This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1998).





St. Joseph's Medical Center, et al.,



State of Minnesota, Department of Human Services,


Filed June 15, 1999


Halbrooks, Judge

Crow Wing County District Court

File No. C2-97-1420

File No. C9-97-1513

Raymond A. Charpentier, Charpentier and Lange, 611 Oak Street, PO Box 341, Brainerd, MN 56401 (for respondents)

Mike Hatch, Attorney General, Paul M. Landskroener, Assistant Attorney General, Narda Jones, Assistant Attorney General, 445 Minnesota Street, Suite 900, St. Paul, MN 55101-2127 (for appellant)

Considered and decided by Halbrooks, Presiding Judge, Peterson, Judge, and Foley, Judge.[*]



In two cases consolidated for appeal, appellant denied payment to respondents for inpatient psychiatric services provided under the Medical Assistance-General Assistance Medical Care (MA-GAMC) program. The district court reversed the decisions of the Commissioner of the Department of Human Services (DHS) finding they were not supported by substantial evidence in the record. Appellant challenges the district court's orders, asserting: (1) it is not proper for respondents to challenge the agency's decisions for lack of substantial evidence when the respondents bear the burden of proof; (2) the commissioner's decisions were supported by substantial evidence; and (3) the decisions were not arbitrary or capricious. Because we determine the commissioner's decisions are supported by substantial evidence and are not arbitrary or capricious, we reverse the district court.


The cases on appeal involve the eligibility of respondents St. Joseph's Medical Center, John Bonde, M.D., and Leonard Fielding, M.D., to receive payment for the costs of inpatient hospitalization for patients A.C. and B.S., who received psychiatric services under the MA-GAMC program.

In both cases, the physicians determined inpatient psychiatric hospitalization was medically necessary because the patients had psychiatric disorders with a significant risk of suicidal behavior. Following the patients' admission, St. Joseph's and the physicians applied to the DHS for certification of payment. In both cases, a medical review agent determined the initial 24-hour crisis observation was appropriate, but declined to approve payment for further inpatient treatment. In B.S.'s case, the reviewer stated B.S.'s primary problem was alcoholism, and "chemical dependency is not covered under Medical Assistance." The reviewer concluded appropriate care could have been provided in a less-intensive setting. In A.C.'s case, the reviewer found the acute nature of A.C.'s condition was resolved after the crisis observation period and longer term treatment could be provided in a less intensive setting.

St. Joseph's and Dr. Bonde requested an administrative review of the decisions pursuant to Minn. Stat. § 256.9685, subd. 1a. Three psychiatrists conducted the reviews and, in both cases, a majority agreed that the hospitalization was not medically necessary.

In B.S.'s case, two of the reviewing doctors noted that B.S. had been drinking and concluded 24-hour crisis observation followed by outpatient chemical dependency treatment was appropriate. The third doctor opined that, even though B.S. denied being suicidal while in the hospital, her recent significant threat warranted further observation and stabilization.

In A.C.'s case, the two doctors who found hospitalization after the crisis observation period was not medically necessary concluded A.C.'s suicide attempts were an attention-seeking mechanism directed toward his girlfriend and did not indicate he was a danger to himself. The third doctor found suicidal issues remained after the initial observation period and felt additional inpatient treatment was appropriate.

St. Joseph's and the physicians requested additional review pursuant to Minn. Stat. § 256.9685, subd. 1b. Upon review, the Commissioner of Human Services found there was not a significant risk of suicidal behavior at the time B.S. was admitted to the psychiatric unit because the focus of the treatment was alcohol dependency and B.S. denied suicidal ideation on the day of admission. With regard to A.C., the commissioner held: "The records do not indicate an immediate or significant risk of harm. The patient denied suicidal plans when he was admitted to the inpatient program."

St. Joseph's and the physicians subsequently appealed to the district court for review pursuant to Minn. Stat. § 256.9685, subd. 1c. The district court found the commissioner's decisions were not supported by substantial evidence in view of the entire record and that St. Joseph's treatment of B.S. and A.C. was medically necessary.

In response, the DHS brought the instant appeal. It contends the district court erred in applying the substantial-evidence test, the district court erred in concluding the commissioner's order was not supported by substantial evidence, and the commissioner's decision was not arbitrary or capricious.


When reviewing an appeal from the district court's appellate review of an administrative agency's decision, we do not defer to the district court's review. Reserve Mining Co. v. Herbst, 256 N.W.2d 808, 824 (Minn. 1977); Johnson v. Minnesota Dep't of Human Servs., 565 N.W.2d 453, 457 (Minn. App. 1997). Instead, we independently examine the agency's record and determine the propriety of the agency's decision. Johnson, 565 N.W.2d at 457. Our review of a decision of the Commissioner of Human Services is governed by Minn. Stat. § 14.69 (1998). Kaplan v. Washington County Community Soc. Servs., 494 N.W.2d 487, 489 (Minn. App. 1993). This statute provides:

[T]he court may affirm the decision of the agency or remand the case for further proceedings; or it may reverse or modify the decision if the substantial rights of the petitioners may have been prejudiced because the administrative finding, inferences, conclusion, or decisions are:

* * * *

(e) Unsupported by substantial evidence in view of the entire record as submitted; or

(f) Arbitrary or capricious.

Minn. Stat. § 14.69 (1998). The party seeking review has the burden of proving one of these statutory grounds. Markwardt v. State, Water Resources Bd., 254 N.W.2d 371, 374 (Minn. 1977).

1. Applicability of the substantial-evidence test

In the present case, the DHS argues that use of the substantial-evidence standard of review does not apply where an applicant to an agency bears the burden of proof. In these cases, the DHS asserts only the arbitrary-or-capricious standard should be applied. The DHS bases its argument on this court's decision in North Memorial Med. Ctr. v. Minnesota Dep't of Health, 423 N.W.2d 737, 740 (Minn. App. 1988), and the lack of a clear distinction between the two standards.

Appellant's contention that North Memorial stands for the proposition that, in all cases where an applicant bears the burden of proof, the substantial-evidence test does not apply overstates the holding of the case. In North Memorial, we stated

Where the Commissioner's decision [to deny an applicant] is based on an applicant's failure to submit evidence, and the lack of evidence is supported by the record, it is not proper for the applicant to seek reversal on the ground that the decision is not supported by evidence it had the burden to present.

Id. The indication that the "lack of evidence" must be "supported by the record" necessarily requires the reviewing court to examine the record for evidence; not to abdicate the substantial-evidence test in every case where an applicant bears the burden of proof.

Accordingly, where an applicant for statutory benefits has submitted evidence but been denied benefits by the agency, the applicant is entitled to appeal the decision on the ground that substantial evidence does not support the agency's decision. See Johnson, 565 N.W.2d at 457-59 (applying the substantial-evidence test to review Department of Human Services determination that applicant for medical assistance funds to purchase a stand-up wheelchair failed to establish the wheelchair was medically necessary); Dozier v. Commissioner of Human Servs., 547 N.W.2d 393, 396 (Minn. App. 1996) (applying the substantial-evidence test to review an agency decision where applicant for position at childcare facility licensed by Department of Human Services had burden to prove he was qualified for the job), review denied (Minn. Jul. 10, 1996); Erickson v. Commissioner of Human Servs., 494 N.W.2d 58, 63 (Minn. App. 1992) (applying substantial-evidence test to review agency's denial of benefits to applicant for Aid to Families with Dependent Children benefits).

2. Substantial evidence

In the present case, respondents contend the commissioner's decisions denying payment for inpatient psychiatric care for B.S. and A.C. are not supported by substantial evidence. Substantial evidence has been defined as:

(1) such relevant evidence as a reasonable mind might accept as adequate to support a conclusion; (2) more than a scintilla of evidence; (3) more than "some evidence"; (4) more than "any evidence"; and (5) evidence considered in its entirety.

Reserve Mining, 256 N.W.2d at 825. The substantial-evidence test requires the reviewing court to evaluate the evidence relied on by the fact-finder "in view of the entire record as submitted." Minn. Stat. § 14.69(e) (1998); Minnesota Power & Light Co. v. Minnesota Pub. Utils. Comm'n, 342 N.W.2d 324, 332 (Minn. 1983). If an administrative agency engages in reasoned decision making, the court will affirm, even though it may have reached a different conclusion had it been the fact-finder. First Nat'l Bank v. Department of Commerce, 350 N.W.2d 363, 368 (Minn. 1984).

In order to receive payment for the costs of inpatient hospitalization for persons receiving services under the MA-GAMC program, the hospital and admitting physician must receive admission certification from the DHS. Minn. R. 9505.0520, subpt. 1 (1997). The DHS has a medical review agent provide the certification services, see Minn. R. 9505.0500, subpt. 18 (1997), and determine whether the admission was "medically necessary." Minn. R. 9505.0540, subpt. 1 (1997). Whether inpatient psychiatric hospitalization is "medically necessary" is based on criteria referenced at Minn. R. 9505.0530 (1997). These criteria state in part:

Services will be provided if one or more of the following describe the patient's current condition.

1. Actual or potential danger to self, others, and/or property.

a. Psychiatric disorder with significant risk of suicidal and/or homicidal behavior.

b. Psychiatric disorder with dangerous assaultive or other uncontrolled behavior not due to acute intoxication.

Blue Cross & Blue Shield of Minnesota, Criteria for Inpatient Psychiatric Treatment (1991).

In this case, respondents were required to prove B.S and A.C. had "psychiatric disorder[s] with significant risk of suicidal behavior" and posed an "actual or potential danger to [themselves], others and/or property." The commissioner reviewed both patients' medical records, appeal letters from the admitting physician, the initial denial letters from the review agent, and notes submitted by the physician reviewers. The commissioner concluded that B.S. and A.C. did not pose a significant risk of suicidal behavior and could have been treated in a less-intensive setting.

Giving due deference to the agency's expertise in determining the appropriate level of medical care required, we conclude there is substantial evidence in the record to support the commissioner's decisions. See, e.g., Reserve Mining, 256 N.W.2d at 824 (holding "decisions of administrative agencies enjoy a presumption of correctness, and deference should be shown by courts to the agencies' expertise and their special knowledge in the field of their technical training, education, and experience.").

With regard to B.S., the medical records indicate her diagnosis upon admission was depression and alcohol dependency. When B.S. arrived at St. Joseph's, she smelled strongly of alcohol and was unkempt. The staff monitored B.S. for alcohol intoxication and withdrawal symptoms. Dr. Bonde referred B.S. for a chemical dependency assessment because of the alcohol dependency diagnosis. The assessment began on December 13, 1993, within 24 hours of her admission. B.S. had previously received inpatient treatment for alcoholism.

Additionally, although she was depressed, B.S. never specifically indicated an intent to take her own life after her admission to the hospital. Based on these facts, the commissioner reasonably concluded B.S. did not present a significant risk of suicide after the first 24 hours of her admission and her primary problem was alcoholism. In A.C.'s case, following admission to St. Joseph's, A.C. never indicated an intent to take his own life. He consistently denied any intent to kill himself, and admitted his self-injurious actions were a cry for help, designed to get his girlfriend's attention. We find the commissioner could reasonably conclude A.C.'s actions were not necessarily suicide attempts, but instead were dramatic calls for help.

3. Arbitrary and capricious

Appellant contends the commissioner's decisions were not arbitrary or capricious because there was evidence in the record from which the commissioner could conclude neither patient presented a significant risk of suicide when admitted to the inpatient psychiatric unit. We agree.

Although the commissioner's order is brief, the commissioner indicated she reviewed all of the evidence in the record and based her determinations on that evidence. In B.S.'s case, the commissioner reviewed the determinations of three independent physicians, two of whom concluded B.S. did not show a significant risk of suicide following the first 24 hours of her admission to the hospital. Like these physicians, the commissioner found B.S.'s primary problem was alcoholism, which is not covered under Medical Assistance. Moreover, the medical records indicate B.S. did not repeat her suicidal ideation or take any action consistent with a desire to injure herself once she was admitted to the hospital.

Similarly, in A.C.'s case, the commissioner reviewed all of the evidence in the record, including the determinations of three independent physicians, two of whom found A.C. was no longer acutely suicidal within 24 hours after admission and his actions were attention-seeking devices. The commissioner specifically articulated A.C.'s denial of suicidal plans as the basis for her decision. We, therefore, conclude the commissioner's decisions are the result of reasoned judgment and are not based on whim. See Mammenga v. State Dept. of Human Servs., 442 N.W.2d 786, 789 (Minn. 1989) (stating an agency's decision may be arbitrary or capricious if the decision is "based on whim" or "devoid of articulated reasons").


[*] Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.