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SSI Medical Services, Inc. v. State Dept. of Human Services

November 20, 1996

SSI MEDICAL SERVICES, INC., APPELLANT-RESPONDENT,
v.
STATE OF NEW JERSEY, DEPARTMENT OF HUMAN SERVICES, DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES, RESPONDENT-APPELLANT.



On appeal from the Superior Court, Appellate Division, whose opinion is reported at 284 N.J. Super. 184 (1995).

Chief Justice Poritz and Justices Pollock, O'hern, Garibaldi, Stein and Coleman join in Justice HANDLER's opinion.

The opinion of the court was delivered by: Handler

SYLLABUS

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

SSI MEDICAL SERVICES, INC. V. STATE OF NEW JERSEY, DEPARTMENT OF HUMAN SERVICES, DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES (A-10-96)

Argued September 9, 1996 -- Decided November 20, 1996

HANDLER, J., writing for a unanimous Court.

In this appeal, the Court addresses the standard of proof required to demonstrate whether reimbursement claims submitted by a medical provider under the Medicaid program were timely filed and the sufficiency of the evidence under that standard.

New Jersey is a participant in the Medicaid program, which is administered by the Division of Medical and Health Services ("DMAHS"). Under the program, medical providers are reimbursed for treatment or equipment furnished to eligible individuals from the New Jersey Medicaid Program fund.

SSI Medical Services, Inc. ("SSI"), a provider of medical equipment, filed a notice of appeal with the Office of Administrative Law in response to the denial of payment on disputed claims by the State's fiscal agent, Unisys. At the hearing before the Chief Administrative Law Judge ("CALJ"), SSI claimed that it mailed the reimbursement forms within the statutorily prescribed period. SSI submitted into evidence photocopies of employee affidavits attesting to SSI's standard procedure for mailing of Medicaid claims. The State submitted its computer printout of claims received during a one-year period showing no record of timely receipt of SSI's claims.

The CALJ issued a written preliminary decision recommending payment on one-half of the claims, finding that the evidence supported the Conclusion that the claims were completed and mailed in accordance with SSI's procedure and custom. The CALJ further ruled that SSI could rely only on the presumption of proper mailing and receipt for a reasonable period of time. Because Medicaid regulations required the submission of claims within twelve months of the provision of services and allowed inquiries into unsettled claims no later than ninety days after the expiration of the twelve-month period, the CALJ recommended payment only of those claims for which SSI had produced a copy of resubmitted billing mailed either within the twelve-month period or within the additional ninety-day inquiry period.

The CALJ's decision was reviewed by the Acting Director of DMAHS, who disallowed payment of both those claims for which there was no evidence of resubmission and those for which there was proof of resubmission. The Acting Director rejected payment of even those claims for which there was evidence of resubmission because SSI had failed to meet the "heightened standard of proof" historically required by the Division to demonstrate proof of mailing. SSI appealed the Acting Director's decision.

The Appellate Division disapproved of the standard of proof required by the Acting Director to demonstrate proof of mailing, finding that it was higher than the traditional preponderance of the evidence standard generally applied in agency matters. The court held that proof of mailing could be established by evidence of habit or routine practice and that the evidence presented by SSI fully supported the CALJ's Conclusion that the resubmitted claims were properly and duly mailed. The Dissent concluded that the Acting Director had not required a higher standard of proof than that ordinarily required of any litigant, considering the applicable standard of proof for demonstrating proper mailing to require evidence that the office custom was actually followed in a particular case. The Dissent further noted that, even if the law were otherwise, it would still defer to the standard applied by the Acting Director as the agency director charged with interpreting and administering the law governing the agency.

Based on the Dissent, the State filed an appeal as of right to the Supreme Court.

HELD: In the absence of any administrative rule or regulation to the contrary, the traditional preponderance of the evidence standard applies to administrative agency matters. In order to raise a presumption of mailing and receipt and meet the preponderance of the evidence standard, evidence of office custom requires other corroboration that the custom was followed in a particular instance.

1. Ordinarily, courts have a limited role in reviewing the decision of an administrative agency, reversing only if the agency decision is arbitrary, capricious or unreasonable. However an agency has no expertise to decide purely legal issues, such as the standard of proof required to prove a particular claim. (pp. 6-7)

2. New Jersey cases have recognized a presumption that mail properly addressed, stamped, and posted was received by the party ...


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