In the Matter of the SIRS Appeal by Professional PCA Services LLC.

This opinion is nonprecedential except as provided by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
A22-0848

In the Matter of the SIRS Appeal by Professional PCA Services LLC.

Filed April 24, 2023
Affirmed
Larson, Judge

Minnesota Department of Human Services
File No. 37033

Daniel L. M. Kennedy, Kennedy & Cain, PLLC, Minneapolis, Minnesota (for relator
Professional PCA Services, LLC)

Keith Ellison, Attorney General, João C.J.G. de Medeiros , Assistant Attorney General,
St. Paul, Minnesota (for respondent Minnesota Department of Human Services)

Considered and decided by Reilly, Presiding Judge; Reyes, Judge; and Larson,
Judge.
NONPRECEDENTIAL OPINION
LARSON, Judge
In this administrative appeal, r elator Professional PCA Services , LLC (PPS)
challenges respondent Minnesota Department of Human Services ’s (DHS) order
determining PPS committed abuse in connection with the provision of personal-care -
assistance services to public -assistance recipients . On appeal, PPS argues DHS:
(1) improperly held PPS responsible for overpayments incurred under previous ownership
and (2) arbitrarily and capriciously determined the overpayment amount . We affirm.
2
FACTS
Minnesota participates in the federal Medicaid program, which funds medical
assistance (MA) 1 for individuals who are unable to pay for their medical care. See
generally 42 U.S.C. §§ 1396-1396w (2022); Minn. Stat. §§ 256B.01- .851 (2022). DHS
administers and oversees the Medicaid program through the Minnesota Health Care
Programs (MHCP). See Minn. Stat. § 256B.04, subd. 10; Minn. R. 9505.0011 (2021). As
part of its oversight, DHS created an internal unit, called the Surveillance and Integrity
Review Section unit (SIRS). SIRS reviews and monitors legal compliance when DHS pays
vendors or recipients for MA-eligible services under the MHCP. See Minn. R. 9505.0180,
subp. 3, .2160, subp. 1 (2021). If SIRS establishes fraud, theft, abuse, or error by a
preponderance of the evidence, DHS may impose sanctions and order overpayment
recovery. See Minn. Stat. § 256B.064, subd. 1a ; Minn. R. 9505.2245, subp. 1 (2021);
Minn. R. 1400.7300, subp. 5 (2021).
PPS provides personal -care-assistance services to MA -eligible individuals and
participates in the MHCP. SIRS began investigating PPS in January 2017. SIRS
performed two onsite visits in November 2017 and July 2018, reviewing and scanning
recipient files. After reviewing the documents , SIRS determined that , between October 1,
2016, and December 31, 2017, PPS engaged in abuse , as defined in Minn. R. 9505.2165,

1 “Medical assistance” means “ payment of part or all of the cost of the care and services
identified [by statute] . . . for eligible individuals whose income and resources are
insufficient to meet all of this cost.” Minn. Stat. § 256B.02, subd. 8 (2022).
3
subp. 2(A) (2021),2 in the form of missing or incomplete documentation. 3 SIRS
determined this abuse resulted in PPS receiving overpayment .
Between the two onsite visits, i n May 2018, Abdirsirak Abdulle entered an
agreement to purchase PPS from its previous owner (the purchase agreement) . Abdulle
and the previous owner agreed that they would complete the ownership transfer when DHS
approved PPS’s MHCP application under new ownership.4 That same day, PPS started the
MCHP application process, submitting DHS form 5550 (Provider Entity Sale or Transfer
Addendum ). Under “effective date,” PPS wrote, “as soon as approved.” On the form, PPS
confirmed that it would “keep the [provider -identification number] established for this
entity.”5 Maintaining the same provider-identification number enabled PPS to continue

2 “Abuse” means “a pattern of practices that are incon sistent with sound fiscal, business,
or health service practices, and that result in unnecessary costs” to the MHCP. Minn. R.
9505.2165, subp. 2(A). Specific practices considered “abuse” include failing to develop
and maintain health -service records as r equired under Minn. R. 9505.2175 (2021), and
repeatedly failing to comply with the requirements of the provider agreement that relate to
the programs covered by Minn. R. 9505.2160- .2245 (2021). PPS does not contest DHS’s
finding that PPS engaged in abuse between October 1, 2016, and December 31, 2017.
3 Specifically, SIRS found : (1) “PCA time sheets were missing for corresponding dates of
service”; (2) “PCA time sheets reviewed were missing required elements”; (3) a
“[r]ecipient was inpatient”; (4) “PCA s ervices were billed more units than documented”;
and (5) “[r]ecipient care plans were either not completed or missing required components.”
4 The purchase agreement also included: (1) a clause warranting that the previous owner
was not aware “ of any fraud, false claims or other activities . . . that would interfere with
Company activities or reimbursement for services provided” and (2) an indemnification
clause.
5 There are two types of provider identification numbers relevant to this appeal: National
Provider Identifiers (NPI) and Unique Minnesota Provider Identifiers (UMPI). The
primary distinction between the two is the entity assigning them; the federal government
assigns NPIs and DHS assigns UMPIs. A vendor may enroll in MHCP using either an NPI
or UMPI. PPS obtained an NPI under it s previous owner, which PPS continued to use
through December 2020, despite PPS applying for a UMPI in November 2018. For
4
collecting MCHP payments before DHS approved the application. Also in May 2018, PPS
submitted a DHS form 5259 ( Disclosure of Ownership and Control Interest of an Entity)
noting that as of May 1, 2018, Abdulle owned a 100% interest in PPS.
In November 2018, PPS submitted a new form 5550. This form again attached the
effective date to DHS’s approval. This time, PPS checked a box providing that PPS would
change its provider -identification number. This checked box also stated , “All claims
payments and claims adjustments will accrue to the entity unde r whose [provider-
identification number] claims were submitted.” Along with the new form 5550, PPS
included an MHCP enrollment application, including a new Federal Employer
Identification Number (FEIN), a new Minnesota tax number, and a statement that PPS
would change its provider-identification number. DHS and PPS then engaged in a drawn -
out process related to PPS’s MHCP application.
In March 2020, DHS issued a notice of overpayment to PPS , regarding the
overpayments between October 1, 2016, and December 31, 2017. PPS timely appealed the
notice of overpayment. In its appeal letter, PPS claimed it was not responsible for the
overpayments because it had changed ownership since the alleged abuse . In May 2020,
DHS amended the notice to up date the alleged overpayment amount to $634,303.47.
On August 20, 2020, DHS finally approved PPS’s MHCP application and provided
PPS a new provider-identification number . DHS made its approval retroactive to March

purposes of this appeal, NPIs and UMPIs are collectively referred to as a “provider-
identification number.”
5
6, 2020. However, as PPS requested,6 DHS set the effective date for the new provider-
identification to December 2020. Between PPS’s initial MHCP application and the agreed-
to effective date, DHS paid PPS approximately $4.5 million in MA reimbursements under
the former provider-identification number, despite PPS’s new ownership.
An Administrative Law Judge ( ALJ) held a two-day evidentiary hearing in August
2021 to address PPS’s challenge to the overpayment notice . The ALJ heard testimony
from several DHS employees and Abdulle. DHS specifically offered testimony regarding
overpayments associated with three recipients that lacked necessary documentation. DHS
relied only on exhibits to support the remainder of its claimed overpayments. The exhibits
included “close to 800 pages of spreadsheets ‘summarizing’ the claims ” (the summary
spreadsheets) and more than 12,000 pages of copies of recipient files ” (the underlying
documentation). A senior SIRS investigator7 testified regarding how SIRS determined the
overpayment amount.
Regarding the exhibits, the ALJ required DHS to provide a means to match the
recipient claims in the summary spreadsheets with the underlying documentation. When
DHS complied, it realized it had omitted underlying documentation supporting claimed
overpayments for 12 recipients listed in the summary spreadsheet s. DHS moved to
supplement the record to include these records . The ALJ denied the motion because “it

6 PPS made that request because its personal-care assistant s were not affiliated with the
new provider-identification number.
7 The senior SIRS investigator attended the onsite visit in July 2018 but did not attend the
onsite visit in November 2017.
6
would be unfair to PPS to delay the hearing while it reviewed thousands of pages that
[DHS] should have known were missing and could easily have provided sooner .”
Relevant to this appeal, at the hearing, PPS argued that it was not responsible for
any overpayment because it had changed ownership since the alleged abuse. DHS
responded that PPS’s ownership was irrelevant to whether DHS may obtain monetary
recovery from PPS. DHS also argued that the missing documents for 12 recipients did no t
negate overpayment because the summary spreadsheets were admissible under Minn. R.
Evid. 1006.
On January 7, 2022, the ALJ issued findings of fact, conclusions of law, and a
recommendation that DHS issue an amended notice requiring PPS to repay $335,337.92.
The ALJ determined that DHS did not establish by a preponderance of the evidence that it
could recover the full $634,303.47 claimed overpayment amount, because DHS lacked any
documentary evidence for overpayment claims related to 12 recipients and presented
limited evidence relating to two other recipients. The ALJ also recommended that DHS
hold PPS responsible for the proven overpayment amounts despite the ownership change .
On May 19, 2022, the DHS commissioner issued her final order. The commissioner
agreed with the ALJ’s recommendation that PPS was responsible for overpayments despite
the ownership change . But the commissioner departed from the ALJ’s recommendations
with respect to the overpayment amount . The commissioner instead found that DHS had
established by a preponderance of evi dence that it may recover overpayment totaling
$405,367.33, because it met its burden regarding three of the 12 recipient files the ALJ said
lacked any documentary evidence . The commissioner relied on the senior SIRS
7
investigator’s testimony regarding the three recipient records collected at the July 2018
onsite visit, because the senior SIRS investigator personally attended the visit and scanned
the documents reflected in the summary spreadsheets. The commissioner, thus, increased
the overpayment amount by $70,029.41 from the ALJ’s recommendation.
PPS appeals.
DECISION
PPS appeals the commissioner’s order determining PPS committed abuse and is,
thereby, responsible for overpayment amounting to $405,367.33. PPS argues the
commissioner: (1) erred when she determined PPS is responsible for overpayments
incurred under previous ownership and (2) acted arbitrarily and capriciously when she di d
not adopt the ALJ’s recommended overpayment amount .
We review an administrative agency ’s decision following a contested -case hearing
under the Minnesota Administrative Procedure Act, Minn. Stat. §§ 14.63-.69 (2022). We
may reverse or modify any agency’s decision
if the substantial rights of the petitioners may have been
prejudiced because the administrative finding, inferences,
conclusion, or decisions are:
(a) in violation of constitutional provisions; or
(b) in excess of the statutory authority or jurisdiction of
the agency; or
(c) made upon unlawful procedure; or
(d) affected by other error of law; or
(e) unsupported by substantial evidence in view of the
entire record as submitted; or
(f) arbitrary or capricious.

Minn. Stat. § 14.69. Relators have the burden of proof when challenging an agency
decision. In re Excelsior Energy, Inc ., 782 N.W.2d 282, 289 (Minn. App. 2010).
8
I.
While conceding PPS engaged in abuse between October 1, 2016, and December
31, 2017, PPS argues that it is not responsible for the overpayment because PPS became a
different “vendor.” PPS’s argument presents a legal question, which we review de novo.
In re Waters, 977 N.W.2d 874, 885 (Minn. App. 2022).
Under Minn. Stat. § 256B.064, DHS “may obtain monetary recovery from a vendor
who has been improperly paid ” as a result of abuse. Min n. Stat. § 256B.064,
subds. 1a(a)(1), 1c(a) (emphasis added). The term “vendor” shares its meaning with
“vendor of medical care” as defined in Minn. Stat. § 256B.02, subd . 7. Minn. R.
9505.2165, subp. 16a. The term “vendor” is not limited to humans, it also applies to
corporate entities. Minn. Stat. § 256B.02, subd. 7 (defining “[v]endor of medical care,” in
part, as “any person or persons furnishing, within the scope of the vendor’s respective
license, any or all [medical] goods or services [enumerated in this subdivision]”);
Minn. Stat. § 645.44, subd. 7 (2022) (“‘Person’ may extend and be applied to bodies politic
and corporate, and to partnerships and other unincorporated associations.”). The term
“vendor” also includes “ a provider,” Minn. R. 9505.2165, subp. 16a , meaning a vendor
“that has signed an agreement approved by [DHS] for the provision of health services to a
recipient,” Minn. R. 9505.0175, subps . 38, 50 (2021).
As an LLC, PPS operates a s “an entity distinct from its members.” Minn. Stat.
§ 322C.0104 (2022); see also Minn. Stat. § 322C.0304, subd. 1 (2022) (establishing “[t]he
debts, obligations, or other liabilities of a limited liability company . . . are solely the debts,
obligations, or other liabilities of the company” ). DHS’s records show that PPS listed
9
itself, not its owners, as the “provider” receiving funds through MHCP. PPS was,
therefore, the vendor who committed abuse and was improperly paid MHCP funds between
October 1, 2016, and December 31, 2017. Minn. Stat. § 256B.064, subd. 1c( a). And the
record shows PPS continued to collect MA reimbursements under the former provider-
identification number until December 2020. Thus, when DHS sent the notice of
overpayment in March 2020, PPS was the same vendor that committed the abuse and
improperly collected the MHCP funds.
PPS disagrees, arguing it took sufficient steps to convert PPS into a new vendor that
is not responsible for the overpayment. To support its argument, PPS cites Minn. Stat.
§ 256B.0641, subds. 1, 2. PPS first argues s ection 256B.0641, subdivision 1, illustrates
that an entity becomes a new vendor when it obtains a new tax-identification number. We
disagree. Section 256B.0641, subdivision 1, provides a mechanism for DHS to recover
overpayment after an administrative determination. Under section 256B.0641,
subdivision 1(4), DHS can collect a “ past due obligation[]” from “a provider or vendor
that has the same tax identification number as is assigned to a provider or vendor with past
due obligations.” (Emphasis added .) Here, DHS does not seek to collect past -due
obligations. Instead, DHS issued a final order determining PPS —as a vendor —committed
abuse that resulted in overpaym ent. Thus, section 256B.0641, subdivision 1, is
inapplicable to this case.
10
PPS next argues section 256B.0641, subdivision 2, indicates that new owners 8 are
not responsible for overpayments. Section 256B.0641, subdivision 2, specifically provides
when DHS can pursue overpayment from “[t]he current owner of a nursing home, boarding
care home, or intermediate care facility .” But again, this provision is inapplicable to this
case because DHS has not pursued collecting overpayme nt from PPS’s owner. Instead,
DHS has administratively determined that PPS—the entity —committed abuse that resulted
in overpayment. Additionally, PPS is a personal-care-assistance provider , not “a nursing
home, boarding care home, or intermediate care fa cility.” Minn. Stat. § 256B.0641,
subd. 2. Thus, section 256B.0641, subdivision 2, is also inapplicable to this case.
Finally, PPS argues that DHS’s later decision to assign PPS a new provider -
identification number frees PPS from the responsibility for t he overpayment.9 We are not
persuaded. DHS makes clear throughout its forms regarding ownership transfer that there
are consequences if a new owner allows a provider -entity to use an existing provider -
identification number. For example, form 5550 notes that use of the established provider-
identification number will lead to “all claims payments and claims adjustments” accruing

8 We agree with the ALJ that “[i]f Mr. Abdulle and [the previous owner] have a dispute
between themselves as to responsibility for payment of the LLC’s debts, that is a matter
between them to take to district court.”
9 PPS also challenges that DHS served the notice of overpayment on Abdulle. But DHS
requires organizations participating in MHCP to inform DHS anytime a change in
ownership or a control interest occurs. In May 2018, PPS submitted the form 5259 to DHS
noting that , as of May 1, 2018, PPS’s ownership and control interest had changed, with
Abdulle owning a 100% interest in PPS. On this form, PPS listed the former provider-
identification number. Thus, DHS appropriately served Abdulle with the notice of
overpayment, because he held himself out as the appropriate contact for PPS based on its
ownership structure.
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to the “transferee” or “the entity under whose [provider-identification number] claims were
submitted.”
Here, PPS decided to continue using the former provider-identification number from
May 2018 through December 2020. And this decision was lucrative; PPS collected
approximately $4.5 million in MA reimbursements during that time. Thus, at the time
DHS issued the not ice of overpayment in March 2020, PPS continued to operate as the
same vendor that committed the abuse and improperly collected the MHCP funds. DHS
appropriately sent the notice of overpayment to the entity using the corresponding
provider-identification number, and PPS remains responsible for the overpayment. 10
We, therefore, affirm the commissioner’s decision that PPS was the appropriate
“vendor” and responsible for the abuse that resulted in overpayment.
II.
PPS argues the commissioner acted arbitrarily and capriciously when she increased
the overpayment amount from the ALJ’s recommendation. An agency ’s decision is
arbitrary and capricious only if it :
(a) relied on factors not intended by the legislature; (b) entirely
failed to consider an important aspect of the problem;

10 DHS concedes that there is an administrative avenue for new owners to have a “clean
break” when obtaining an existing entity. If an owner stops the provider-entity from using
the former provider-identification number, obtains new tax -identification numbe rs,
submits a new MHCP enrollment application, and waits until it has a new provider
identifier before submitting claims for reimbursement of MHCP funds, DHS will recognize
the entity as a new provider . See Minn. R . 9505.0195 (2021) (detailing the terms for
provider participation in MHCP). But where, as here, the provider continues to operate —
and, in fact, collects approximately $4.5 million in MA reimbursements—while waiting
for DHS to approve the new application, the entity remains the same provider for purposes
of overpayment claims.
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(c) offered an explanation that runs counter to the evidence; or
(d) the decision is so implausible that it could not be explained
as a difference in view or the result of the agency ’s expertise.

Citizens Advocating Responsible Dev . v. Kandiyohi C nty. Bd. of Comm ’rs, 713 N.W.2d
817, 832 (Minn. 2006). An “agency’s conclusions are not arbitrary and capricious so long
as a rational connection between the facts found and the choice made has been articulated.”
In re Excess Surplus Status of Blue Cross & Blue Shield of Minn., 624 N.W.2d 264, 277
(Minn. 2001) (quotation omitted). We do not apply a heightened standard of review where
the agency’s final decision differs from the ALJ ’s recommendation. Id. at 278. But an
agency’s failure to give reasons for its rejection of the ALJ ’s recommendation may be
evidence that the agency acted arbitrarily and capriciously. In re Grand Rapids Pub. Utils.
Comm’n, 731 N.W.2d 866, 870 (Minn. App. 2007).
Here, the commissioner thoroughly explained her decision to increase the
overpayment amount. The commissioner disagreed with the ALJ regarding the importance
of the senior SIRS investigator’s testimony and the summary spreadsheets . As the
commissioner noted, evidentiary rules are more relaxed in contested -case hearings. Minn.
Stat. § 14.60, subd. 1 (2022) (“In contested cases agencies may admit and give probative
effect to evidence which possesses probative value commonly accepted by reasonable
prudent persons in the conduct of their affairs.”); Minn. R. 1400.7300, subp. 1 (2021) (“The
[administrative law] judge may admit all evidence which possesses probative value,
including hearsay, if it is the type of evidence on which reasonable, prudent persons are
accustomed to rely in the conduct of their serious affai rs.”). Applying the more lenient
evidentiary rules, t he commissioner determined the senior SIRS investigator credibly
13
testified regarding her observations and methods when personally collecting materials
during the July 2018 onsite visit . The commissioner decided the senior SIRS investigator
could act as a foundational witness for the recipient materials reflected in the summary
spreadsheets from that date. Thus, the commissioner determined DHS needed to increase
the overpayment amount by $70,029.41 to reflect the additional three recipients DHS
proved by a preponderance of the evidence.
The commissioner’s decision reflects a “rational connection between the facts found
and the choice made,” Excess Surplus , 624 N.W .2d at 277 (Minn. 2001) (quotation
omitted), reasonably relying on the spreadsheets, which were explained through the senior
SIRS investigator’s testimony, to increase the overpayment amount . Therefore, the
commissioner did not engage in arbitrary and capricious decisionmaking when she
increased the ALJ’s recommended recovery amount by $70,029.41.
Affirmed.