J. Woodfin Jones, Chief Justice
Harlingen Family Dentistry, P.C. and Trueblood Dental Associates, P.A. (collectively, the Dental Groups) filed suit in Travis County district court challenging certain rules adopted by the Texas Health and Human Services Commission (HHSC). See Tex. Gov't Code § 2001.038 (permitting challenge to validity or applicability of agency rule). The challenged rules permit HHSC and its Office of Inspector General (OIG) to impose a payment hold against a Medicaid provider in certain circumstances. See 1 Tex. Admin. Code § 371.1709(a)(2), (3), (4) (2012) (Tex. Health & Human Servs. Comm'n, Payment Hold). The Dental Groups also challenged a rule permitting the OIG to retain funds that were accumulated during a payment hold even after the hold has been terminated and to use those funds to offset any monies that may be determined to be owed as a result of an ongoing investigation of the provider. Id. § 371.1709(e)(2). After the trial court rendered judgment that the challenged rules were valid, the Dental Groups perfected this appeal. We will reverse the trial court's judgment and render judgment that the challenged rules are not valid.
In their sole issue on appeal, the Dental Groups contend the trial court erred in finding that the challenged administrative rules are a valid exercise of HHSC's statutory rulemaking authority. We presume that an agency rule is valid, and the party challenging the rule has the burden of demonstrating its invalidity. See Texas Ass'n of Psychological Assocs. v. Texas State Bd. of Exam'rs of Psychologists, 439 S.W.3d 597, 603 (Tex.App.-Austin 2014, no pet.). To establish a rule's facial invalidity, the challenger must show that the rule (1) contravenes specific statutory language; (2) is counter to the statute's general objectives; or (3) imposes additional burdens, conditions, or restrictions in excess of or inconsistent with the relevant statutory provisions. See Ware v. Texas Comm'n on Law Enforcement Officer Standards & Educ., No. 03-12-00740-CV, 2013 WL 2157244, at *2 (Tex.App.-Austin May 16, 2013, no pet.) (mem.op.);
The Dental Groups contend that HHSC exceeded its statutory authority by promulgating the challenged rules permitting certain pre-notice payment holds. The dispute, therefore, turns principally on the construction of a statute, a question of law that we review de novo. See First Am. Title Ins. Co. v. Combs, 258 S.W.3d 627, 632 (Tex.2008). Our primary objective in construing statutes is to give effect to the legislature's intent. Galbraith Eng'g Consultants, Inc. v. Pochucha, 290 S.W.3d 863, 867 (Tex.2009). The plain meaning of the text is the best expression of legislative intent unless a different meaning is supplied by legislative definition or is apparent from the context, or unless the plain meaning would lead to absurd or nonsensical results that the legislature could not have intended. City of Rockwall v. Hughes, 246 S.W.3d 621, 625-26 (Tex. 2008); see Tex. Gov't Code § 311.011 ("Words and phrases shall be read in context and construed according to the rules of grammar and common usage."). We look to the entire act in determining the legislature's intent with respect to a specific provision. Taylor v. Firemen's & Policemen's Civil Serv. Comm'n, 616 S.W.2d 187, 190 (Tex.1981); Northwest Austin Mun. Util. Dist. No. 1 v. City of Austin, 274 S.W.3d 820, 828 (Tex.App.-Austin 2008, pet. denied). The doctrine of unius est exclusio alterius has long been recognized in this state: "[I]t is a settled rule that the express mention or enumeration of one person, thing, consequence or class is equivalent to an express exclusion of all others." Johnson v. Second Injury Fund, 688 S.W.2d 107, 108-09 (Tex.1985). Although the doctrine is not an absolute rule, it can be helpful in determining legislative intent. Mid-Century Ins. Co. v. Kidd, 997 S.W.2d 265, 274 (Tex.1999). We believe it is helpful in the present case.
The first set of challenged rules purports to grant HHSC and the OIG authority to impose a pre-notice payment hold on providers under certain circumstances. The Dental Groups argue that the rules exceed the limited authority the legislature granted HHSC to impose such payment holds on a Medicaid provider's reimbursement claims for services provided. Specifically, the Dental Groups maintain that because the challenged rules purport to permit a payment hold in instances that do not involve evidence of fraud by the provider, they exceed HHSC's statutory authority and therefore are invalid. The issue in this case, then, reduces to whether HHSC has the authority to adopt rules permitting the OIG to impose a pre-notice payment hold on a Medicaid provider for a program violation that does not involve evidence of or allegations of fraud.
When the challenged rules were promulgated in 2005, two statutes expressly authorized a pre-notice hold on payment to a Medicaid provider. Government Code section 531.102(g)(2) provided:
Act of June 2, 2003, 78th Leg., R.S., ch. 198, § 2.19(a), 2003 Tex. Gen. Laws 611, 652 (emphasis added) (amended 2005) (current version at Tex. Gov't Code § 531.102(g)(2)). Section 531.102 also provided that, on timely written request by the provider, HHSC "shall file a request with the State Office of Administrative Hearings for an expedited administrative hearing regarding the hold." Id. (current version at Tex. Gov't Code § 531.102(g)(3)).
In addition, Human Resources Code section 32.0291(b) provided:
Act of June 2, 2003, 78th Leg., R.S., ch. 198, § 2.103, 2003 Tex. Gen. Laws 611, 690 (emphasis added) (amended 2013) (current version at Tex. Hum. Res. Code § 32.0291(b)). The plain language of these statutes authorized HHSC to impose a payment hold if it had "reliable evidence that the provider has committed fraud or wilful misrepresentation" and required the OIG to impose a payment hold "to compel production of records or when requested by the state's Medicaid fraud unit."
It was within the context of the foregoing statutory framework that HHSC adopted rule 371.1703(b), since amended, which provided in pertinent part:
1 Tex. Admin. Code § 371.1703(b) (2005) (Tex. Health & Human Servs. Comm'n, Payment Hold) (emphasis added) repealed 37 Tex. Reg. 7989-90 (2012) (proposed August 10, 2012). Subsections (5) and (6) of the rule clearly expanded the circumstances under which a pre-notice payment hold could be imposed beyond those identified in Government Code section 531.021(g)(2) and Human Resources Code section 32.0291(b). For instance, subsection
In 2011 the legislature amended Government Code section 531.102(g)(2) to add a third basis for the OIG to impose a payment hold, but the new basis was essentially identical to the one for which HHSC was already authorized to impose a hold under section 32.0291(b) of the Human Resources Code:
Act of May 28, 2011, 82d Leg., R.S., ch. 879, § 3.11, 2011 Tex. Gen. Laws 2228, 2234-35 (emphasis added) (further amended 2013) (current version at Tex. Gov't Code § 531.102(g)(2)). The effect of this 2011 amendment was to require the OIG to impose a payment hold upon receipt of reliable evidence of fraud or wilful misrepresentation as required by 42 C.F.R. § 455.23, which provides that a "State Medicaid agency must suspend all Medicaid payments to a provider after the agency determines there is a credible allegation of fraud...." 42 C.F.R. § 455.23.
Thereafter, HHSC replaced old rule 371.1703 with current rule 371.1709. See 1 Tex. Admin. Code § 371.1709. The challenged portions of this rule now provide:
1 Tex. Admin. Code § 371.1709 (2014) (Tex. Health & Human Servs. Comm'n, Payment Hold). Subsection (b) of rule 371.1709, which the Dental Groups do not challenge, reflects the 2011 amendment to Government Code section 531.102(g)(2) and provides that the OIG must impose a payment hold against a person (1) to compel production of records or documents; (2) when requested to by the state's Medicaid Fraud Unit; or (3) upon receipt of reliable evidence that verifies a credible allegation of fraud. Id. § 371.1709(b)(1), (2), (3). By contrast, subsection (a) quoted above, the validity of which the Dental Groups do challenge, authorizes the OIG to impose a payment hold if a provider commits a "program violation," "is affiliated with a person who commits a program violation," or "for any other reason provided by statute or regulation." See id. § 371.1709(a)(2), (3), (4). Again, we agree with the Dental Groups that Government Code section 531.102(g)(2), as amended in 2011, does not provide authority for pre-notice payment holds under the circumstances set forth in rule 371.1709(a)(2), (3), or (4).
Finally, in 2013 the legislature again amended both Government Code section 531.102(g)(2) and Human Resources Code section 32.0291. As amended, Human Resources Code section 32.0291(b) now provides that HHSC's imposition of a payment hold is subject to Government Code section 531.102. Deleted from that section is the language that specifically authorized HHSC to impose a pre-notice payment hold upon receipt of credible evidence of fraud or willful misrepresentation by the provider.
As HHSC correctly states in its brief, the determining factor in deciding whether an administrative agency has exceeded its rule-making authority is whether the rules are "in harmony" with the general objectives of the legislation involved. Railroad Comm'n of Tex. v. Lone Star Gas Co., 844 S.W.2d 679, 685 (Tex. 1992); Gulf Coast Coal. of Cities v. Public Util. Comm'n, 161 S.W.3d 706, 711 (Tex. App.-Austin 2005, no pet.). For an administrative rule to be "in harmony" with legislative objectives, it must not impose additional burdens, conditions, or restrictions in excess of or inconsistent with relevant statutory provisions. Gulf Coast Coal. of Cities, 161 S.W.3d at 712. This is a question of law determined through statutory construction. Id. Here, the Dental Groups argue that administrative rules permitting a payment hold without prior notice under the broad circumstances provided for in rule 371.1709(a) contravene the legislative language and intent, as expressed in Government Code section 531.102(g)(2), that such holds are to be imposed only in the narrow circumstances identified in that statute.
OIG is the arm of HHSC responsible for "the investigation of fraud and abuse in the provision of health and human services." Tex. Gov't Code § 531.102(a). The statutory provisions in the Government Code pertinent to the OIG, including section 531.102, relate to the OIG's statutorily defined function to detect fraud and process cases of suspected fraud, waste, or abuse. See id. § 531.103. Through the challenged rules, HHSC grants the OIG authority, and assumes authority for itself, to impose a payment hold whenever it believes a provider has committed any program violation, no matter how minor and irrespective of whether there is any indication of fraud or other intentional abuse. As noted above, the rules significantly expand the circumstances under which a pre-notice payment hold can be imposed beyond those enumerated in Government Code section 531.021(g)(2). Thus, the challenged rules are inconsistent with the legislature's directives related to those payment holds that it has expressly authorized.
In addition, we note that a provider subject to a payment hold imposed pursuant to the challenged rules is not expressly given the right to the procedural protections that the legislature mandated be available when a pre-notice payment hold is imposed for the more serious circumstances involving Medicaid fraud or refusal to produce requested documents or records. If HHSC has the authority to impose a payment hold under any circumstances, rather than being limited to the circumstances identified in section 531.102(g)(2), the result would be that providers who were subjected to a mandatory payment hold based on allegations of fraud are given more procedural protections (such as a contested-case hearing at the State Office of Administrative Appeals (SOAH)) than a provider who committed a less serious "program violation." As written, the rules permit the OIG to impose a payment hold, without notice and in the absence of fraud, and yet avoid the due-process notice procedures and expedited administrative review the legislature required in connection with the payment holds it expressly authorized. "Implied authority is not authority to depart from the intent of the statute." Texas Dep't of Human Servs. v. Christian Care Ctrs., Inc., 826 S.W.2d 715, 721 (Tex.App.-Austin 1992, writ denied).
We hold that HHSC's adoption of rules that permit pre-notice payment holds to be imposed for any alleged violation of the
We are cognizant that the legislature gave HHSC full rulemaking authority as necessary for the proper and efficient operation of the Medicaid program. See Tex. Hum. Res.Code § 32.021(c). A means of enforcing the administrative rules can certainly be implied from the grant of this authority. See Christian Care Ctrs., 826 S.W.2d at 720. In fact, HHSC has adopted rules permitting it to impose a variety of sanctions for non-fraud-related program violations. Implied statutory authority, however, is limited to what is necessary and reasonable. See Bullock v. Hewlett-Packard Co., 628 S.W.2d 754, 756 (Tex.1982). The Government Code expressly grants the OIG authority to assess administrative penalties on HHSC's behalf. See Tex. Gov't Code § 531.102(h). It is neither reasonable nor necessary, however, for HHSC to be permitted to impose a pre-notice payment hold, without the opportunity for an administrative hearing regarding the hold, on a provider who commits a Medicaid-program violation merely to enforce its rules or ensure the proper and efficient operation of the program.
We next consider the validity of challenged rule 371.1709(e)(2), which provides that when HHSC has imposed a pre-notice payment hold on Medicaid reimbursement funds pursuant to either section 371.1709(a) or 371.1709(b), it may retain seized funds even after that hold is terminated for any reason. Because we have concluded that rules 371.1709(a)(2), (3), and (4) are not valid, we need only consider
42 C.F.R. § 455.23.
Thus, a payment hold imposed pursuant to Government Code section 531.102(g) is temporary and must end under the circumstances outlined in the applicable federal and state regulations. As we held in Janek v. Harlingen Family Dentistry, HHSC's right to possess funds pursuant to a payment hold for fraud depends solely on the existence of credible evidence of such fraud. In the absence of such evidence, "the State's right to temporary possession of the funds no longer exist[s]." Janek, 2014 WL 5653501, at *5. Once the statutory basis for imposing the hold ceases to exist, HHSC no longer has the authority to possess those funds. The same is true for funds accumulated pursuant to a hold imposed for the other reasons identified in section 531.102(g)(2). Accordingly, a rule permitting the OIG to continue to possess a Medicaid provider's funds when the justification for imposing the temporary payment hold has terminated is in excess of HHSC's statutory authority. For this reason, we hold that current rule 371.1709(e)(2) is invalid, and the trial court erred in concluding otherwise.
For the reasons stated above, we sustain the Dental Groups' sole appellate issue and reverse the trial court's judgment. We render judgment that old rules 371.1703(b)(5) and (6) and current rules 371.1709(a)(2), (3), (4) and 371.1709(e)(2) are invalid.
Sunset Advisory Commission, Health & Human Servs. Comm'n, Staff Report, at 159 (Oct. 2014).
