1. Case Name: Kootenai Med. Ctr. V. Idaho Dep’t of Health & Welfare, Supreme Court of Idaho, September 24, 2009. 147 Idaho 872, 216 P.3d 630

2. Type of Treatment Services Denied: The Plaintiff Medical Center provided inpatient psychiatric treatment for three patients at issue. Defendant denied at least some portion of Medicaid reimbursement for all three patients.

3. Lawyers:

  • Counsel for Plaintiff: Honorable Lawrence G. Wasden, Attorney General
  • Counsel for Defendant: Paine Hamblen

4. Format: Published amended opinion

5. Outline:

  • ERISA Claim? No
  • Class Action/or Individual Action: Three Individuals Actions
  • Defendant: Idaho Department of Health and Welfare
  • Type of Insurance Plan: Medicaid plan
  • Type of Coverage Denial: Medical necessity
  • Causes of Action: Plaintiff challenges Defendant’s decision to deny reimbursement for inpatient psychiatric care

6. Legal Pointer: The Plaintiff challenges Defendant’s decision to deny reimbursement for inpatient psychiatric care

7. Legal Issues and Causes of Action: Plaintiff challenges Defendant’s decision to deny reimbursement for inpatient psychiatric care.

  • Ruling: The Court reverses the decision of the district court and declined to award attorney fees.

8. Narrative Case Description: The Plaintiff provided inpatient psychiatric care under Idaho’s Medicaid program. Defendant denied at least some portion of Medicaid reimbursement in all three cases. The Plaintiff appealed the decision to deny reimbursement and filed petitions for judicial review. The district court reversed the decisions of the Defendant and ordered reimbursement in full in all three cases.

All of the cases were subject to a retrospective review focusing on medical necessity after the patients had been discharged. The retrospective reviews were conducted by a quality improvement organization (QIO), Qualis, by one of their consultants, Dr. Lehman. Dr. Lehman recommended only partial reimbursement. An independent review of the decision rendered by Qualis was performed by an independent peer review psychiatrist who concurred with Dr. Lehman’s decision. The decision was then reviewed and upheld in administrative hearings. Finally, the Department Director affirmed the hearing officer’s decisions.

The three cases are outlined as follows:

  • J.M., 16-year-old male, attempted suicide by cutting his wrists on August 19, 2005. Was admitted to inpatient psychiatric care on August 20 and discharged on August 31.  Reimbursement was approved for August 20-24 but denied for the time period of August 25-31.
  • J.G., a 14-year-old female was admitted on December 23, 2005. She had been in a juvenile detention center and made suicidal statements, and self-mutilated. She was treated until January 4, 2006. Reimbursement was approved from December 23-28 but denied for the time period of December 29-January 4.
  • T.K., a 19-year-old female, was admitted on November 6, 2005. She had a history of mental health issues and was hospitalized in a youth residential program for 2 years. She was treated from November 6 – December 14. On November 19, she was committed to the custody of the Department. Reimbursement was approved from November 6-8 but denied from November 9 – December 14. Defendant later reimbursed the Plaintiff for the period of November 19-December 12 through a non-Medicaid fund.

Idaho hospitals must provide inpatient psychiatric care to patients as long as medical necessity exists.

Four issues are argued on appeal: 1) whether Plaintiff has standing to assert the due process rights of its patients; 2) whether Idaho documentation requirements conflict with federal certification requirements; 3) whether the hearing officer’s preliminary orders were supported by substantial evidence; and 4) whether Defendant is entitled to an award of attorneys fees and costs.

The Court finds that the district court erred in concluding that Plaintiff has standing to assert the due process rights of its patients. Plaintiff argues that Qualis’ method of conducting their retrospective review violates the due process violations outlined in Goldberg v. Kelly. However, the Court finds that the procedural protections afforded by Goldberg only apply to state agency denial or withdrawal of Medicaid benefits. This case does not involve the denial or withdrawal of Medicaid benefits. Plaintiff also argues that it has the third-party standing to assert the rights of patients who faced a loss of services. In support of this argument, the Plaintiff cites Singleton v. Wuff. However, that case dealt with a constitutionally protected rights of the patients whereas here, the patients were not responsible for paying for its medical services. Here, the Court finds that the Plaintiff is not entitled to claim the benefit of the due process protections afforded to recipients set forth in Goldberg.

The Court also considers whether the findings of the peer review psychiatrist were properly admissible. The Defendant argued that Plaintiff isn’t entitled to cross-examine the peer review psychiatrist because federal regulations protect the identities of peer reviewers. Here, the psychiatrist did not provide consent to release his or her identity. The Plaintiff does not provide any authority in support of their argument. The Court finds Plaintiff’s argument unpersuasive and declines to address the argument.

The Court then considers whether Idaho law conflicts with federal law concerning certification of need for services. The Court finds that the documentation requirement in IDAPA is consistent with federal law.

The next argument considered by the Court is whether the Defendant properly denied reimbursement for psychiatric care if there is no showing of medical necessity. Medical necessity is governed by severity of illness and intensity of services criteria. The Court considers the question of medical necessity for each of the three cases:

  • J.M.: The Court concludes that partial reimbursement was proper because J.M. was not suffering any suicidal or homicidal ideation after August 22.
  • J.G.: The Court concludes that partial reimbursement was proper because Plaintiff did not establish by a preponderance of the evidence that she needed inpatient psychiatric care. She did not evidence a specific intent to harm herself and had no current intent or plan for acting on the suicidal thoughts.
  • T.K.: The Court concludes that partial reimbursement was proper because the medical record did not document that T.K, was gravely impaired and that continued inpatient care would benefit her condition.

Finally, the Court considers whether to award attorney fees. The Plaintiff is not entitled to attorney fees because it did not prevail in its claims. The Defendant is also not entitled to attorneys fees because this case involves a matter of first impression. Therefore, neither party is entitled to attorneys fees.

9. Additional Comments: None

10. Website: http://caselaw.findlaw.com/id-supreme-court/1115218.html

11. Practical Implications and Lessons Learned: The record did not demonstrate medical necessity and therefore the decision for partial reimbursement was upheld

12. All Legal Theories Presented in Case:

13. Successful Legal Theories in Case:


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