Filed 7/27/21 (mod.); Certified for Publication 7/30/21 (order attached following unmodified opinion)
NOT TO BE PUBLISHED
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
FAMILY HEALTH CENTERS OF SAN DIEGO, C089555
Plaintiff and Appellant, (Super. Ct. No.
34-2018-80002953-CU-WM-
v. GDS)
STATE DEPARTMENT OF HEALTH CARE ORDER MODIFYING
SERVICES, OPINION AND
DENYING REHEARING
Defendant and Respondent. [NO CHANGE IN
JUDGMENT]
THE COURT:
It is ordered that the opinion filed on July 6, 2021, be modified as follows:
1. In the last partial paragraph starting at the bottom page 13 that begins with
“We agree with the ALJ,” delete the second sentence that begins with “Plaintiff’s
outreach efforts” and replace it with the following sentence:
1
Plaintiff’s outreach efforts involve going into public spaces such as on the
street, at schools, business venues, beaches, and parks to attract new patients
from its audiences within the general public, provide counseling regarding
eligibility for services, and make medical appointments for services.
2. Delete the first sentence in the first full paragraph on page 14 that begins
with “The regulations exclude costs” and replace it with the following sentence:
The regulations exclude costs that the program defines as not allowable, and
the PRM makes clear that “[c]osts of advertising to the general public which
seeks to increase patient utilization of the provider’s facilities are not
allowable.”
3. In the first full paragraph on page 14 that begins with “The regulations
exclude costs,” delete the sentence in the fourth line that begins with “The evidence
showed” and replace it with the following sentence:
The evidence showed that plaintiff performed its outreach activities to “get
the word out” about its various services to its audiences within the general
public and “develop[ ] awareness of each clinic’s presence, resources,
cultural competence, and desire to serve among members of [plaintiff’s]
target populations.”
This modification does not change the judgment.
The petition for rehearing is denied.
2
BY THE COURT:
ROBIE , Acting P. J.
HOCH , J.
KRAUSE , J.
3
Filed 7/6/21 Family Health Centers etc. v. State Dept. of Health Care Services CA3 (unmodified opinion)
NOT TO BE PUBLISHED
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
FAMILY HEALTH CENTERS OF SAN DIEGO, C089555
Plaintiff and Appellant, (Super. Ct. No.
34-2018-80002953-CU-WM-
v. GDS)
STATE DEPARTMENT OF HEALTH CARE
SERVICES,
Defendant and Respondent.
Plaintiff Family Health Centers of San Diego operates a federally qualified health
center (FQHC) that provides various medical services to its patients, some of whom are
Medi-Cal beneficiaries. Under section 330 of the Public Health Service Act (42 U.S.C.
§ 201 et seq.), FQHC’s like plaintiff also may provide additional health services,
including (1) services designed to assist patients in establishing eligibility for and gaining
access to federal and state assistance programs (such as Medi-Cal), (2) services that
1
enable individuals to use the health center’s services (including outreach, transportation,
and interpreter services), and (3) education regarding the availability and proper use of
health services. (42 U.S.C. §§ 254b(b)(1)(A)(iii)-(v).)
Section 330 of the Public Health Service Act authorizes grants to be made to
FQHC’s. (42 U.S.C. §§ 254b, 1395x(aa)(4).) In addition, FQHC’s may seek
reimbursement under Medi-Cal for certain expenses, including reasonable costs directly
or indirectly related to patient care. Plaintiff appeals from the trial court’s order denying
its petition for writ of mandate seeking to compel the State Department of Health Care
Services (DHCS) to reimburse plaintiff for money it expended for outreach services.
We reject plaintiff’s contention that the trial court and the DHCS improperly
construed and applied applicable guidelines in the Centers for Medicare & Medicaid
Services Publication 15-1, The Provider Reimbursement Manual (PRM). We conclude
that the monies spent by plaintiff were not an allowable cost because they were akin to
advertising to increase patient utilization of plaintiff’s services. We therefore will affirm
the trial court’s denial of the petition for writ of mandate.
BACKGROUND
1. Statutory background
The federal government provides financial assistance to states in order to provide
medical care to low-income individuals through the Medicaid program. (42 U.S.C.
§ 1396 et seq.) California has implemented the program through Medi-Cal. (Welf. &
Inst. Code, § 14000 et seq.; Robert F. Kennedy Medical Center v. Belshé (1996) 13
Cal.4th 748, 751 (Kennedy).) The DHCS is the state agency designated to administer the
Medi-Cal program. (Welf. & Inst. Code, § 14203.)
“Pursuant to Medi-Cal, participating health care providers, such as hospitals,
receive reimbursement directly from the [DHCS] for providing medical care to Medi-Cal
beneficiaries.” (Simi Valley Adventist Hospital v. Bontá (2000) 81 Cal.App.4th 346,
348.) Providers are reimbursed for their allowable costs, as determined under
2
Medicare/Medicaid standards and principles of reimbursement set forth in the Code of
Federal Regulations and the PRM. (Oroville Hospital v. Department of Health Services
(2006) 146 Cal.App.4th 468, 472; see also Cal. Code Regs., tit. 22, § 51536, subds. (a)(2)
& (b)(4); see also PRM; Community Care Foundation v. Thompson (2006) 412
F.Supp.2d 18, 22-23 [PRM provisions are interpretations of the Medicare regulations].)
In general, to be reimbursable, claimed costs “must be based on the reasonable cost of
[covered] services” and “related to the care of beneficiaries.” (42 C.F.R. § 413.9(a)
(2021); see also PRM § 2100 (rev. 454, 09-12) [“All payments to providers of services
must be based on the reasonable cost of services covered under title XVIII of the Act and
related to the care of beneficiaries”].) These federal regulations are incorporated into
state law and apply to Medi-Cal providers such as plaintiff. (Welf. & Inst. Code, §
14132.100, subds. (e)(1) & (i)(2)(B)(ii).)
Under the federal regulations, “[r]easonable cost includes all necessary and proper
expenses incurred in furnishing services, such as administrative costs, maintenance costs,
and premium payments for employee health and pension plans. It includes both direct
and indirect costs and normal standby costs. However, if the provider’s operating costs
include amounts not related to patient care, specifically not reimbursable under the
program, or flowing from the provision of luxury items or services (that is, those items or
services substantially in excess of or more expensive than those generally considered
necessary for the provision of needed health services), such amounts will not be
allowable.” (42 C.F.R. § 413.9(c)(3) (2021).) The regulations define necessary and
proper costs as “costs that are appropriate and helpful in developing and maintaining the
operation of patient care facilities and activities. They are usually costs that are common
and accepted occurrences in the field of the provider’s activity.” (42 C.F.R. § 413.9(b)(2)
(2021).)
Advertising costs are allowable if they are “incurred in connection with the
provider’s public relations activities [and are] primarily concerned with the presentation
3
of a good public image and directly or indirectly related to patient care. Examples are:
visiting hours information, conduct of management-employee relations, etc.” (PRM
§ 2136.1 (rev. 267, 09-82).) However, “[c]osts of advertising to the general public which
seeks to increase patient utilization of the provider’s facilities are not allowable. . . .
While it is the policy of the [relevant federal agencies] to promote the growth and
expansion of needed provider facilities, general advertising to promote an increase in the
patient utilization of services is not properly related to the care of patients.” (PRM
§ 2136.2 (rev. 267, 09-82).)
“The method by which the [DHCS] reimburses [Medi-Cal providers] is explained
in detail in [Kennedy, supra, 13 Cal.4th 748]. Briefly stated, [Medi-Cal providers]
receive interim estimated payments of Medi-Cal reimbursement during each fiscal year,
with retroactive adjustments occurring at the end of each fiscal year when actual costs are
known. (Cal. Code Regs., tit. 22, § 51536, subds. (c)(2) & (d).) Within four months of
the end of each fiscal year, the [provider] submits a cost report based on actual costs. (42
C.F.R. § 413.24(f)(2)[ ].) The [DHCS] makes a tentative settlement based on the
[provider’s] unaudited cost report, making additional payments to the hospital if
warranted. Following an audit which must be completed within three years (Welf. &
Inst. Code, § 14170, subd. (a)(1)), the [DHCS] issues a final audit report and settlement.”
(Little Company of Mary Hospital v. Belshé (1997) 53 Cal.App.4th 325, 327, fn.
omitted.)
“Consistent with [the] statutory authority [set forth in Welfare and Institutions
Code section 14171], the regulations establish detailed appeal procedures applicable to
the audit process, including an appeal from a final audit report. (Cal. Code Regs., tit. 22,
§ 51016 et seq.)” (Kennedy, supra, 13 Cal.4th at p. 758.) A Medi-Cal provider may
request a hearing regarding disputed audit findings by submitting a statement of disputed
issues to the DHCS. (Cal. Code Regs., tit. 22, § 51017.)
4
At the appeal hearing, the DHCS bears the burden of establishing by a
preponderance of the evidence that its audit findings were correct. (Cal. Code Regs., tit.
22, § 51037, subd. (i).) After the DHCS has made a prima facie case, the burden shifts to
the provider to demonstrate by a preponderance of the evidence that its position is
correct. (Ibid.)
2. Factual background
a. December 2016 audit and appeal
In December 2016, the DHCS audited plaintiff’s 2013 cost report and reclassified
as nonreimbursable $78,032 in salary and benefit expenses that were for community
outreach. The audit report noted (1) there was insufficient documentation demonstrating
that the expenses were related to services and supplies incident to an FQHC visit, and (2)
the expenses were not a covered benefit under Welfare and Institutions Code section
14132.100. The report further noted the documentation was insufficient under 42 Code
of Federal Regulations parts 413.9, 413.20, and 413.24; PRM sections 2102, 2300, 2304,
and 2328; sections 1395x(s)(2)(A), 1395x(AA)(1)(A)-(1)(C), 1396d(a)(2)(C), and
1396(d)(1)(2) of title 42 of the United States Code; and State Plan Amendments 09-001
and 09-015.
Plaintiff appealed the DHCS’s determination in January 2017. After holding an
informal hearing in March 2017, the hearing auditor upheld the adjustment in May 2017.
The hearing auditor reasoned that Welfare and Institutions Code section 14132.100
defines the FQHC covered benefits reimbursable under the Medi-Cal program as
physician services and services and supplies that meet the definition of being incident to
an FQHC visit. The hearing auditor found that plaintiff had failed to demonstrate that its
outreach encounters lead to an FQHC visit and a covered benefit under the Welfare and
Institutions Code. In June 2017, plaintiff requested a formal hearing.
5
b. October 2017 hearing
During the October 2017 hearing, Jeff Cates, a health program auditor for the
DHCS, testified first. At the time, Cates had worked for over 17 years at the DHCS and
had conducted approximately 200 audits. He agreed with the report’s conclusion and
testified to the accuracy of the basis for reclassification of plaintiff’s outreach costs as
nonreimbursable. Cates had reviewed plaintiff’s salary detail, job descriptions for those
providing outreach services, and state plan amendments and regulations. In Cates’s
opinion, plaintiff’s outreach costs were not allowable under the applicable regulations.
Plaintiff’s chief executive officer, Fran Butler-Cohen, testified next. She
explained that plaintiff served low-income and diverse populations that often are unaware
of the existence of affordable or free health care services. Plaintiff required its outreach
workers to go into the community and make medical appointments for people with whom
they came in contact, such as an outpatient visit, a pregnancy test, or entry into the
prenatal program. In her experience, patients contacted by outreach workers had a “very
high show rate,” typically between 75 to 85 percent. It is plaintiff’s practice to track the
appointment rates for individual outreach workers and actual services received. She
provided a sample billing ledger that lists the services that occurred for some of the
patients that were contacted by outreach workers.
Butler-Cohen testified that, in her opinion, FQHC’s are mandated by the federal
government and the state to perform outreach services, and therefore such costs were
allowable. She cited several documents in support of her opinion. For example, the
DHCS’s grant application form for FQHC’s lists “outreach” in the “required services
provided” section. As reflected in the application, plaintiff provided outreach services
directly. As part of its nonclinical outreach, plaintiff also provided counseling regarding
eligibility for services, counseling regarding HIV-related issues, and counseling to teens
regarding sexual education and health. In addition, plaintiff provided outreach “for the
specific purpose of developing awareness of each clinic’s presence, resources, cultural
6
competence, and desire to serve among members of [plaintiff’s] target populations.”
Plaintiff performed these tasks “in the street, in schools, in agen[cies], business venues
[such as LGBTQ bars and clubs, etc.], [and] other public venues such as beaches and
parks.” Butler-Cohen testified that the purpose of the company’s efforts was to “get the
word out, so to speak, for the various services we provide.”
Butler-Cohen also cited a document published by the Health Resources and
Services Administration (which regulates plaintiff) titled “Program Requirements,”
which lists outreach as a required service to be provided by a FQHC like plaintiff. The
document explains that “[o]utreach services are a broad range of culturally and
linguistically appropriate activities focused on recruiting and retaining patients from the
target population/service area. [¶] At a minimum, these services must promote
awareness of the health center’s services and support entry into care. [¶] These services
do not involve direct patient care where a provider is generating a face-to-face visit with
a patient, documenting the care in a patient medical record, or exercising clinical
judgment in the provision of services to a patient.” The document references section
330(b)(1)(A)(iv) of the Public Health Service Act and 42 Code of Federal Regulations
part 51c.102(j)(14). She further testified about a “Policy Information Notice” published
by the Health Resources and Services Administration, listing nonclinical outreach as a
service that may be (and often is) provided by FQHC’s. The document explains that “[i]f
it is the policy of the grantee that staff conduct outreach where no clinical services are
offered, the grantee should list the activity as ‘non-clinical outreach.’ ”
Butler-Cohen testified that a 1994 letter from Sally Richardson, the then-Director
of the federal Medicaid Bureau at the Department of Health and Human Services,
addressed to the state Medicaid director states that Medicaid outreach is “ ‘an
administrative cost necessary for the proper and efficient administration of the state
plan.’ ” In Butler-Cohen’s opinion, Richardson’s letter established that outreach is an
allowable expense.
7
Butler-Cohen also cited legislation and regulations that she believed supported her
opinion regarding reimbursement for outreach costs. She testified that 42 Code of
Federal Regulations part 51c.102(j)(14) defines “[s]upplemental health services” to
include “[s]ervices, including the services of outreach workers, which promote and
facilitate optimal use of primary health services and [other] services . . . .” She further
opined that outreach was a required primary health care service under section 254b,
subdivision (b)(1)(A)(iv) of title 42 of the United States Code.
Butler-Cohen testified regarding the former “Expanded Access to Primary Care”
(EAPC) program, a state program designed to expand access to and improve the quality
of outpatient health care for medically indigent persons. The program information
defined reimbursable versus allowable services. For example, outpatient visits were
allowable and reimbursed under certain circumstances, while “information sessions for
prospective recipients [and] health presentations to community groups” were not
reimbursable.
Similarly, the May 2010 Affordable Care Act (ACA) encouraged assistance to
low-income individuals to access and appropriately use health services, enroll in health
coverage programs, obtain a regular primary care provider or a medical home, provide
case management and care management, perform health outreach using neighborhood
health workers (which plaintiff had), provide transportation, expand capacity, and
provide direct patient care services.
Butler-Cohen also testified regarding a Medi-Cal timeline produced by the DHCS.
The document indicates that when the ACA was adopted in 2010, California received $10
billion to implement health coverage for low-income and uninsured individuals, and to
improve care for vulnerable populations. To get matching federal funds under the ACA,
California “funneled” vulnerable individuals from the “Healthy Families Program” into
Medi-Cal. Outreach was necessary to ensure that these individuals were moved to Medi-
Cal.
8
Butler-Cohen also testified about a 2012 letter from then-director of the DHCS,
Toby Douglas. The letter discussed an initial plan to implement the ACA in California,
including transitioning the “Low Income Health Program” (LIHP) to ACA coverage
options, with the goal of enrolling 450,000 to 500,000 individuals by December 31, 2013.
The attachment to the letter stated that the DHCS intended to “develop and partner with
local LIHP[’]s, the [insurance exchange (Exchange)] and stakeholders on an outreach and
communication strategy for the transition of LIHP enrollees to Medicaid or the
Exchange. The outreach and communication effort will include general notification from
the LIHP transition to enrollees during 2013 and information on any available transition
assistance through the Exchange or the counties.” This document was part of an effort by
the DHCS to engage stakeholders such as plaintiff to make contact with eligible
individuals and enroll them. Butler-Cohen testified there was “no question in [her] mind
that the direction from the [DHCS] was clear in the utilization of [plaintiff’s] outreach
workers, because [they] were the boots on the ground.” In Butler-Cohen’s opinion,
plaintiff could reach eligible individuals “far better” than the DHCS or even the county. 1
c. Decision by administrative law judge
In May 2018, the administrative law judge (ALJ) issued a proposed decision
finding that the “ ‘community outreach services’ ” did not involve patient care and
instead were efforts to attract new patients and increase patient utilization of plaintiff’s
services. The ALJ noted that members of plaintiff’s outreach staff were “tasked to
‘promote awareness of the health center’s services and support entry into care’ of the new
patients contacted.” These tasks included “attempting to make new patients ‘comfortable
1 DHCS requests we take judicial notice of the (1) California Medicaid State Plan,
Attachment 4.19-B (as in effect in 2013); and (2) California Medicaid State Plan
Amendments 05-006, 08-003, 09-015, 11-037a. We deny the request. (People v. Preslie
(1977) 70 Cal.App.3d 486, 493.)
9
enough to seek care,’ such as through repeated ‘passes’ of contact.” The ALJ concluded
that the evidence established that the disallowed amounts were spent for patient
recruitment efforts not reimbursable with Medi-Cal funds.
In making its decision, the ALJ relied on part 413 of title 42 of the Code of
Federal Regulations for the proposition that, to be reimbursable, costs must be reasonable
and related to the care of beneficiaries. (42 C.F.R. § 413.9.) Per the PRM, reasonable
costs include “all necessary and proper costs incurred in rendering the services,”
including both “direct and indirect costs of providers of services.” (PRM §§ 2100,
2102.1 (rev. 454, 09-12).)
The ALJ reviewed the authorities submitted by plaintiff, but found them
unconvincing. According to plaintiff, section 220.3 of the Medicare Benefit Policy
Manual identified outreach as “ ‘non-reimbursable [but] nevertheless allowable.’ ” The
ALJ noted that the cited section applied only to “ ‘preventative health services’ provided
‘by or under the direct supervision of a physician’ and [said] nothing about outreach or
patient recruitment.” As such, even if plaintiff had provided such services at the
specified locations, they would have been excluded from reimbursement by Medi-Cal.
The ALJ also rejected the idea that plaintiff should be reimbursed because it is
required to provide outreach services in order to receive certain grants. The ALJ
reasoned that the availability of these grants was not in question, nor did the grants
necessarily require Medi-Cal to also reimburse plaintiff.
The ALJ further concluded that outreach activities are not reimbursable as case
management under the 1994 letter to the state Medicaid director. The ALJ reasoned that
the letter identified “ ‘Medicaid outreach’ as one of the ‘administrative costs necessary
for the proper and efficient administration of the State plan,’ it does not contemplate
subcontracting this to FQHC clinics through cost basis reimbursement but merely cites to
the Center for Medicare/Medicaid Services’ . . . Medicaid Manual authorizing the State to
spend Federal money on case management services. The Medicaid Manual in its current
10
form still authorizes such use of Federal Medicaid funds by the State, but does not
discuss using FQHC clinics as outreach contractors or incorporating case management
payments into FQHC per-visit rates.”
With respect to the PRM, the ALJ rejected plaintiff’s argument that outreach
services were reimbursable because there was no provision that restricts it, such that
general cost principles should be applied. The ALJ reasoned that outreach work is
“performed specifically to bring new patients into the facilities.” Although such
activities are not prohibited, costs for patient recruitment are excluded under section
2136.2 of the PRM.
Given his conclusions, the ALJ declined to reach the DHCS’s argument that the
outreach costs were nonallowable due to insufficient documentation.
d. Motion for reconsideration and petition for writ of mandate
Plaintiff filed a petition for reconsideration. In July 2018, the Chief ALJ affirmed
the ALJ’s decision, finding that the outreach costs were really patient recruitment costs
and therefore nonreimbursable.
In August 2018, plaintiff filed a petition for writ of mandate in the trial court. The
trial court denied the petition in April 2019. Noting that outreach costs are not discussed
in the PRM, the trial court agreed with the ALJ and the Chief ALJ and found that
plaintiff’s outreach services are similar to advertising intended to increase patient use of
plaintiff’s services. Given that the cost of advertising to increase utilization of the
provider’s facilities is not allowable under the PRM, the trial court held that the costs
were not reimbursable.
DISCUSSION
1. Standard of review
Pursuant to Code of Civil Procedure section 1094.5, the trial court may review a
Chief ALJ’s final decision. (Welf. & Inst. Code, § 14171, subd. (j).) “When reviewing
the denial of a petition for writ of administrative mandate under Code of Civil Procedure
11
section 1094.5, we ask whether the public agency committed a prejudicial abuse of
discretion. ‘Abuse of discretion is established if the [public agency] has not proceeded in
the manner required by law, the order or decision is not supported by the findings, or the
findings are not supported by the evidence.’ [Citations.]” (County of Kern v. State Dept.
of Health Care Services (2009) 180 Cal.App.4th 1504, 1510.)
Like the trial court, an appellate court’s task is to “determine whether the
[DHCS’s] decision is supported by substantial evidence. [Citation.] [¶] ‘As to questions
of law, appellate courts perform essentially the same function as trial courts in an
administrative mandate proceeding, and the trial court’s conclusions of law are reviewed
de novo.’ ” (Hi-Desert Medical Center v. Douglas (2015) 239 Cal.App.4th 717, 730.)
With respect to questions of law, we apply the same rules governing interpretation of
statutes to the interpretation of administrative regulations, with the fundamental goal of
ascertaining the agency’s intent and effectuating the purpose of the law. (Pang v. Beverly
Hospital, Inc. (2000) 79 Cal.App.4th 986, 994-995.) We seek to “give the regulatory
language its plain, commonsense meaning . . . , and we must read regulations as a whole
so that all of the parts are given effect.” (County of Kern v. State Dept. of Health Care
Services, supra, 180 Cal.App.4th at p. 1512.) As this court recently explained, although
state agencies such as the DHCS “may be entitled to deference in interpreting its own
regulations and policies” (Oak Valley Hospital District v. State Dept. of Health Care
Services (2020) 53 Cal.App.5th 212, 224), we do not extend such deference when it
comes to the DHCS’s interpretation of regulations and policies such as the PRM that are
issued by federal agencies like the Centers for Medicare and Medicaid Services. (Id. at
pp. 224-225.)
2. Plaintiff’s claims on appeal
Plaintiff contends the trial court erred in concluding that outreach costs are not
allowable under part 413.9 of title 42 of the Code of Federal Regulations. First, plaintiff
argues that part 413.9(c)(3)’s requirement that costs must be “related to the care of
12
Medicare beneficiaries” should be interpreted under its broad, ordinary meaning.
According to plaintiff, its outreach activities are related to patient care because they are
“designed to inform indigent people about their healthcare options,” and there is a “direct
linear connection” between helping people obtain such information and providing the
services.
Plaintiff also argues its outreach costs were “reasonable” (and allowable under
part 413.9(a) of title 42 of the Code of Federal Regulations) because they were
“necessary and proper” to the furnishing of those health care services. According to
plaintiff, outreach is a crucial function in providing health care to indigent individuals.
Plaintiff contends such costs should be allowable, given the broad scope of costs that are
allowable under the regulations.
Finally, plaintiff argues the trial court erred in concluding that outreach was akin
to advertising to the general public to increase patient utilization of its facilities and
therefore unallowable per PRM section 2136.2. Plaintiff argues the PRM was created
before the advent of FQHC’s and was not intended to address their outreach activities.
According to plaintiff, courts have defined advertising as “ ‘widespread promotional
activities usually directed at the public at large,’ ” which is much different than plaintiff’s
targeted activity of sending trained individuals into the community to help at-risk
individuals obtain health care. Plaintiff argues it is bad public policy to disallow outreach
costs given its value to society and the communities plaintiff serves. We find no merit in
plaintiff’s arguments.
3. Analysis
We agree with the ALJ, the Chief ALJ, and the trial court that the DHCS did not
abuse its discretion in finding that plaintiff’s outreach costs were nonreimbursable.
Plaintiff’s outreach efforts involve going into public spaces such as on the street, at
schools, business venues, beaches, and parks to attract new patients, provide counseling
regarding eligibility for services, and make medical appointments for services. Such
13
services may benefit the recipient by increasing awareness of care available through
plaintiff and making the recipient feel more comfortable seeking care. And, such
activities are required as part of plaintiff’s role as a FQHC grant recipient. (42 U.S.C.
§§ 254b(b)(1)(A)(iii)-(v), 1395x(aa)(4).) However, requiring plaintiff to perform such
services as an FQHC grant recipient does not automatically make the associated costs
reimbursable under Medicare (or Medi-Cal), even if they provide a benefit for the
recipient.
The regulations exclude costs that the program defines as not allowable, and the
PRM makes clear that advertising costs “seek[ing] to increase patient utilization of the
provider’s facilities are not allowable.” (PRM § 2136.2 (rev. 267, 09-82); 42 C.F.R.
§ 413.9(c)(3) (2021).) The evidence showed that plaintiff performed its outreach
activities to “get the word out” about its various services and “develop[ ] awareness of
each clinic’s presence, resources, cultural competence, and desire to serve among
members of [plaintiff’s] target populations.” It was not an abuse of discretion to find that
such activities had the purpose and effect of bringing in new patients and increasing
utilization of plaintiff’s facilities, making them akin to advertising.
We disagree with plaintiff that we must disregard the PRM’s clear guidance about
advertising costs merely because the manual was drafted before the current FQHC
program was implemented. Had the relevant agencies wished to change the manual to
make FQHC outreach costs reimbursable, they would have done so. (See City of Long
Beach v. Workers’ Comp. Appeals Bd. (2005) 126 Cal.App.4th 298, 311 [“[i]f the
language of the statute is unambiguous, we presume the Legislature meant what it
said”].)
14
DISPOSITION
The judgment is affirmed. Costs on appeal are awarded to defendant. (Cal. Rules
of Court, rule 8.278(a)(1), (2).)
KRAUSE , J.
We concur:
ROBIE , Acting P. J.
HOCH , J.
15
Filed 7/30/21
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
FAMILY HEALTH CENTERS OF SAN DIEGO C089555
Plaintiff and Appellant, (Super. Ct. No.
34-2018-80002953-CU-WM-
v. GDS)
STATE DEPARTMENT OF HEALTH CARE ORDER CERTIFYING
SERVICES, OPINION FOR
PUBLICATION
Defendant and Respondent.
APPEAL from a judgment denying a petition for writ of mandate of the Superior
Court of Sacramento County, Steven M. Gevercer, Judge. Affirmed.
Douglas Cumming Medical Law, Douglas S. Cumming; Murphy, Campbell,
Alliston & Quinn and George E. Murphy for Plaintiff and Appellant.
Xavier Becerra and Rob Bonta, Attorneys General, Cheryl L. Feiner, Assistant
Attorney General, Niromi W. Pfeiffer, Gregory D. Brown, Marianne A. Pansa, and Kevin
L. Quade, Deputy Attorneys General, for Defendant and Respondent.
1
THE COURT:
The opinion in the above-entitled matter filed on July 6, 2021, was not certified for
publication in the Official Reports. For good cause it now appears that the opinion
should be published in the Official Reports, and it is so ordered.
BY THE COURT:
ROBIE , Acting P. J.
HOCH , J.
KRAUSE , J.
2