Opinion
No. 1 CA-UB 18-0116
06-20-2019
A.W., Appellant, v. ARIZONA DEPARTMENT OF ECONOMIC SECURITY, an Agency, and DES/DDD, Appellees.
Lewis Roca Rothgerber Christie LLP, Phoenix, By Jared L. Sutton, Counsel for Appellant Arizona Attorney General’s Office, Phoenix, By JoAnn Falgout, Counsel for Appellee Arizona Department of Economic Security
Lewis Roca Rothgerber Christie LLP, Phoenix, By Jared L. Sutton, Counsel for Appellant
Arizona Attorney General’s Office, Phoenix, By JoAnn Falgout, Counsel for Appellee Arizona Department of Economic Security
Chief Judge Samuel A. Thumma delivered the opinion of the Court, in which Presiding Judge Lawrence F. Winthrop and Judge Maria Elena Cruz joined.
THUMMA, Chief Judge: ¶1 A.W. appeals from a decision of the Arizona Department of Economic Security (ADES) Appeals Board to terminate developmental disabilities services previously provided to her. Because ADES’ notice of intent to terminate was deficient in a material way, the decision is affirmed in part and vacated in part as set forth below.
FACTS AND PROCEDURAL HISTORY
¶2 A.W. was born in late 2009 with several chronic complications resulting in extensive medical needs. Throughout her life, she has had various surgeries (including open heart surgery and a tracheostomy ), spent more than 100 days in the hospital and been on a ventilator for months. She has been diagnosed with failure to thrive; speech, visual and fine motor coordination delays or limitations and a neurodevelopmental chromosomal syndrome known as DUP 15Q.
¶3 At some point before A.W. turned six, her mother (who has acted for A.W. in these proceedings) applied for services from the ADES Division of Developmental Disabilities (DDD). ADES approved the application and provided A.W. with DDD services, including therapies and related treatments.
¶4 DDD services are available to eligible Arizonans with a "developmental disability." See Ariz. Rev. Stat. (A.R.S.) § 36-551(19) (2019) (defining "developmental disability"); Ariz. Admin. Code (A.A.C.) R6-6-302 (2019) ("Eligibility for Program"). The requirements for eligibility vary according to the individual’s age. Individuals six years old or older must have a "severe, chronic disability" attributable to a qualifying diagnosis (here, Autism ) that (1) manifested before age 18 and is likely to continue indefinitely and (2) results in substantial functional limitations in at least three of seven areas of major life activity. See A.R.S. § 36-551(19) ; A.A.C. R6-6-302(H). For individuals under six, there must be a "strongly demonstrated potential" that the child has or will be diagnosed with such a developmental disability. See A.R.S. § 36-551(19) ; A.A.C. R6-6-302(G). A.W. received DDD services before turning six, meaning ADES had determined she met this "strongly demonstrated potential" standard.
In 2018, ADES amended both its general administrative procedures, see 23 Ariz. Admin. Reg. 3343, 3350-55 (eff. Jan. 27, 2018) (A.A.C. R6-6-1801 to - 1813 ) and those governing DDD services, see 24 Ariz. Admin. Reg. 2003, 2013-30 (eff. Aug. 24, 2018) (A.A.C. R6-6-301 to -309, -501 to -505 ). Because the parties do not argue these changes are material to this appeal, statutes and rules cited in this opinion refer to the current versions.
¶5 A.W. turned six on December 30, 2015. ADES was required to "conduct periodic reviews in six-month intervals, or more frequently" to evaluate her services, including to determine whether "services should be terminated." A.A.C. R6-6-604(A). Although two such reviews should have occurred in 2016, ADES did not seek to terminate DDD services for A.W. at that time. On May 1, 2017, nearly 18 months after A.W. turned six, ADES sent her a Notice of Intended Action stating it intended to terminate her eligibility for DDD services. The form Notice (DDD-1476A LTHFF (12-16)) stated ADES was "taking this action for the following reason(s): ... For individuals six years or older, we reviewed the records provided to us, and they do not show that you have ... [a] diagnosis that qualifies you for DDD [services] (Cognitive Disability/Intellectual Disability, Autism, Cerebral Palsy, or Epilepsy ), which began before age 18 and is likely to continue." A "Detail(s)" field repeated: "[n]o documentation has been provided that states [A.W. has] been given an approved DDD diagnosis."
¶6 The Notice had a box ADES could have checked to indicate that its review failed to show "[s]ubstantial functional limitations in at least three ... areas of major life activities resulting from a DDD qualifying diagnosis." ADES, however, did not check that box. Accordingly, the Notice did not inform A.W. that ADES’ review failed to show substantial functional limitations. This May 1, 2017 Notice was the only official notice ever provided to A.W.
¶7 According to the Notice, unless A.W. sought administrative review, ADES would "[t]erminate eligibility" for DDD services effective June 19, 2017. On May 9, 2017, however, A.W. timely requested administrative review. On May 31, 2017, A.W. submitted to the DDD Office of Administrative Review (OAR) an August 19, 2015 cognitive evaluation from her school stating she had various cognitive-ability limitations. On June 2, 2017, OAR "forwarded the available records to the DDD Clinical Psychologist for review and recommendation." As later quoted by ADES, the DDD Clinical Psychologist, elsewhere identified as Dr. Jennifer Gray, at some point "responded to the request for" administrative review, "reviewed the available records, and uph[e]ld the termination of eligibility for [DDD] services" for A.W.
¶8 Exactly what records Dr. Gray reviewed, or when and how she reached that conclusion, is not apparent from the record. No report from Dr. Gray is included in the record, and it does not appear the report was provided to A.W. Instead, a June 22, 2017 OAR Administrative Decision contains a three-page quote attributed to Dr. Gray. Based on "the available records," Dr. Gray concluded that "[t]he allegation appears to be Cognitive/Intellectual Disability, however, the evidence does not support this DDD qualifying diagnosis in a clear and consistent manner." Dr. Gray concluded that A.W. "does not allege, nor is there evidence for the diagnoses of: Autistic Disorder /Autism Spectrum Disorder, Cerebral Palsy, or Epilepsy."
¶9 Although the May 1, 2017 Notice did not cite the absence of functional limitations as a basis to terminate DDD services, Dr. Gray addressed the issue. Dr. Gray concluded A.W.’s condition did "not meet criteria for a DDD qualifying diagnosis, thus, there [wa]s no evidence of at least three (3) substantial functional limitations attributable to a DDD qualifying diagnosis." Adopting Dr. Gray’s opinion, the June 22, 2017 OAR Administrative Decision concluded the ADES record did not show a qualifying diagnosis or that A.W. had substantial functional limitations in at least three major life activities. Accordingly, the OAR Administrative Decision upheld ADES' "decision to TERMINATE services."
¶10 A.W. timely requested a hearing before an Administrative Law Judge (ALJ). Meanwhile, A.W. was evaluated by Dr. Megan Aros-O’Malley, a Ph.D. psychologist. In an August 2017 report, Dr. Aros-O’Malley diagnosed A.W. with "Autism Spectrum Disorder, with accompanying intellectual impairment, with language impairment, level 1 severity for social communication and restricted and repetitive behaviors," as well as Attention Deficit/Hyperactivity Disorder. A.W. timely submitted Dr. Aros-O’Malley’s diagnosis to ADES.
¶11 At a January 2018 evidentiary hearing, the ALJ heard testimony from Dr. Gray and A.W.’s mother and received exhibits, including the cognitive evaluation from A.W.’s school and Dr. Aros-O’Malley’s report. Albeit with "some reservations," Dr. Gray accepted Dr. Aros-O’Malley’s Autism diagnosis. Although the May 1, 2017 Notice did not assert an absence of substantial functional limitations, Dr. Gray testified at some length regarding her conclusion that "there wasn’t evidence for ... substantial functional limitations."
¶12 The ALJ upheld the OAR’s Administrative Decision. The ALJ concluded ADES, the party seeking to change the status quo, had the burden of proof "by a preponderance of the evidence to prove the merits of the case." The ALJ found A.W. had been diagnosed with Autism, "which meets the definition of a qualifying disability." Although the May 1, 2017 Notice did not assert an absence of substantial functional limitations, the ALJ found A.W. had no such limitations, or what limitations she had could not be linked to the Autism diagnosis. Accordingly, the ALJ affirmed the termination of DDD services for A.W. based on the absence of substantial functional limitations.
¶13 A.W. timely sought review of the ALJ’s decision. The ADES Appeals Board (Board) affirmed, concluding ADES "established by a preponderance of the evidence that it properly terminated [A.W.’s] DDD services." The Board first found A.W. had an Autism diagnosis, noting ADES "conceded that the evidence is sufficient to establish" A.W. had been diagnosed with Autism in August 2017. The Board then found evidence of A.W.’s substantial functional "limitations [was] not sufficient to meet the requirements of the statute." Accordingly, the Board adopted the ALJ’s "findings of fact, reasoning, and conclusions of law as [its] own" and concluded ADES "properly terminated [A.W.’s] DDD services."
¶14 A.W. timely sought review of the Board’s decision by this court. In May 2018, this court granted A.W.’s application for appeal, placed this matter in the Arizona Court of Appeals Pro Bono Representation Program and stayed the appeal. After pro bono counsel was appointed, and after granting requested briefing extensions, this court lifted the stay, received full briefing from the parties and heard oral argument. This court has appellate jurisdiction pursuant to A.R.S. § 41-1993(B).
DISCUSSION
¶15 "This court must accept the Board’s factual findings unless they are arbitrary, capricious, or an abuse of discretion. ... The Board’s legal conclusions, however, are not binding on this court, and we review de novo whether the Board properly interpreted the law." Rice v. Ariz. Dep’t of Econ. Sec. , 183 Ariz. 199, 201, 901 P.2d 1242, 1244 (App. 1995) (citations omitted).
¶16 On appeal, the parties disagree whether the Board correctly found ADES had the burden of proof and whether the Board correctly applied that burden of proof. The ALJ found (and the Board affirmed) that ADES, as the party seeking to terminate benefits and change the status quo, had the burden of proof. ADES has shown no basis for this court to conclude it was error to assign ADES the burden of proof to justify termination of A.W.’s DDD services. That said, even if A.W. had the burden to prove continued eligibility, ADES provided neither adequate notice of the basis for termination nor proper assistance to A.W. as required by law.
¶17 In addressing the burden of proof, ADES argues that it did not terminate DDD services. Instead, ADES asserts that A.W. either re-applied, or "later applied for DDD services ... under a category for individuals who are age six or older," and that it denied that application. The record does not support this assertion. ADES provided DDD services to A.W. without interruption for nearly 18 months after she turned six. ADES’ May 1, 2017 Notice stated an intent to "[t]erminate" DDD services effective June 19, 2017. ADES then repeatedly and consistently referenced its decision to terminate DDD services, including in (1) Dr. Gray’s opinion; (2) the OAR’s Administrative Decision; (3) the ALJ’s decision and (4) the Board’s decision affirming the ALJ’s decision.
¶18 Although a statute governing termination of DDD services discusses automatic termination when a beneficiary turns 18 years old, A.R.S. § 36-566(B)-(C), no comparable provisions exist that govern termination when a beneficiary turns six. Moreover, when ADES "determines an individual to be ineligible for" DDD services, its own regulations require that ADES "shall send the applicant a written notice of ineligibility by registered mail with return receipt requested." A.A.C. R6-6-302(I). ADES never sent such a notice of ineligibility to A.W. This record shows ADES attempted to terminate A.W.’s DDD services, not that ADES denied a new or renewed application for DDD services after A.W. turned six.
¶19 Under these circumstances, ADES’ attempt to terminate DDD services to A.W. is based on the reason it cited in the May 1, 2017 Notice. Due process required ADES to provide A.W. meaningful notice and an opportunity to be heard when it sought to terminate her DDD services. See, e.g. , Mathews v. Eldridge , 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976). Due process "requires that a benefit recipient be given ‘adequate notice detailing the reasons for termination, and an effective opportunity to defend by confronting any adverse witnesses and by presenting his [or her] own arguments and evidence.’ " Henricks v. Ariz. Dep’t of Econ. Sec. , 229 Ariz. 47, 49 ¶ 10, 270 P.3d 874, 876 (App. 2012) (quoting Goldberg v. Kelly , 397 U.S. 254, 267-68, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970) ). "Proper notice protects benefit recipients from arbitrariness and erroneous deprivation of benefits by giving them enough information to assess whether" the agency’s actions are proper. Henricks , 229 Ariz. at 49 ¶ 11, 270 P.3d at 876 (citations omitted). Consistent with these concepts, by statute and regulation, ADES is required to provide specific written notice of any attempted termination of services. A.R.S. § 36-565(C) ; A.A.C. R6-6-309.
¶20 As to a lack of a qualifying medical diagnosis, the May 1, 2017 Notice clearly informed A.W. that ADES’ records did not contain such a diagnosis. In response, A.W. timely provided ADES Dr. Aros-O’Malley’s report confirming an Autism diagnosis. ADES then accepted that diagnosis. But the May 1, 2017 Notice did not alert A.W. that ADES perceived she had no substantial functional limitations. To the contrary, although the May 1, 2017 Notice listed an absence of substantial functional limitations as an available option, ADES did not check the box for that option. As a result, the May 1, 2017 Notice did not suggest ADES intended to terminate services on that ground. Nor did it provide proper notice to A.W. of ADES’ intention to terminate services on that ground.
¶21 If appropriate, the May 1, 2017 Notice should have advised A.W. that ADES’ review of its records failed to show "functional limitations in at least three" major life activity areas. It did not do so. At oral argument before this court, ADES asserted that the June 22, 2017 OAR Administrative Decision provided such notice. Not so. Although mentioning a lack of functional limitations, the Administrative Decision repeatedly tied that deficiency to the absence of a qualifying diagnosis. Moreover, Dr. Gray testified that she had "reviewed, but not summarized" certain documents in ADES’ file because "they do not contribute to the determination of a DDD qualifying diagnosis."
¶22 ADES did not, at any point, either amend the May 1, 2017 Notice or issue another notice informing A.W. that substantial functional limitations were at issue. Having failed to provide proper notice of any intent to terminate based on the substantial functional limitations requirement, on this record ADES could not — consistent with due process, statutory obligations and its own regulations — rely on that ground to terminate DDD services for A.W.
¶23 It is true that, at the ALJ hearing, Dr. Gray addressed substantial functional limitations without apparent objection by A.W. ADES, however, has not shown how that testimony excused or otherwise cured its failure to provide A.W. proper notice. See Henricks , 229 Ariz. at 50 ¶ 16, 270 P.3d at 877 (holding ADES’ declaration of a "misprint" in a notice during an administrative hearing failed to cure the deficiency because "[b]y that time, it was too late for [the beneficiary] to have a meaningful opportunity to prepare for the hearing"). In short, the failure to provide adequate notice meant A.W. was not prepared to address what the ALJ determined, at the hearing, was the dispositive issue. Indeed, the transcript from the hearing shows substantial confusion about what was required, including why ADES did not consider documents in its file addressing various aspects of A.W.’s needs. That same transcript shows confusion about what records ADES had in its file, including A.W.’s mother stating "it is sort of the blind leading the blind process. Um, (inaudible) assumption that all of [A.W.’s physical and occupational therapy] evals, ... her [independent educational plan], everything I made an assumption was in [the ADES] file, I was incorrect about."
¶24 The petition for review of the ALJ’s decision further confirms that the defect in the May 1, 2017 Notice had not been cured. In the petition, A.W.’s mother explains "[i]t is [her] belief that [A.W.] qualifies for continued [DDD] Services due to qualifying diagnos[e]s of Autism and Cognitive Disability," without mentioning substantial functional limitations. This record shows the lack of notice regarding substantial functional limitations permeated the administrative proceeding.
A.W. appended to her appeal application to this court more than 100 pages of documents appearing to discuss A.W.’s substantial functional limitations, which were not part of the administrative record. As ADES correctly notes, this court cannot properly consider such documents for the first time on appeal. See GM Dev. Corp. v. Cmty. Am. Mortg. Corp. , 165 Ariz. 1, 4, 795 P.2d 827, 830 (App. 1990).
¶25 On this record, the lack of proper notice also appears to have hampered actions ADES was required to take on behalf of A.W. ADES regulations required A.W.’s case manager to assist her and her family "in all aspects of the [DDD] service delivery system," including "[t]he pursuit of evaluations and professional assessments necessary to substantiate the need for services" and "[t]he collection and analysis of information regarding eligibility." A.A.C. R6-6-601. Consistent with these obligations, Dr. Gray testified about the type of assistance that beneficiaries should receive to obtain evaluations and secure documentation. The record, however, does not show A.W. received any such assistance, let alone the type of assistance required by ADES’ own regulations. Indeed, there is no suggestion ADES personnel made any efforts to secure evaluations and professional assessments of A.W. or to collect and analyze materials regarding A.W.’s substantial functional limitations. The record similarly is silent as to the reason for ADES’ failure to discharge these obligations, which may have been caused by the May 1, 2017 Notice not citing to the absence of substantial functional limitations as a ground for terminating DDD services.
CONCLUSION
¶26 ADES’ May 1, 2017 Notice provided A.W. proper notice of its intent to terminate DDD services based on a lack of a proper diagnosis. A.W., in response, provided an Autism diagnosis that ADES accepted. Thus, the sole ground listed in the Notice was met and, factually, does not support terminating A.W.’s DDD services. Accordingly, the Board’s conclusion that A.W. had a required diagnosis is affirmed.
¶27 ADES’ May 1, 2017 Notice failed to provide A.W. proper notice of its intent to terminate DDD services based on the absence of substantial functional limitations. Given that failure, which was not cured, the Board’s conclusion that A.W. lacked the required substantial functional limitations is vacated.