In the Matter of the SIRS Appeal of Community Involvement Programs-FSE.

This opinion is nonprecedential except as provided by
Minn. R. Civ. App. P. 136.01, subd. 1(c).

STATE OF MINNESOTA
IN COURT OF APPEALS
A20-1047

In the Matter of the SIRS Appeal of Community Involvement Programs-FSE.

Filed April 12, 2021
Affirmed
Florey, Judge

Office of Administrative Hearings
File No. 60-1800-35962

Samuel D. Orbovich, Pari I. McGarraugh, Fredrikson & Byron, PA, Minneapolis,
Minnesota (for relator Community Involvement Programs-FSE)

Keith Ellison, Attorney General, Molly Beckius, Assistant Attorney General, St. Paul,
Minnesota (for respondent Minnesota Department of Human Services)

Considered and decided by Florey, Presiding Judge; Frisch, Judge; and John Smith,
Judge.*
NONPRECEDENTIAL OPINION
FLOREY, Judge
Relator, a provider of personal -care-assistant (PCA) services, challenges a final
decision by an administrative-law judge (ALJ) determining that the Minnesota Department
of Human Services (DHS) was entitled to recover from relator $103,897.95 paid to relator
for services provided by a PCA who had not been reinstated as an approved provider after
a two -year suspension. The ALJ’s recommendation became the final agency decision

* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.

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based on the commissioner’s failure to act pursuant to Minn. Stat. § 14.62, subd. 2a (2020).
Relator asserts that the ALJ (1) erred in interpreting Minn. Stat. § 256B.064, subd. 1c
(2020), and Minn. R. 9505.2235 (2019) to allow recovery of funds even though the PCA’s
suspension had expired and (2) erred by interpreting the language of Minn. R. 9505.2235,
subp. 3, to require recovery when relator did not know and did not have reason to know of
the PCA’s expired suspension. Relator also argues that the commissioner of human
services erred by failing to exercise discretion as to the recovery . Because we determine
the ALJ’s recommen dation and the commissioner’s failure to exercise discretion were
consistent with the applicable law, we affirm.
FACTS
Community Involvement Partners (CIP or relator) appeals the summary disposition
in favor of respondent DHS. CIP is a PCA-provider agency that supplies or assists with
home- and community-based services in the Consumer Directed Community Support
(CDCS) program. The CDCS program enables certain waivered recipients to receive PCA
services. K.W. was a PCA who was affiliated with CIP.
In March 2009, respondent DHS suspended K.W. from the Minnesota Health Care
Program (MHCP) for two years, until March 28, 2011. In the letter of suspension, DHS
informed K.W. that she “may apply for reinstatement at the end of the two -year period.
However, reinstatement is not automatic. You must formally reapply.”
After her suspension ended but before she had been reinstated, K.W. applied to
provide services though the CDCS p rogram, using CIP as the fiscal -support entity (FSE),
the conduit throu gh which providers are paid for authorized services . CIP performed

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employee-related services, including submitting claims to DHS for PCA services provided
by K.W.1 CIP submitted K.W. for a background study through DHS’s Background Studies
Division. DHS completed the background study and informed CIP that K.W. was
approved to work. CIP also checked K.W.’s name against the Office of the Inspector
General’s exclusion list and confirmed that she did not appear on that list.
At the time K.W. was hired in 2012, DHS did not have a “public facing exclusion
list.” In 2013, DHS created a public -facing state exclusion list that identified people and
entities deemed ineligible, suspended, or terminated from the Minnesota Medical
Assistance program. K.W. did not appear on DHS’s state exclusion list until June 1, 2015.
On September 28, 2015, DHS again cleared K.W. to continue working after CIP
submitted an updated background-study request. K.W. continued working with CIP until
February 28, 2017.
In March 2016, DHS notified providers that background studies would include a
check of the state exclusion list both when the study was first submitted and later when
“rap-back” searches were performed. On August 1, 2019, the Minnesota Legislature
enacted a new statute req uiring vendors to check the state exclusion list “on a monthly
basis and document the date and time the exclusion list was checked and the name and title
of the person who checked the exclusion list.” Minn. Stat. § 256B.064, subd. 3 (2020).
On February 8, 2018, the Surveillance and Integrity Review Section (SIRS) of DHS
issued a notice of overpayment to CIP seeking reimbursement of $123,678.93 for services

1 It is uncontested that CIP never received a copy of K.W.’s suspension letter and had no
relationship with K.W. during the period of her suspension.

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provided by K.W. between January 1, 2014 , and February 28, 2017 , because she “was
excluded from providing services in the [MHCP].” CIP appealed, and the notice was later
withdrawn to allow for further investigation. On June 4, 2018, DHS issued an amended
notice of overpayment to CIP seeking reimbursement of $103,897.95 for services provided
by K.W. between January 1, 2014, and February 28, 2017.2 DHS noted the reason for the
amended notice was, again, that CIP submitted claims for services provided by K.W. “after
she had been suspended but before she had been reinstated.”
CIP appealed the amended n otice, and DHS initiated a contested-case proceeding.
On cross-motions for summary disposition, the ALJ recommended granting DHS’s motion,
finding that money paid to CIP for K.W.’s services was paid “in error” and was recoverable
because K.W. had not been reinstated to MHCP at the time she provided services. The
ALJ also determined that although CIP did not know and could not have known of K.W.’s
suspension, that fact only limited DHS’s ability to impose a sanction, not to seek monetary
recovery. The ALJ stated:
This is an incredibly harsh result. CIP did nothing wrong.
[K.W.’s] suspension had run its course prior to her being
affiliated with CIP. CIP twice submitted her name to [DHS]
for background studies. Each time [DHS] cleared her to work.
[DHS] did not establish its exclusion list until 2013 and
[K.W.’s] name did not even appear on the list until 2015. And
there was no obligation for an organization like CIP to even
check the exclusion list until August of 2019. When [K.W.]
applied for reinstatement [to the Minnesota Medical Assistance
program] in 2017, [DHS] granted her request. The record is

2 DHS limited the time period over which is sought to recover the alleged overpayment to
January 1, 2014 , even though K.W.’s affiliation with CIP began in 2012 beca use “there
was not online access to check the exclusion list until 2014.”

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clear, CIP did not know and had no reason to know that [K.W.]
had been suspended and not reinstated.

Nevertheless, the ALJ concluded:

Under the statutory scheme implemented by the Legislature
none of that matters. Monies were paid to [K.W.] in error. The
law allows DHS to recover those sums even if [CIP] was
blameless and the money was paid as a result of DHS mistakes.

The DHS commissioner took no action in response to the ALJ recommendation, and
the recommendation became the final decision.
This appeal follows.

DECISION
Standard of Review

“Summary disposition is the administrative equivalent of summary judgment. ”
Pietsch v. Min n. Bd. of Chiropractic Exam’ rs, 683 N.W.2d 303, 306 (Minn. 2004). We
review a summary-judgment award to determine whether there are any genuine issues of
material fact and whether there was an error in applying the law to the facts. Jorgensen v.
Knutson, 662 N.W.2d 893, 897 (Minn. 2003). When summary judgment is granted after
applying the law to undisputed facts, the legal conclusion is reviewed de novo. Lefto v.
Hoggsbreath Enters., Inc., 581 N.W.2d 855, 856 (Minn. 1998).
Agency decisions are presumptive ly valid, and “deference should be shown by
[appellate] courts to the agencies’ expertise and their special knowledge in the field of their
technical training, education and experience.” Reserve Mining Co. v. Herbst, 256 N.W.2d
808, 824 (Minn. 1977). Upo n review of an agency decision, we must exercise judicial
restraint, lest we substitute our judgment for that of the agency. In re Denial of Eller Media

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Co.’s Applications for Outdoor Advert. Device Permits , 664 N.W.2d 1, 7 (Minn. 2003);
See In re Minn. Power’s Transfer of M.L. Hibbard Units 3 & 4 Boilers , 399 N.W.2d 147,
149 (Minn. App. 1987) (holding that “[a] reviewing court must not substitute its judgment
on a question the agency is authorized to decide”).
“If an administrative agency engages in re asoned decision making, the court will
affirm, even though it may have reached a different conclusion.” Cable Commc’ns Bd. v.
Nor-West Cable Commc’ns P’ship, 356 N.W.2d 658, 669 (Minn. 1984). We review de
novo errors of law that arise when an agency decision is based on the meaning of words in
a statute. See St. Otto’ s Home v. Minn. Dept. of Human Servs ., 437 N.W.2d 35, 39 -40
(Minn. 1989).”
I. The ALJ did not err by finding that DHS could recover monies paid to K.W.

CIP argues that the ALJ erred by determining that DHS may recover money paid to
K.W. through CIP because K.W.’s suspension expired prior to her affiliation with CIP. In
response, DHS argues that the ALJ correctly determined that it can recover the money
because DHS paid for services performed by K.W., who was ineligible. We affirm the
ALJ’s decision because it correctly applies the relevant statute and rule.
Minn. Stat. § 256B.064 , subd. 1c(a), provides that DHS “may obtain monetary
recovery from a vendor wh o has been improperly paid . . . as a result of a vendor or
department error , regardless of whether the error was intentional.” Under Minn. R.
9505.2235, subp. 2:
A vendor who is under suspension or terminated from
participation is eligible to apply for reinstatement as a
provider or vendor at the end of the period of suspension or

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when the basis for termination no longer exists. The
department shall review a vendor’s application to determine
whether the vendor is qualified to participate as specified by
the participation requirements.

Under Minn. R. 9505.2235 subp. 3:

A provider shall not submit a claim for a health service under
a program provided by a vendor who is under suspension or
terminated from participation unless the health service was
provided before the vendor’s suspension or termination. If a
provider receives payment under a program for a health service
provided by a vendor after the vendor’s suspension or
termination from participation, the department shall recover
the amount of the payment and may impose administrative
sanctions against the provider if the commissioner determines
that the provider knew or had reason to know of the suspension
or termination.

CIP argues that
although DHS may have erred by failing to identify [ K.W.’s]
expired suspension when it twice cleared her to work under the
background study law and it may have erred when it failed to
place her name on the state exclusion lis t, the agency did not
commit an “error” triggering a monetary recovery within the
meaning of Minn. Stat. § 256B.064, subd. 1c. This is because
CIP was never “improperly paid.”

In support of this argument, CIP contends that Minn. R. 9505.2235 contemplate s
two types of vendors: those who are “under suspension” and those who “apply for
reinstatement as a provider or vendor at the end of the period of suspension or when the
basis for termination no longer exists.” CIP thus argues that a plain reading of Min n. R.
9505.2235 “shows that the monetary recovery provision in subparagraph 3 only applies to
individuals ‘under suspension,’” and because K.W.’s suspension had expired before she
became affiliated with CIP, she could no longer be considered under suspension.

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Therefore, CIP concludes “there is no relevant ‘error’ here for SIRS to correct under the
authority granted by Minn. Stat. § 256B.064, subd. 1c.”
The ALJ determined that while it was true that K.W.’s suspension period had ended
before she was affiliated with CIP, it was also true that K.W. had not been reinstated, which
was required for her to be eligible to participate in MHCP. K.W. was required to apply to
DHS for reinstatement, and DHS “needed to make an independent [judgment] as to
whether [K.W.] was qualified to participate in the program.” See Minn. R. 9505.2235,
subp. 2. We agree.
The statutory language at issue here is clear: DHS was authorized to recover the
funds paid in error to K.W., regardless of whether the error was intention al. See Minn.
Stat. § 256B.064, subd. 1c(a). When K.W. was suspended from participating in MHCP,
DHS informed her that she “may apply for reinstatement at the end of the two-year period.
However, reinstatement is not automatic. You must formally reapply.” K.W. did not apply
for reinstatement and was therefore ineligible to receive funds for the duration of her
employ with CIP. See Minn. R. 9505.2232, subp. 2. Because K.W. was ineligible to
receive funds, the monies DHS paid to CIP for her services were paid in error. Therefore,
the ALJ did not err in determining that K.W. was “improperly paid” as a result of an
“error,” and we affirm the ALJ’s recommendation allowing DHS to recover those monies.

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II. The ALJ did not err in determin ing that DHS was entitled to recover despite
CIP’s lack of knowledge that K.W. had not been reinstated .

CIP argues that the “[r]ecommendation must be reversed because it improperly
disregards the undisputed facts demonstrating that CIP did not know, and did not have
reason to know, that [K.W.] has been suspended for a two-year period beginning more than
three y ears before her affiliation with CIP.” Specifically, CIP contends that Minn. R.
9505.2235, subp. 3, requires knowledge of K.W.’s ineligibility in order for DHS to recover.
While we are sympathetic to this argument, we affirm the ALJ’s recommendation that DHS
can recover despite CIP’s lack of knowledge because it correctly applie d the language of
the applicable rule.
The ALJ determined that CIP misinterpreted Minn. R. 9505.2235, subp. 3 , by
arguing that the law allows DHS to collect only if it can establish CIP knew or should have
known that K.W. had been suspended. Rather, the ALJ determined that the rule should be
interpreted as containing two independent clauses as follows: first, “if a provider receives
payment under a program for health services provided by a vendor after the vendor’s
suspension or termination from participation, [DHS] shall recover the amount of the
payment;” and second, DHS “may impose administrative sanctions against the provider if
the commissioner determines that the provider knew or had reason to know of the
suspension or termination.” The first clause does not condition recovery on whether the
provider knew or should have known o f the vendor’s suspension. However, the second
clause contains a modifier that conditions the imposition of sanctions on whether the
provider “knew or had reason to know of the suspension.” Therefore, the ALJ concluded

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that under the plain language of th e statute “‘the knew or had reason to know’ provision
applies to the imposition of administrative sanctions,” but “not to the recovery of money
paid.”
We agree. The ALJ’s interpretation of the statute; namely, that the “knew or should
have known” provision conditions only DHS’s ability to impose sanctions, not its ability
to recover payment, is consistent with the plain language of Minn. Stat. § 256B.064, subd.
1c(a). Based on this plain reading, because K.W. received payment after she was
suspended and before she applied to DHS to be reinstated, DHS can recover the amount of
the payment even though CIP did not know or have reason to know about K.W.’s failure
to be reinstated.
Furthermore, even if we were to conclude that the Minn. R. 9505.2235 is ambiguous
because it is unclear whether the “knew or should have known” provision applies to DHS’s
ability to recover monies paid in error, this interpretation conflicts with Minn. Sta t.
§ 256B.064, subd. 1c(a), which states that “whether the error was intentiona l” is
inconsequential to DHS’s ability to obtain monetary recovery from a vendor who has been
improperly paid. To construe the rule to deny recovery unless knowledge can be proved
would effectively limit the broad authority given to DHS by the statute to recover
improperly paid monies “regardless of whether the error was intentional.” See Minn. Stat.
§ 256B.064, subd. 1c(a). The ALJ determined that
The terms of Minn. Stat. § 256B.064, subd 1c and Minn. R.
9505.2235, subp. 3 may easily be read to give e ffect to both.
Minn. Stat. § 256B.064, subd 1c allows [DHS] to recover
money paid in error. Minn. R. 9505.2235, subp. 3 requires the
[DHS] to recover money paid to a vendor after suspension and

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permits the imposition of administrative sanctions if the
provider knew or had reason to know of the suspension. The
statute is broader than the rule, covering any monies paid in
error, while the rule addresses situations regarding monies paid
while a vendor was suspended. The terms of Minn. Stat. §
256B.064, subd 1c and Minn. R. 9505.2235, subp. 3 are not in
conflict and are, in fact, complementary.

It is well settled that an administrative rule cannot contradict or override a statute.
See Billon v. Comm’r of Rev. , 827 N.W.2d 773, 781 (Minn. 2013) (stating that whe n an
applicable statute and administrative rule conflict, the statu te prevails). Also, this court
does not interpret laws in a way that renders other statutes meaningless or irreconcilable.
See Village Lofts at St. Anthony Falls Ass’n v. Housing Partners III-Lofts, LLC , 937
N.W.2d 430, 439 (Minn. 2020) (citing Mi nn. Stat. § 645.26, subd. 1 (2020 )). For the
foregoing reasons, we conclude that the ALJ did not err in concluding that DHS was
required to recover under Minn. R. 9505.2235.
CIP next argues that the ALJ’s recommendation impermissibly seeks to enforce a
requirement to check the state exclusions list, even though no such requirement was in
existence during the relevant time period. The ALJ determined that “there was no
obligation for an organizatio n like CIP to check the exclusion list until August of 2019,”
when Minn. Stat. § 256B.064, subd. 3 , was adopted by the Minnesota Legislature. We
agree with the ALJ, but DHS’s ability to recover is based on the fact that the money paid
to K.W. was paid in error, not on the fact that CIP failed to check the state exclusions list.
Finally, CIP argues that the ALJ’s decision must be reversed because the ALJ
adopted a strict-liability standard that is inconsistent with DHS’s authority to recover under
Minn. R. 9505.2235, citing St. Otto’s Home, 437 N.W.2d at 43, 45 , in support of this

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contention. In that case, the Minnesota Supreme Court determined that DHS’s
interpretation of an amended administrative rule was unreasonable in light of its past
interpretation of similar language in a previous version of the rule and because DHS’s
interpretation contradicted the plain language of the rule. CIP argues that DHS has again
put forth a “new and contrary” interpretation of an administrative rule , but provides no
authority for its assertion that DHS has changed its own interpretation of Minn. R.
9505.2235.
The ALJ observed that this is “an incredibly harsh result.” The record not only
demonstrates that CIP did not know that K.W. had been suspended for a two -year period
before her affiliation with CIP, but also demonstrates that CIP did nothing wrong. CIP
took reasonable steps to comply with the law and to determine K.W.’s eligibility by
submitting her name to DHS for background studies. We also highlight that DHS twice
cleared K.W. to provide services, did not establish its exclusion list until 2013, and , even
more troubling, K.W.’s name did not appear on that list until 2015. Adding to the
“harshness” of this result is the fac t that there was no requirement for CIP to check the
exclusion list until August 2019 , when the Minnesota Legislature added Minn.
Stat. § 256B.064 subd. 3(d). 2019 Minn. Laws ch. 9, art. 2, § 114, at 1602-1603. Based
on these undisputed facts, we agree with the ALJ that to grant summary disposition to DHS
is “incredibly harsh;” nevertheless, the law supports this result. See County of Freeborn v.
Bryson, 294 N.W.2d 851, 853 (Minn. 1980) (“Although we are sympathetic to appellants’
position, we are bound by the statutory language ” [ and] “arguments for change[s to
statutory provisions] must be directed to the legislature, not to the courts.”).

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III. The commissioner did not err by failing to issue a final order.

CIP argues that the commissioner “amplified” the ALJ’s misreading of the statute
and committed reversible error “by refusing to exercise any discretion at all as evidenced
by her refusal to either adopt or reject the [r]ecommendation.” While we are sympathetic
to the CIP’s position, the commissioner did not err based on the applicable law.
An appellate court may reverse or modify an
administrative decision if substantial rights of the petitioners
have been prejudiced by administrative findings, inferences,
conclusions or decisions that are unsupported by substantial
evidence in view of the entire record, or arbitrary and
capricious, but the court must also recognize the need for
exercising judicial restraint and for restricting judicial
functions to a narrow area of responsibility lest [the court]
substitute its judgment for that of the agency.

In re Excess Surplus Status of Blue Cross & Blue Shield of Minn. , 624 N.W.2d 264, 277
(Minn. 2001) (quotation and citation omitted). When there is room for two opi nions on
the matter, the action is not arbitrary and capricious, even though the court may believe an
erroneous decision was reached. Brown v. Wells, 181 N.W.2d 708, 711 (1970).
Under Minn. Stat. § 14.62, subd. 2a, “[u]nless otherwise provided by law, the report
or order of the administrative law judge constitutes the final decision in the case unless the
agency modifies or rejects it . . . within 90 days after the record of the proceeding closes.”
Here, the commissioner did not issue a final order, but a designee notified the ALJ and the
parties that the recommendation would constitute the final order of the agency pursuant to
Minn. Stat. § 14.62, subd. 2a. Nothing in the applicable statutes or case law mandates th e
commissioner review the ALJ’s recommendation and suggest modifications, nor does the
record demonstrate that the commissioner acted arbitrarily or capriciously.

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Notwithstanding the commissioner’s compliance with the law , we note that the
commissioner co uld have amended the order, acting within her discretionary power, to
soften the “extremely harsh result” to CIP. See Minn. Stat. § 256B.064, subd. 1c.
However, we have no choice but to exercise judicial restraint and determine that the
commissioner did not err by failing to issue a final order on the contested matter and
allowing the ALJ’s recommendation to become the final agency decision . See County of
Freeborn, 294 N.W.2d at 853; see also Brown, 181 N.W.2d at 711.
IV. Relator did not raise an argument for estoppel.

DHS argues that CIP implicitly raised an estoppel argument as a defense. However,
the record does not support DHS’s contention that CIP raised an estoppel claim either in
the contested-case proceeding or on appeal and, therefore, we need not address it here. See
Thiele v. Stich , 425 N.W.2d 580, 582 (Minn. 1988) (explaining that appellate courts
generally will not consider new issues on appeal).
Affirmed.