Medicaid Rehearing Time-Barred

Elder Law Answers case summary.The Alabama Court of Civil Appeals affirms the circuit court’s dismissal of an appeal as untimely filed because the review sought was of a rehearing denial, not a final order. In Diversicare of Winfield v. Alabama Medicaid Agency (Ala. Civ. App., CL-2022-0714, April 14, 2023).

Mrs. Paulette Steele received care at Diversicare of Winfield, LLC, a skilled nursing facility. When she entered the facility in 2019, she executed Alabama Medicaid Agency Form 202, titled “Appointment of Representative.” This form designated Ms. Carrie Sullins, a business office administrator at Diversicare, as her Medicaid benefits representative to act entirely on her behalf, including applying, reapplying, and making claims.

On May 19, 2020, the Alabama Medicaid Agency imposed a transfer penalty on Mrs. Steele because of her credit card payments and property transfers her husband made for less than fair market value, delaying her receipt of benefits to November 2020.

Arguing that the Agency had erred in imposing a penalty period and asserting that the penalty caused Mrs. Steele undue hardship, Diversicare appealed.

After the hearing, the Commissioner of the Agency adopted the administrative law judge’s recommendation to impose the transfer penalty and issued a final order upholding the penalty period on October 29, 2020. The ruling stated that Mrs. Steele could request a rehearing or judicial review of the decision under the Alabama Administrative Procedure Act.

On November 13, 2020, Ms. Sullins applied for a rehearing, which the Agency denied by operation of law. The Commissioner also sent a letter dated December 16, 2020, reiterating the denial of the rehearing request.

Mrs. Steele passed away on January 8, 2021. On January 15, 2021, Diversicare appealed the final order and letter. The Montgomery Circuit Court denied a rehearing, dismissing the appeal as untimely filed. Diversicare appealed the denial for a rehearing.

Diversicare argued that C.F.R. § 431.245 mandates written notice of any agency decision involving an applicant’s rights, so the Agency could not deny an application for rehearing by operation of law.

The Alabama Court of Civil Appeals holds that § 431.245 applies to decisions on the merits of a claim for Medicaid benefits, not the denial of an application for a rehearing. A rehearing application denial maintains the effective date of the Agency’s final order unless the Agency or court replaces, modifies, or sets it aside.

In this case, the 30 days since the relevant date of the final order – October 29, 2020 – have elapsed. The circuit court was correct in dismissing the appeal as time-barred.

Read the full opinion.