Court of Appeals of Texas, Third District, Austin
THE DISTRICT COURT OF TRAVIS COUNTY, 98TH JUDICIAL DISTRICT
NO. D-1-GN-13-003744, HONORABLE RHONDA HURLEY, JUDGE
Chief Justice Rose, Justices Goodwin and Baker.
J. Baker, Justice.
Thomas & Lewin Associates, Inc. filed a petition for
judicial review of a final order of the Appeals Division of
the Texas Health and Human Services Commission (HHSC). The
order sustained certain cost adjustments that the HHSC made
in an informal review of Appellant's mandatory cost
reports filed in compliance with HHSC regulations.
See 1 Tex. Admin. Code § 355.722(j)(2) (2019)
(Texas Health & Human Servs. Comm'n, Reporting Costs
by Home and Community-based Services (HCS) and Texas Home
Living (TxHmL) Providers). In a final order, the trial court
granted the HHSC's plea to the jurisdiction and, to the
extent necessary, granted the HHSC's motion for summary
judgment. For the following reasons, we affirm the trial
court's order granting the HHSC's plea to the
provides long-term care for persons with mental retardation
or related conditions under a contract with the State of
Texas in the HCS program funded by Medicaid. As an HCS
provider, Appellant is required to file annual cost reports
with the HHSC. See id. In 2010, the HHSC issued
Appellant a letter stating that it intended to recoup $80,
528 from Appellant based on adjustments the HHSC made to the
undisputed actual costs incurred and reported on
Appellant's 2006 cost report. See id. (j)(5)
(outlining cost adjustment and recoupment procedures).
Appellant requested informal review of the HHSC's
recoupment decision, specifically requesting review of
particular "lines" of its 2006 cost report. See
id. §§ 355.110(c) (2019) (Texas Health &
Human Servs. Comm'n, Informal Reviews and Formal
Appeals), 355.722(b) ("A provider who disagrees with
HHSC's exclusion or adjustment of items in cost reports
may request an informal review and, when appropriate, an
administrative hearing as specified in § 355.110 of this
title (relating to Informal Reviews and Formal
Appeals)."). After the informal review, the HHSC reduced
its recoupment demand to $63, 611. See id. §
355.722(j)(5) (requiring HHSC to notify providers of any
adjustments to recoupment amount after informal review of
initial recoupment determination).
HHSC attached an appendix to its Informal Review Decision
outlining the various lines affected by its adjustment to the
recoupment amount. Appellant requested a formal hearing
before an administrative law judge (ALJ) with the HHSC's
Appeals Division, taking issue with several lines of the cost
report that the HHSC had adjusted in its informal review.
See id. § 355.110(d) (providing that
"interested party who disagrees with the results of an
informal review . . . may file a formal appeal").
conducted the formal hearing on September 14, 2012, but
announced no rendition of judgment on the merits in open
court. On May 24, 2013, the ALJ signed a "Final
Order." The Final Order made the following relevant
Findings of Facts and Conclusions of Law:
Finding of Fact 7. On November 17, 2010, HHSC notified
Appellant that it had completed the Informal Review and
reduced the amount that it would recoup to $63, 611.00.
Finding of Fact 11. At the hearing Appellant and HHSC
stipulated that only line 181 remained at issue.
Finding of Fact 12. Line 181 represented Staff Expenses -
Case Managers Salaries and Wages. A portion of the salaries
and wages reported on line 181 were for related party wages.
Finding of Fact 17. The allowable non-related party hourly
wage rate for employees who work as Case Managers was $16.99
per hour in 2006.
Finding of Fact 18. Appellant showed that non-related parties
provided 40% or more of the hours worked as Case Managers,
thereby allowing Appellant to calculate the related
party's reportable hours at the rate of $16.99.
Finding of Fact 19. HHSC adjusted line 181 of Appellant's
2006 Cost Report to reflect the allowable rate of pay for