Snelling v. South Dakota Department of Social Services

#25337-a-DG

2010 SD 24

IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA

* * * *

KYLA SNELLING, Appellant,

v.

SOUTH DAKOTA DEPARTMENT OF
SOCIAL SERVICES, SOUTH DAKOTA
DEPARTMENT OF HUMAN SERVICES, Appellees.

* * * *

APPEAL FROM THE CIRCUIT COURT OF
THE SECOND JUDICIAL CIRCUIT
MINNEHAHA COUNTY, SOUTH DAKOTA

* * * *

HONORABLE KATHLEEN K. CALDWELL
Judge

* * * *

DOMINIC M. SMITH
South Dakota Advocacy Services
Sioux Falls, South Dakota Attorney for appellant.

MARTY J. JACKLEY
Attorney General

LAURIE M. BAUER
Special Assistant Attorney General
Department of Human Services
Pierre, South Dakota Attorneys for appellees.

* * * *

CONSIDERED ON BRIEFS
ON JANUARY 11, 2010

OPINION FILED 03/03/10
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GILBERTSON, Chief Justice

[¶1.] Kyla Snelling (Kyla) appeals the circuit court’s decision and order

affirming the Administrative Law Judge’s (ALJ) determination that Kyla was not

eligible for services under a federally funded Medicaid waiver program for in-

home/community-based services for the mentally retarded. 1 Kyla also appeals the

circuit court’s decision affirming the ALJ’s denial of reimbursement for a functional

evaluation. We affirm.

FACTS

[¶2.] Kyla is a sixteen-year-old young woman with Spinal Atrophy Type II, a

degenerative muscular disease. 2 Unable to walk or stand, she uses an electric

1. The distinction between a mental disability caused by a condition other than
“mental retardation” and an individual who is “mentally retarded” is crucial
in the federal statutes and regulations at issue in this opinion. For that
reason, the term “mentally retarded,” as opposed to the more generally
accepted terms mentally challenged or mentally handicapped, is used in this
opinion.

2. According to the National Institutes of Health, Spinal Muscular Atrophy
(SMA) Type II, is a hereditary disease “that cause[s] weakness and wasting of
the voluntary muscles in the arms and legs of infants and children.” The
disorder is

caused by an abnormal or missing gene known as the survival
motor neuron gene (SMN1), which is responsible for the
production of a protein essential to motor neurons. Without this
protein, lower motor neurons in the spinal cord degenerate and
die. . . . Type II (also known as juvenile SMA, intermediate
SMA, or chronic SMA, has an onset between 6 and 18 months[)].
Legs tend to be more impaired than arms. Children with Type
II are usually able to sit without support if placed in position.
Some may be able to stand or walk with help.

(continued . . .)
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wheelchair. Kyla is unable to use her arms to transfer to and from her wheelchair.

She is also unable to bathe, dress her lower body, attend to her personal hygiene

needs, use the bathroom, prepare her meals, shop, clean her home, or do any

activities of daily living without help. Kyla is physically limited by her ability to lift

only small and light objects to and from her lap to a low countertop or table. She

has begun experiencing difficulty tipping her head back to drink and uses a straw to

compensate. Kyla can feed herself, but requires help cutting solid foods. Her

mother, who also cares for two other physically disabled children in the home,

provides all of Kyla’s care at home and transports her to all her activities. Her

mother either uses an electric lift to transfer Kyla, or lifts her manually. Kyla’s

mother is the sole caregiver except while Kyla is at school.

[¶3.] Kyla has an IQ of 109, well within the normal range, and attends

public high school in Sioux Falls with the help of an educational assistant. A Hoyer

lift is used to transfer Kyla at school. Kyla is considered bright, social, and able to

comport herself in school without any behavioral issues. Kyla is currently working

on obtaining a driver’s license; although she will require an adapted automobile

after she is licensed to drive.

[¶4.] Kyla receives Supplemental Social Security Income (SSI) and services

from a non-waiver family support program administered by the Department of

Social Services (DSS) through Volunteers of America and funded exclusively with

________________________
(. . . continued)
National Institutes of Health, National Institute of Neurological Disorders
and Stroke, http://www.ninds.nih.gov/disorders/sma/sma.htm (last visited
February 22, 2010).

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general state funds. The state-funded, non-waiver program is codified at SDCL

chapter 27B-2. Services through the state-funded non-waiver program are limited

to individuals with a developmental disability as defined at SDCL 27B-1-18, which

provides:

A developmental disability is any severe, chronic disability of a
person that:

(1) Is attributable to a mental or physical impairment or
combination of mental and physical impairments;

(2) Is manifested before the person attains age twenty-two;

(3) Is likely to continue indefinitely;

(4) Results in substantial functional limitations in three or
more of the following areas of major life activity: self-care,
receptive and expressive language, learning, mobility,
self-direction, capacity for independent living, and
economic self-sufficiency; and

(5) Reflects the person’s need for an array of generic services,
met through a system of individualized planning and
supports over an extended time, including those of a life-
long duration.

(Emphasis added).

[¶5.] A second family support program managed by DSS, administered

through a Medicaid waiver and funded with federal funds (Medicaid FS Waiver

program), is available to qualified South Dakota residents. The Medicaid FS

Waiver program is limited to individuals in need of and eligible for institutionalized

services in an Intermediate Care Facility for People with Mental Retardation

(ICF/MR) as provided by 42 CFR § 440.150, but who could remain in their homes or

in the community if services were available.

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[¶6.] The Code of Federal Regulations, Chapter 42, Section 440.150,

contains the eligibility requirements for services and institutionalization in an

ICF/MR, which also determine whether an individual may also qualify for the

Medicaid FS Waiver program. It provides:

(a) “ICF/MR services” means those items and services furnished
in an intermediate care facility for the mentally retarded if the
following conditions are met:

(1) The facility fully meets the requirements for a State license
to provide services that are above the level of room and board.

(2) The primary purpose of the ICF/MR is to furnish health or
rehabilitative services to persons with mental retardation or
persons with related conditions.

(3) The ICF/MR meets the standards specified in subpart I of
part 483 of this chapter.

(4) The recipient with mental retardation for whom payment is
requested is receiving active treatment, as specified in § 483.440
of this chapter.

(5) The ICF/MR has been certified to meet the requirements of
subpart C of part 442 of this chapter, as evidenced by a valid
agreement between the Medicaid agency and the facility for
furnishing ICF/MR services and making payments for these
services under the plan.

42 CFR § 440.150. The Medicaid FS Waiver program’s objective is to avoid placing

a qualified individual in an ICF/MR if necessary services are available in the

community. See 42 USC § 1396a(a)(10)(A)(ii)(VI); 42 CFR § 441.301(b)(1)(ii) and

(iii)(B); 42 CFR § 430.25(c)(2). An individual qualifies for placement in an ICF/MR

under 42 CFR § 435.1010, which defines “Persons with related conditions” as

follows:

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Persons with related conditions mean individuals who have a
severe, chronic disability that meets all of the following
conditions:

(a) It is attributable to--

(1) Cerebral palsy or epilepsy; or

(2) Any other condition, other than mental illness, found to be
closely related to mental retardation because this condition
results in impairment of general intellectual functioning or
adaptive behavior similar to that of mentally retarded persons,
and requires treatment or services similar to those required for
these persons.

(b) It is manifested before the person reaches age 22.

(c) It is likely to continue indefinitely.

(d) It results in substantial functional limitations in three or
more of the following areas of major life activity:

(1) Self-care.

(2) Understanding and use of language.

(3) Learning.

(4) Mobility.

(5) Self-direction.

(6) Capacity for independent living.

(Emphasis added).

[¶7.] South Dakota currently maintains one ICF/MR in Redfield, South

Dakota. Services focus on the individual needs of each resident in the areas of

“personal care, social interaction skills, behavioral impulse control, making

appropriate choices, domestic skills, etc. Depending upon the person, techniques

may be utilized to enhance sensory motor skills, responses to stimuli, orientation to

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one’s environment, etc. Vocational and educational training are also offered.” S.D.

Dep’t of Human Services, http://dhs.sd.gov/sddc/about.aspx (last visited February

22, 2010).

[¶8.] The Centers for Medicaid and Medicare approved South Dakota’s

participation in the Medicaid FS Waiver program for home and community based

services (HCBS). South Dakota Administrative Rules provide the qualifications for

participation in the Medicaid FS Waiver program and mirror the federal

requirements. An individual seeking to participate in the Medicaid FS Waiver

program must meet the requirements of ARSD 67:54:04:04, which provides:

In addition to qualifying under § 67:54:04:03, an individual must
meet the following requirements:

(1) Be developmentally disabled according to § 67:54:04:05;

(2) Be appropriate for HCBS placement according to §
67:54:04:06; and

(3) Be in need of and eligible for placement in an intermediate
care facility for the mentally retarded or the developmentally
disabled according to § 67:54:03:04.

An individual who has been denied social security or SSI
disability benefits based on a disability is ineligible for HCBS.

An individual may be eligible for the program if that person meets the requirements

of ARSD 67:54:04:04, and the requirements of ARSD 67:54:04:03, which provides:

HCBS may be available to an individual who meets one of the
following requirements:

(1) Is receiving AFDC, SSI, or a foster care maintenance
payment under Title IV-E of the Social Security Act; or

(2) Is aged, blind, or disabled and has an income less than 300
percent of the SSI standard benefit but is not eligible for SSI.

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The individual must also satisfy the requirements of ARSD 67:54:04:05, which

provides:

The provider shall maintain documentation signed by a
physician or psychologist which indicates that the individual is
developmentally disabled. An individual is considered
developmentally disabled if the individual meets all of the
following criteria:

(1) The individual has a severe, chronic disability attributable to
mental retardation, cerebral palsy, epilepsy, head injury, brain
disease, or autism or any other condition, other than mental
illness, closely related to mental retardation and requires
treatment or services similar to those required for the mentally
retarded. To be closely related to mental retardation, a
condition must cause impairment of general intellectual
functioning or adaptive behavior similar to that of mental
retardation;

(2) The disability manifested itself before the individual reached
age 22; and

(3) The disability is likely to continue indefinitely.

(Emphasis added). Finally, an individual qualified by virtue of having a

developmental disability as defined by ARSD 67:54:04:05 must need the types of

services offered in an ICF-MR by demonstrating a “substantial functional

limitation” in three or more of the functional areas listing in ARSD 67:54:03:04:

(1) Self-care—the daily activities enabling a person to meet basic
life needs for food, hygiene, and appearance;

(2) Receptive and expressive language—communication
involving verbal and nonverbal behavior that enables a person
to understand others and to express ideas and information to
others;

(3) Learning/general cognitive competence—the ability to
acquire new behaviors, perceptions, and information and to
apply the experiences to new situations;

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(4) Mobility—the ability to use fine or gross motor skills to move
from one place to another with or without mechanical aids;

(5) Self-direction—the management of one’s social and personal
life; the ability to make decisions affecting and protecting one's
self-interests;

(6) Capacity for independent living—based on age, the ability to
live without extraordinary assistance; and

(7) Economic self-sufficiency—the maintenance of financial
support.

[¶9.] On December 10, 2007, Kyla submitted her Medicaid FS Waiver

program application. DSS initially determined she was financially eligible for the

program under ARSD 67:54:04:03 due to her receipt of SSI. On January 22, 2008,

her application was submitted to the Division of Developmental Disabilities for

further review by the Utilization Review Team (URT) because Kyla’s IQ exceeded

seventy (70), the threshold for mental retardation or developmental deficiency. The

URT met and determined Kyla was not eligible for the program because she did not

meet the definition of “Persons with related conditions” in 42 CFR § 435.1010, in

that she was neither mentally retarded nor did she have a “related condition”

within the meaning of subsection (a)(2) as defined. It further determined that she

was not appropriate for placement at Redfield because she was not in need of the

same services as that facility’s population due to her normal intellectual abilities.

Kyla’s application was denied by DSS.

[¶10.] Kyla appealed the denial to an ALJ. Prior to the hearing before the

ALJ, a functional evaluation was performed by Joan Mutchler, who had worked as

Kyla’s occupational therapist since Kyla was three years old. That evaluation found

Kyla met four of the seven functional areas listed in ARSD 67:54:03:04. The

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functional evaluation was performed without prior approval from DSS, Division of

Developmental Disabilities.

[¶11.] On September 10, 2008, after a hearing on the matter, the ALJ issued

a Notice of Pending Decision and Pending Decision affirming DSS’s denial of Kyla’s

application. Kyla timely filed objections and a supporting brief. The ALJ then

issued its final decision denying Kyla’s request. The ALJ also denied payment for

Mutchler’s functional evaluation because prior approval for payment was not sought

by Kyla and the evaluation was not necessary to determine whether Kyla was

eligible for the program. The circuit court affirmed the ALJ’s decision.

[¶12.] Kyla appeals to this Court raising the following two issues:

1. Whether the circuit court erred in affirming the ALJ’s decision that
Kyla was ineligible for the Medicaid FS Waiver program.

2. Whether the circuit court erred in affirming the ALJ’s denial of
reimbursement for the functional evaluation.

STANDARD OF REVIEW

[¶13.] A review of an administrative agency’s decision requires this Court to

“give great weight to the findings made and inferences drawn by an agency on

questions of fact.” Tebben v. Gil Haugen Constr., Inc., 2007 SD 18, ¶15, 729 NW2d

166, 171. Only when an agency’s decision is “clearly erroneous in light of the entire

evidence in the record” we will reverse on appeal. Id. (citing Wells v. Howe Heating

& Plumbing, Inc., 2004 SD 37, ¶9, 677 NW2d 586, 590) (quoting SDCL 1-26-36)).

We examine de novo all questions of law, as well as documentary evidence

contained in the record. Id. Statutory interpretation is also a question of law

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reviewed under the de novo standard. Discover Bank v. Stanley, 2008 SD 111, ¶15,

757 NW2d 756, 761.

DECISION AND ANALYSIS

[¶14.] 1. Whether the circuit court erred in affirming the ALJ’s
decision that Kyla was ineligible for the Medicaid FS
Waiver program.

[¶15.] The circuit court found that because Spinal Atrophy Type II was

strictly a physical disability without any mental retarding effect, Kyla was

ineligible for the Medicaid FS Waiver program despite having substantial

functional limitations in four of the seven categories listed in 42 CFR § 435.1010. It

further found that because Kyla lacked a diagnosis that qualified as “a severe,

chronic disability attributable to mental retardation, cerebral palsy, epilepsy, head

injury, brain disease, or autism or any other condition, other than mental illness,

closely related to mental retardation,” as defined in ARSD 67:54:04:05 and 42 CFR

§ 435.1010 “Persons with related conditions,” DSS did not need to consider Kyla’s

functional limitations to determine her eligibility.

[¶16.] Kyla argues she qualifies for the waiver because her condition causes

impairment of adaptive behaviors similar to the deficits of the mentally

handicapped population. She argues her need for assistance with almost all

activities of daily living renders her at risk for institutionalization if her mother’s

care is no longer available. Kyla further argues she is qualified for the Medicaid FS

Waiver program because she has four of the seven substantial functional limitations

as listed in ARSD 67:54:03:04 and 42 CFR § 435.1010 “Persons with related

conditions” (d)(1)-(7). She also argues that the holding in Pacheco v. R.I. Dep’t of

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Mental Health, Retardation and Hosps, 1996 WL 936911 (RISuper), supports

expanding the eligibility for the Medicaid FS Waiver program beyond the diagnostic

approach of using the categories of mental retardation, cerebral palsy, autism,

epilepsy or other conditions closely related to mental retardation. DSS argues the

language of ARSD 67:54:04:05(1) and 42 CFR § 435.1010 “Persons with related

conditions” (a)(1)-(2) requires that an individual first meet the diagnostic

requirements before it may consider any functional limitation.

[¶17.] As we have previously stated:

The purpose of statutory construction is to discover the true
intention of the law which is to be ascertained primarily from
the language expressed in the statute. The intent of a statute is
determined from what the legislature said, rather than what the
courts think it should have said, and the court must confine
itself to the language used. Words and phrases in a statute
must be given their plain meaning and effect. When the
language in a statute is clear, certain and unambiguous, there is
no reason for construction, and the Court’s only function is to
declare the meaning of the statute as clearly expressed.

Discover Bank, 2008 SD 111, ¶15, 757 NW2d at 761.

[¶18.] A plain reading of the language in ARSD 67:54:04:05(1) and 42 CFR §

435.1010 “Persons with related conditions” (a)(1)-(2) shows that an applicant must

meet the diagnostic requirement of having “a severe, chronic disability attributable

to mental retardation, cerebral palsy, epilepsy, head injury, brain disease, or autism

or any other condition, other than mental illness, closely related to mental

retardation,” before any consideration is given to the applicant’s functional

limitations. The condition must also result in “impairment of general intellectual

functioning or adaptive behavior similar to that of mentally retarded persons.”

ARSD 67:54:04:05(1); 42 CFR § 435.1010 “Persons with related conditions” (a)(1)-

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(2). The diagnostic condition and resulting impairments must make placement in

an ICF/MR appropriate. ARSD 67:54:04:05(1); 42 CFR § 435.1010 “Persons with

related conditions” (a)(1)-(2).

[¶19.] An applicant must meet all the requirements in 42 CFR § 435.1010

“Persons with related conditions” subsections (a) through (d) to quality for the

program as evidenced by the lack of the disjunctive word “or” between the four

subsections. The same language and lack of a disjunctive connector exists between

subsections (1) through (3) in ARSD 67:54:04:05, which shows an individual must

first qualify as mentally retarded, or as having a condition closely related to mental

retardation, before any consideration is given to functional limitations.

[¶20.] The URT determined that Kyla was not an appropriate candidate for

placement at Redfield due to her intellectual functional capacity and IQ in the

normal range. The URT acknowledged that Kyla’s Spinal Muscular Atrophy Type

II made her unable to provide for her own care, limited her mobility and self-

direction, and capacity for independent living. However, the disease did not do so

by harming or retarding her intellect. Based on the record developed before the

ALJ, the circuit court found Kyla was able to determine her physical needs and how

best to care for them by applying her intellect and reasoning skills, unlike a

mentally retarded person. It also found Kyla was able to direct others on how to

best provide for her physical needs without the programming and services available

at Redfield, including social interaction skills, behavioral impulse control,

enhancement of sensory motor skills, responses to stimuli, and orientation to

environment. Based on the determination that Kyla was not appropriate for

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placement in South Dakota’s only ICR/MR institution, she was found ineligible for

the Medicaid FS Waiver program because she was not at risk for

institutionalization at that facility. We can find no error in the findings of fact

regarding the lack of any connection between Kyla’s physical limitations and

mental retardation or a closely related condition.

[¶21.] Kyla’s reliance on Pacheco is misplaced. In that unpublished opinion,

the Superior Court of Rhode Island held that Rhode Island’s state-funded non-

waiver program was available to Pacheco despite the lack of a diagnosis of mental

retardation. 1996 WL 936911, at *5. It did so after determining that the state-

funded non-waiver program applied equally to mentally retarded individuals and

non-mentally retarded individuals with chronic disabilities. Id. (holding Pacheco

was ultimately ineligible because although he was developmentally disabled, he did

not meet the requirement of having at least three functional limitations required by

the relevant statute). That case dealt with a program similar to the state-funded

non-waiver program codified at SDCL chapter 27B-2, for which Kyla was already

receiving benefits and was not at issue in this appeal. See RI Gen Laws § 40.1-21-

4.3 (defining “developmentally disabled adults to include both mentally retarded

individuals and those with a severe chronic mental or physical disability”); § 40.1-

21-10 (codifying state appropriations for services for developmentally disabled

adults).

[¶22.] The circuit court did not err when it upheld the ALJ’s determination

that Kyla was not qualified for the Medicaid FS Waiver program because she failed

to meet the first qualification in that she was not mentally retarded nor did she

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have a condition closely related to mental retardation. While Kyla’s physical

limitations are similar to those of some individuals with qualifying medical

conditions, Kyla’s cognitive abilities and IQ place her beyond the population for

which the Medicaid FS Waiver program was intended as she is not appropriate for

institutionalization at the Redfield program. 3

[¶23.] 2. Whether the circuit court erred in affirming the ALJ’s
denial of reimbursement for the functional evaluation.

[¶24.] The ALJ found Mutchler did not have a Medicaid provider agreement

and that the South Dakota medical assistance program was authorized

to make payments only to providers with such an agreement with DSS. It also

found Mutchler’s evaluation was not necessary to determine whether Kyla was

qualified for the program under ARSD 67:54:04:05 because she was neither

mentally retarded nor did she have a condition closely related to mental

retardation. The ALJ denied payment. The circuit court affirmed the ALJ’s

decision.

[¶25.] Kyla argues the functional evaluation performed by Mutchler prior to

the hearing before the ALJ was necessary to her case, and therefore the circuit

court erred when it upheld the ALJ’s denial of payment. DSS argues that because

Kyla did not meet the first criteria under the program, she was neither mentally

3. Kyla’s argument that she is at risk for institutionalization if her mother’s
care is no longer available is valid. However, the type of placement
appropriate for Kyla would not be at Redfield according to members of the
URT. Kyla appears to be more appropriate for placement in a nursing home,
or community-based facility for individuals with spinal cord injuries rather
than a facility for the mentally retarded.

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retarded nor did she have a condition closely related to mental retardation, the

functional evaluation was not necessary. DSS further argues Kyla’s failure to

obtain prior payment approval also supports denying reimbursement.

[¶26.] ARSD 67:17:02:23 (2007) (repealed 25 SDR 166, effective December 24,

2008), provided:

When a hearing involves medical issues, a medical assessment
by a general practitioner or a specialist in the area of the alleged
disability or incapacity other than that of the person involved in
making the original medical examination shall be authorized if
the hearing examiner considers it necessary and shall be made
part of the record. If the additional medical assessment
recommends referral for additional examination or testing, it
shall be authorized and paid for by DSS.

The ALJ determined the evaluation was not necessary to determine whether Kyla

was qualified for the program. It also determined the assessment was not

preauthorized as required. Given our holding in Issue 1, Mutchler’s evaluation was

not necessary to determine Kyla’s eligibility. Failure to obtain preapproval from

DSS for an unnecessary evaluation is fatal to this issue on appeal.

[¶27.] Affirmed.

[¶28.] KONENKAMP, ZINTER, MEIERHENRY, and SEVERSON, Justices,

concur.

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