CLC of Biloxi, LLC v. Mississippi Division of Medicaid , 238 So. 3d 16 ( 2018 )

IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI
NO. 2016-CC-01034-COA
CLC OF BILOXI, LLC D/B/A BILOXI APPELLANT
COMMUNITY LIVING CENTER
v.
MISSISSIPPI DIVISION OF MEDICAID AND APPELLEES
DAVID J. DZIELAK, IN HIS OFFICIAL
CAPACITY AS EXECUTIVE DIRECTOR OF
THE DIVISION OF MEDICAID
DATE OF JUDGMENT: 06/21/2016
TRIAL JUDGE: HON. PATRICIA D. WISE
COURT FROM WHICH APPEALED: HINDS COUNTY CHANCERY COURT,
FIRST JUDICIAL DISTRICT
ATTORNEYS FOR APPELLANT: JAMES RAY MOZINGO
LYDIA QUARLES
HORACE HUNTER TWIFORD IV
ATTORNEYS FOR APPELLEES: JANET MCMURTRAY
LAURA L. GIBBES
NATURE OF THE CASE: CIVIL - STATE BOARDS AND AGENCIES
DISPOSITION: AFFIRMED: 02/13/2018
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
BEFORE GRIFFIS, P.J., BARNES AND FAIR, JJ.
FAIR, J., FOR THE COURT:
¶1. CLC Biloxi sought a per diem reimbursement from the Mississippi Division of
Medicaid (DOM) for their respiratory-therapist expenses. The DOM denied CLC Biloxi’s
request. After an administrative hearing, the DOM executive director affirmed the DOM.
CLC Biloxi then appealed to Hinds County Chancery Court, which also affirmed the DOM.
Finally, CLC appealed to this Court. After review, we find the DOM’s decision to deny CLC
reimbursement for respiratory-therapist expenses on a per diem basis was supported by
substantial evidence. Accordingly, we affirm.
FACTS
¶2. CLC Biloxi is a long-term skilled nursing facility that entered into a contract with the
DOM to provide nursing-home services to Mississippi residents. In turn, the costs of the
services provided by CLC Biloxi were reimbursed by the DOM in two ways: (1) as an
expense could be billed directly to Medicaid for reimbursement of a specific service; and (2)
CLC Biloxi could file an annual cost report with the DOM, which could include certain
allowable costs or services that have been incurred to provide reasonable care to Medicaid
patients; the cost report would be used to calculate a per diem cost of care for Medicaid
patients.
¶3. Among the numerous services CLC Biloxi provided to Medicaid patients, respiratory
therapy was utilized to treat nursing-home patients who suffered from a pulmonary illness.
Although most respiratory-therapy services could be treated by a regular nursing staff, CLC
Biloxi employed “respiratory therapists” to provide certain respiratory treatments to patients.1
¶4. On May 29, 2009, CLC Biloxi filed its annual cost report for allowable expenses
incurred during 2008. It listed its respiratory therapists’ salaries on Form 6, Line 2, under
therapy expenses. In response to CLC Biloxi’s original 2008 cost report, the DOM
1
Specifically, CLC Biloxi utilized respiratory therapists to assist in the treatment of
patients who had undergone tracheotomies.
2
performed a “desk review,” to ensure that necessary adjustments were made before the DOM
reimbursed CLC Biloxi for services rendered. Upon review of the cost report, the DOM
determined not to reimburse CLC Biloxi for the respiratory-therapist salaries once it
calculated the appropriate per diem to be provided. On August 2, 2010, CLC Biloxi filed an
amended cost report with the DOM. Unlike the original 2008 cost report, CLC Biloxi sought
reimbursement for the respiratory-therapist salaries as a direct care expense on Form 6, Line
1. In contrast to the initial desk review of the original 2008 CLC Biloxi cost reports, the first
amended desk review handed down by the DOM on January 12, 2011, allowed the
respiratory therapists’ salaries to be used to calculate CLC Biloxi’s per diem. Accordingly,
approximately $82,000 in salaries for respiratory therapists was included in CLC’s per diem
calculation.2
¶5. Upon discovery of the improper classification made by CLC Biloxi, the DOM issued
a second amended desk review on March 2, 2012. Consequently, the DOM removed the
respiratory-therapist salaries from CLC Biloxi’s per diem calculation, as was done in the
original desk review. As a result, the DOM sought to recoup the $82,000 that had been paid
to CLC Biloxi for the inclusion of respiratory-therapist salaries in their per diem rates.
¶6. In response, on March 30, 2012, CLC Biloxi requested an administrative appeal of the
2
It should be noted, however, that the DOM’s first amended desk review explicitly
stated, “[y]our cost report is subject to additional adjustments brought to the attention of the
[DOM] and may be selected for field review, which could result in changes and additional
adjustments.” Therefore, the DOM made it clear to CLC Biloxi that the per diem rate could
be adjusted at any given time.
3
adjustments handed down by the DOM in the second amended desk review. Less than a
month later, the DOM denied the appeal. Upon denial of the appeal, CLC Biloxi requested
an administrative hearing. Following the hearing, the hearing officer recommended and the
DOM executive director affirmed the DOM’s disallowance of the respiratory therapists’
salaries as part of CLC Biloxi’s per diem calculation.
¶7. On October 23, 2013, CLC Biloxi filed a complaint in the Hinds County Chancery
Court seeking declaratory and injunctive relief to prevent the DOM from breaching its
contract with CLC Biloxi and from adopting what CLC Biloxi believed to be “an arbitrary
and capricious interpretation of its controlling regulations.” The DOM then filed a motion
to dismiss the complaint and challenged the chancery court’s jurisdiction to hear
administrative appeals from the DOM. The case was stayed pending the outcome of the
interlocutory appeal in Mississippi Division of Medicaid v. Alliance Health Center, 174 So.
3d 254, 263 (¶26) (Miss. 2015), in which the Mississippi Supreme Court affirmed the
jurisdiction of the chancery court over appeals from the DOM.
¶8. On March 29, 2016, the chancery court heard oral arguments on the dispute.
Ultimately, on June 21, 2016, the court affirmed the DOM’s final decision and held that the
language found in the State Medicaid Plan (State Plan), its policy provider manual, and cost
report “does not include respiratory therapists within those categories of therapists that are
allowed to enroll as Medicaid providers and thus receive direct reimbursement for their
services.” Further, the court found that CLC Biloxi did not fall within the categories of
4
medical facilities that are allowed a per diem reimbursement for respiratory therapists’
salaries.3
¶9. CLC Biloxi filed the instant appeal.
STANDARD OF REVIEW
¶10. We will reverse the decision of an administrative agency only if the decision (1) was
unsupported by substantial evidence; (2) was arbitrary or capricious; (3) was beyond the
power of the administrative agency to make; or (4) violated the complaining party’s statutory
or constitutional right. Hinds Cty. Sch. Dist. Bd. of Trs. v. R.B. ex rel. D.L.B., 10 So. 3d 387,
394-95 (¶17) (Miss. 2008). An agency may not adopt rules and regulations that are contrary
to statutory provisions, or that exceed or conflict with the authority granted by statute. Miss.
Pub. Serv. Comm’n v. Miss. Power & Light Co., 593 So. 2d 997, 1000, 1004 (Miss. 1991).
¶11. “An agency’s interpretation of a rule or statute governing the agency’s operation is
a matter of law that is reviewed de novo, but with great deference to the agency’s
interpretation.” Buffington v. Miss. State Tax Comm’n, 43 So. 3d 450, 454 (¶12) (Miss.
2010). This “duty of deference derives from our realization that the everyday experience of
the administrative agency gives it familiarity with the particularities and nuances of the
3
The court held that under the controlling State Plan, only three types of facilities are
entitled to reimbursement of therapy expenses as part of their per diem calculation: private
nursing facilities for the severely disabled (NFSD); psychiatric residential treatment facilities
(PRTF); and intermediate care facilities for the intellectually challenged (ICF/IID). Since
CLC Biloxi was classified as a large nursing facility (LNF), the court found that it was not
entitled to claim respiratory-therapy expenses as part of its per diem calculation.
5
problems committed to its care which no court can hope to replicate.” Gill v. Miss. Dep’t of
Wildlife Conservation, 574 So. 2d 586, 593 (Miss. 1990). An agency’s interpretation will
not be upheld if “it is so plainly erroneous or so inconsistent with either the underlying
regulation or statute as to be arbitrary, capricious, an abuse of discretion[,] or otherwise not
in accordance with law.” Buelow v. Glidewell, 757 So. 2d 216, 219 (¶10) (Miss. 2000).
DISCUSSION
¶12. Mississippi Code Annotated section 43-13-117(A) (Rev. 2015) requires the DOM to
“include payment of part or all of the costs . . . of the following types of care and services
rendered to eligible applicants who have been determined to be eligible for that care and
services, within the limits of state appropriations and federal matching funds.” Section 43-
13-117(A)(4)(a)-(f) specifies the required assistance and payment methods for nursing
facility services. Miss. Code Ann. 43-13-117(A)(4). Mississippi Code Annotated section
43-13-121(1) (Rev. 2015) grants the DOM the following administrative authority over the
Medicaid program:
(1) The division shall administer the Medicaid program under the provisions
of this article, and may do the following:
(a) Adopt and promulgate reasonable rules, regulations and standards,
with approval of the Governor, and in accordance with the
Administrative Procedures Law, Section 25-43-1.101 et seq.:
(i) Establishing methods and procedures as may be necessary for
the proper and efficient administration of this article;
(ii) Providing Medicaid to all qualified recipients under the
provisions of this article as the division may determine and
6
within the limits of appropriated funds;
(iii) Establishing reasonable fees, charges and rates for medical
services and drugs; in doing so, the division shall fix all of those
fees, charges and rates at the minimum levels absolutely
necessary to provide the medical assistance authorized by this
article, and shall not change any of those fees, charges or rates
except as may be authorized in [s]ection 43-13-117 . . . .
1. Denial of Reimbursement
¶13. To fully understand both CLC Biloxi and the DOM’s arguments, it is important to
examine all relevant portions of the State Plan, policy provider manual, and cost-report
instructions. The State Plan is promulgated and administered by the DOM. It is then
approved by the Mississippi attorney general and the governor, and ultimately checked for
compliance with federal Medicaid regulations by the federal Centers for Medicare and
Medicaid. Any proposed changes or adoptions must be approved by the same respective
parties.
¶14. Attachment 4.19-D of the State Plan provides guidelines for the reimbursement for
medical-assistance beneficiaries of long-term care facilities:
A facility’s direct care costs, therapy costs, care related costs, administrative
and operating costs and property costs related to covered services will be
considered in the findings and allocation of costs to the Medical Assistance
Program for its eligible recipients. Costs included in the per diem rate will be
those necessary to be incurred by efficiently and economically operated
nursing facilities that comply with all requirements of participation in the
Medicaid program with the exception of services provided that are reimbursed
on a fee for service basis or as a direct payment outside of the per diem rate.
CLC Biloxi originally filed its cost report by reporting its respiratory-therapist salaries under
7
Section 2 Therapy Expenses on Form 6, Line 2, as provided in Attachment 4.19-D, Section
A(18):
Costs attributable to the administering of therapy services should be reported
on Form 6, Line 2. Therapy expenses will be included in the per diem rate for
NFSD, PRTF and ICF/IID providers. Therapy expenses for Small Nursing
Facilities and Large Nursing Facilities will be reimbursed on a fee for service
basis.
The cost-report instructions for including therapy expenses are specified in Form 6:
Line 2 Therapy Expense Costs attributable to the administering of therapy
services must be included in Section 2, Lines 2-01 through 2-16 . . . .
Line 2-01, Salaries - Occupational Therapists[:] Gross salaries of occupational
therapists
Line 2-02, Salaries - Physical Therapists[:] Gross salaries of physical
therapists
Line 2-03, Salaries - Speech Therapists[:] Gross salaries of speech therapists
Line 2-04, Salaries - Other Therapists[:] Gross salaries of therapists other
than occupational therapists, physical therapists and speech therapists,
including but not limited to, respiratory therapists . . . .
(Emphasis added).
¶15. Under Section A(18), only three types of facilities, all of which are high acuity
facilities, are allowed to claim respiratory-therapy expenses as part of their per diem
calculation: (1) NFSD: private nursing facility for the severely disabled; (2) PRTF:
psychiatric residential treatment facility; and (3) ICF/IID: intermediate care facility for the
intellectually challenged. CLC Biloxi, as a large nursing facility, does not qualify for per
diem reimbursement. Rather, Section (A)(18) states that “[t]herapy expenses for [s]mall
8
[n]ursing [f]acilities and [l]arge [n]ursing [f]acilities will be reimbursed on a fee for service
basis.”
¶16. CLC Biloxi originally placed the respiratory-therapist salaries on Form 6, Line 2, as
required in Section (A)(18). The DOM claims it denied reimbursement because respiratory
therapy is not reimbursable on a fee-for-service basis for respiratory therapists working in
small and large nursing facilities. The DOM explains that, although respiratory therapy in
small and large nursing facilities is “allowable,” it is not “coverable” because Section 50.02
of the policy provider manual specifically states that DOM “does not enroll respiratory
therapist[s] as eligible providers and does not directly reimburse respiratory therapists for
services provided to Medicaid beneficiaries.” In other words, since respiratory therapists
cannot be “providers,” their salaries cannot be covered on a fee-for-service basis.
¶17. After the DOM denied reimbursement for the salaries on Form 6, Line 2, CLC Biloxi
did not appeal. Instead, it amended its cost report to include its respiratory-therapist salaries
under Section 1, Direct Care Expenses, on Form 6, Line 1-01: “Salaries - Aides[,] Gross
salary of certified nurse aids and nurse aides in training.” CLC Biloxi claims this was proper
because respiratory therapists are not actually “therapists” for purposes of the State Plan, but
instead are “salaried direct care staff” under Attachment 4.19-D Chapter 2, Section A(15) of
the State Plan:
15. Salaries and Fringe Benefits. Allowable costs include payments for
salaries and fringe benefits for those employees who provide services in the
normal conduct of operations related to patient care. These employees include,
but are not limited to, registered nurses, licensed practical nurses, nurses aides,
9
other salaried direct care staff, director of nursing, dietary employees,
housekeeping employees, maintenance staff, laundry employees, activities
staff, pharmacy employees, social workers, medical records staff, non-owner
administrator, non-owner assistant administrator, accountants and bookkeepers
and other clerical and secretarial staff.
(Emphasis added).
¶18. To support its argument, CLC Biloxi cites the Mississippi Respiratory Care Practice
Act (MRCPA), Mississippi Code Annotated section 73-57-5(e) (Rev. 2017), which states that
the “[p]ractice of respiratory care shall include, but not be limited to: direct and indirect
respiratory care services . . . .” However, CLC Biloxi disregards that 42 U.S.C. § 1396a
(e)(9)(C) (2017), the federal statute governing state plans for medical assistance, refers to
respiratory therapists as “therapists.” Further, the MRCPA itself refers to persons who
practice respiratory care as therapists:
An applicant for a license to practice respiratory care shall submit to the board
written evidence, verified by oath, that the applicant holds a credential,
conferred by the National Board of Respiratory Care, as a Certified
Respiratory Technician (CRT) and/or as a Registered Respiratory Therapist
(RRT), or their successor credentials, providing such credential has not been
suspended or revoked, or at the time of application has not lapsed.
Miss. Code Ann. § 73-57-17(1) (Rev. 2017) (emphasis added). DOM’s determination of
how to allocate funding is entirely within its discretion. Based on our reading of the statutes
listed above, we agree with the DOM that respiratory therapists are “therapists” for purposes
of the State Plan. We also agree that Section (A)(18) requires small and large nursing
facilities to report respiratory-therapy expenses on Form 6, Line 2.
¶19. The DOM has no statutory requirement to provide funds for respiratory therapy.
10
Nevertheless, it chooses to provide funding for respiratory services on a per diem basis for
three different types of long-term care facilities – private nursing facilities for the severely
disabled (NFSD); psychiatric residential treatment facilities (PRTF); and intermediate care
facilities for the intellectually challenged (ICF/IID). As a large nursing facility, CLC Biloxi
does not fall into any of those categories. Nor do respiratory therapists fall into the category
of salaried direct-care staff in Attachment 4.19-D Chapter 2, Section A(15). Accordingly,
we affirm the DOM’s finding that CLC Biloxi was not allowed to place its respiratory
therapists’ salaries on Line 1-01 of the cost report.
2. Freedom of Choice
¶20. CLC Biloxi next argues that the DOM’s prohibition of respiratory therapists in small
and large nursing facilities, but approval of the same in hospitals and higher acuity nursing
facilities, violates the “freedom of choice” provision in Mississippi Code Annotated section
43-13-5 (Rev. 2015). Section 43-13-5 addresses medical assistance for the aged and
provides that “no regulation shall be promulgated [that] limits or abridges the recipient’s free
choice of the provider of medical and remedial care or service.” As the DOM points out, the
term “[m]edical assistance for the aged” is defined to mean “payment of part or all of the
cost” of a specifically defined scope of care and services, as set forth in the statute. Miss.
Code Ann. § 43-13-3(1)(a)-(l) (Rev. 2015) (emphasis added).
¶21. Contrary to CLC’s contention, section 43-13-5 is not so broad to imply that the
DOM’s decision to limit payment for respiratory therapy limits a recipient’s freedom of
11
choice. As previously stated, the DOM has no statutory requirement, through 42 U.S.C.
§ 1396a (e)(9)(C) (2017) or section 43, to provide funding for respiratory therapy. Even so,
the DOM does provide funding for respiratory therapy in some facilities; although small and
large nursing facilities are not included, those patients have the choice to seek respiratory
care at a hospital, where respiratory-therapy expenses are included for inpatient hospital
reimbursement. See State Plan Attachment 4.19-A.
3. Due Process
¶22. Finally, CLC Biloxi asserts that its due-process rights have been violated because the
DOM is allowed to recoup the $82,000 in respiratory-therapist salaries that CLC Biloxi was
erroneously paid. Both the United States and Mississippi Constitutions guarantee a right to
due process before an administrative agency. See U.S. Const. amend XIV § 1; Miss. Const.
art. 3, § 14. Administrative proceedings are to be “conducted in a fair and impartial manner,
free from any just suspicion or prejudice, unfairness, fraud, or oppression.” Miss. State Bd.
of Health v. Johnson, 197 Miss. 417, 417, 19 So. 2d 445, 447 (1944). The minimum
procedural due-process requirements an administrative board must afford parties are notice
and an opportunity to be heard. Booth v. Miss. Emp’t Sec. Comm’n, 588 So. 2d 422, 428
(Miss. 1991). Here, CLC Biloxi has been afforded all the due-process protections provided
by the DOM’s administrative process and has availed itself of the appeals afforded by both
the chancery court and this Court. Accordingly, we find no due-process violation has
occurred.
12
¶23. AFFIRMED.
LEE, C.J., IRVING AND GRIFFIS, P.JJ., BARNES, CARLTON, WILSON,
GREENLEE, WESTBROOKS AND TINDELL, JJ., CONCUR.
13