MCO Rebuffs ALJ Order That Expressly States “Binding on [MCO];” Don’t Fret; This is Not the End!

Can an Managed Care Organization (MCO) refuse to comply with a Judge’s Order? Are MCOs above such Orders? Are MCOs, which handle federal and state Medicaid funds, beyond the supervision or reach of the very entities of which contract them? If Division of Medical Assistance (DMA) contracts out to a private company, does that allow DMA to say, “Hey, if you have a complaint, take it to the private company. Even though we supposedly manage the North Carolina Medicaid system, since we gave authority to a private company, we are no longer liable for the Medicaid’s system’s problems?”

This is the question that I am encountering. My answer? Heck No! (I didn’t want to use an explicative). DMA manages Medicaid. Period. Any entity acting on DMA’s behalf is an agent of the State. Until proven otherwise (and maybe even then), I refuse to accept lack of accountability between DMA and the MCOs.

Yet, a couple weeks ago, we were successful in arguing to an Administrative Law Judge (ALJ) that, by contract, an MCO acted as an agent of the DMA when the MCO rescinded or refused to offer a health care provider a contract with the MCO to provide Medicaid services to Medicaid recipients.

In fact, the Order explicitly states (I am removing the MCO’s name), “[The MCO] contracts with the Respondent’s Division of Medical Assistance (DMA) to act on Respondent’s behalf as a Medicaid managed care organization (“MCO”) for mental health, intellectual/developmental disability and substance abuse services in Durham county and other surrounding counties.”

Can it get any clearer? Remember when John Hancock signed the Declaration of Independence large enough for the King to read his signature without his glasses? Maybe the Judge, when drafting this Order, should have used larger font.

The Judge explicitly Ordered that the MCO acts as an agent of DMA. The Judge explicitly Ordered this in a signed, executed Preliminary Injunction Order.

Thus, I forwarded this signed and executed Order to the MCO.  This is what I received (in an email with all names removed, except mine:) ):

“Knicole:  Thank you for your email.  [MCO] was not a party to this litigation and the Office of Administrative Hearings does not have the authority (or jurisdiction) to direct us to enroll a provider into our Network.”

What? Double-take. Jaw dropping.

Ok, well, I disagree. Anyone else?

I know the Judge agrees with me. The Order also states, “Such STAY is binding on Respondent’s officers, agents, servants, employees, and attorneys pending on the decision of this pending litigation, including [the MCOs] refusal to contract with Petitioner to provide Medicaid funded services through [the MCO].”

Don’t worry, we are planning to pursue the MCOs’ email refusing to abide the Order. 🙂

But, meanwhile, this whole argument of mine (the agency relationship between DMA and the MCOs) is at issue in the General Assembly in House Bill 320.  House Bill 320 states, in part, “Jurisdiction of OAH. – The Office of Administrative Hearings does not have jurisdiction over a dispute concerning a grievance or managed care action, except as expressly set forth in this Chapter.”

First, this House Bill has NOT been passed into law. (Which obviously begets the logical response: If a statute is needed to determine that the MCOs are NOT agents of DMA, obviously, as of now, MCOs are agents of DMA).

If this House Bill is passed, the fact that this proposed statute states that OAH does not have jurisdiction over the MCOs, the statute is indirectly stating that the MCOs are NOT agents of DMA.  (Because OAH only has jurisdiction over state agencies and its agents).

Guess who proposed this statute?


Biting your nails?

Holding your breath?

An MCO.  Shocker.


Posted on March 27, 2013, in Division of Medical Assistance, Health Care Providers and Services, Injunctions, Jurisdiction, Legal Analysis, Legislation, MCO, Medicaid, Medicaid Contracts, Mental Health, Mental Illness, NC DHHS, North Carolina, OAH, Provider Medicaid Contracts and tagged , , , , , , . Bookmark the permalink. 1 Comment.

  1. Conflict of interest, which is not uncommon in today’s political influence of corporate gain, the federal government has to answer to Congress and its taxpayers, the State has to answer to the the Federal government and all taxpayers. So why should a privately owned company, who already has a conflict of interest on the best interest of monies allocated to any terms, not be controlled by the entity or entities who hired them. There’s got to be some kind of contract that states who is in control or what entity is supervising whom. Please, please tell me that a privately-owned company hired by the state does NOT have the power to NOT answer to the state, if so, this on any terms, is not acceptable in our society.

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