C.P. v. Utah Office of Crime Victims Reparations

C. P., Plaintiff and Appellant, v. Utah Office of Crime Victims' Reparations, Defendant and Appellee.
Case No. 971763-CA
COURT OF APPEALS OF UTAH
966 P.2d 1226
October 16, 1998, Filed

JUDGES: Before Review Judith M. Billings, Judge. WE CONCUR: James Z. Davis, Presiding Judge, Russell W. Bench, Judge.

BILLINGS, Judge:

C.P. appeals the denial of her request for crime victim reparation funds to pay for her sexually abused daughter's mental health counseling. We reverse and remand.

FACTS

C.P.'s daughter was sexually abused by her uncle. C.P. applied for reparation funds from the Utah Office of Crime Victims' Reparations (Crime Victims') in 1989. Crime Victims' granted C.P.'s daughter an award for mental health counseling on June 23, 1989. On June 29, 1991, C.P.'s daughter was admitted into a Benchmark Hospital (Benchmark) counseling program, a non-Medicaid provider. Crime Victims' learned of the admission on July 1, 1991, and notified Benchmark that because the daughter was eligible for Medicaid through July 31, 1991, Crime Victims' would not reimburse the clinic for her treatment. On September 10, 1991, Crime Victims' first notified C.P. that it would not cover any charges stemming from her daughter's stay at Benchmark because she was eligible for Medicaid at the time. In 1993, a Crime Victims' reparations officer denied payment for the daughter's stay at Benchmark because potential Medicaid coverage was considered as an available collateral source under the Crime Victims' Act.

C.P. appealed the reparations officer's decision. An administrative hearing officer affirmed the reparations officer's decision to deny payment. C.P. appealed the hearing officer's determination to the Crime Victims' Board (the Board). The Board denied C.P.'s appeal on October 11, 1994, stating that Crime Victims' unwritten "statements of policy were binding upon the director, the reparations officers and other staff," and thus C.P.'s claims were properly reduced to exclude counseling received when her daughter was eligible for Medicaid.

On November 8, 1994, C.P. filed a Complaint and Petition for Review of Informal Adjudicative Proceedings in Third District Court … the trial court held that Crime Victims' properly denied C.P.'s claim. C.P. appeals.

ANALYSIS

Crime Victims' Unwritten Medicaid Policy

The trial court alternatively ruled that the Board's unwritten policy barred C.P.'s claim. The Board's unwritten policy provided that if a claimant could have received services from a Medicaid provider, the claim for services from a non-Medicaid provider would be barred because the potential Medicaid coverage is an available collateral source. C.P. argues that this policy does not preclude her recovery because it was not properly adopted through the Utah Administrative Rulemaking Act.

Whether Crime Victims' can bar reparation claims based on an informal policy not adopted pursuant to the Utah Administrative Rulemaking Act is a question of law. We therefore review the trial court's ruling for correctness. See Williams v. Public Serv. Comm'n, (Utah 1986).

Sections 63-63-6(1)(b)(c) and (2) of the Crime Victims' Act stated that the

(1) The Board shall:. . . .

(b) prescribe policy for the Reparations office;

(c) adopt rules according to the Utah Administrative Rulemaking Act to implement this chapter and board policies, and establish procedure and practice requirements of the board and staff, which rules may include but are not limited to, setting of ceilings on reparations, defining of terms not specifically stated in this chapter . . .

(2) All rules, or other statements of policy, along with application forms specified by the board, are binding upon the director, the reparations officers, and other staff.

Utah Code Ann. §§ 63-63-6(1)(b)(c) & (2) (1986) (emphasis added).

The Utah Administrative Rulemaking Act defines "policy" as "a statement applying to persons or agencies that: (i) broadly prescribes a future course of action, guidelines, principles or procedures; or (ii) prescribes the internal management of an agency." Utah Code Ann. § 63-46a-2(10)(a) (Supp. 1997) (emphasis added). Further, section 63-46a-3 outlines when rulemaking is and is not required:

(2) In addition to other rulemaking required by law, each agency shall make rules when agency action:

(a) authorizes, requires, or prohibits an action;. . . .

(4) Rulemaking is not required when:

(a) agency action applies only to internal agency management . . .

(c) an agency issues policy or other statements that are advisory, informative, or descriptive, and do not conform to the requirements of Subsections (2) and(3) . . .

Id. § 63-46a-3. (Emphasis added.)

The plain language of the Act and the Administrative Rulemaking Act require that the Board "adopt rules according to the Utah Administrative Rulemaking Act to implement . . . board policies." Id. § 63-63-6(1)(c) (1997). Furthermore, the Administrative Rulemaking Act requires that an agency follow the procedures for rulemaking whenever an agency action "authorizes, requires or prohibits an action." Id. § 63-46a-3(2)(a). Certainly, requiring Medicaid applicants to use a Medicaid provider before using other sources is a broad policy. Thus, the plain language of these Acts requires Crime Victims' to implement its Medicaid policy through the procedures provided in the Administrative Rulemaking Act. n4

Our reading is consistent with prior case law considering when it is essential for agencies to follow formal rulemaking procedures. In Williams v. Public Serv. Comm'n, 720 P.2d 773, 775 (Utah 1986), our supreme court looked at three factors in determining that the Public Service Commission had violated the Utah Rulemaking Act by failing to promulgate a rule pursuant to the Rulemaking Act's requirements.

First, the Commission's decision was generally applicable . . . Second, the [Commission's] letter interpreted the scope of the Commission's statutory regulatory powers, thus "interpreting the law" within the meaning of the Rule Making Act. Moreover [and finally], in so acting the Commission, in the words of Professor Davis, made a "change in clear law." The court concluded that the Commission's decision not to require a "certificate of public convenience and necessity" for the operation of a one-way mobile paging service was invalid because it failed to follow the Rulemaking Act's requirements.

Applying the three-part Williams test here, we conclude that the Board impermissibly promulgated a "rule" without following the requirements of the Administrative Rulemaking Act. First, the Board's Medicaid policy was "generally applicable" to any and all persons seeking reparation funds. Second, the Board's policy plainly "interpreted the scope of the [Board's] statutory regulatory power, thus 'interpreting the law,' within the meaning of the [Administrative Rulemaking Act]." Finally, though it is uncertain as to what extent the Board's policy resulted in a "change in clear law," prior to the Medicaid policy being promulgated, a Medicaid-eligible victim could apparently seek treatment through any facility and expect to receive reparation funds.

We thus conclude the Board's Medicaid policy impermissibly circumvented the Administrative Rulemaking Act's requirements and cannot be used to bar C.P. from recovering reparations.

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n4 Crime Victims' argues that section 63-63-6(2) of the Act provides that policies are binding on the director and the staff. However, reading the statute as a whole, under section 63-63-6(1) it is clear policies are binding only when adopted under the Administrative Rulemaking Act.