In a case decided December 19, 2014 by the Nebraska Supreme Court, Kutak Rock attorneys Thomas Kenny and Edward Fox secured a decision leading to the dismissal of all claims against a managed care company (MCO) client of the firm. The Supreme Court’s opinion in Shaffer v. Department of Health and Human Services, 289 Neb. 740 (2014) held unanimously in favor of the firm’s client, finding that the District Court’s decision in favor of the Medicaid beneficiary should be dismissed. Shaffer was a case of first impression under Nebraska’s Administrative Procedure Act (APA), Neb. Rev. Stat. §§ 84 901 et seq.

In Shaffer, the plaintiff sought long term insurance benefits from the MCO for private nursing duty care lasting 18 hours per day. The Medicaid beneficiary prevailed before the District Court, which held that the nursing services requested were “medically necessary” under applicable law and other guidance. Even though the MCO was not named a party and did not participate in the District Court proceeding, it appealed directly to the Nebraska Court of Appeals. The Supreme Court, after removing the case directly to its docket, rejected the Medicaid beneficiary’s arguments that the MCO lacked standing to appeal and that the MCO did not need to be joined at the District Court level. Instead, the Court found that the MCO’s appeal was proper and, because the MCO was a “necessary party” that was not joined at the District Court level, the lower court’s order must be vacated and the Medicaid beneficiary’s administrative appeal dismissed.

The Shaffer decision, by changing the composition of the parties required to participate at the district court in agency appeals, will fundamentally alter the course of administrative litigation before Nebraska courts and administrative tribunals, such as the Department of Health and Human Services. The decision obtained by the firm ended a costly and long-running problem for the MCO by relieving it of a significant obligation going forward.