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Life Long Medical Care, Inc v. Department of Health Care Services

December 30, 2010


(Super. Ct. No. 34200880000053CUWMGDS)

The opinion of the court was delivered by: Mauro ,j.

Life Long Med. Care v. Dept. Health Care Serv.



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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

Petitioner Life Long Medical Care, Inc. (Life Long) appeals from the trial court's judgment denying Life Long's petition for writ of mandate. Life Long contends that in calculating Life Long's Medi-Cal reimbursement rates, the Department of Health Care Services (the Department) improperly disallowed certain costs relating to unlicensed medical social workers and case managers. We conclude that Life Long forfeited its claims on appeal by failing to demonstrate error. We will affirm the judgment.


Life Long did not adequately set forth the relevant factual background in its opening brief (see Cal. Rules of Court, rule 8.204, subdivision (a)(2)(C)), and it did not raise a cognizable challenge to the sufficiency of the evidence. Under the circumstances, we will rely on the background provided by the trial court and the administrative law judge in their rulings.

Life Long operates three community health clinics enrolled in the Medi-Cal program as Federally Qualified Health Centers (clinics). (42 U.S.C. §§ 254b, 1396d(a)(2)(C).) The patients treated at the clinics are generally elderly individuals suffering from multiple chronic medical conditions. Many have dementia, limited education, low income, and families who are unable to assist them, all of which make it difficult for the patients to access and use medical services. Life Long's clinics employ medical social workers and case managers to perform clinical social work and assist these patients.

Not all clinic services are reimbursable covered services under Medi-Cal. (42 C.F.R. §405.2446 (2009).) Clinics and their professional medical staff must comply with federal and state laws, including laws regarding licensure. (42 U.S.C. § 1395x(r), (hh); 42 C.F.R. § 491.4 (2009).) Accordingly, social worker services are not covered services unless they are furnished by a licensed clinical social worker, because a license is required by state law. (Bus. & Prof. Code, § 4996, 4996.9; Cal. Code Regs., tit. 22, § 70055, subd. (a)(37); 42 U.S.C. §§ 1395x(aa)(3), 1396x(hh)(l)(C); 42 C.F.R. § 405.2450(a)(3) (2009).)

Clinics are reimbursed for covered Medi-Cal services based on a prospective "per visit" payment rate. (42 U.S.C. § 1396a(bb)(2); Welf. & Inst. Code, § 14132.100, subd. (c).) A "visit" means a face-to-face encounter between a clinic patient and a specified professional, such as a physician, registered nurse, clinical psychologist, or licensed clinical social worker. (Welf. & Inst. Code, § 14132.100, subd. (g).) The "per visit" payment rate may be adjusted subsequently to account for increases in the medicare economic index applicable to primary care services and/or to account for any increase or decrease in the scope of services provided by the clinic. (42 U.S.C. § 1396a(bb)(2), (3)(A), (B); Welf. & Inst. Code, § 14132.100, subds. (d) & (e).) Rate changes based on a change in the scope of services "shall be evaluated in accordance with Medicare reasonable cost principles" set forth in Part 413 of Title 42 of the Code of Federal Regulations. (Welf. & Inst. Code, § 14132.100, subd. (e)(1).)

"Reasonable cost includes all necessary and proper costs incurred in furnishing the services, subject to principles relating to specific items of revenue and cost." (42 C.F.R. § 413.9(a) (2009).) "Necessary and proper costs are 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) (2009).) Reasonable costs may encompass both direct and indirect costs incurred in furnishing services, such as administrative costs, maintenance costs, and premium payments for employee health and pension plans (42 C.F.R. § 413.9(c)(3) (2009)), but "if the provider's operating costs include amounts not related to patient care, [or are] specifically not reimbursable under the program, . . . such amounts will not be allowable." (Ibid.)

In 2004, Life Long filed a request for an adjustment to the prospective per-visit reimbursement rates for its clinics based on changes in the scope of services. The Department disallowed the costs of salaries and fringe benefits for Life Long's medical social workers and case managers because (1) they were performing unlicensed clinical social work in place of licensed clinical social workers, (2) their services were not incident to services furnished by a physician or licensed clinical social worker, and (3) many of the services they performed were not related to patient care. (42 C.F.R. §§ 405.2413, 405.2450 (2009).)

Life Long appealed the Department's findings and an administrative law judge (ALJ) conducted a formal hearing. Life Long did not dispute that the medical social workers and case managers were not licensed clinical social workers, or that Life Long could not be reimbursed directly for their services on a per-visit basis; rather, Life Long argued that the costs related to medical social workers and case managers were allowable because they were incident to physician services. Covered services include those furnished by a physician or clinical social worker, and services and supplies furnished as an "incident to" such services. (42 U.S.C. § 1395x(aa)(3), (s)(1), (2)(A) & (N), (hh); 42 C.F.R. §§ 405.2446(b)(1),(5), 405.2412, 405.2450 (2009).) Life Long presented evidence concerning the various ...

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