1000 Lincoln Drive Operations, LLC, d/b/a Valley Center v. West Virginia Department of Human Services, Bureau for Medical Services

IN THE INTERMEDIATE COURT OF APPEALS OF WEST VIRGINIA
FILED
1000 LINCOLN DRIVE OPERATIONS, LLC, August 29, 2025
d/b/a VALLEY CENTER, ASHLEY N. DEEM, CHIEF DEPUTY CLERK
Petitioner Below, Petitioner INTERMEDIATE COURT OF APPEALS
OF WEST VIRGINIA

v.) No. 24-ICA-490 (Case: In Re: 1000 Lincoln Drive Operations, LLC,
d/b/a Valley Center)

WEST VIRGINIA DEPARTMENT
OF HUMAN SERVICES,
BUREAU FOR MEDICAL SERVICES,
Respondent

MEMORANDUM DECISION

Petitioner 1000 Lincoln Drive Operations, LLC d/b/a Valley Center (“Valley
Center”) appeals the respondent West Virginia Department of Human Services, Bureau for
Medical Services’ (the “Bureau”) November 7, 2024, Decision, which adopted the hearing
examiner’s October 23, 2024, Recommended Decision. In the Recommended Decision,
the hearing examiner concluded that Valley Center’s repayment of $834,844.15 of State
Medicaid funds due to incomplete records was warranted, based on the results of a
Medicaid Unified Program Integrity Contractor audit performed by contractor SafeGuard
Services, LLC (“SafeGuard”). The Bureau filed a response.1 Valley Center filed a reply.

This Court has jurisdiction over this appeal pursuant to West Virginia Code § 51-
11-4 (2024). After considering the parties’ arguments, the record on appeal, and the
applicable law, this Court finds no substantial question of law and no prejudicial error. For
these reasons, a memorandum decision affirming the Bureau’s order is appropriate under
Rule 21(c) of the Rules of Appellate Procedure.

This action arises from an administrative appeal of the Bureau’s determination that
it overpaid Valley Center for certain nursing facility Medicaid claims, which were denied
subsequent to a post-payment audit. The audit was conducted by government contractor
SafeGuard, the contractor for the Unified Program Integrity Contract in the Southeast
region. The audit of WSSC was limited to claims for skilled nursing services submitted
with revenue code 0550.

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Valley Center is represented by Jeffrey M. Wakefield, Esq., and L. Elizabeth King,
Esq., Flaherty Sensabaugh & Bonasso PLLC. The Bureau is represented by Attorney
General John B. McCuskey, Esq., and Assistant Attorney General Gary L. Michels, Esq.

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On February 24, 2021, SafeGuard provided its initial report to Valley Center. The
initial report determined that one hundred and eighty-five (185) claim lines for thirty-five
(35) Valley Center residents were discrepant out of the one hundred and ninety-three (193)
claim lines for thirty-six (36) Valley Center residents that were reviewed. As a result,
Valley Center provided a response to the initial report as well as supporting documentation.

After reviewing Valley Center’s response and supporting documents, on November
17, 2021, SafeGuard issued its Final Findings Report for the audit of Valley Center for the
period of March 1, 2016, to July 31, 2019. The review determined there were one hundred
and twenty-six (126) out of one hundred and ninety-three (193) claim lines for twenty-
eight (28) of the thirty-six (36) Valley Center residents found to have been billed in error.
As a result, SafeGuard’s final report made three findings: 1) the Case Mix Class identified
by Valley Center was not supported by documentation in the medical record; 2) there was
insufficient or missing documentation to validate Valley Center’s calculated Case Mix
Class; and 3) documentation required by State policy was missing from the medical record.

SafeGuard noted, in regard to the first finding:

[SafeGuard] determined that one member's record contained five claim lines
that were discrepant due to errors in the case mix calculation. The scores
submitted for payment by [Valley Center] were not properly calculated to the
appropriate case mix class and were not reproducible. Inconsistencies were
noted between the Activities of Daily Living (ADL) documentation prepared
by [Valley Center] and the ADL Index Score used to calculate the case mix
class. [SafeGuard] was unable to replicate the [Valley Center]-calculated
case mix class. Inconsistencies in the medical record documentation did not
support that [Valley Center] calculated the case mix class properly.

For example, Exhibit 2, Sample 2, . . . the calculated case mix score was
Class 5 by [Valley Center] and was not supported by the medical record. The
documentation supported a Class 6. Inconsistencies in the medical record
documentation did not support [Valley Center]’s calculated case mix class.

State nursing facilities are required to conduct a comprehensive, accurate,
standardized, and reproducible assessment of each resident's functional
capacity. The Bureau for Medical Services (BMS) utilizes the standardized
Minimum Data Set (MDS) assessment to determine the State specific case
mix class. This calculation is completed by utilizing the BMS Case-Mix
Classification Workbook, which converts the self-performance/support
provided for each functional ADL task into a reproducible score to correlate
with the appropriate billable case mix class. These assessments are to be
completed on every resident admitted to the facility by day 14 of the
admission and reassessed on at least a quarterly basis and annually thereafter.

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Documentation required to complete the case mix calculation would include
the MDS assessment and the ADL record.

SafeGuard noted, in regard to the second finding:

[SafeGuard] determined that 24 members’ records contained 91 claim lines
that were discrepant, as documentation necessary to support [Valley
Center]’s case mix calculation was insufficient or missing from the medical
record. Pertinent documentation of the MDS assessment, ADL record, or
other documentation necessary to support the calculated case mix class was
missing from the medical record.

For example, Exhibit 14, Sample 21, . . . there was insufficient
documentation to validate if [Valley Center] calculated the case mix
properly. The therapy progress notes were missing from the medical record;
therefore, documentation did not support the services rendered.

SafeGuard also noted, in regard to the third finding:

[SafeGuard] determined that 7 members’ records contained 61 claim lines
that were discrepant due to missing medical record documentation required
by State policy.

For example, in Exhibit 9, Sample 13, . . . documentation required by State
policy was missing from the medical record. The Pre-Admission Screening
(PAS) was missing from the medical record.

SafeGuard’s final report of the Valley Center audit attached exhibits that contained
an analysis of each patient record examined. As a result of the audit, SafeGuard determined
that there was an overpayment of $834,844.15.

On February 24, 2022, the Bureau sent Valley Center a decision adopting the result
of the audit conducted by SafeGuard. Valley Center submitted a request for a
Document/Desk Review, which was denied on March 14, 2024. Valley Center then
submitted its request for an evidentiary hearing on April 11, 2024.

On August 6, 2024, a hearing was held before Hearing Examiner Lewis Brewer. On
October 23, 2024, the hearing examiner issued his Recommended Decision. In the
Recommended Decision, the hearing examiner held that the findings of the SafeGuard
audit were all based on specific requirements set forth in rules applicable to nursing homes
in West Virginia providing services which are paid with State Medicaid funds through the
Bureau. The hearing examiner acknowledged that Valley Center argued that no West
Virginia law or guidance reflects the requirement to provide therapy treatment notes to

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validate therapy minutes; SafeGuard was able to validate therapy minutes through provided
documentation; and that the rules relied upon by SafeGuard may be invalid because they
were not properly enacted pursuant to notice and comment rule making. In regard to these
arguments, the hearing examiner held that:

Although therapy treatment notes may not be needed to validate the time
spent providing therapy to residents, what [SafeGuard] needed to validate the
treatments was progress notes that aligned with the RAI requirement for
documentation to indicate that the beneficiary's condition was being
monitored on an an-going basis, and which was derived from all direct care
staff of all shifts. Further, the audit indicates that the documentation produced
by Valley Center failed to support [Valley Center’s] case mix calculation,
and this failure was not attributable simply to the absence of daily therapy
treatment notes.

Accordingly, the undersigned Hearing Examiner finds that Valley Center has
not demonstrated that the findings contained in the [SafeGuard] audit are
inconsistent with established requirements applicable to such facilities, or
that the application of those rules was clearly wrong.

Finally, [Valley Center] suggests that the rules relied upon by [SafeGuard]
and the Bureau may be invalid because they were not properly enacted
pursuant to notice-and-comment rulemaking as required by the decisions in
Azar v. Allina Health Services, 587 U.S. 566 (2018), and Loper Bright
Enterprises v. Raimondo, [603] U.S. [369], 144 S. Ct. 2244 (2024). However,
this argument fails to specify any federal rule pertinent to this matter which
was improperly promulgated. Further, the primary state rule referenced in
the [SafeGuard] audit is a legislative rule and when such rules have been
adopted by the West Virginia Legislature, they take the form of a statute
which may be ignored only if the agency exceeded its constitutional or
statutory authority, or the rule is arbitrary or capricious.

On November 7, 2024, the Commissioner of the Bureau for Medical Services issued
its Decision adopting the Recommended Decision in its entirety. It is from this Decision
that Valley Center appeals.

Our review of this matter is governed by the State Administrative Procedures Act,
and it provides:

The court may affirm the order or decision of the agency or remand the case
for further proceedings. It shall reverse, vacate, or modify the order or
decision of the agency if the substantial rights of the petitioner or petitioners

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have been prejudiced because the administrative findings, inferences,
conclusions, decision, or order are:

(1) In violation of constitutional or statutory provisions;
(2) In excess of the statutory authority or jurisdiction of the agency;
(3) Made upon unlawful procedures;
(4) Affected by other error of law;
(5) Clearly wrong in view of the reliable, probative, and substantial evidence
on the whole record; or
(6) Arbitrary or capricious or characterized by abuse of discretion or clearly
unwarranted exercise of discretion.

W. Va. Code § 29A-5-4(g) (2021); accord W. Va. Code § 16B-2-2 (2024).

On appeal, Valley Center argues that the Bureau’s Decision is insufficient because
it fails to adequately explain its resolution of conflicting evidence and the Decision of the
Bureau is against the weight of the evidence.2 The Court notes that Valley Center must
carry the burden of showing error in the judgment of which it complains, and error will not
be presumed. See Syl. Pt. 5, Morgan v. Price, 151 W. Va. 158, 150 S.E.2d 897
(1966); Cobble v. Lester, No. 24-ICA-201, 2024 WL 5201017, at *2 (W. Va. Ct. App. Dec.
23, 2024) (memorandum decision). Here, Valley Center failed to provide any substantive
citation to the over 11,000-page record to demonstrate the result was against the weight of
the evidence, the existence of conflicting evidence, or how such evidence was presented to
the Bureau. Accordingly, Valley Center has failed to demonstrate error in the Bureau’s
decision in regard to the weight of the evidence or the Bureau’s resolution of conflicting
evidence.3

Valley Center also argues “that the [United States] Supreme Court has recently
taken up a number of relevant administrative matters . . . any use of guidance that is not

2
The Court notes that consideration of this matter was made more difficult by
Valley Center’s briefing. Valley Center asserted four (4) lengthy assignments of error.
However, the argument section of Valley Center’s brief does not “contain an argument . .
. under headings that correspond with the assignments of error.” W. Va. R. App. P.
10(c)(7). The Court has combined related issues presented by Valley Center’s brief for
discussion. See generally Tudor’s Biscuit World of Am. v. Critchley, 229 W. Va. 396, 402,
729 S.E.2d 231, 237 (2012) (per curiam).
3
Further, the Court notes that on appeal, Valley Center has the duty to support its
arguments with “appropriate and specific citations to the record . . . .” W. Va. R. App. P.
10(c)(7). Such specific citations include “citations that pinpoint when and how the issues
in the assignments of error were presented to the lower tribunal.” Id.

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subject to notice-and-comment rulemaking may not be used to support a denial of claims.”
However, Valley Center fails to identify any rule, regulation, or guidance relied on in this
matter that was improperly promulgated. Accordingly, Valley Center has again failed to
demonstrate error.

Based on the foregoing, we affirm the Bureau’s November 7, 2024, Decision, which
adopted the hearing examiner’s October 23, 2024, Recommended Decision.

Affirmed.

ISSUED: August 29, 2025

CONCURRED IN BY:

Chief Judge Charles O. Lorensen
Judge Daniel W. Greear
Judge S. Ryan White

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