                                          COURT OF APPEALS OF VIRGINIA


            Present: Judges Humphreys, Petty and Chafin
            Argued at Richmond, Virginia
PUBLISHED




            MPS HEALTHCARE, INC., d/b/a
             CONTINUUM PEDIATRIC NURSING SERVICES
                                                                                  OPINION BY
            v.     Record No. 1125-18-2                                     JUDGE TERESA M. CHAFIN
                                                                                 APRIL 9, 2019
            DEPARTMENT OF MEDICAL ASSISTANCE
             SERVICES/COMMONWEALTH OF VIRGINIA


                             FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND
                                        Daniel T. Balfour, Judge Designate

                           Belinda Jones (Jonathan M. Joseph; Harrison M. Gates; Christian &
                           Barton, L.L.P., on briefs), for appellant.

                           Usha Koduru, Assistant Attorney General (Mark R. Herring,
                           Attorney General; Cynthia V. Bailey, Deputy Attorney General;
                           Kim F. Piner, Senior Assistant Attorney General, on brief), for
                           appellee.


                   The Director of the Department of Medical Assistance Services (“DMAS”) issued a final

            agency decision (“FAD”) requiring that MPS Healthcare, Inc., doing business as Continuum

            Pediatric Nursing Services (“MPS”), reimburse DMAS for an overpayment of $63,972.15. The

            decision was based on a failure to maintain adequate documentation of criminal background checks.

            MPS appealed to the Circuit Court for the City of Richmond, which affirmed the Department’s

            decision. MPS now appeals to this Court, assigning error to the circuit court in (1) affirming

            DMAS’s FAD, which rejected the hearing officer’s recommendation in favor of MPS concerning

            the criminal background checks; (2) finding that MPS violated Code § 32.1-162.9:1(A) and 12

            VAC 30-120-1730(A)(5); and (3) determining that an overpayment amount of $63,972.15 related to
Error Code 913 should be returned to DMAS. For the reasons that follow, we affirm the decision of

the circuit court.

                                        I. BACKGROUND

        DMAS is the state agency authorized to administer the medical assistance program

known as Medicaid, which is a federally and state funded program providing medical assistance

to the eligible and medically indigent citizens of Virginia. The Social Security Act requires the

state to establish a medical assistance plan setting forth state regulations governing Virginia’s

Medicaid program. 42 U.S.C. § 1396(a). DMAS is empowered to exercise administrative

discretion and to issue rules, regulations, and policies on Department matters. 42 C.F.R.

§ 431.10(c)(1)(i) and (ii).

        The Technology Assisted Waiver Program (“Tech Waiver”) is a Medicaid program that

provides services to persons dependent on a medical device, and therefore, requiring ongoing

nursing care for the management of the device and for everyday activities.1 Under such a waiver

program, qualifying individuals are enabled “to remain in their homes or communities instead of

residing in a nursing home.” 1st Stop Health Servs. v. Dep’t of Med. Assistance Servs., 63

Va. App. 266, 270 (2014).

        MPS is an enrolled provider of private duty nursing services under the Medicaid

program. In the Provider Participation Agreement, MPS contracted “to provide services in

accordance with the Provider Participation Standards published periodically by DMAS in the

appropriate Provider Manual(s) . . . .” In the same agreement, MPS agreed to “keep such records

as DMAS determines necessary,” and “to comply with all applicable state and federal laws, as

well as administrative policies and procedures of [DMAS] as from time to time amended.”


        1
        As of July 1, 2017, the Technology Assisted Medicaid Waiver and the Elderly or
Disabled with Consumer Direction Medicaid Waiver combined into one Medicaid Waiver and
became the Commonwealth Coordinated Care (CCC) Plus Medicaid Waiver.
                                            -2-
Pursuant to 12 VAC 30-120-1730(A)(5), providers are required to perform criminal background

checks on all employees who may have contact or provide services to the waiver individual.

These background checks must be performed by the Virginia State Police.

       DMAS regulations require that providers maintain sufficient records documenting fully

and accurately the nature, scope, and details of the services provided. 12 VAC

30-120-930(A)(12). “To ensure accountability, the state conducts after-the-fact audits. In order

for these audits to function efficiently, uniformity and clarity of documentation is essential.” 1st

Stop Health Services, 63 Va. App. at 277.

       Through its internal auditors, DMAS conducted a “desk audit” of MPS’s services

provided to twenty-five Medicaid recipients from October 1, 2014, through December 31, 2014.2

On August 18, 2015, the auditors requested information on MPS staff who provided care,

including criminal background checks performed by the Virginia State Police. On September 9,

2015, MPS responded with invoices and proof of payment to the Virginia State Police for all but

four nurses. The invoices disclosed the names of the MPS employees, the month in which the

request for a background check was made, and the dates of the completed searches.

       Pat Kaufman, a DMAS Healthcare Compliance specialist, conducted the audit of MPS.

On July 13, 2016, she wrote a file memorandum stating that criminal background checks were

missing for a number of employees and a few supervisory employees for whom MPS had not

submitted personnel files. On August 5, 2016, Kaufman sent a preliminary findings report to

MPS advising it of the preliminary review and requested the submission of additional

documentation regarding certain claims within thirty days of the receipt of the letter. An

attached report and spreadsheet stated that certain criminal background check information was



       2
         In the course of a “desk audit,” the auditors make written requests to the Medicaid
provider for documents that the auditors deem necessary for review.
                                                -3-
missing. The missing documentation indicated three error codes. Error Code 101 pertained to

requirements for written documentation to support claims billed. Error Code 913 pertained to

the requirement that a Medicaid provider perform criminal background checks and verify

personal references of prospective employees. Under this error code, the auditors identified a

lack of documentation for criminal record checks for three nurses. Error Code 915 pertained to

the lack of personnel files, including criminal background checks, for staff.

       Pamela Hubbard, the MPS Director of Nursing, testified that MPS did not receive the

August 5, 2016 letter, and thus, MPS did not send the documentation within the thirty days. On

September 20, 2016, DMAS allotted five additional days for MPS to submit the missing

documentation.

       On September 21, 2016, MPS sent additional documentation to DMAS excluding

criminal background checks, stating that the criminal background checks were in the personnel

files but could not be provided due to Virginia State Police dissemination policies. MPS stated

that “[f]or each employee and registered nurse providing the supervisory visits for the recipients

in question we have submitted, paid for and received back the information from the Virginia

police and are maintained in a file.”

       On November 14, 2016, Kaufman issued a notification and collection letter to MPS

indicating that MPS was responsible for an overpayment of $74,894.25 for services rendered in

the audited time frame. The letter indicated that no documentation was submitted showing the

completion of a criminal background check for three nurses. Although personnel files were

submitted for five registered nurses, the files did not contain a criminal background check, nor

were their names noted in the invoices submitted on September 9, 2015. These deficiencies were

identified under Error Code 913. Further, the letter stated that no personnel files were submitted




                                               -4-
for one licensed practical nurse (L.P.N.) and one R.N. These deficiencies were identified under

Error Code 915.

         MPS filed an appeal of DMAS’s findings with the DMAS Appeals Division and

requested an informal hearing. An informal appeal decision was issued on May 9, 2016, which

upheld the overpayment determinations.3 MPS again appealed and requested a formal hearing.

On October 4, 2017, the hearing officer issued his recommended decision. He recommended

reversing the retractions associated with Error Codes 913 and 915. DMAS and MPS both filed

exceptions to the recommended decision. A FAD was filed on December 1, 2017. The FAD

upheld the retractions associated with Error Code 913, but reversed the retractions associated

with 915. As all administrative remedies had been exhausted, MPS appealed to the circuit court.

On June 18, 2018, the circuit court affirmed the FAD and ordered that the overpayment amount

of $63,972.15 related to Error Code 913 should be returned to DMAS. MPS now appeals to this

Court.

                                 II. STANDARD OF REVIEW

         “Under the [Virginia Administrative Process Act (“VAPA”)], the circuit court reviews an

agency’s action in a manner ‘equivalent to an appellate court’s role in an appeal from a trial

court.’” Family Redirection Inst., Inc. v. Dep’t of Med. Assistance Servs., 61 Va. App. 765, 771

(2013) (quoting Mattaponi Indian Tribe v. Commonwealth, 43 Va. App. 690, 707 (2004)

(citations omitted)). “The circuit court has no authority under VAPA to reweigh the facts in the

agency’s evidentiary record.” Id. “Instead, ‘when the appellant challenges a judgment call on a

topic on which the agency has been entrusted with wide discretion by the General Assembly, we



         3
         MPS also submitted additional documentation to DMAS on December 12, 2016, during
the informal appeal process. DMAS admitted at the informal hearing that this documentation
would have satisfied the criminal background check requirements. MPS was not given credit for
the submissions, however, because they were submitted post-audit.
                                             -5-
will overturn the decision only if it can be fairly characterized as arbitrary or capricious and thus

a clear abuse of delegated discretion.’” Id. at 772 (quoting Citland, Ltd. v. Commonwealth ex

rel. Kilgore, 45 Va. App. 268, 275 (2005) (citation and quotation marks omitted)).

       This Court “afford[s] DMAS ‘great deference’ in its administrative ‘interpretation and

application of its own regulations.’” Id. (quoting Finnerty v. Thornton Hall, Inc., 42 Va. App.

628, 634 n.2 (2004) (citation omitted)).

               “This deference stems from Code § 2.2-4027, which requires that
               reviewing courts ‘take due account’ of the ‘experience and
               specialized competence of the agency’ promulgating the
               regulation.” [Bd. of Supervisors v. State Bldg. Code Tech. Review
               Bd., 52 Va. App. 460, 466 (2008)] (quoting Real Estate Bd. v.
               Clay, 9 Va. App. 152, 160-61 (1989)). However, “‘deference is
               not abdication, and it requires us to accept only those principles of
               agency interpretations that are reasonable in light of the principles
               of construction courts normally employ.’” Id. (quoting EEOC v.
               Arabian American Oil Co., 499 U.S. 244, 260 (1991)).

Avante at Roanoke v. Finnerty, 56 Va. App. 190, 197 (2010); see also Appalachian Voices v.

State Air Pollution Control Bd., 56 Va. App. 282, 293 n.2 (2010); Avalon Assisted Living

Facilities, Inc. v. Zager, 39 Va. App. 484, 503 (2002).

       Thus, this Court gives no deference to an agency’s interpretation of its own regulation

that is “arbitrary and capricious,” meaning an interpretation that is “‘unreasonable’” or “‘without

determining principle.’” Williams v. Commonwealth of Va. Real Estate Bd., 57 Va. App. 108,

135 (2010) (quoting Sch. Bd. of the City of Norfolk v. Wescott, 254 Va. 218, 224 (1997)).

                                           III. ANALYSIS

       On appeal, MPS contends that the circuit court erred in affirming the DMAS Director’s

FAD. Specifically, MPS argues that the FAD arbitrarily and capriciously reversed the

retractions associated with Error Code 913. Next, MPS contends that the circuit court erred in

finding that MPS violated Code § 32.1-162.9:1(A) and 12 VAC 30-12-1730(A)(5). Lastly, MPS

argues that the circuit court erred in determining that the overpayment amount of $63,972.15
                                                -6-
associated with Error Code 913 should be remitted to DMAS. For the reasons that follow, we

affirm the decision of the circuit court.

                            A. The Hearing Officer’s Recommendation

       MPS contends on appeal that the Error Code 913 retractions “arose as a result of the

[a]uditor arbitrarily setting new and inconsistent standards not supported by Virginia law.”

Specifically, MPS refers to the auditor advising MPS that proof of criminal record check

requirements could be met by simply a written statement saying that the criminal record checks

were completed, then later requiring MPS to submit copies of invoices from the Virginia State

Police or the actual criminal record checks.

       The hearing officer ruled in MPS’s favor concerning the Error Code 913 retractions,

concluding that MPS acted appropriately based on Virginia law and the auditor’s direction.

Code § 2.2-4020(C) states that “[t]he agency shall give deference to findings by the presiding

officer explicitly based on the demeanor of witnesses.” However, Code § 32.1-325.1(B) states,

               The Director shall adopt the hearing officer’s recommended
               decision unless to do so would be an error of law or Department
               policy. Any final agency case decision in which the Director
               rejects a hearing officer’s recommended decision shall state with
               particularity the basis for rejection.

       Here, the hearing officer ruled that 1st Stop Health Services did not apply to the facts of

this case, stating that “1st Stop does not address when [required] documentation must be

submitted in order to be considered in the appeals process.” The hearing officer found that the

required records existed, were in MPS’s files, and “ultimately were submitted.” In making his

decision, he found that MPS justifiably relied on the auditor’s advice as to acceptable

documentation for criminal background checks. We find that the Director’s FAD properly

rejected the hearing officer’s decision.




                                               -7-
       The Technology Assisted Waiver and Private Duty Nursing Services Manual (“Tech

Waiver Manual”) was incorporated by reference into the Provider Participation Agreement, in

which MPS contracted to “keep such records as DMAS determines necessary,” and “to comply

with all applicable state and federal laws, as well as administrative policies and procedures of

[DMAS] as from time to time amended.” The Tech Waiver Manual specifically states that,

“[a]ny paid provider claim that cannot be verified at the time of review cannot be considered a

valid claim for services provided, and is subject to retraction.” Tech Waiver Manual, Chapter

VI, page 4 (2015) (emphasis added). 12 VAC 30-120-1720(A)(4) further states that “[p]roviders

shall be required to refund payments to DMAS if they . . . have failed to maintain records to

support their claims for services.” “The required documentation must be maintained prior to and

at the time of the audit, not through reorganizing and explaining following a failed audit.” 1st

Stop Health Services, 63 Va. App. at 280. To accept post-audit documentation “would ignore

the plain terms of the Provider Agreement and the Manual, incentivize sloppy recordkeeping,

and increase the cost and complexity of audits.” Id. at 279. The documents submitted by MPS

on December 16, 2016, during the informal appeal proceedings could not be considered even

though they would have satisfied the regulatory requirements if submitted at the time of the

audit. Therefore, the Director’s FAD properly rejected the hearing officer’s decision based on an

error of law and policy. Code § 32.1-325.1(B).

                  B. Dissemination of Criminal Background Checks to DMAS

       MPS maintains on appeal, as it did throughout the entire audit and agency appeals

process, that pursuant to Code § 19.2-389, the criminal background check results for nurses who

were part of the audit could not be released to DMAS.4 We find that when Code § 19.2-389 is


       4
          The DMAS auditor independently determined that invoices from the Virginia State
Police proving payment for the criminal background checks would be acceptable documentation
to satisfy the statutory and regulatory requirements. At other times, the DMAS auditor indicated
                                                -8-
read in conjunction with Code § 32.1-162.9:1 and 12 VAC 30-120-1730(A)(5), it is evident that

criminal background check results may, in fact, be provided to DMAS for audit purposes.

       The rules of statutory construction dictate that closely related statutes must be read as

being consistent with one another. See Zamani v. Commonwealth, 26 Va. App. 59, 63 (1997),

aff’d, 256 Va. 391 (1998); see also Lillard v. Fairfax Cty. Airport Auth., 208 Va. 8, 13 (1967).

Code § 32.1-162.9:1(A) provides that a “home care organization . . . shall, within 30 days of

employment, obtain for any compensated employees an original criminal record clearance with

respect to convictions for offenses specified in this section or an original criminal history record

from the Central Criminal Records Exchange.” Code § 32.1-162.9:1(A) also notably states that

“[f]urther dissemination of the information provided pursuant to th[e] section is prohibited other

than to a federal or state authority or court as may be required to comply with an express

requirement of law for such further dissemination.” (Emphasis added).

       12 VAC 30-120-1730(A)(5) states that providers must

               [p]erform a criminal background check on all employees,
               including the business owner, who may have any contact or
               provide services to the waiver individual. Such record checks shall
               be performed by the Virginia State Police for the Commonwealth.
               When the Medicaid individual is a minor child, searches shall also
               be made of the Virginia CPS Central Registry.

               a. Provider documentation of the results of these searches must be
                  made available upon request of DMAS or its authorized
                  representatives. Persons convicted of having committed barrier
                  crimes as defined in § 32.1-162.9:1 of the Code of Virginia
                  shall not render services to waiver individuals for the purposes
                  of seeking Medicaid reimbursement.

               b. Persons having founded dispositions in the CPS Central
                  Registry at DSS shall not be permitted to render services to
                  children in this waiver and seek Medicaid reimbursement.

that a letter stating that the checks had been performed would suffice to meet the requirement.
The fact that the auditor gave erroneous and inconsistent advice upon which MPS relied does not
prevent the government from enforcing its laws. See Sink v. Commonwealth, 13 Va. App. 544
(1992). See also Heckler v. Community Health Services, 467 U.S. 51 (1984).
                                                 -9-
                   Medicaid reimbursement shall not be made for providers’
                   employees who have findings with the Virginia Board of
                   Nursing of the Department of Health Professions concerning
                   abuse, neglect, or mistreatment of individuals or
                   misappropriation of the property.

Therefore, under the applicable regulation and statute, MPS was clearly required to procure

background checks for its employees within thirty days of hiring and document the criminal

record checks performed in compliance with Code § 32.1-162.9:1. MPS was also required to

provide such documentation to DMAS on request.

       During the course of the audit, DMAS and MPS viewed Code § 32.1-162.9:1 and 12

VAC 30-120-1730(A)(5) in light of Code § 19.2-389, which limits the dissemination of criminal

background check results. Both parties erroneously interpreted the statutes to mean that although

MPS was required to complete background checks on all employees, the results of such checks

could not then be disseminated to DMAS for audit purposes.

       Code § 19.2-389 states in pertinent part:

               A. Criminal history record information shall be disseminated,
                  whether directly or through an intermediary, only to:

                      ....

                   7. Agencies of any political subdivision of the
               Commonwealth, . . . for the conduct of investigations of applicants
               for employment, permit, or license whenever, in the interest of
               public welfare or safety, it is necessary to determine under a duly
               enacted ordinance if the past criminal conduct of a person with a
               conviction record would be compatible with the nature of the
               employment, permit, or license under consideration . . . .

       When all three statutes are read together, it is clear that the legislature intended agencies

to be given access to the results of criminal background check results for employment purposes.

It reasons then that in order to ensure that Medicaid providers are complying with regulatory and

statutory requirements of performing criminal background checks on all employees, the DMAS

auditors should be given access to the results of the checks.
                                               - 10 -
                                      IV. CONCLUSION

       For the above-stated reasons, we affirm the circuit court’s decision to retract payments

associated with Error Code 913. “[T]he regulations warn providers that ‘noncompliance with

DMAS policies and procedures may result in a retraction of Medicaid payment or termination of

the provider agreement, or both.’” 1st Stop, 63 Va. App. at 272 (quoting 12 VAC

30-120-930(A)(17)). As MPS failed to comply with policies and procedures concerning criminal

background checks on employees, MPS shall reimburse DMAS the overpayment amount of

$63,972.15.

                                                                                        Affirmed.




                                              - 11 -
