vii) reasonable and appropriate appliances for measuring blood pressure and blood
glucose suitable to the recipient's medical situation to include replacement parts
and supplies;
(viii) lifts for assisting recipient to ambulate within residence;
(ix) pumps for feeding tubes and IV administration; and
(x) respiratory or oxygen related equipment.
(D) Medical equipment or appliances not listed in subparagraph (C) of this
paragraph may, in exceptional circumstances, be considered for payment when it can
be medically substantiated as a part of the treatment plan that such service would
serve a specific medical purpose on an individual case basis.
(5) Physical therapy. To be payable as a home health benefit, physical therapy
services must:
(A) be provided by a physical therapist who is currently licensed by the Texas
Board of Physical Therapy Examiners, or physical therapist assistant who is licensed
by the Texas Board of Physical Therapy Examiners who assists and is supervised by
a licensed physical therapist;
(B) be for the treatment of an acute musculoskeletal or neuromuscular condition
or an acute exacerbation of a chronic musculoskeletal or neuromuscular condition;
(C) be expected to improve the patient's condition in a reasonable and generally
predictable period of time, based on the physician's assessment of the patient's
restorative potential after any needed consultation with the therapist; and
(D) not be provided when the patient has reached the maximum level of improvement.
Repetitive services designed to maintain function once the maximum level of im-
provement has been reached are not a benefit. Services related to activities for the
general good and welfare of patients such as general exercises to promote overall
fitness and flexibility and activities to provide diversion or general motivation
are not reimbursable.
(6) Occupational therapy. To be payable as a home health benefit, occupational
therapy services must be:
(A) provided by one who is currently registered and licensed by the Texas Board
of Occupational Therapy Examiners or by an occupational therapist assistant who is
licensed to assist in the practice of occupational therapy and is supervised by an
occupational therapist;
(B) for the evaluation and function-oriented treatment of individuals whose
ability to function in life roles is impaired by recent or current physical illness,
injury or condition; and
 Page 5
1 TAC § 354.1039

(C) specific goal directed activities to achieve a functional level of mobility
and communication and to prevent further dysfunction within a reasonable length of
time based on the therapist's evaluation and physician's assessment and plan of care.
(7) Insulin syringes and needles. Insulin syringes and needles must meet the
following requirements to qualify for reimbursement under Medicaid home health
services.
(A) Pharmacies enrolled in the Medicaid Vendor Drug Program may dispense insulin
syringes and needles to eligible Medicaid recipients with a physician's prescription.
(B) Prior authorization is not required for an eligible recipient to obtain insulin
syringes and needles.
(C) Insulin syringes and needles obtained in accordance with this section will
be reimbursed through the Medicaid Vendor Drug Program.
(D) A physician's plan of care is not required for an eligible recipient to obtain
insulin syringes and needles under this section.
(8) Diabetic supplies and related testing equipment. Diabetic supplies and related
testing equipment must meet the following requirements to qualify for reimbursement
under Medicaid home health services.
(A) diabetic supplies and related testing equipment must be prescribed by a
physician;
(B) prior authorization is required unless otherwise specified by the department;
and
(b) Home health service limitations include the following.
(1) Patient supervision.
(A) Patients must be seen by their physician within 30 days prior to the start
of home health services. This physician visit may be waived when a diagnosis has
already been established by the attending physician and the patient is currently
undergoing active medical care and treatment. Such a waiver is based on the
physician's statement that an additional evaluation visit is not medically necessary.
(B) Patients receiving home health care services must remain under the care and
supervision of a physician who reviews and revises the plan of care at least every
60 days or more frequently as the physician determines necessary.
(2) Time limited prior authorizations.
(A) Prior authorizations for payment of home health services may be issued by the
department for a service period not to exceed 60 days on any given authorization.
Specific authorizations may be limited to a time period less than the established
maximum. When the need for home health services exceeds 60 days, or when there is
a change in the service plan, the provider must obtain prior approval and retain the
physician's signed and dated orders with the revised plan of care.
(B) The provider shall be notified by the department in writing of the au-
thorization (or denial) of requested services.
(C) Prior authorization requests for covered Medicaid home health services must
include the following information:
(i) The Medicaid identification form with the following information:
(I) full name, age, and address;
(II) Medical Assistance Program Identification number;
 Page 6
1 TAC § 354.1039

(III) health insurance claim number (where applicable);
(IV) Medicare number;
(ii) the physician's written, signed and dated plan of care (submitted by the
provider if requested);
(iii) the clinical record data (completed and submitted by provider if requested);
(iv) a description of the home or living environment;
(v) a composition of the family/caregiver;
(vi) observations pertinent to the overall plan of care in the home; and
(vii) the type of service the patient is receiving from other community or state
agencies.
(D) If inadequate or incomplete information is provided, the provider will be
requested to furnish additional documentation as required to make a decision on the
request.
(3) Medication administration. Nursing visits for the purpose of administering
medications are not covered if:
(A) the medication is not considered medically necessary to the treatment of the
individual's illness;
(B) the administration of medication exceeds the therapeutic frequency or duration
by accepted standards of medical practice;
(C) there is not a medical reason prohibiting the administration of the medication
by mouth; or
(D) the patient, a primary caregiver, a family member and/or neighbor has been
taught or can be taught to administer intramuscular (IM) and intravenous (IV)
injections.
(4) Prior approval. Services or supplies furnished without prior approval, unless
otherwise specified by the department, are not benefits.
(5) Recipient residence. Services, equipment, or supplies furnished to a recipient
who is a resident or patient in a hospital, skilled nursing facility, or intermediate
care facility are not benefits.
(c) Home health services are subject to utilization review which includes the
following:
(1) the physician is responsible for retaining in the client's record a copy of
the plan of care and/or a copy of the request form documenting the medical necessity
of the health care service, supply, equipment, or appliance and how it meets the
recipient's health care needs; and
(2) the home health services provider is responsible for documenting the amount,
duration, and scope of services in the recipient's plan of care, the equipment/supply
order request, and the client record based on the physician's orders. This information
is subject to retrospective review; and
(3) the State or its designated contractor may establish random and targeted
utilization review processes to ensure the appropriate utilization of home health
benefits and to monitor the cost effectiveness of home health services.
TAB E
TAB F
TAB G
221
222
223
224
TAB H
 DEPARTMENT OF HEALTH & HUMAN SERVICES
Health Care Financing Administration
Center for Medicaid and State Operations
7500 Security Boulevard
Baltimore, MD 21244-1850
September 4, 1998
Dear State Medicaid Director:
We have received a number of inquiries regarding coverage of medical equipment (ME) under the Medicaid program in light of the
ruling of the United States Court of Appeals for the Second Circuit in DeSario v. Thomas. In that case, the court examined the
circumstances under which a State may use a list to determine coverage of ME and offered its interpretation of HCFA's policies. We
have concluded that it would be helpful to provide States with interpretive guidance clarifying our policies concerning ME coverage
under the Medicaid program and the use of lists in making such coverage determinations. This guidance is applicable only to ME
coverage policy.
As you know, the mandatory home health services benefit under the Medicaid program includes coverage of medical supplies,
equipment, and appliances suitable for use in the home (42 C.F.R. § 440.70(b)(3)). A State may establish reasonable standards,
consistent with the objectives of the Medicaid statute, for determining the extent of such coverage (42 U.S.C. § 1396(a)(17)) based on
such criteria as medical necessity or utilization control (42 C.F.R. § 440.230(d)). In doing so, a State must ensure that the amount,
duration, and scope of coverage are reasonably sufficient to achieve the purpose of the service (42 C.F.R. § 440.230(b)). Furthermore,
a State may not impose arbitrary limitations on mandatory services, such as home health services, based solely on diagnosis, type of
illness, or condition (42 C.F.R. § 440.230(c)).
A State may develop a list of pre-approved items of ME as an administrative convenience because such a list eliminates the need to
administer an extensive application process for each ME request submitted. An ME policy that provides no reasonable and meaningful
procedure for requesting items that do not appear on a State's pre-approved list, is inconsistent with the federal law discussed above. In
evaluating a request for an item of ME, a State may not use a "Medicaid population as a whole" test, which requires a beneficiary to
demonstrate that, absent coverage of the item requested, the needs of "most" Medicaid recipients will not be met. This test, in the ME
context, establishes a standard that virtually no individual item of ME can meet. Requiring a beneficiary to meet this test as a criterion
for determining whether an item is covered, therefore, fails to provide a meaningful opportunity for seeking modifications of or
exceptions to a State's pre-approved list. Finally, the process for seeking modifications or exceptions must be made available to all
beneficiaries and may not be limited to sub-classes of the population (e.g., beneficiaries under the age of 21).
In light of this interpretation of the applicable statute and regulations, a State will be in compliance with federal Medicaid
requirements only if, with respect to an individual applicant's request for an item of ME, the following conditions are met:
ƒ The process is timely and employs reasonable and specific criteria by which an individual item of ME will be judged for
coverage under the State's home health services benefit. These criteria must be sufficiently specific to permit a determination
of whether an item of ME that does not appear on a State's pre-approved list has been arbitrarily excluded from coverage
based solely on a diagnosis, type of illness, or condition.
ƒ The State's process and criteria, as well as the State's list of pre-approved items, are made available to beneficiaries and the
public.
ƒ Beneficiaries are informed of their right, under 42 C.F.R. Part 431 Subpart E, to a fair hearing to determine whether an
adverse decision is contrary to the law cited above.
We encourage you to be cognizant of the approval decisions you make regarding items of ME that do not appear on a pre-approved
list, to ensure that the item of ME is covered for all beneficiaries who are similarly situated. In addition, your list of pre-approved
items of ME should be viewed as an evolving document that should be updated periodically to reflect available technology.
HCFA's Regional Offices will be monitoring compliance with the statute and regulations that are the subject of this guidance. Any
questions concerning this letter or the ME benefit may be referred to Mary Jean Duckett of my staff at (410) 786-3294.
Sincerely,
/s/
Sally K. Richardson
Director
cc:
All HCFA Regional Administrators
All HCFA Associate Regional Administrators for Medicaid and State Operations
Lee Partridge American Health Services Association
Joy Wilson National Conference of State Legislatures
bcc: HCFA Press Office CMSO Senior Staff
TAB I
 Page 1

SCOTT DETGEN, by His Next Friend, L.C. Detgen; JUANITA
BARRAZA, by Her Next Friend, Yolanda Villareal; BRANDON
DOYEL; JOSHUA VARGAS, Plaintiffs-Appellants, versus DR. KYLE
JANEK, in His Official Capacity as Executive Commissioner,
Texas Health and Human Services Commission,
Defendant-Appellee.

No. 13-10396

UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

752 F.3d 627; 2014 U.S. App. LEXIS 9107

May 16, 2014, Filed

PRIOR HISTORY: [**1] Circuit Judges.
Appeal from the United States
District Court for the Northern OPINION BY: JERRY E. SMITH
District of Texas.
Detgen v. Janek, 945 F. Supp. 2d 746, OPINION
2013 U.S. Dist. LEXIS 34532 (N.D.
Tex., 2013) [*629] JERRY E. SMITH, Circuit
Judge:

COUNSEL: For SCOTT DETGEN, by his next The four plaintiffs are Medicaid
friend, L.C. Detgen, JUANITA BARRAZA, beneficiaries with near total physical
by her next friend, Yolanda Villareal, disabilities, requiring constant
Brandon Doyel, Joshua Vargas, personal assistance and care. On the
Plaintiffs - Appellants: Maureen A. advice of professionals, they asked
O'Connell, Southern Disability Law Texas's Health and Human Services
Center, Austin, TX; Lewis Alan Commission to pay for ceiling lifts,
Golinker, Assistive Technology Law which are classified as durable
Center, Ithaca, NY. medical equipment ("DME"). Such lifts
are expensive but would allow the
For DR. KYLE JANEK, in his official disabled beneficiaries to move with
capacity as Executive Commissioner, straps attached to ceilings. Texas
Texas Health and Human Services denied coverage under a categorical
Commission, Defendant - Appellee: [**2] exclusion in the state's
Jonathan F. Mitchell, Douglas D. implementing Medicaid regulations. The
Geyser, Office of the Solicitor district court granted summary
General, Austin, TX; Erika M. Kane, judgment for the state on the ground
Office of the Attorney General, that, so long as federal monies were
Austin, TX. not available to reimburse it, it did
not need to provide the lifts.
JUDGES: Before JONES, SMITH, and OWEN,
 Page 2
752 F.3d 627, *629; 2014 U.S. App. LEXIS 9107, **2

The Center for Medicare and Ct. 1204, 182 L. Ed. 2d 101 (2012).
Medicaid Services ("CMS") has since
offered guidance, however, that 1 Plaintiffs rely on 42 U.S.C.
federal financial participation would § 1983 for their due-process
be available. In addition to appealing claims.
the judgment, the plaintiffs move this
court to vacate it for In light of the Court's failure in
reconsideration. In the appeal, they Douglas to hold to the contrary, this
maintain that the state's categorical appeal is governed by Planned
exclusions are preempted by federal Parenthood of Houston & Southeast
law or otherwise violate their Texas v. Sanchez ("PPHST"), 403 F.3d
procedural due-process rights. Texas 324, 330-35 (5th Cir. 2005). There
responds that categorical exclusions this court held that the Supremacy
are not preempted and, moreover, that Clause confers an implied private
a state can never violate the Medicaid cause of action to enforce all
Act and that the plaintiffs do not Spending Clause legislation by
have a private cause of action to bringing preemption actions.2 [**4]
enforce it. The state is correct that since then,
the Supreme Court has held that
Under binding precedent, these certain federal statutes contain no
plaintiffs have an implied private private right of action,3 but that was
cause of action under the Supremacy true when PPHST was decided. See,
Clause to pursue this challenge. We e.g., Sandoval, 532 U.S. at 288-93. In
additionally note that the state must Sandoval, Horne, and Brunner, it
comply with the requirements of the appears that the plaintiffs never made
Medicaid Act, but the Act does not the alternative claim that if the
preempt the state's categorical statute does not provide a cause of
exclusions. We therefore affirm the action, the Supremacy Clause does.4
summary judgment and deny the motion
to [**3] vacate. 2 PPHST, 403 F.3d at 333
("While [prior cases] do not
I. directly address the issue of
whether a valid cause of action
The plaintiffs assert that they existed [under the Supremacy
have an implied cause of action to Clause], we assumed that one did.
pursue their claims. Normally a cause Today we hold that one does.
of action must be found in a statute: Other circuits have similarly
"Like substantive federal law itself, recognized an implied cause of
private rights of action to enforce action to bring preemption claims
federal law must be created by seeking injunctive and
Congress." Alexander v. Sandoval, 532 declaratory relief even absent an
U.S. 275, 286, 121 S. Ct. 1511, 149 L. explicit statutory claim.").
Ed. 2d 517 (2001). The plaintiffs' 3 See, e.g., Horne v. Flores,
theory of an implied cause of action 557 U.S. 433, 456 n.6, 129 S. Ct.
does not depend on any rights-creating 2579, 174 L. Ed. 2d 406 (finding
language in the Medicaid Act; rather, no private cause of action to
they rely on the [*630] Supremacy enforce the No Child Left Behind
Clause.1 The Supreme Court recently Act); Brunner v. Ohio Republican
dodged the question--incidentally in a Party, 555 U.S. 5, 6, 129 S. Ct.
case involving the Medicaid 5, 172 L. Ed. 2d 4 (2008)
Act--whether the Supremacy Clause (suggesting no private cause of
provides a cause of action itself in action to enforce the Help
the absence of a statutory private America Vote Act).
cause of action. See Douglas v. Indep. 4 The Tenth Circuit has only
Living Ctr. of S. Cal., Inc., 132 S. recently come to the opposite
 Page 3
752 F.3d 627, *630; 2014 U.S. App. LEXIS 9107, **4

conclusion. See Planned would contradict PPHST, which held
Parenthood of Kan. & Mid-Mo. v. that there is an implied private cause
Moser, 12-3178, 747 F.3d 814, of action under the Supremacy Clause
2014 U.S. App. LEXIS 5467, 2014 to enforce all Spending Clause
WL 1201488 (10th Cir. Mar. 25, legislation. Under the state's theory,
2014) [**5] (holding that the the holding in PPHST would have been
Supremacy Clause does not provide totally unnecessary because it is
a private cause of action). impossible for a state to violate a
Spending Clause statute, so a private
II. cause of action does plaintiffs no
good. We agree that if no private
The state makes the alternative cause of action existed, it would be
argument that even if plaintiffs have up to the federal government to decide
a cause of action, it is impossible how to enforce compliance, and it
for a state to violate the Medicaid could choose to withhold funds. That,
Act. The state analogizes the Act to indeed, is how at least two Supreme
legislation tying highway funds to a Court Justices would interpret the
certain maximum speed limit: A state Medicaid Act.5 But this court in
may lawfully establish a higher limit, PPHST, 403 F.3d at 332 & n.34,
but it will forgo funds. Thus, the specifically discounted those two
state claims, here it may lawfully views in coming to its conclusion.
pass nonconforming Medicaid Although it is quite possible, as
legislation at the risk of losing Texas maintains, that no state has
federal funds, but not at the risk of made such an argument, PPHST
private lawsuits. It reasons that necessarily (even if implicitly)
unlike other legislation that can directs that when a state violates the
preempt state law, this federal law federal [**7] requirements of the
does not include language such as Medicaid Act, a private plaintiff can
"shall," commanding a state to perform sue the state to enforce those
a certain function. requirements.
The provision on which plaintiffs 5 See Pharm. Research & Mfrs.
rely, however, does contain such of Am. v. Walsh, 538 U.S. 644,
language: "A State plan for medical 675, 123 S. Ct. 1855, 155 L. Ed.
assistance must . . . include 2d 889 (2003) (Scalia, J.,
reasonable standards . . . for concurring in the judgment) ("I
determining eligibility . . . . " 42 would reject petitioner's
U.S.C. § 1396a(a)) (emphasis added). statutory claim on the ground
Additionally, several courts, that the remedy for the State's
including the Supreme Court, have held failure to comply with the
that once a state accepts federal obligations it has agreed to
funding, it must conform to the undertake under the Medicaid Act
requirements of the relevant federal is set forth in the Act itself:
law, including the Medicaid Act: termination of funding by the
"Although participation [**6] in the Secretary of the Department of
Medicaid program is entirely optional, Health and Human Services.
once a State elects to participate, it Petitioner must seek enforcement
must comply with the requirements of of the Medicaid conditions by
Title XIX." Harris v. McRae, 448 U.S. that authority . . . ." (internal
297, 301, 100 S. Ct. 2671, 65 L. Ed. citations omitted)); id. at 682
2d 784 (1980); see also Hope Med. Grp. (Thomas, J., concurring in the
for Women v. Edwards, 63 F.3d 418, 421 judgment) ("[T]he Secretary's
(5th Cir. 1995). mandate from Congress is to
conduct, with greater expertise
[*631] Indeed, a contrary ruling and resources than courts, the
 Page 4
752 F.3d 627, *631; 2014 U.S. App. LEXIS 9107, **7

inquiry into whether [state law] prohibit categorical exclusions.
upsets the balance contemplated
by the Medicaid Act. Congress' As we have noted, the statute
delegation to the agency to requires that "[a] State plan for
perform this complex balancing medical assistance must . . . include
task precludes federal-court reasonable standards . . . for
intervention on the basis of determining eligibility for and the
obstacle pre-emption--it does not extent of medical assistance under the
bar the Secretary from performing plan." Additionally, the Medicaid Act
his duty to adjudge whether [the requires a state program to cover
State's law] upsets the balance "home health services," 42 U.S.C. §
the Medicaid Act contemplates and 1396a(a)(10)(D), which [*632]
withhold approval or funding include "[m]edical supplies,
[**8] if necessary."). equipment, and appliances suitable for
use in the home," 42 C.F.R. §
III. 440.70(b)(3). But, as plaintiffs
acknowledge, the Act does not identify
Regarding the merits, the basis for the specific equipment that a state
this challenge is the requirement that must offer, and the scope of offerings
"[a] State plan for medical assistance is governed by the "reasonableness"
must . . . include reasonable standard in the statute. Plaintiffs
standards . . . for determining maintain that the categorical
eligibility for and the extent of exclusion of ceiling lifts is
medical assistance under the plan . . unreasonable because ceiling lifts
. which are consistent with the fall within the state's definition of
objectives of this subchapter," 42 DME and are medically necessary.
U.S.C. § 1396a(a)(17), and the
implementing regulation requiring that The state categorically excludes
each provided service "must be such lifts from coverage for a number
sufficient in amount, duration, and of reasons. Although the district
scope to reasonably achieve its court specifically relied on the lack
purpose," 42 C.F.R. § 440.230(b). The of federal financial assistance for
plaintiffs rely on this statutory its ruling--a ruling that is
language, an agency guidance letter, undermined by subsequent CMS guidance
and precedent to contend that the to the contrary--the state [**10]
state's categorical exclusion is not a also flatly excludes such lifts
"reasonable standard." because they require structural
modifications to residences. Texas
States have broad discretion to also excludes from the definition of
implement the Medicaid Act: "This DME, in the home services category,
[statutory] language confers broad ramps, elevators, stair-well lifts,
discretion on the States to adopt and platform lifts. Further, the state
standards for determining the extent explains in its brief that it provides
of medical assistance, requiring only more cost-effective alternatives such
that such standards be 'reasonable' as "transfer boards, freestanding
and 'consistent with the objectives' track (or 'Niklas') lifts, transfer
of the Act." Beal v. Doe, 432 U.S. chair systems for use with the bath or
438, 444, 97 S. Ct. 2366, 53 L. Ed. 2d commode, and manually or
464 (1977). In combination with the electronically operated floor lifts
presumption against preemption and its (also known as 'Hoyer' lifts)." The
concomitant clear-statement rule, the ceiling lifts at issue here would cost
discretion conferred in Doe leaves the state between $15,000 and $20,000,
little doubt that we [**9] must and even the insurers Aetna and Cigna
affirm the summary judgment if the deny coverage for such equipment.
statutory language does not plainly
 Page 5
752 F.3d 627, *632; 2014 U.S. App. LEXIS 9107, **10

It is hardly unreasonable for a [**12] law."7
state to exclude--even
categorically--any medical device 7 Letter from Sally K.
whose purpose can be served by a more Richardson, Director, Ctr. for
cost-effective method. Not only has Medicaid and State Operations,
Texas not violated the plain language Dep't of Health & Human Servs. to
of the statute, but also the State Medicaid Directors (Sept.
reasonableness standard in the text 4, 1998), available at
likely supports its imposition of http://downloads.cms.gov/cmsgov/archived
reasonable categorical exclusions. The -downloads/SMDL/downloads/SMD090498.pdf.
plaintiffs' notion that it would be
unreasonable for a state not to Deference to the guidance letter is
provide particular equipment within not an issue, because the state has
its definition of DME sounds not violated its requirements: The
plausible, except that the state can letter says only that if a state has a
choose by [**11] definition to pre-approved list, there must be some
exclude ceiling lifts.6 Moreover, a way to prove need for items not on it.
categorical exclusion based on the This letter says nothing about the
availability of cost-effective possibility of a state's deciding that
alternatives cannot mean that the some items shall be on a "never
state has denied a medically necessary approved [*633] list," that is, that
device, even if the statute did impose some items may be categorically
such a standard. excluded. It would be perfectly
consistent with federal law and this
6 The state defines DME at a letter to adopt a list of pre-approved
high level of generality, saying devices for convenience and a list of
that it includes equipment with a categorical exclusions if based on
projected term of use of more reasonable grounds, such as the
than one year or if the availability of more cost-effective
reimbursement is over $1,000. 1 alternatives, and to permit a
TEX. ADMIN. CODE § 354.1031(b)(2). beneficiary to demonstrate need for an
But Texas's Medicaid Provider item on neither list. In short,
Procedures Manual explains that nothing in the DeSario letter
not all DME will be considered prohibits categorical exclusions,
reimbursable as a home health which might even be eminently
service; rather, the DME must reasonable and thus consistent with
meet a list of criteria after the statutory language.
which it "may" be a covered
benefit. Section 2.2.14.27 of the Contrary to the plaintiffs'
manual specifically excludes many assertions, no decision [**13] of
DMEs, including home this court prohibits categorical
modifications. exclusions, and none of the cases they
cite is on point. Our decision in Rush
Plaintiffs rely heavily on a 1998 v. Parham, 625 F.2d 1150, 1157 n.12
guidance letter from CMS's predecessor (5th Cir. 1980), merely stands for the
(the "DeSario letter") to support proposition that a state cannot deny a
their assertions. The letter explains treatment solely based on "diagnosis,
that a state may "develop a list of type of illness, or condition," which
pre-approved items of [medical is an explicit requirement of the Code
equipment] as an administrative of Federal Regulations. As for Hope
convenience," but a "policy that Medical Group, an important
provides no reasonable and meaningful distinction is that there the
procedure for requesting items that do treatment in question was generally
not appear on a State's pre-approved available, but the state had limited
list [ ] is inconsistent with federal its availability for non-medical
 Page 6
752 F.3d 627, *633; 2014 U.S. App. LEXIS 9107, **13

reasons. See Hope Med. Grp., 63 F.3d also be provided to adults as
at 427. That situation is thus medically necessary. On the second
distinguishable from a categorical appeal, we affirmed because [**15]
exclusion of an item, which might be the district court was governed by the
based on a reasonable ground such as "law of the case" as established by a
the availability of more previous short per curiam opinion,
cost-effective alternatives. Fred C. v. Texas Health & Human
Services Commission, 117 F.3d 1416
The plaintiffs rely most heavily on (5th Cir. 1997). In that first appeal
Fred C. v. Texas Health & Human the court had remanded for a
Services Commission, 988 F. Supp. 1032 determination of whether the plaintiff
(W.D. Tex. 1997), aff'd, 167 F.3d 537 was even eligible for home services;
(5th Cir. 1998). Plaintiffs aver that we implied that if that requirement
that case stands for the proposition was met, he would be eligible. The
that if the state's Medicaid program court never actually addressed the
provides a medical service or device merits of the district court's
for an individual under age age-based reasoning, and it never held
twenty-one, it must also provide that (although it may have assumed) as the
service, if medically necessary, to a district court did that because the
person over that age. Such an [**14] device was provided for children under
outcome would benefit the plaintiffs twenty-one, it must also be provided
because the state provides ceiling to adults.
lifts to those younger than
twenty-one. Moreover, we later noted that,
although a state must provide certain
As the state contends here, benefits to children under twenty-one,
however, even if Fred C. could be read it need not provide those same
for that proposition, it would be benefits to adults:
absurd: The states are required by
federal law to provide any and all [*634] Further, the §
services to individuals under 1396d(a)(7) category of home
twenty-one if medically necessary, health care services is an
"whether or not such services are optional, not a mandatory,
covered under the State plan." 42 category of medical
U.S.C. § 1396d(r)(5). But if states do assistance. §
so and therefore must also so provide 1396a(a)(10)(A). Thus, the
for anyone over twenty-one, the state was not required to
special federal rule for the provision provide this category of
of more expansive benefits to children care and services to
would be unnecessary because the individuals over the age of
standards for children and the twenty-one at all. . . .
standards for adults would be CMS's approval of the
collapsed into the same standard. The effective exclusion
plaintiffs' reading would render indicates only that the
superfluous the language "whether or exclusion may be an
not such services are covered under appropriate limitation
the State plan," which suggests that [**16] on the scope of the
the states must be able to offer some home health care benefit as
benefits to children that they do not it applies to recipients
have to offer adults. over twenty-one years of
age. It does not express or
We need not read Fred C. as imply that CMS has approved
plaintiffs wish. There the district an exclusion applicable to
court had held that a device provided EPSDT benefits [for
for children under twenty-one must children].
 Page 7
752 F.3d 627, *634; 2014 U.S. App. LEXIS 9107, **16

construe it now.
S.D. ex rel. Dickson v. Hood, 391 F.3d
581, 597 (5th Cir. 2004). Therefore, Because plaintiffs have not shown
plaintiffs' reading of Fred C. is not an entitlement to the ceiling lifts,
how this court has subsequently their due process claims fail as well.
interpreted the law respecting The summary judgment is AFFIRMED, and
Medicaid, and it is not how we the motion to vacate is DENIED.