ANALYSIS OF MAY 19, 2009 CAV OPINIONS
 
[Posted May 19, 2009] Today is an interesting day on the appellate front, as the Court of Appeals hands down three intriguing opinions.
 
Domestic relations
When is an agreement not an agreement? The court answers this question, sort of, in Doering v. Doering, involving a property settlement agreement that didn’t make it into a divorce decree. Husband and wife both signed the PSA, and a few months later, wife sued for divorce. As usual, she asked that the PSA be ratified, confirmed, and incorporated into the final decree.
 
Husband didn’t see it that way; he responded that the “agreement” was the product of fraud, misrepresentation, and duress. He also sought relief from the by-then onerous obligation to pay $4,000 a month in spousal support and $1,200 a month in child support.
 
The trial court initially held a hearing on the validity of the PSA, and the court grudgingly upheld it (though not before calling it “a lousy agreement” for the husband). But when the time came a year later for argument on the final divorce, Husband had a bit more success. He convinced the court that he had suffered a material change in his financial circumstances in the intervening time. The trial court thus declined to incorporate the PSA into the final decree and cut the support back to an aggregate of $866 per month.
 
Wife understandably appealed.  The primary issue in today’s decision is whether a trial court has the authority not to incorporate a PSA into a divorce decree. This one’s easy; the statute permitting incorporation provides that a trial court “may affirm, ratify, and incorporate by reference” a PSA into a decree. May in this case also means the court might well decide not to. Ad the trial court amply set forth its findings on change of circumstances, so it didn’t abuse its discretion.
 
That might prove to be an empty victory for Husband, since the court points out in a footnote that the failure to incorporate the PSA into the decree doesn’t deprive Wife of all her ability to enforce its terms; it just takes away the contempt route. Presumably (if I’m reading footnote 2 correctly) she can still sue Husband for breach of his contractual obligation to pay her the support.
 
The court decides one other issue today, holding that the presence of a modification clause (permitting the court to modify the terms due to a change in circumstances) permits the court to reduce the support as it did. Again, the trial court supplied the necessary factual findings to support a reduction in the award, so the judgment is affirmed.
 
There is one thing I can’t figure out about this appeal – according to today’s opinion, the final decree was entered in April 2006. I cannot fathom why it took three-plus years to get an initial appellate ruling on the case, unless the matter was previously remanded for some reason. Today’s opinion says nothing about that. I know the Court of Appeals doesn’t take that long to get its rulings out (especially since this is an appeal of right, so Wife didn’t have to go through the petition process), so something unusual must have gone on here.
 
Administrative law
Talk about your pyrrhic victories – the appellee in VRS v. Cirillo wins today, but the case is remanded and she might find herself in hot water at the end of the process. At stake is her claim for Virginia Retirement System disability benefits. She filed several applications with VRS, and met (mostly) with failure. The VRS Board issued a final decision denying benefits in one short paragraph.
 
The employee appealed, and the circuit court reversed and ordered the benefits to be paid. It found that the VRS is statutorily required to set forth the factual basis for its denial of the benefits, and the short paragraph wasn’t sufficiently detailed.
 
Today, the CAV affirms the trial court’s finding that VRS didn’t give the required explanation. Good for the employee, right? Well, yes, . . . but the CAV also reverses the trial court’s directive to pay the benefits. That’s because the court’s discretion is also constrained; if it finds a violation, it has to “suspend or set . . . aside” the agency action, and remand for a proper finding. That means the trial court should simply have sent the matter back to the VRS, telling it to “go back and get it right this time.”
 
If you’re the employee, this is a troubling “victory.” The appellate court has basically given the VRS a perfect road map for a proper denial: All it has to do is make suitable factual findings, and explain in some detail the reason for its denial, and the employee gets nothing. At least that’s the way I see today’s opinion, where the employee may win the battle but lose the war.
 
In Psychiatric Solutions of Virginia v. Finnerty, this time it’s the appellant who loses while winning. At stake is over three-quarters of a million dollars in Medicaid funds. Psychiatric Solutions bought a small facility in 2003 in which it provided services to teenagers. It signed up to receive Medicaid patients, and agreed thereby to keep meticulous records to support its claims for payment.  

During an audit in 2006, the Department of Medical Assistance Services, which administers Medicaid here in Virginia, found the facility’s records to be sorely lacking in detail. (Today’s appellee, Finnerty, is the director of DMAS.) It therefore directed the facility to refund $761,000 in previous payments. An informal fact-finding conference, a full agency appeal, and a further appeal to circuit court ensued. At each stage, the facility lost, so it sought succor in the Court of Appeals.

Today the CAV affirms, though not without giving the facility a token victory on a procedural point. The facility had argued that contract law, not statutory record-keeping principles, governed the resolution of this dispute. The trial court had made its findings according to the statute, and the CAV reverses that much of the ruling. But even under contract law, the court finds that there is ample evidence in the record to support the agency’s decision, so the ultimate ruling is affirmed.

In affirming, the court notes the deference paid to agencies in matters within its expertise. If the case turns on questions of pure law, then the courts don’t afford that deference; after all, judges are supposed to be the ones with expertise in the law. But here, the dispositive issue was whether the failure to provide the added detail was a material breach of the facility’s obligations. This implicates matters of treatment, and the mental health pros admittedly know more about that than do generalist judges.