INDIANA FAMILY AND SOCIAL SERVICES ADMINISTRATION v. CAISTER (2025)

MEMORANDUM DECISION

[1] The Indiana Family and Social Services Administration and related entities and officers (collectively, “FSSA”) appeal the trial court's judgment reinstating the administrative law judge's (“ALJ's”) decision in favor of Mireille Caister (“Mireille”) on her application for services under the Community Integration and Habilitation Waiver (“CIH waiver”) program. FSSA presents three issues for our review, which we consolidate and restate as two issues:

1. Whether the trial court erred when it concluded that FSSA abused its discretion when it denied Mireille's application.

2. Whether the trial court's reinstatement of the ALJ's decision rather than remanding for a new hearing was appropriate.

Mireille cross-appeals and argues that FSSA denied her the right to due process.

[2] We affirm in part and remand for further proceedings.

Facts and Procedural History

[3] Mireille was born in Russia in March 2008, and her parents, Timothy and Jennifer Caister, adopted her in 2009. Mireille has been diagnosed with ADHD, Disruptive Mood Dysregulation Disorder (“DMDD”), autism, fetal alcohol spectrum disorder, and PTSD. In 2017, Mireille began receiving services from the Bureau of Developmental Disabilities Services (“BDDS”) under a family supports waiver, including case management, music therapy, and behavior management services. Mireille continued to live at home with her parents and brother.

[4] On three occasions in 2021, Mireille physically attacked Jennifer. After the third attack, Mireille was no longer left alone with Jennifer. And in August, Mireille was hospitalized at the NeuroDiagnostic Institute (“NDI”) for ten weeks before being discharged. A typical inpatient stay at NDI is four to six weeks.

[5] On February 3, 2022, Mireille applied for a CIH waiver, whereby she and her family could receive additional services to enable her to continue to live at home. Shortly after she submitted her application, Mireille's Person-Centered Individualized Support Plan (“PCISP”) indicated that she was exhibiting “verbal aggression less than ten times a week, with a duration of greater than ten minutes and a high typical severity.” Appellants’ App. Vol. 2, p. 55. The PCISP also indicated that Mireille was exhibiting “physical aggression five times a week, with typical duration of one to five minutes and more than ten minutes and a high typical severity.” Id.

[6] Likewise, a behavior support plan (“BSP”) prepared after Mireille had submitted her application indicated that

[t]here has been a notable increase in intensity/duration with verbal and physical aggression, resulting in the need for two adults to be present in the home 24 hours a day for safety. Impulsive and planned acts of violence requires [sic] parents to place her in [a] trained safety hold. She has decreased willingness to accept light touches on her arm when she feels dysregulated and refuses to take a break or implement a known positive coping strategy. The family has a safety plan in place.

Id. The BSP further specified that Mireille was “throwing/tossing objects, violently attacking and hitting others, biting, pulling hair, and breaking objects” and that she was committing acts of self-harm, including pulling her own hair and scratching herself. Id.

[7] Based only on her application and not the later reports, the Director of the Division of Disability and Rehabilitative Services (“DDRS”) determined that Mireille did not meet the criteria for CIH eligibility and denied her application in May 2022. Mireille filed a timely administrative appeal. Following a hearing, the ALJ concluded that Mireille did meet the eligibility criteria for a CIH waiver under Indiana Code section 12-15-1.3-15(c)(4) and reversed the DDRS's decision.

[8] BDDS appealed the ALJ's decision to the FSSA employee with the statutory “ultimate authority” to make FSSA's final decision in the matter, Jessica Harlan-York (“Harlan-York”), and she reversed the ALJ's decision. See I.C. § 4-21.5-3-9. Mireille then filed her verified petition for judicial review. The trial court initially remanded the case to Harlan-York with instructions “to issue an order with findings of fact that meet the requirements of Ind. Code Section 4-21.5-3-28(g).” Appellants’ App. Vol. 3, p. 223. In January 2024, Harlan-York issued an amended notice of final agency decision stating in relevant part as follows:

The issue identified on this administrative appeal is whether Petitioner Mireille Caister's situation falls under the health and safety risk category for emergency placement priority eligibility for the CIH waiver program.

[Mireille] has not demonstrated that there are health and safety risks that would warrant an emergency placement under the health and safety category. [Mireille] applied for the CIH waiver by submitting a Needs Based Access Request (NBAR) February 3, 2022. On May 5, 2022, BDS sent a denial letter to [Mireille]. Information and events occurring post the original CIH application of February 3, 2022, are not considered as part of this final agency decision. This includes the following Findings of Fact (FOFs) in the Administrative Review Decision, FOF 16, 17, 18, 19, 20, and 21. This also includes any and all information submitted to [Harlan-York] by [Mireille] and [FSSA] related to facts and events post the February 3, 2022, application date. Additionally, FOFs mention [Mireille's] behaviors; however, there are no FOFs that discuss the specifics of any incident reports during the applicable time for this appeal, a behavior support plan for the applicable time period of this appeal, any risk plans created, or any targeted goals tied to these behaviors. The HCBS waiver program is not an entitlement program. 42 CFR Section 441.720 specifically requires utilization of all available entitlement options prior to consideration for an HCBS waiver, and then after the criteria established in Indiana Code Section 12-15-1.3-15 has also been met. The FOFs do not mention that the current options have been exhausted or are not available. [Mireille] continues to have an array of additional state options that are available and must be exhausted prior to emergency placement.

Id. at 223-24 (emphasis added).

[9] Mireille filed another verified petition for judicial review of the final agency action and alleged in relevant part that

[t]he amended final order erroneously asserts that “42 CFR Section 441.720 specifically requires utilization of all available entitlement options prior to consideration for an HCBS waiver, and then after the criteria established in Indiana Code Section 12-15-1.3-15 has also been met” and that “[Mireille] has an array of additional state options that are available and must be exhausted prior to emergency placement.” The amended final order contains no other Conclusions of Law. [Harlan-York] applied the wrong standard of law in the amended final order.

Appellants’ App. Vol. 2, p. 25.

[10] Following a hearing, the trial court found in Mireille's favor and reinstated the ALJ's decision granting the CIH waiver. FSSA filed a motion to correct error, which the court granted. The trial court then issued an amended order in Mireille's favor to correct nonsubstantive errors. The court found that the ALJ's findings “properly frame the issue which was supported by arguments of counsel at the hearing in this matter.” Id. at 17. The court also found that Mireille “has reached the monetary cap for services” designed to keep her at home and that Mireille

has in fact exhausted all other options within the confines of the money allotted and participates to the best of her ability in all services recommended. Nowhere in Ind. Code § 12-15-1.3-15 is there a requirement that in order to qualify for a CIH waiver (assuming [Mireille] falls within one of the exceptions) that they must exhaust other efforts. Such a requirement (evidenced by the word must) is an abuse of discretion.

Id. at 17-18 (emphases original). This appeal ensued.

Discussion and Decision

Standard of Review

[11] FSSA contends that the trial court erred when it reinstated the ALJ's decision granting Mireille's application for a CIH waiver. In an appeal involving a decision of an administrative agency, our standard of review is governed by the Administrative Orders and Procedures Act (“AOPA”), and we are bound by the same standard of review as the trial court. Dev. Servs. Alternatives, Inc. v. Ind. Fam. & Soc. Servs. Admin., 915 N.E.2d 169, 176 (Ind. Ct. App. 2009), trans. denied. Appellate courts stand in the same position as that of the trial court when reviewing a decision of an administrative agency. Filter Specialists, Inc. v. Brooks, 906 N.E.2d 835, 844 (Ind. 2009). A reviewing court is not bound by a finding of fact made by the ultimate authority if the finding of fact is not supported by the record, and the court shall decide all questions of law, including any interpretation of a federal or state constitutional provision, state statute, or agency rule, without deference to any previous interpretation made by the agency. Ind. Code § 4-21.5-5-11 (2024).¹ Judicial review of disputed issues of fact must be confined to the agency record for the agency action. Id. We will reverse the agency's decision only if it is

(1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;

(2) contrary to constitutional right, power, privilege, or immunity;

(3) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;

(4) without observance of procedure required by law; or

(5) unsupported by a preponderance of the evidence.

I.C. § 4-21.5-5-14(d) (2024).

Background

[12] With her application for a CIH waiver, Mireille sought additional home-based services under Indiana Code section 12-15-1.3-15(c), which provides:

The office shall apply to the United States Department of Health and Human Services for approval to amend a waiver to set an emergency placement priority for individuals in the following situations:

(1) Death of a primary caregiver.

(2) The primary caregiver is at least eighty (80) years of age.

(3) There is evidence of abuse or neglect in the current institutional or home placement.

(4) There is evidence of other health and safety risks, as determined by the division director, where other available services through:

(A) the Medicaid program and other federal, state, and local public programs; and

(B) supports that families and communities provide;

are insufficient to address the other health and safety risks, as determined by the division director.

(Emphases added.) Specifically, Mireille sought, and FSSA denied, a CIH waiver under subsection (c)(4). A CIH waiver

is one of two Medicaid Home and Community-Based Services waiver programs for children and adults with intellectual and developmental disabilities. Home and Community-Based Medicaid Waivers provide person-centered individualized supports that assist individuals in living in their own home or family home and have full access to the benefits of community living.

https://www.in.gov/fssa/ddrs/developmental-disability-services/ [https://perma.cc/WM39-ADZC].

Issue One: Statutory Interpretation

[13] FSSA first contends that the trial court erred when it rejected FSSA's interpretation of the applicable statutes to mean “that in order to qualify for a CIH waiver ․ [an applicant] must exhaust other efforts[ to obtain additional services].” Appellants’ App. Vol. 2, pp. 17-18 (emphasis original). FSSA argues that it “appropriately applied Subsection (c)(4) when it evaluated [Mireille's] request for a CIH waiver.” Appellants’ Br. at 27. In particular, FSSA maintains that

[t]he trial court's decision to read Subsection (c)(4) as prohibiting FSSA from considering [Mireille's] unexhausted alternative treatment options is at odds with both the text of the statute and the federal regulations governing state HCBS waiver programs. Indiana's Emergency Placement Statute plainly contemplates that the division director will consider the appropriateness of at least some alternative placements before approving a waiver. After all, each of the statute's subsections include identical sub-requirements that “alternative placement in a supervised group setting” be either “unavailable” or “determined by the division director to be an inappropriate option.” I.C. § 12-15-1.3-15(c). Similarly, 42 C.F.R. § 447.720(a) requires that state agencies consider an individualized assessment that includes documentation regarding the availability of Medicaid, other federally funded programs, and state-funded services before admitting an applicant to an HCBS waiver program. 42 C.F.R. §§ 447.720(a)(7) through (9). Clearly, these governing regulations anticipate that FSSA will consider unexhausted options, otherwise there would be no reason for the agency to collect documentation in the first place. That there is a requirement for the agency to collect this documentation at all strongly suggests that agencies must give at least some consideration to these alternatives.

Id. at 29-30 (emphasis added).

[14] But giving FSSA discretion to “consider unexhausted options” is vastly different than imposing a nonexistent requirement on Mireille to exhaust her options. Id. at 30. Indeed, FSSA acknowledges that Harlan-York may have “overstated the legal requirements for approval of a [CIH] waiver[.]” Appellants’ Br. at 33. We agree with the trial court that Harlan-York erroneously interpreted the law.

[15] Still, FSSA maintains that “any error is harmless because there is an adequate, independent basis for the authority's decision and the division director had discretion to consider other options available to [Mireille].” Appellants’ Br. at 31. In particular, FSSA argues that Indiana Code section 12-15-1.3-15(c)(4) explicitly gives the division director broad discretion to determine whether “other available services ․ are insufficient to address” the alleged health and safety risks to Mireille. Thus, FSSA maintains that “the director can still consider the same evidence regarding available resources when deciding whether to accept [Mireille's] waiver application.” Appellants’ Br. at 33.

[16] In support of this contention, FSSA cites American Senior Communities v. Indiana Family & Social Services Administration, 206 N.E.3d 495 (Ind. Ct. App. 2023), trans. denied. In that case, the ALJ conducted an independent internet search in the course of defining the term “direct care component” as used in the applicable administrative code provision. Id. at 501. We agreed that the internet search was only “ ‘incidental to the [ALJ's] final decision’ ” and was, therefore, harmless error. Id. We stated that the “error is not prejudicial because the finding is not necessary to support the ALJ's judgment.” Id.

[17] In contrast, here, Harlan-York's assessment of Mireille's application was based on an erroneous interpretation of the law. While FSSA is correct that the division director may consider whether available resources are adequate to address Mireille's needs, Harlan-York went well beyond that to require Mireille to exhaust services where no such requirement exists. The error was not incidental, and it was, therefore, not harmless.²

Issue Two: Request for Remand

[18] Next, FSSA argues that, if we agree with the trial court that FSSA erred, the proper remedy is to remand for further proceedings. Indiana Code section 4-21.5-5-15 provides:

If the court finds that a person has been prejudiced under section 14 of this chapter, the court may set aside an agency action and:

(1) remand the case to the agency for further proceedings; or

(2) compel agency action that has been unreasonably delayed or unlawfully withheld.

The trial court here chose to exercise its discretion under subsection (2) to compel the agency action. However, as we explain below, we exercise our discretion to remand the case to FSSA for further proceedings.

[19] As this Court explained in Indiana State Board of Health Facility Administrators v. Werner, 841 N.E.2d 1196, 1209 (Ind. Ct. App. 2006), trans. denied,

“[t]he express intent of this part of the statute is to limit the reviewing court's authority to remand the case to the administrative agency for further proceedings after a proper determination that the agency's decision was contrary to law. If upon remand the agency unlawfully withholds or unreasonably delays the redetermination of the case, then the trial court may compel agency action by direct order. Otherwise the reviewing court does not have power to compel agency action as part of the initial review function. It may only remand the cause for rehearing.”

(Quoting Ind. Alcoholic Bev. Comm'n v. Johnson, 158 Ind. App. 467, 476-77, 303 N.E.2d 64, 69 (1973); emphasis added).

[20] Here, Mireille maintains that, because the trial court had already remanded the case to FSSA once, it is appropriate to compel the agency action, especially given that more than three years have passed since she applied for the CIH waiver. But the trial court's remand to Harlan-York was limited and merely instructed her “to issue an order with findings of fact that meet the requirements of Ind. Code Section 4-21.5-3-28(g).” Appellants’ App. Vol. 3, p. 223. There is no evidence of unlawful withholding or unreasonable delay after that remand. Indeed, Harlan-York issued the amended decision promptly.

[21] In any event, our review of the record shows that there is evidence to support either granting or denying Mireille's CIH waiver application. And “[t]his is a decision best left to [FSSA].” See Werner, 841 N.E.2d at 1210. Accordingly, we remand for a new hearing and instruct FSSA to impose on Mireille only the requirements set out in Indiana Code section 12-15-1.3-15(c)(4), which, again, provides:

(4) There is evidence of other health and safety risks, as determined by the division director, where other available services through:

(A) the Medicaid program and other federal, state, and local public programs; and

(B) supports that families and communities provide;

are insufficient to address the other health and safety risks, as determined by the division director.

[22] Explicit in the division director's discretion is a determination that the designated “other available services” are insufficient to address the health and safety risks faced by Mireille. But, to reiterate, Mireille is not required to show that she has exhausted all other available services in order to qualify for the CIH waiver.

Cross-appeal

[23] In her cross-appeal, Mireille contends that we should affirm the trial court because FSSA denied her the right to due process. As our Supreme Court has explained, “the fundamental requirement of procedural due process is the opportunity to be heard at a meaningful time and in a meaningful manner.” Perdue v. Gargano, 964 N.E.2d 825, 832 (Ind. 2012).

[24] Mireille maintains that, under Indiana Code section 4-21.5-3-29, Harlan-York was required to provide Mireille with written notice of the issues she would review related to the ALJ's decision. Mireille states that she never received any such notice and that she was, therefore, denied due process. FSSA argues that the statute only applies where the ultimate authority reviews a decision sua sponte, which is not the case here. In any event, FSSA argues that BDDS's objection to the ALJ's decision sufficiently informed Mireille of the issues in dispute.

[25] Assuming without deciding that the statute applies here, Mireille has not explained how she was denied due process. She has not, for instance, alleged that she was surprised by any issues or arguments raised before Harlan-York. Nor has Mireille argued that she would have made different arguments had she received written notice of the issues. Accordingly, we reject Mireille's argument that she was denied her right to due process. See, e.g., In re Contempt of Wabash Valley Hosp., Inc., 827 N.E.2d 50, 63 (Ind. Ct. App. 2005) (holding no due process violation despite technical violation of statute where hospital admitted that its argument would have been the same whatever the content of the written order that was not served on it).

Conclusion

[26] FSSA abused its discretion when it denied Mireille's CIH waiver application based on her failure to exhaust her efforts to seek all available services under her existing family supports waiver. Rather than compel agency action, we remand for a new hearing and instruct FSSA to impose on Mireille only the requirements set out in Indiana Code section 12-15-1.3-15(c)(4). We deny Mireille's cross-appeal based on an unsupported allegation of a denial of due process.

[27] Affirmed in part and remanded for further proceedings.

FOOTNOTES

1.   This statute was amended effective July 1, 2024, and applies to a proceeding for judicial review commenced after June 30, 2024. FSSA filed its notice of appeal in December 2024. I.C. § 1-1-5.5-24(b)(1). Accordingly, we apply the statute as amended here.

2.   FSSA also argues that “substantial evidence supports the final reviewing authority's determination” rejecting Mireille's application and the trial court erroneously reweighed the evidence when it found that Mireille's behaviors met the health and safety risk requirement for the CIH waiver. Appellants’ Br. at 22. Because we remand for further proceedings, as we explain below, we need not address that issue.

Mathias, Judge.

May, J., and Bradford, J., concur.