North Carolina § 150B-22 - Settlement; contested case.

§ 150B-22. Settlement; contested case.

It is the policy of this State that any dispute between an agency and another person that involves the person's rights, duties, or privileges, including licensing or the levy of a monetary penalty, should be settled through informal procedures. In trying to reach a settlement through informal procedures, the agency may not conduct a proceeding at which sworn testimony is taken and witnesses may be cross-examined. If the agency and the other person do not agree to a resolution of the dispute through informal procedures, either the agency or the person may commence an administrative proceeding to determine the person's rights, duties, or privileges, at which time the dispute becomes a "contested case." A party or person aggrieved shall not be required to petition an agency for rule making or to seek or obtain a declaratory ruling before commencing a contested case pursuant to G.S. 150B-23. History (1985 (Reg. Sess., 1986), c. 1022, s. 1(11); 1991, c. 418, s. 16; 2019-140, s. 2(a).) Department of Health and Human Services Waiver Application. - Session Laws 2011-398, s. 55.1, provides: "Pursuant to 31 U.S.C. § 6504, the Department of Health and Human Services shall request a waiver from the single State agency requirement contained in 42 C.F.R. § 432.10(e)(3) with regard to final decisions in administrative hearings. The waiver application shall include the following: "(1) The waiver request is made at the direction of the North Carolina General Assembly, which is responsible for the organizational structure of State government. "(2) The single State agency requirement prevents the establishment of the most effective and efficient arrangement for providing administrative hearings to claimants because it requires that after a hearing and decision by an administrative law judge, the case must be returned to the agency for a final decision. The return to the agency is an unnecessary, time-consuming, and costly additional step. "(3) The use of another State administrative hearings arrangement will not endanger the objectives of the law authorizing the Medicaid program because the administrative law judges will abide by the properly adopted policies, rules, and regulations of the State Medicaid agency in making final decisions." Request to Administer Certain Environmental Protection Programs. - Session Laws 2011-398, s. 55.2, as amended by Session Laws 2012-187, s. 7.3, provides: "If necessary to effectuate the purposes of this act, the Office of Administrative Hearings shall seek United States Environmental Protection Agency approval to become an agency responsible for administering programs under the federal Clean Water Act, 33 U.S.C. § 1251 et seq., the Clean Air Act, 42 U.S.C. § 7401 et seq., and the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq. On or before December 31, 2011, the Office of Administrative Hearings and the Department of Environment and Natural Resources shall jointly develop and submit any Memoranda of Agreement, delineations of programmatic responsibility, procedure for coordination, and other information that United States Environmental Protection Agency may require in order to effectuate any necessary approval process." Report on Mediation. - Session Laws 2011-398, s. 61.1, effective July 25, 2011, provides: "The Office of Administrative Hearings shall evaluate the use of mediated settlement conferences under G.S. 150B-23.1 and shall develop a plan to expand the use of mediation in the contested case process. The Office of Administrative Hearings shall report its findings and recommendations to the Joint Legislative Regulatory Reform Committee by February 1, 2012." Appeal to State MH/DD/SA Appeals Panel. - Session Laws 2008-107, s. 10.15A(h1)-(h6), as amended and added to by Session Laws 2008-118, s. 3.13(a), (b), and as amended by Session Laws 2009-526, s. 2(a) and (b), Session Laws 2009-550, s. 1.1(a) and (b), and Session Laws 2010-31, s. 10.30(b), provides: "(h1)(1) General Rule. - Notwithstanding any provision of State law or rules to the contrary, this subsection shall govern the process used by a Medicaid applicant or recipient to appeal a determination made by the Department of Health and Human Services to deny, terminate, suspend, or reduce Medicaid covered services. For purposes of this subsection, the phrase 'adverse determination' means a determination by the Department to deny, terminate, suspend, or reduce Medicaid covered services. For purposes of this subsection, all references to an applicant or recipient include the applicant or recipient's parent, guardian, or legal representative; however, notice need only be given to a parent, guardian, or legal representative who has requested in writing to receive the notice. "(2) Notice. - Except as otherwise provided by federal law or regulation, at least 10 days before the effective date of an adverse determination, the Department shall notify the applicant or recipient, and the provider, if applicable, in writing of the determination and of the applicant's or recipient's right to appeal the determination. The notice shall be mailed on the date indicated on the notice as the date of the determination. The notice shall include: "a. An identification of the applicant or recipient whose services are being affected by the adverse determination, including full name and Medicaid identification number. "b. An explanation of what service is being denied, terminated, suspended, or reduced and the reason for the determination. "c. The specific regulation, statute, or medical policy that supports or requires the adverse determination. "d. The effective date of the adverse determination. "e. An explanation of the applicant's or recipient's right to appeal the Department's adverse determination in an evidentiary hearing before an administrative law judge. "f. An explanation of how the applicant or recipient can request a hearing and a statement that the applicant or recipient may represent himself or use legal counsel, a relative, or other spokesperson. "g. A statement that the applicant or recipient will continue to receive Medicaid services at the level provided on the day immediately preceding the Department's adverse determination or the amount requested by the applicant or recipient, whichever is less, if the applicant or recipient requests a hearing before the effective date of the adverse determination. The services shall continue until the hearing is completed and a final decision is rendered. "h. The name and telephone number of a contact person at the Department to respond in a timely fashion to the applicant's or recipient's questions. "i. The telephone number by which the applicant or recipient may contact a Legal Aid/Legal Services office. "j. The appeal request form described in subdivision (4) of this subsection that the applicant or recipient may use to request a hearing. "(3) Appeals. - Except as provided by this subsection and subsection 10.15A(h2) of this act, a request for a hearing to appeal an adverse determination of the Department under this section is a contested case subject to the provisions of Article 3 of Chapter 150B of the General Statutes. The applicant or recipient must request a hearing within 30 days of the mailing of the notice required by subdivision (2) of this subsection by sending an appeal request form to the Office of Administrative Hearings and the Department. Where a request for hearing concerns the reduction, modification, or termination of Medicaid services, upon the receipt of a timely appeal, the Department shall reinstate the services to the level or manner prior to action by the Department as permitted by federal law or regulation. The Department shall immediately forward a copy of the notice to the Office of Administrative Hearings electronically. The information contained in the notice is confidential unless the recipient appeals. The Office of Administrative Hearings may dispose of the records after one year. The Department may not influence, limit, or interfere with the applicant's or recipient's decision to request a hearing. "4. Appeal Request Form. - Along with the notice required by subdivision (2) of this subsection, the Department shall also provide the applicant or recipient with an appeal request form which shall be no more than one side of one page. The form shall include the following: "a. A statement that in order to request an appeal, the applicant or recipient must send the form by mail or fax to the address or fax number listed on the form within 30 days of mailing of the notice. "b. The applicant's or recipient's name, address, telephone number, and Medicaid identification number. "c. A preprinted statement that indicates that the applicant or recipient would like to appeal the specific adverse determination of which the applicant or recipient was notified in the notice. "d. A statement informing the applicant or recipient that he or she may choose to be represented by a lawyer, a relative, a friend, or other spokesperson. "e. A space for the applicant's or recipient's signature and date. "(5) Final Decision. - After a hearing before an administrative law judge, the judge shall return the decision and record to the Department in accordance with subsection 10.15A(h2) of this act. The Department shall make a final decision in the case within 20 days of receipt of the decision and record from the administrative law judge and promptly notify the applicant or recipient of the final decision and of the right to judicial review of the decision pursuant to Article 4 of Chapter 150B of the General Statutes. "(h2)(1) Application. - This subsection applies only to contested Medicaid cases commenced by Medicaid applicants or recipients under subsection 10.15A(h1) of this act. Except as otherwise provided by subsection 10.15A(h1) and this subsection governing time lines and procedural steps, a contested Medicaid case commenced by a Medicaid applicant or recipient is subject to the provisions of Article 3 of Chapter 150B . To the extent any provision in this subsection or subsection 10.15A(h1) of this act conflicts with another provision in Article 3 of Chapter 150B , this subsection and subsection 10.15A(h1) controls. "(2) Simple Procedures. - Notwithstanding any other provision of Article 3 of Chapter 150B of the General Statutes, the chief administrative law judge may limit and simplify the procedures that apply to a contested Medicaid case involving a Medicaid applicant or recipient in order to complete the case as quickly as possible. To the extent possible, the Office of Administrative Hearings shall schedule and hear all contested Medicaid cases within 55 days of submission of a request for appeal. Hearings shall be conducted telephonically or by video technology, however the recipient or applicant, or the recipient's or applicant's representative may request that the hearing be conducted before the administrative law judge in-person. An in-person hearing shall be conducted in Wake County, however for good cause shown, the in-person hearing may be conducted in the county of residence of the recipient or applicant. Good cause shall include but is not limited to the applicant's or recipient's impairments limiting travel or the unavailability of the applicant's or recipient's treating professional witnesses. The Department shall provide written notice to the recipient or applicant of the use of telephonic hearings, hearings by video conference, and in-person hearings before the administrative law judge, and how to request a hearing in the recipient's or applicant's county of residence. The simplified procedure may include requiring that all prehearing motions be considered and ruled on by the administrative law judge in the course of the hearing of the case on the merits. An administrative law judge assigned to a contested Medicaid case shall make reasonable efforts in a case involving a Medicaid applicant or recipient who is not represented by an attorney to assure a fair hearing and to maintain a complete record of the hearing. The administrative law judge may allow brief extensions of the time limits contained in this section for good cause and to ensure that the record is complete. Good cause includes delays resulting from untimely receipt of documentation needed to render a decision and other unavoidable and unforeseen circumstances. Continuances shall only be granted in accordance with rules adopted by the Office of Administrative Hearings, and shall not be granted on the day of the hearing, except for good cause shown. If a petitioner fails to make an appearance at a hearing that has been properly noticed via certified mail by the Office of Administrative Hearings, the Office of Administrative Hearings shall immediately dismiss the contested case provision. "(3) Mediation. - Upon receipt of an appeal request form as provided by subdivision 10.15A(h1)(4) of this act or other clear request for a hearing by a Medicaid applicant or recipient, the Office of Administrative Hearings shall immediately notify the Mediation Network of North Carolina which shall within five days contact the petitioner to offer mediation in an attempt to resolve the dispute. If mediation is accepted, the mediation must be completed within 25 days of submission of the request for appeal. Upon completion of the mediation, the mediator shall inform the Office of Administrative Hearings and the Department within 24 hours of the resolution by facsimile or electronic messaging. If the parties have resolved matters in the mediation, the case shall be dismissed by the Office of Administrative Hearings. The Office of Administrative Hearings shall not conduct any contested Medicaid cases hearings until it has received notice from the mediator assigned that either: (i) the mediation was unsuccessful, or (ii) the petitioner has rejected the offer of mediation, or (iii) the petitioner has failed to appear at a scheduled mediation. Nothing in this subdivision shall restrict the right to a contested case hearing. "(4) Burden of Proof. - The petitioner has the burden of proof to show entitlement to a requested benefit or the propriety of requested agency action when the agency has denied the benefit or refused to take the particular action. The agency has the burden of proof when the appeal is from an agency determination to impose a penalty or reduce, terminate, or suspend a benefit previously granted. The party with the burden of proof on any issue has the burden of going forward, and the administrative law judge shall not make any ruling on the preponderance of evidence until the close of all evidence. "(4a) New Evidence. - The petitioner shall be permitted to submit evidence regardless of whether obtained prior to or subsequent to the Department's actions and regardless of whether the Department had an opportunity to consider the evidence in making its determination to deny, reduce, terminate or suspend a benefit. When such evidence is received, at the request of the Department, the administrative law judge shall continue the hearing for a minimum of 15 days and a maximum of 30 days to allow for the Department's review of the evidence. Subsequent to review of the evidence, if the Department reverses its original decision, it shall immediately inform the administrative law judge. "(4b) Issue for Hearing. - For each penalty imposed or benefit reduced, terminated, or suspended, the hearing shall determine whether the Department substantially prejudiced the rights of the petitioner and if the Department, based upon evidence at the hearing: "a. Exceeded its authority or jurisdiction; "b. Acted erroneously; "c. Failed to use proper procedure; "d. Acted arbitrarily or capriciously; or, "e. Failed to act as required by law or rule. "(5) Decision. - The administrative law judge assigned to a contested Medicaid case shall hear and decide the case without unnecessary delay. The Office of Administrative Hearings shall send a copy of the audiotape or diskette of the hearing to the agency within five days of completion of the hearing. The judge shall prepare a written decision and send it to the parties. The decision must be sent together with the record to the agency within 20 days of the conclusion of the hearing. "(h3) From funds available to the Department of Health and Human Services (Department) for the 2010-2011 fiscal year, the sum of one million dollars ($1,000,000) shall be transferred by the Department to the Office of Administrative Hearings (OAH). These funds shall be allocated by OAH for mediation services provided for Medicaid recipient appeals and to contract for other services necessary to conduct the appeals process. OAH shall continue the Memorandum of Agreement (MOA) with the Department for mediation services provided for Medicaid recipient appeals and contracted services necessary to conduct the appeals process. The MOA will facilitate the Department's ability to draw down federal Medicaid funds to support this administrative function. Upon receipt of invoices from OAH for covered services rendered in accordance with the MOA, the Department shall transfer the federal share of Medicaid funds drawn down for this purpose. "(h4) Effective October 1, 2008, the Department of Health and Human Services shall discontinue its current informal appeals process for Medicaid applicants and recipients appealing a determination made by the Department to deny, terminate, suspend, or reduce Medicaid covered services. All such informal appeals by Medicaid applicants or recipients under the current system which are pending on that date and for which a hearing has not been held shall be discontinued and the applicant or recipient offered an opportunity to appeal to the Office of Administrative Hearings in accordance with the provisions of subsection 10.15A(h1) of this act. The Department shall make every effort to resolve or settle all of the backlogged cases prior to the effective date of this act. "(h5) Nothing in this act shall prevent the Department of Health and Human Services from engaging in an informal review of the case with the applicant or recipient prior to issuing a notice of adverse determination as provided by subsection 10.15A(h1) of this act. "(h6) The appeals process for Medicaid applicants and recipients established under this section shall expire July 1, 2010. The Department of Health and Human Services and the Office of Administrative Hearings shall each report to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Subcommittee on Health and Human Services, the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services, and the Fiscal Research Division on March 1, 2009, October 1, 2009, and March 1, 2010, on the costs, effectiveness, and efficiency of the appeals process for Medicaid applicants and recipients and make recommendations regarding the continuation of the process." Community Support Providers Appeals Process. - Session Laws 2008-107, s. 10.15A(e1)-(e4), as amended by Session Laws 2009-526, s. 2(c), provides for administrative appeals by community support providers. See notes under G.S. 150B-1, 122C-115.4, and 122C-151.4. Editor's Note. - Session Laws 2008-107, s. 1.2, provides: "This act shall be known as 'The Current Operations and Capital Improvements Appropriations Act of 2008.' " Session Laws 2008-107, s. 30.3, provides: "Except for statutory changes or other provisions that clearly indicate an intention to have effects beyond the 2008-2009 fiscal year, the textual provisions of this act apply only to funds appropriated for, and activities occurring during, the 2008-2009 fiscal year." Session Laws 2008-107, s. 30.5, is a severability clause. This chapter was amended by various sections in Session Laws 2011-398. Session Laws 2011-398, s. 63, as amended by Session Laws 2012-187, s. 8.1, provides in relevant part: "Sections 15 through 55 of this act become effective January 1, 2012, and apply to contested cases commenced on or after that date. With regard to contested cases affected by Section 55.2 of this act, the provisions of Sections 15 through 27 of this act become effective when the United States Environmental Protection Agency approvals referenced in Section 55.2 have been issued or October 1, 2012, whichever occurs first. With regard to contested cases affected by Section 55.1 of this act, the provisions of Sections 15 through 27 and Sections 32 and 33 of this act become effective when the waiver referenced in Section 55.1 has been granted or February 1, 2013, whichever occurs first. Unless otherwise provided elsewhere in this act, the remainder of this act is effective when it becomes law." Session Laws 2020-3, s. 1.1(a)-(d), provides: "(a) Interest Waiver. - As a result of the COVID-19 outbreak, the Secretary of Revenue has extended the franchise, corporate income, and individual income tax payment deadline from April 15, 2020, to July 15, 2020, and pursuant to G.S. 105-249.2, the Secretary will not assess a penalty for failure to file a return or pay a tax due as long as the return is filed and the tax due is paid by July 15, 2020. Notwithstanding G.S. 105-241.21(b), the Secretary of Revenue shall also waive the accrual of interest from April 15, 2020, through July 15, 2020, on an underpayment of tax imposed on a franchise, corporate income, or individual income tax return, including a partnership and estate and trust tax return, due from April 15, 2020, through July 15, 2020. The relief from accrual of interest from April 15, 2020, through July 15, 2020, also includes interest imposed pursuant to G.S. 105-163.15 and G.S. 105-163.41 for payments due on or before July 15, 2020. "(b) Refund Request. - For franchise, corporate income, and individual income tax, the statute of limitations for obtaining a refund is extended to July 15, 2020, for refund claims for which the statute of limitations to seek a refund expires on or after April 15, 2020, and before July 15, 2020. "(c) Time-Sensitive Actions. - Certain actions required to be taken by a taxpayer on or after April 1, 2020, and before July 15, 2020, will be considered timely if the request or petition is filed on or before July 15, 2020. This subsection applies to requests for Departmental review under G.S. 105-241.11, petitions for a contested case hearing at the Office of Administrative Hearings under Article 3 of Chapter 150B of the General Statutes and G.S. 105-241.15, and petitions for judicial review under Article 4 of Chapter 150B of the General Statutes and G.S. 105-241.16. "(d) This section is effective when it becomes law." Session Laws 2020-3 became law on May 4, 2020. Session Laws 2020-3, s. 5, is a severability clause. Session Laws 2021-62, s. 3.5A(a)-(h), provides: "(a) When a county disengages from one area authority and realigns with another area authority under G.S. 122C-115, a portion of the risk reserve and other funds of the area authority from which the county is disengaging shall be transferred to the area authority with which the county is realigning. The amount of risk reserve and other funds to be transferred shall be determined by the Department of Health and Human Services (DHHS) in accordance with a formula or formulas developed in accordance with this section. "(b) Any formula developed by DHHS under this section shall consider the stability of both the area authority from which the county is disengaging and the area authority with which the county is realigning. The formula shall support the ability for each area authority to carry out its responsibilities under State law and shall support the successful operation of BH IDD tailored plans under G.S. 108D-60. The formula shall assure that the area authority from which the county is disengaging retains sufficient funds to pay any outstanding liabilities to health care providers, staff-related expenses, and other liabilities. "(c) Upon the Secretary's approval of a disengagement under G.S. 122C-115(a3), the area authority from which the county is disengaging and the area authority with which the county is realigning shall provide DHHS with all financial information requested by DHHS that is necessary to determine the amount of funds to be transferred using the formula or formulas developed under this section. "(d) Prior to finalizing any formula developed under this section, DHHS shall post the proposed formula on its website and provide notice of the proposed formula to all area authorities, the Joint Legislative Oversight Committee on Health and Human Services, the Joint Legislative Oversight Committee on Medicaid and NC Health Choice, and the Fiscal Research Division. DHHS shall accept public comment on the proposed formula. DHHS shall post the final version of the formula on its website no later than August 1, 2021. "(e) No later than October 15, 2021, DHHS shall report to the Joint Legislative Oversight Committee on Health and Human Services, the Joint Legislative Oversight Committee on Medicaid and NC Health Choice, and the Fiscal Research Division on any formulas developed under this section and any funds transferred during the previous quarter. Beginning January 15, 2022, and quarterly thereafter through April 15, 2026, DHHS shall report to the Joint Legislative Oversight Committee on Health and Human Services, the Joint Legislative Oversight Committee on Medicaid and NC Health Choice, and the Fiscal Research Division on any funds transferred as a result of disengagements during the previous quarter. A final quarterly report shall be due June 30, 2026, for the quarter ending on that date. "(f) Notwithstanding any provision of law to the contrary, the development and application of the formula or formulas under this section shall be exempt from the rulemaking requirements under Article 2A of Chapter 150B of the General Statutes and the contested case provisions of Chapter 150B of the General Statutes. "(g) This section is effective when it becomes law and applies to disengagements approved by DHHS with an effective date on or after September 1, 2021. "(h) This section shall expire on June 30, 2026.” Effect of Amendments. - Session Laws 2019-140, s. 2(a), effective July 19, 2019, designated the existing provisions as subsections (a) and (b), and added the last sentence to subsection (b). Legal Periodicals. - For note on the Brownfields Property Reuse Act of 1997, see 78 N.C.L. Rev. 1015 (1998).