Pachas v. N.C. Dep't of Health & Human Servs.

IN THE SUPREME COURT OF NORTH CAROLINA

No. 144A18

Filed 1 February 2019

CARLOS PACHAS, by his attorney in fact, JULISSA PACHAS,

Petitioner

v.
NORTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES,

Respondent

Appeal pursuant to N.C.G.S. § 7A-30(2) from the decision of a divided panel of

the Court of Appeals, ___ N.C. App. ___, 814 S.E.2d 136 (2018), affirming an order

entered on 21 April 2017 by Judge W. Robert Bell in Superior Court, Mecklenburg

County. Heard in the Supreme Court on 1 October 2018.

Charlotte Center for Legal Advocacy, by Douglas Stuart Sea and Cassidy Estes-
Rogers, for petitioner-appellant.

Joshua H. Stein, Attorney General, by Lee J. Miller, Assistant Attorney General,
for respondent-appellee.

John R. Rittelmeyer for Disability Rights North Carolina, amicus curiae.

HUDSON, Justice

This case comes to us by way of petitioner’s notice of appeal based on a

dissenting opinion in the Court of Appeals. We now review “whether the Court of

Appeals erred as a matter of law in ruling that the superior court lacked jurisdiction

to decide whether its previous order was being violated by a state agency on the
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Opinion of the Court

grounds that petitioner failed to exhaust administrative remedies before moving to

enforce the court’s order.” Because we conclude that the superior court had

jurisdiction to enforce its previous order, we vacate the Court of Appeals’ decision.

Pachas v. N.C. Dep’t of Health & Human Servs., ___ N.C. App. ___, ___, 814 S.E.2d

136, 137 (2018). Accordingly, we remand this case to the Court of Appeals to address

the merits of respondent’s argument that the North Carolina Department of Health

and Human Services (DHHS) did not violate the 17 March 2016 order.

I. Factual and Procedural Background

Petitioner Carlos Pachas, a resident of Mecklenburg County, and a Medicaid

recipient, was left completely disabled and requiring twenty-four hour care as result

of a stroke and a brain tumor in 2014. At the time, petitioner lived with his wife,

their two minor children, and his wife’s elderly parents. All members of the

household were dependent on petitioner for their financial support. In January 2015,

he began receiving Social Security Disability benefits, and thereafter applied for re-

enrollment in Medicaid.

On 5 May 2015, the Mecklenburg County Department of Social Services (DSS)

sent petitioner a notice that his currently ongoing Medicaid benefits would be

terminated starting on 1 June 2015, and that he would need to meet a deductible of

$6642 during the period of 1 May through 31 October 2015 to regain eligibility for

Medicaid benefits. The DSS decision was based on the agency’s determination that

petitioner, because of his monthly Social Security Disability benefits of $1369 that

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began in January 2015, exceeded the income limit for an individual to qualify for

Medicaid as “Categorically Needy”—the income limit being one hundred percent of

the federal poverty level1—and that petitioner now qualified for Medicaid as

“Medically Needy” under DSS regulations. Under these regulations, “Categorically

Needy” Medicaid recipients are not charged a deductible, but “Medically Needy”

recipients are. Medicaid Eligibility Unit, Div. of Med. Assistance, N.C. Dep’t of

Health & Human Servs., Aged Blind and Disabled Medicaid Manual, MA-2360 ¶ I

(Nov. 1, 2011).

Petitioner requested a hearing before DSS concerning the termination of his

Medicaid benefits, and the hearing was held on 8 May 2015. On 13 May 2015, DSS

sent petitioner a Notice of Decision affirming the termination of his Medicaid

benefits. The Notice of Decision instructed petitioner that he could appeal the matter

to DHHS. On the same day, petitioner filed a written request to appeal the decision,

and the appeal was heard on 16 June. DHHS affirmed DSS’s decision requiring

Pachas to meet a $6642 deductible in a Notice of Decision dated 10 August 2015.

On 13 August, Pachas as petitioner appealed the unfavorable decision to

DHHS, and he submitted his written appeal on 27 August 2015. In his appeal,

petitioner maintained that DHHS erred in affirming the DSS decision to discontinue

1This income limit was established by the Current Operations and Capital
Improvements Appropriations Act of 2013, sec. 12H.10.(a)-(b)(1), 2013 N.C. Sess. Laws
2013-360 (Regular Sess.) 995, 1180-81.

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his Medicaid benefits arguing that DSS’s method of calculating his income eligibility

for Medicaid “violate[s] the plain language of the federal Medicaid statute and

controlling North Carolina case law.”

First, petitioner argued that DSS’s policy violates the plain language of the

controlling federal Medicaid statute, 42 U.S.C. § 1396a(m). Petitioner stated that the

General Assembly elected to provide Medicaid to aged, blind, and disabled persons

with incomes under one hundred percent of the federal poverty level. Petitioner noted

that beneficiaries who meet these criteria are considered to be “Categorically Needy,”

and their eligibility for Medicaid is governed by 42 U.S.C. § 1396a(m). Petitioner

then pointed to § 1396a(m)(2)(A), which states that a beneficiary’s income level is

determined by considering “a family of the size involved.” Petitioner contended that

this language required DSS to determine whether his monthly income from Social

Security Disability payments was more than one hundred percent of the federal

poverty line if used not just to support himself, but to support all six members of his

family as dependents.

Second, petitioner argued that the North Carolina Court of Appeals’ decision

in Martin v. North Carolina Department of Health and Human Services, 194 N.C.

App. 716, 670 S.E.2d 629, disc. rev. denied, 363 N.C. 374, 678 S.E.2d 665 (2009),

required DSS to determine whether petitioner’s income exceeded one hundred

percent of the federal poverty guideline if used to support all six members of his

family. According to petitioner, Martin involved a parallel Medicaid eligibility

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category, Medicaid for Qualified Medicare Beneficiaries (MQB-B), which contained

the same “family of the size involved” language. Petitioner further noted that the

court in Martin held that “a family of the size involved” meant “a group consisting of

parents and their children; a group of persons who live together and have a shared

commitment to a domestic relationship.” 194 N.C. App. at 722, 670 S.E.2d at 634. As

a result, Pachas argued that Martin directed DHHS to consider his entire family

when calculating whether his income rose above one hundred percent of the federal

poverty level.

Finally, petitioner pointed to a decision of the Superior Court in Mecklenburg

County that he viewed as applying the reasoning in Martin to “all individuals who

receive Medicaid benefits on the basis of disability.” See Cody v. N.C. Dep’t of Health

& Human Servs., No. 13 CVS 19625 (N.C. Super. Ct. Mecklenburg County Mar. 11,

2014). Additionally, petitioner argued that “failure to consider his wife, children and

dependent parents as part of his family leads to absurd results and violates the

purpose of the Medicaid Act.”

In its Final Decision, dated 1 October 2015, DHHS affirmed that petitioner

must meet a deductible in order to regain eligibility for Medicaid given that his

income exceeded one hundred percent of the federal poverty guideline for a single

individual. On 16 October 2015, petitioner sought judicial review of the DHHS Final

Decision in the Superior Court in Mecklenburg County. Petitioner requested that the

court grant the following relief: (1) reverse the final agency decision and declare

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DHHS’s interpretation of the law illegal; (2) order DHHS to reinstate petitioner’s

Medicaid benefits without requiring a deductible effective 1 June 2015; and (3) award

petitioner costs and a reasonable attorney’s fee. In support of this request for relief,

petitioner claimed, in pertinent part, that DHHS erred by “concluding that the

Medicaid income limit applicable to Petitioner was the limit for a single individual in

violation of 42 U.S.C. § 1396a(m), under which the applicable income limit is 100% of

the federal poverty line for a ‘family of the size involved.’ ”

On 17 March 2016,2 the Superior Court in Mecklenburg County signed an

order reversing the final decision of DHHS. The superior court reached this

determination because it concluded that:

2. The North Carolina General Assembly has elected the
option under the federal Medicaid statute, 42 U.S.C. §
1396a(m), to provide Medicaid to aged, blind and
disabled persons with incomes under 100% of the
federal poverty level. This category of Medicaid is
known as categorically needy coverage for the aged,
blind and disabled (MABD-CN).

3. The income limit for MABD-CN varies by the number
of persons considered by the agency to be in the
household unit because the federal poverty line varies
by household size.

4. The DHHS Medicaid rule at issue in this case is
contained in Section 2260 of the DHHS Adult Medicaid
Manual. Under this provision, only the aged, blind or

2The dissenting judge at the Court of Appeals noted that although the order was
entered on 18 March 2016, he was going to refer to the order as the 17 March 2016 order
because that was how the parties had been referring to it. Pachas, ___ N.C. at ___, 814
S.E.2d at 142 n.6 (Hunter Jr., J., dissenting).

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disabled individual is considered to be part of the
household unit used for determining the applicable
income limit for MABD-CN. The only exceptions in
this rule are where the spouse of the individual is also
aged, blind or disabled, or where the spouse has income
that is deemed available to the aged, blind or disabled
individual, in which case the household size is two.
....

6. Pursuant to the challenged DHHS rule, Mecklenburg
County DSS determined that Mr. Pachas’ Social
Security income of $1396 per month was greater than
$981 per month, which is the current federal poverty
limit for a household size of one person.
....

8. The plain language of the controlling federal statutory
provision, 42 U.S.C. § 1396a(m), states that the
applicable Medicaid income limit for the MADB-CN
category must be based on a “family of the size
involved.” Because the official poverty line published
annually by the federal government varies by family
size, the determination of family size determines the
applicable income limit under the language of this
statute.

9. The Federal Medicare and Medicaid agency has
interpreted the language “a family of the size involved”
to include “the applicant, the spouse who is living in
the same household, if any, and the number of
individuals who are related to the applicant or
applicants, who are living in the same household and
who are dependent on the applicant or the applicant’s
spouse for at least one-half of their financial support.”
42 C.F.R. § 423.772 (2005).

10. There is no dispute in the record or the briefing that
Petitioner is providing over half of the financial
support for his wife, their two minor children and his
wife’s elderly parents, all of whom live with Petitioner.

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11. In Martin v. North Carolina Department of Health and
Human Services, the North Carolina Court of Appeals
interpreted the identical phrase, “family of the size
involved,” applied to similar facts, in reviewing a
parallel provision of the federal Medicaid statute for
the MQB category of benefits. The Court of Appeals
held that the DHHS interpretation of “family of the
size involved” for the MQB program violated the
federal Medicaid statute and was therefore invalid.

12. Following the Martin decision, DHHS updated its
Medicaid state plan and manual provisions to clarify
that MQB eligibility must be based upon “family size”
which includes “the [applicant/beneficiary], the spouse
if there is one, and any dependent children under age
18 living in the home.” However, DHHS did not change
its rule as to the MABD-CN category.

13. The provisions of the Federal Medicaid statute at issue
in Martin and in this case contain precisely the same
language regarding both the determination of family
size and the countable income for Medicaid
beneficiaries.

14. DHHS conceded at oral argument that prior to the
Martin ruling, the same methodology for determining
eligibility was used for both the MADB-CN and MQB
programs.

(second alteration in original). While reversing the DHHS final decision on these

grounds, the superior court ordered, in pertinent part, that DHHS “promptly

reinstate Medicaid benefits to Petitioner effective June 1, 2015 and [ ] continue

providing Medicaid to Petitioner until determined ineligible under the rules as

modified according to this decision.”

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Following the superior court’s reversal of the DHHS final decision, on 13 April

2016, DHHS instructed Mecklenburg County DSS to reinstate petitioner’s Medicaid

benefits. Thereafter, following a hospital stay, Pachas entered a nursing facility on

6 May 2016, and his Medicaid benefits continued the entire time he was in the

nursing home; on 14 February 2017, he was discharged from the nursing facility and

returned home to live with his family. Pachas suffered from anxiety as well as his

physical conditions while being away from his family. Pachas was to receive at-home

care under Medicaid’s Community Alternative Program for Disabled Adults (CAP-

DA).

On the same day Pachas left the nursing facility and his care under CAP-DA

was set to begin, Mecklenburg County DSS mailed him a notice that his benefits

would be changed and, effective 1 March 2017, he would be required to meet a

monthly deductible of $1113 for his CAP-DA care. In the notice DSS stated that the

change in benefits was required by state regulations found in “MA 2280.” The notice

also advised Pachas that he had sixty days to request an agency hearing if he

disagreed with the decision.

Instead of requesting an agency hearing, Pachas filed a motion in the cause to

enforce the court’s order and a petition for writ of mandamus in the Superior Court

in Mecklenburg County on 15 February 2017. In the motion and petition, Pachas

requested the following relief pertinent to this appeal: (1) entry of an order enforcing

the court’s 17 March 2016 order and directing North Carolina DHHS “to immediately

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reinstate his Medicaid benefits, including his CAP-DA services,” and ordering that

the benefits be continued without his having to first meet a deductible; (2) issuance

of a writ of mandamus ordering DHHS to reinstate his benefits effective 14 February

2017; and (3) entry of an order requiring Mecklenburg County DSS to reinstate his

benefits if DHHS failed to do so within ten days of the court’s forthcoming order.

On 6 March 2017, DHHS moved to dismiss petitioner’s motion and petition.

DHHS argued, in pertinent part, that the motion and petition should be dismissed

for these reasons: (1) the superior court did not have jurisdiction over the matter,

because petitioner had not exhausted his administrative remedies; (2) with regard to

the petition for writ of mandamus specifically, that petitioner had another adequate

remedy at law through the agency appeal process; and (3) petitioner’s eligibility for

the CAP-DA program did not fall within the 17 March 2016 order, because the CAP-

DA program, which has its own eligibility and income limit rules under 42 U.S.C. §

1396n, is a “Waiver” program that is separate from the “State Plan” that was the

subject of the previous order.

In support of his motion in the cause seeking enforcement of the 17 March 2016

order and petition for writ of mandamus, petitioner argued that: (1) DHHS’s

termination of all of petitioner’s Medicaid benefits on 14 February 2017 violated the

17 March 2016 order which required DHHS to immediately reinstate petitioner’s

Medicaid benefits and continue to provide them until petitioner is “determined

ineligible under the rules as modified according to [the order]”; (2) under the terms of

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DHHS’s waiver application for CAP-DA, and as stated in its own instruction

manuals, individuals who qualify for Medicaid under the “Categorically Needy”

eligibility group, the very category under which the 17 March 2016 order determined

that petitioner’s benefits were to be reinstated and to continue, are eligible for CAP-

DA without a deductible; (3) the CAP-DA waiver provision in 42 U.S.C. § 1396n(c)

does not contain any “language waiving the requirement in § 1396a(m) to use ‘family

size’ budgeting”; (4) DHHS’s own budgeting rules which state that “the income of a

spouse cannot be counted in determining the CAP-DA applicant’s Medicaid

eligibility” do not apply to “Categorically Needy” Medicaid recipients and are

inconsistent with the 17 March 2016 order; and (5) petitioner fully exhausted his

administrative remedies previously and he should not be required to do so again now

because the superior court has sole jurisdiction to enforce its own order and

exhaustion would be an inadequate or futile remedy.

DHHS responded to petitioner’s arguments by asserting that the motion and

petition should be dismissed on the following grounds: (1) the superior court’s 17

March 2016 order “does not apply because it only contemplated Petitioner’s eligibility

for State Plan services and does not address Petitioner’s Medicaid eligibility through

the CAP/DA waiver,” which is governed by separate federal rules and regulations; (2)

petitioner remains eligible for State Plan Medicaid benefits and therefore DHHS did

not violate the 17 March 2016 order; (3) petitioner failed to exhaust his available

administrative remedies; and (4) petitioner has failed to demonstrate how exhaustion

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of his administrative remedies would be futile when the administrative remedy

provides “relief more or less commensurate with the claim.” Huang v. N.C. State.

Univ., 107 N.C. App. 710, 715, 421 S.E.2d 812, 815 (1992).

The superior court dismissed petitioner’s motion in the cause to enforce the

court’s order and his petition for writ of mandamus on 21 April 2017. In so doing, the

court found that DHHS “has not violated the Order signed on March 17, 2016.” The

court reached this decision for the following reasons:

6. According to 42 U.S.C. § 1396n(c)(3), DHHS is
allowed to waive the State Plan requirements for income
and resource rules under 42 U.S.C. § 1396a(m) that the
Court considered in the March 17, 2016 Order.

7. DHHS does not consider the “size of the family
involved” when determining an individual’s deductible
under the CAP/DA waiver.

8. Therefore, the Order signed on March 17, 2016 does
not apply to Petitioner’s Medicaid eligibility under the
CAP/DA waiver.

9. Petitioner must resort to the administrative process
governed by N.C.G.S. § 108A-79 to appeal the February 14,
2017 decision issued by the Mecklenburg County DSS.

Following this last order, Julissa Pachas filed a motion on 9 May 2017 to substitute

herself as petitioner in the case because Carlos died on 17 April. After being

substituted as petitioner, Julissa Pachas appealed the superior court’s 21 April 2017

order to the North Carolina Court of Appeals, where she presented the issue of

whether “42 U.S.C. § 1396a(m) require[s] respondent/appellee DHHS to determine

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eligibility for Medicaid for the aged, blind and disabled in North Carolina based on a

‘family of the size involved,’ regardless of what Medicaid services the aged, blind or

disabled person requests or receives.”

The Court of Appeals majority affirmed the 21 April 2017 order of the Superior

Court in Mecklenburg County dismissing petitioner’s motion and petition based on

its conclusion that the trial court lacked jurisdiction. Pachas, ___ N.C. App. at ___,

814 S.E.2d at 140. The Court of Appeals reached this decision for two reasons. First,

in relying on a previous decision from our Court, the Court of Appeals concluded that

“[t]he scope of this waiver provision [under 42 U.S.C. § 1396n(c)], and whether the

State in fact applied for and received a waiver of the income limits provision, involve

facts and legal questions that were not ‘actually presented and necessarily involved’

in the trial court’s [17 March 2016] order addressing traditional Medicaid coverage.”

Id. at ___, 814 S.E.2d at 139 (quoting Tenn.-Carolina Transp., Inc. v. Strick Corp.,

286 N.C. 235, 239, 210 S.E.2d 181, 183 (1974)). Specifically, the Court of Appeals

majority reasoned that:

Here, the trial court properly concluded that the
agency’s determination of Pachas’s CAP/DA program
eligibility involved different facts and legal issues than the
traditional Medicaid benefits at issue in its first order. As
the trial court observed, its first order instructed the State
to “reinstate Petitioner’s Medicaid eligibility through the
North Carolina Medicaid State Plan pursuant to the
controlling federal statutory provision, 42 U.S.C. §
1396a(m).”

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Id. at ___, 814 S.E.2d at 139. The Court of Appeals majority determined that the

introduction of these different facts and issues deprived the trial court of the

supervisory authority and jurisdiction that it generally maintains under Rule 70 of

the North Carolina Rules of Civil Procedure to ensure that an agency complies with

the court’s order. Id. at ___, 814 S.E.2d at 139-40. As a result, the majority concluded

that “[t]he trial court lacks jurisdiction to review the legal and factual issues raised

in this appeal until they reach the court through exhaustion of the administrative

review process and a petition for judicial review.” Id. at ___, 814 S.E.2d at 140.

Second, the Court of Appeals majority concluded that the trial court did not

have jurisdiction over petitioner’s motion and petition because petitioner could not

demonstrate that the administrative review process was “futile” or “inadequate.” Id.

at ___, 814 S.E.2d at 140. Specifically, the majority reasoned that “[a]lthough the

agency seems convinced of its legal position, that does not make the administrative

review process ‘futile’ or ‘inadequate’ as those terms are defined by law.” Id. at ___,

814 S.E.2d at 140 (citing Huang, 107 N.C. App. at 715, 421 S.E.2d at 815-16).

Presumably as a result of its holding that the trial court did not have

jurisdiction over petitioner’s motion and petition, the Court of Appeals majority did

not announce a holding with regard to the ultimate issue that petitioner presented

on appeal: “Does 42 U.S.C. § 1396a(m) require respondent/appellee DHHS to

determine eligibility for Medicaid for the aged, blind and disabled in North Carolina

based on a ‘family of the size involved,’ regardless of what Medicaid services the aged,

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blind or disabled person requests or receives?” Id. at ___, 814 S.E.2d at 140 (affirming

the trial court’s dismissal of petitioner’s motion and petition only because the trial

court lacked jurisdiction).

The dissenting judge at the Court of Appeals disagreed with the majority’s

decision that the trial court did not have jurisdiction over petitioner’s motion and

petition and that petitioner would have to exhaust his administrative remedies before

seeking judicial review. Id. at ___, 814 S.E.2d at 140 (Hunter Jr., J., dissenting). The

dissenting judge concluded that the trial court did have jurisdiction over petitioner’s

motion and petition for two reasons. First, the dissenting judge noted that “Pachas

is correct that it is well settled the ‘exhaustion requirement may be excused if the

administrative remedy would be futile or inadequate.’ ” Id. at ___, 814 S.E.2d at 145

(quoting Justice for Animals, Inc. v. Robeson County., 164 N.C. App. 366, 372, 595

S.E.2d 773, 777 (2004)). The dissenting judge reasoned that petitioner’s

administrative remedy here would be futile and inadequate because:

Given the tragic history of Pachas, I cannot vote to
place him, or others similarly situated, back in the hands
of the Medicaid bureaucracy, which has already denied
benefits on the identical question of family size and its
relation to required deductibles for Medicaid coverage. In
my view, it is particularly telling that in the first case, the
law of his case was based upon the conclusion that the
State had made an error of law in denying him benefits. To
tell a dying indigent that he or his family must endure
another round of “administrative remedies”, when the
Medicaid authorities moved him from one program to
another for their own cost benefits, and when the issue is a
matter of law, which had been previously adjudicated, is

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simply unjust and wrong. Under the specific facts of this
case, I would hold requiring the dying indigent to exhaust
his administrative remedies would be futile.

Id. at ___, 814 S.E.2d at 145.

Second, the dissenting judge reasoned that the trial court had jurisdiction over

petitioner’s motion and petition because although N.C.G.S. § 108A-79 provides an

administrative “remedy for individuals who wish to challenge the termination of their

Medicaid coverage,” petitioner here “is not simply challenging the Medicaid coverage

termination, but, rather, the violation of the trial court’s 17 March 2016 order

requiring DHHS to apply his family size to income considerations. Specifically, this

is an appeal for enforcement.” Id. at ___, 814 S.E.2d at 145. The dissenting judge

added that “[a] trial court’s authority encompasses the power to enforce its own

judgments.” Id. at ___, 814 S.E.2d at 145 (first citing Sturgill v. Sturgill, 49 N.C.

App. 580, 587, 272 S.E.2d 423, 428-29 (1980); and then citing Parker v. Parker, 13

N.C. App. 616, 618, 186 S.E.2d 607, 608 (1972)).

Petitioner filed his notice of appeal based on the dissent in the Court of Appeals

presenting the following issue: “Did the Court of Appeals majority err as a matter of

law in ruling that the superior court lacked jurisdiction to decide whether its previous

order was violated because petitioner failed to exhaust administrative remedies

before moving to enforce the court’s order?”

II. Analysis

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We conclude that the Court of Appeals did err in ruling that the superior court

lacked jurisdiction to decide whether DHHS violated the 17 March 2016 order.

Because we so conclude, we vacate the decision of the Court of Appeals affirming the

trial court’s dismissal of petitioner’s motion and petition on that basis. We also

remand this case to the Court of Appeals to address the merits of whether the

superior court erred in determining that DHHS did not violate the 17 March 2016

order because DHHS allegedly obtained a waiver of the requirements of 42 U.S.C. §

1396a(m) in compliance with 42 U.S.C. § 1396n(c). Because we conclude that the trial

court had jurisdiction over petitioner’s motion and petition, we need not determine

whether exhaustion of administrative remedies was inadequate or futile in this case.

The Court of Appeals erred in concluding that the trial court did not have

jurisdiction over petitioner’s motion and petition because: (1) trial courts have

jurisdiction to find new facts and determine whether a party has been “disobedient”

under a court order requiring the party to perform a “specific act,” N.C. R. Civ. P. 70,

and (2) the Court of Appeals relied on an inapposite case from our Court to conclude

that, because the issue of petitioner’s CAP-DA eligibility involved “facts and legal

questions that were not ‘actually presented and necessarily involved’ ” in the 17

March 2016 order, Pachas, ___ N.C. App. at ___, 814 S.E.2d at 139 (majority opinion)

(quoting Tenn.-Carolina Transp., 286 N.C. at 239, 210 S.E.2d at 183), the trial court

did not have jurisdiction over the matter.

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This Court reviews a decision of the Court of Appeals to determine whether it

contains any errors of law. N.C. R. App. P. 16(a); State v. Mumford, 364 N.C. 394,

398, 699 S.E.2d 911, 914 (2010); see also State v. Brooks, 337 N.C. 132, 149, 446 S.E.2d

579, 590 (1994) (explaining that this is the standard of review of a determination by

the Court of Appeals whether the case is before us “by appeal of right or discretionary

review” (first citing State v. Colson, 274 N.C. 295, 163 S.E.2d 376 (1968), cert. denied,

393 U.S. 1087, 89 S. Ct. 876, 21 L. Ed. 2d 780 (1969); then citing State v. Williams,

274 N.C. 328, 163 S.E.2d 353 (1968); and then citing N.C. R. App. P. 16(a)(1994))).

A. The trial court had jurisdiction under the North Carolina Rules of

Civil Procedure (Rule 70) to find new facts and determine whether

DHHS disobeyed the 17 March 2016 order.

It is well settled that, consistent with their inherent authority to enforce their

own orders, North Carolina trial courts have jurisdiction to find new facts and

determine whether a party has been “disobedient” under a previous order that

required the party to perform a “specific act.” N.C. R. Civ. P. 70. Since 1967 the

Rules of Civil Procedure have provided in part:

If a judgment directs a party to execute a conveyance
of land or to deliver deeds or other documents or to perform
any other specific act and the party fails to comply within
the time specified, the judge may direct the act to be done
at the cost of the disobedient party by some other person
appointed by the judge and the act when so done has like
effect as if done by the party. On application of the party
entitled to performance, the clerk shall issue a writ of
attachment or sequestration against the property of the

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disobedient party to compel obedience to the judgment.
The judge may also in proper cases adjudge the party in
contempt.

N.C. R. Civ. P. 70.

Here it appears that DHHS’s decision to cancel petitioner’s Medicaid benefits

under the CAP-DA program and require him to pay a deductible to regain eligibility

invoked the trial court’s power to enforce its 17 March 2016 order.3 In that order the

superior court instructed DHHS “to promptly reinstate Medicaid benefits to

Petitioner . . . and to continue providing Medicaid to Petitioner until determined

ineligible under the rules as modified according to this decision.” The rules as

modified by the order required that petitioner be considered eligible for Medicaid

under the Categorically Needy category so long as his income did not exceed one

hundred percent of the federal poverty level based on a family of six while he was

providing more one-half of their financial support.

It appears, according to DHHS’s own Adult Medicaid Manual and without

considering any effect of the waiver that DHHS allegedly obtained, that petitioner—

having been determined to fit within the Categorically Needy eligibility group and to

be entitled to continued Medicaid benefits under the 17 March 2016 order—should

have seamlessly qualified on 14 February 2017 for Medicaid’s CAP-DA program

without a deductible. Specifically, even DHHS’s waiver application pursuant to 42

3 We do not express an opinion on the merits of the waiver issue we are remanding
to the Court of Appeals.

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Opinion of the Court

U.S.C. § 1396n(c) lists “Categorically Needy” individuals as a Medicaid-eligible group

that will be served by the CAP-DA program. Furthermore, DHHS’s own manual

provides that DHHS will “[d]etermine eligibility [for CAP-DA] according to

requirements for the appropriate aid program/category.” Medicaid Eligibility Unit,

Div. of Med. Assistance, N.C. Dep’t of Health & Human Servs., Aged, Blind and

Disabled Medicaid Manual, MA-2280 ¶ III.A.a.(2) (Oct. 1, 2012) titled “Medicaid

Eligibility and CAP Eligibility.” Moreover, DHHS’s manual states that “[w]hen

Medicaid eligibility can be established regardless of eligibility for CAP,” DHHS will

“not wait for CAP approval” and it will “[a]uthorize [CAP-DA], if appropriate, as for

any other applicant.” Id. MA-2280 ¶ III.A.a.2(c)(1)-(2). Additionally, DHHS’s own

manual indicates that “Categorically Needy” Medicaid recipients will not be charged

a deductible. See id. MA-2360 ¶ I (Nov. 1, 2011) (providing that the deductible

requirement is only to be applied to Medically Needy Medicaid recipients and “[t]he

policy in this section may not be used to find a client eligible in MAABD Categorically

Needy – No Money Payment (N) Classification . . . . Deductible does not apply in these

coverage’s [sic]”). We conclude that—because the 17 March 2016 order determined

that petitioner was to continue receiving Medicaid benefits under the “Categorically

Needy” eligibility group until he was determined to be ineligible under the rules as

modified by that order—DHHS’s decision to terminate petitioner’s Medicaid benefits

under the CAP-DA program on 14 February 2017 and require him to meet a

deductible before he could regain his benefits squarely raises the issue of whether

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Opinion of the Court

DHHS acted as a “disobedient party” under the 17 March 2016 order. N.C. R. Civ. P.

70.

DHHS contends that it did not disobey the 17 March 2016 order, and that the

trial court did not have jurisdiction to enforce that order, because the waiver that it

allegedly obtained under 42 U.S.C. § 1396n(c) allowed it to create different eligibility

rules for the CAP-DA program. Without reaching any conclusions as to the merits of

this argument, we hold that the trial court, in accord with its jurisdiction to find new

facts and determine whether a party has been “disobedient” under a previous order

directing the party to perform a “specific act,” was authorized to determine the precise

issue of whether the waiver that DHHS allegedly obtained under 42 U.S.C. § 1396n(c)

allowed the agency to comply with the 17 March 2016 order while terminating

petitioner’s Medicaid benefits under the CAP-DA program on 14 February 2017 and

requiring him to pay a deductible before qualifying again for Medicaid.

Our conclusion that the trial court had authority to determine that issue is

further supported by the Administrative Procedure Act (the Act) itself. The language

of the Act suggests that the General Assembly contemplated that trial courts would

have such jurisdiction to enforce their own court orders against disobedient agencies

upon motion from a party in the case. Specifically, the Act provides that “[n]othing

in this Chapter shall prevent any party or person aggrieved from invoking any

judicial remedy available to the party or person aggrieved under the law to test the

validity of any administrative action not made reviewable under this Article.”

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Opinion of the Court

N.C.G.S. § 150B-43 (2017) (emphases added).

Here the relevant judicial remedy available to petitioner under the law is

enforcement of the trial court’s 17 March 2016 order. Neither the Act, nor N.C.G.S.

§ 108A-79 which governs public assistance and social services appeals, provide for

administrative review of DHHS’s alleged violation of the 17 March 2016 order. See

id. § 108A-79 (2017) (making no mention that the agency appeals process will

consider whether the agency violated a court order during either the local appeal

hearing, or the hearing before DHHS, or when rendering the final agency decision);

see also id. § 108A-79(k) (2017) (stating that the judicial review at the superior court

“shall be conducted according to the provisions of Article 4, Chapter 150B, of the

North Carolina General Statutes”); see also id. § 150B-51(b)(1)-(6) (2017) (not

including violation of a court order as grounds upon which a trial court can “reverse

or modify” a final decision of the agency); but see id. § 150B-51(d) (2017) (allowing a

trial court to enter certain orders when it reviews “a final [agency] decision allowing

judgment on the pleadings or summary judgment”).

Because the trial court had jurisdiction to find new facts in order to determine

whether DHHS was a disobedient party under its 17 March 2016 order, we conclude

that the Court of Appeals erred in holding that the trial court no longer had

jurisdiction over the case given the new factual and legal issues regarding the effect

of DHHS’s alleged waiver under 42 U.S.C. § 1396n(c).

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Opinion of the Court

B. The Court of Appeals relied on inapposite authority in limiting the

trial court’s jurisdiction under the North Carolina Rules of Civil

Procedure (Rule 70).

The Court of Appeals majority relied on our decision in Tennessee-Carolina

Transportation, Inc. v. Strick Corp. for the principle that a “trial court’s authority

[under the North Carolina Rules of Civil Procedure (Rule 70)] to supervise the

agency’s actions extends only to issues ‘actually presented and necessarily involved

in determining the case.’ ” Pachas, ___ N.C. App. at ___, 814 S.E.2d at 139 (quoting

Tenn.-Carolina Transp., 286 N.C. at 239, 210 S.E.2d at 183). The Court of Appeals

majority then stated, “In other words, the trial court’s continuing jurisdiction applies

to issues involving ‘the same facts and the same questions, which were determined

in the previous appeal.’ ” Id. at ___, 814 S.E.2d at 139 (emphasis added) (quoting

Tenn.-Carolina Transp., 286 N.C. at 239, 210 S.E.2d at 183)).

The Court of Appeals majority then applied the above principle to the facts

here and concluded that the trial court did not have jurisdiction over petitioner’s

motion and petition, and that petitioner would have to exhaust his administrative

remedies, because “[t]he scope of [the 42 U.S.C. § 1396n(c)] waiver provision, and

whether the State in fact applied for and received a waiver of the income limits

provision, involve facts and legal questions that were not ‘actually presented and

necessarily involved’ in the trial court's order addressing traditional Medicaid

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Opinion of the Court

coverage.” Id. at ___, 814 S.E.2d at 139 (quoting Tenn.-Carolina Transp., 286 N.C. at

239, 210 S.E.2d at 183).

We conclude that the Court of Appeals erred in relying on Tennessee-Carolina

Transportation for the proposition that a trial court’s jurisdiction under the North

Carolina Rules of Civil Procedure (Rule 70) to ensure that an agency complies with

the court’s order necessarily ends when new facts and legal issues arise that were not

“actually presented and necessarily involved” in the previous order. Id. at ___, 814

S.E.2d at 139 (quoting Tenn.-Carolina Transp., 286 N.C. at 239, 210 S.E.2d at 183).

The Tennessee-Carolina Transportation case involved application of the “law of the

case” doctrine; it did not involve a motion to enforce a court order as we have here.

See Tenn.-Carolina Transp., 286 N.C. at 238-39, 210 S.E.2d at 183-84). The issue in

Tennessee-Carolina Transportation was whether a decision we made in a former

appeal in that case, in which we determined that Pennsylvania law governed the

action, continued to apply. See id. at 238-39, 210 S.E.2d at 183-84. We concluded

that the decision in the former appeal did continue to govern the case because “[t]he

decision by the Supreme Court on a prior appeal constitutes the law of the case, both

in subsequent proceedings in the trial court and on a subsequent appeal.” Id. at 239,

210 S.E.2d at 183. The full passage from Tennessee-Carolina Transportation which

the Court of Appeals majority quotes only in part as authority for its rule, reads as

follows:

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Opinion of the Court

As a general rule, when an appellate court passes on
questions and remands the case for further proceedings to
the trial court, the questions therein actually presented
and necessarily involved in determining the case, and the
decision on those questions become the law of the case, both
in subsequent proceedings in the trial court and on a
subsequent appeal, provided the same facts and the same
questions, which were determined in the previous appeal,
are involved in the second appeal.

Id. at 239, 210 S.E.2d at 183 (emphases added) (quoting Collins v. Simms, 257 N.C.

1, 11, 125 S.E.2d 298, 305 (1962) (Parker, J., concurring in the result)); see also

Pachas, ___ N.C. App. at ___, 814 S.E.2d at 139. Because Tennessee-Carolina

Transportation involved the doctrine of the law of the case—and did not involve a

motion to enforce a court order, which is the issue here—the Court of Appeals

majority erred in relying on that case to limit the scope of the trial court’s jurisdiction

under the North Carolina Rules of Civil Procedure (Rule 70).

III. Conclusion

We vacate the Court of Appeals’ decision concluding that the trial court did not

have jurisdiction to consider whether DHHS violated the trial court’s previous order.

Accordingly, we remand to the Court of Appeals to address DHHS’s argument that

the agency did not violate the 17 March 2016 order because it allegedly obtained a

waiver under 42 U.S.C. § 1396n(c), permitting it to create its own rules for CAP-DA

eligibility apart from the requirements of 42 U.S.C. § 1396a(m). Because we conclude

that the trial court had jurisdiction over petitioner’s motion and petition, we need not

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Opinion of the Court

determine whether exhaustion of administrative remedies was inadequate or futile

here.

VACATED AND REMANDED.

Justice EARLS did not participate in the consideration or decision of this case.

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