TLC Heath Care Servs., L.L.C. v. Ohio Dept. of Job & Family Servs. , 102 N.E.3d 589 ( 2017 )

[Cite as TLC Heath Care Servs., L.L.C. v. Ohio Dept. of Job & Family Servs., 2017-Ohio-9198.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
TLC Health Care Services, LLC, :
Plaintiff-Appellant, :
v. : No. 17AP-181
(C.P.C. No. 08CV-13630)
Ohio Department of Job & Family Services :
et al., (REGULAR CALENDAR)
:
Defendants-Appellees.
:
Medcorp, Inc. and :
Medcorp E.M.S. South, LLC
:
Plaintiffs-Appellants,
: No. 17AP-182
v. (C.P.C. No. 08CV-17879)
:
Ohio Department of Job & Family Services (REGULAR CALENDAR)
et al., :
Defendants-Appellees. :
D E C I S I O N
Rendered on December 21, 2017
On brief: Barkan & Robon, Ltd., and R. Ethan Davis, for
appellant TLC Health Care Services, LLC.
On brief: Webster & Associates Co., LPA, Geoffrey E.
Webster, and Bryan M. Pritikin, for appellants Medcorp, Inc.
and Medcorp E.M.S. South, LLC. Argued: Geoffrey E.
Webster.
On brief: Michael DeWine, Attorney General, and
Rebecca L. Thomas, for appellees. Argued: Rebecca L.
Thomas.
APPEAL from the Franklin County Court of Common Pleas
Nos. 17AP-181 and 17AP-182 2
SADLER, J.
{¶ 1} Plaintiffs-appellants, TLC Health Care Services, LLC ("TLC") and Medcorp,
Inc. and Medcorp E.M.S. South, LLC1 ("Medcorp") (collectively "appellants"), appeal from
a judgment of the Franklin County Court of Common Pleas dismissing their claims
against defendants-appellees, Ohio Department of Job and Family Services ("ODJFS")
and Helen E. Jones-Kelley, Director of ODJFS (collectively "appellees"), for lack of
subject-matter jurisdiction. For the reasons that follow, we affirm.
I. FACTS AND PROCEDURAL HISTORY
{¶ 2} At all relevant times, appellants engaged in the business of providing both
emergency and non-emergency ambulance services and emergency and non-emergency
ambulette services (wheelchair van) for patients enrolled in the Ohio Medicaid program
administered by appellees. In order for appellants to conduct such business, appellees
required appellants to obtain Medicaid certification and to execute provider agreements
setting forth the terms of service, including the rate of reimbursement for covered services
provided. Ohio Adm.Code 5160-1-17.2 defines the provider agreement, in relevant part,
as follows:
A provider agreement is a contract between the Ohio
department of job and family services (ODJFS) And a
provider of medicaid covered services. By signing this
agreement the provider agrees to comply with the terms of the
provider agreement, Revised Code, Administrative Code, and
federal statutes and rules.
{¶ 3} Ohio Adm.Code 5160-1-60 sets forth the Medicaid payments providers are
to receive for covered services, in relevant part, as follows:
(A) The medicaid payment for a covered procedure, service,
or supply constitutes payment in full and may not be
construed as a partial payment when the payment amount is
less than the provider's submitted charge.
(B) * * * The medicaid payment amount for a covered service,
procedure, or supply is the lesser of the submitted charge or
the established medicaid maximum. Medicaid maximum
payment amounts for many existing services, procedures, and
1Medcorp is a group of "affiliated companies which operate a private medical transport business in the state
of Ohio." (Medcorp Compl. at 2.)
Nos. 17AP-181 and 17AP-182 3
supplies, particularly services rendered by practitioners of the
healing arts, are set forth in the appendix to this rule.
{¶ 4} On December 11, 2007, Medcorp filed a complaint against appellees in the
Lucas County Court of Common Pleas. The complaint alleges the Medicaid
reimbursement rates set by appellees are so low as to violate state and federal statutory,
regulatory, and constitutional provisions, including 42 U.S.C. 1983, 42 U.S.C. 1396a(a)-
(30)(A), 42 C.F.R. 447.204, R.C. Chapter 5111, R.C. 5111.01 and 5111.02, the Due Process
Clauses, the Equal Protection Clauses, and the Takings Clauses. The complaint further
alleges the Medicaid reimbursement rates set by appellees constitute a breach of the
provider agreement. On May 12, 2008, TLC filed a complaint against appellees in the
Lucas County Court of Common Pleas alleging the same claims. Appellants' complaints
seek declaratory and injunctive relief, as well as "just compensation for Medicaid
reimbursement monies taken to which it is entitled." (TLC Compl. at 9; Medcorp Compl.
at 10.)
{¶ 5} On appellees' motion, the Lucas County Court of Common Pleas transferred
venue of the two cases to Franklin County, and the trial court in Franklin County
consolidated the two cases pursuant to Civ.R. 42(A). On October 10, 2008 and
January 20, 2009, appellees filed a motion to dismiss, pursuant to Civ.R. 12(B)(1), for lack
of subject-matter jurisdiction. Appellees argued because appellants alleged claims for
monetary relief against the state of Ohio sounding in breach of contract, the Court of
Claims of Ohio had exclusive original jurisdiction of the complaints. Appellants argued
even though the complaints seek monetary relief against appellees, the claims alleged in
the complaints are purely equitable in nature and are, therefore, within the jurisdiction of
the courts of common pleas.
{¶ 6} The trial court agreed with appellees and granted appellees' motion to
dismiss on February 9, 2017. Appellants timely appealed to this court from the trial court
judgment.
II. ASSIGNMENTS OF ERROR
{¶ 7} Appellants set forth the following two assignments of error:
[1.] THE FRANKLIN COUNTY COMMON PLEAS COURT
ERRED IN FINDING IT DID NOT HAVE SUBJECT MATTER
Nos. 17AP-181 and 17AP-182 4
JURISDICTION OVER THE CLAIMS IN THE UNDERLYING
ACTION.
[2.] THE FRANKLIN COUNTY COURT OF COMMON
PLEAS ERRED IN EXERCISING VENUE OVER THE
UNDERLYING ACTION.
III. STANDARD OF REVIEW
{¶ 8} The issue of subject-matter jurisdiction involves " 'a court's power to hear
and decide a case on the merits and does not relate to the rights of the parties.' "
Columbus Green Bldg. Forum v. State, 10th Dist. No. 12AP-66, 2012-Ohio-4244, ¶ 14,
quoting Vedder v. Warrensville Hts., 8th Dist. No. 81005, 2002-Ohio-5567, ¶ 14. " 'Civ.R.
12(B)(1) permits dismissal where the trial court lacks jurisdiction over the subject matter
of the litigation.' " Patriot Water Treatment, LLC v. Ohio Dept. of Natural Resources,
10th Dist. No. 13AP-370, 2013-Ohio-5398, ¶ 29, quoting PNC Bank, Natl. Assn. v. Botts,
10th Dist. No. 12AP-256, 2012-Ohio-5383, ¶ 21. "When presented with a motion to
dismiss for lack of subject matter jurisdiction pursuant to Civ.R. 12(B)(1), a trial court
must determine 'whether any cause of action cognizable by the forum has been raised in
the complaint.' " Interim HealthCare of Columbus, Inc. v. Ohio Dept. of Adm. Servs.,
10th Dist. No. 07AP-747, 2008-Ohio-2286, ¶ 7, quoting PNP, Inc. v. Ohio Dept. of Job &
Family Servs., 10th Dist. No. 04AP-1294, 2006-Ohio-1159, ¶ 9, citing State ex rel. Bush v.
Spurlock, 42 Ohio St.3d 77, 80 (1989). Appellate courts review de novo the issue of
subject-matter jurisdiction without any deference to the trial court's determination.
Cheap Escape Co., Inc. v. Tri-State Constr., LLC, 173 Ohio App.3d 683, 2007-Ohio-6185,
¶ 18 (10th Dist.).
IV. LEGAL ANALYSIS
A. First Assignment of Error
{¶ 9} In appellants' first assignment of error, appellants argue the trial court erred
when it dismissed their complaints against appellees for lack of subject-matter
jurisdiction because the claims alleged in the complaints are purely equitable in nature
and, therefore, within the jurisdiction of the courts of common pleas. We disagree.
{¶ 10} R.C. 2743.03 created the Court of Claims and vested the court with
jurisdiction of the following:
Nos. 17AP-181 and 17AP-182 5
(A)(1) * * * The court of claims is a court of record and has
exclusive, original jurisdiction of all civil actions against the
state permitted by the waiver of immunity contained in
section 2743.02 of the Revised Code and exclusive jurisdiction
of the causes of action of all parties in civil actions that are
removed to the court of claims. The court shall have full equity
powers in all actions within its jurisdiction and may entertain
and determine all counterclaims, cross-claims, and third-
party claims.
(Emphasis added.)
{¶ 11} R.C. 2743.02(A)(1) sets out the state's waiver of sovereign immunity, in
relevant part, as follows:
The state hereby waives its immunity from liability, * * * and
consents to be sued, and have its liability determined, in the
court of claims created in this chapter in accordance with the
same rules of law applicable to suits between private parties,
except that the determination of liability is subject to the
limitations set forth in this chapter * * *. To the extent that
the state has previously consented to be sued, this chapter has
no applicability.
{¶ 12} Pursuant to the statutory framework, the Ohio General Assembly vested the
Court of Claims with exclusive, original jurisdiction of all civil actions against the state
permitted by the waiver of immunity contained in R.C. 2743.02 and full equity powers in
all actions within its jurisdiction. State ex rel. Moritz v. Troop, 44 Ohio St.2d 90, 92
(1975). In Cristino v. Ohio Bur. of Workers' Comp., 10th Dist. No. 13AP-772, 2014-Ohio-
1383, appeal not allowed, 140 Ohio St.3d 1416, 2014-Ohio-3785, this court defined the
jurisdictional limits of the Court of Claims in terms of the particular relief sought as
follows:
The [Court of Claims Act] does not apply "[t]o the extent that
the state ha[d] previously consented to be sued" in the courts
of common pleas. R.C. 2743.02(A)(1). * * * As a result, the
Court of Claims has no jurisdiction over actions that only seek
declaratory judgment or injunctive relief because, before the
advent of the act, parties could sue the state for declaratory
and injunctive relief in the courts of common pleas. Racing
Guild of Ohio, Local 304, Serv. Emps. Internatl. Union, AFL-
CIO, CLC v. Ohio Racing Comm., 28 Ohio St.3d 317, 320, 28
Ohio B. 386, 503 N.E.2d 1025 (1986). Nevertheless, when a
Nos. 17AP-181 and 17AP-182 6
claim for declaratory judgment, injunctive relief or other
equitable relief is ancillary to a claim over which the Court of
Claims has jurisdiction, the Court of Claims possesses
jurisdiction to adjudicate the entire action. R.C. 2743.03(A)-
(2); Ohio Hosp. Assn. v. Ohio Dept. of Human Servs., 62 Ohio
St.3d 97, 103, 579 N.E.2d 695 (1991). The Court of Claims has
exclusive jurisdiction over civil actions against the state for
money damages that sound in law. Measles v. Indus. Comm.,
128 Ohio St.3d 458, 2011-Ohio-1523, ¶ 7, 946 N.E.2d 204.
Thus, if a plaintiff asserts a legal claim for money damages in
addition to a claim for declaratory and/or injunctive relief,
and all of the asserted claims arise out of the same
circumstances, then the Court of Claims can exercise
jurisdiction over the entire action. Interim HealthCare at
¶ 13.
Id. at ¶ 12.
{¶ 13} In this instance, appellants acknowledge the complaints seek to compel the
payment of money by appellees. Appellants argue, however, that even though their
complaints seek monetary relief from appellees, their claims are purely equitable in
nature, not claims for money damages at law. In Cristino, this court addressed the
distinction between equitable claims seeking the payment of money and legal claims
seeking monetary relief as follows:
[N]ot every claim seeking monetary relief is a claim for money
damages. [Interim HealthCare] at ¶ 15. Even where a
claimant seeks relief that will ultimately result in the payment
of money by the state, "a cause of action will sound in equity if
'money damages' is not the essence of the claim." Id., citing
Ohio Academy of Nursing Homes v. Ohio Dept. of Job &
Family Servs., 114 Ohio St.3d 14, 2007-Ohio-2620, ¶ 15, 867
N.E.2d 400. For example, an equitable action for specific
relief, seeking reimbursement of the compensation allegedly
denied or retained, is not transformed into a claim for
damages simply because it involves the payment of money.
Zelenak v. Indus. Comm., 148 Ohio App.3d 589, 2002-Ohio-
3887, ¶ 18, 774 N.E.2d 769 (10th Dist.) (claim for specific
temporary total disability compensation, to which plaintiffs
were statutorily entitled, sought equitable relief and not
monetary damages), citing Ohio Edison Co. v. Ohio Dept. of
Transp., 86 Ohio App.3d 189, 194, 620 N.E.2d 217 (10th
Dist.1993). "Unlike a claim for money damages where a
plaintiff recovers damages to compensate, or substitute, for a
Nos. 17AP-181 and 17AP-182 7
suffered loss, equitable remedies are not substitute remedies,
but an attempt to give the plaintiff the very thing to which it
was entitled." Interim HealthCare at ¶ 15, citing Santos [v.
Ohio Bur. of Workers' Comp., 101 Ohio St.3d 74, 2004-Ohio-
28] at ¶ 14.
Id. at ¶ 13.
{¶ 14} In Interim HealthCare, this court further clarified the distinction between
claims seeking an equitable remedy, which includes the payment of money, from legal
claims seeking money damages. Therein, we noted "a claim that seeks to require a state
agency to pay amounts it should have paid all along is a claim for equitable relief, not
monetary damages." Id. at ¶ 17. If, on the other hand, a plaintiff "cannot assert title or
right to possession of particular property," but he or she may, nevertheless, "be able to
show just grounds for recovering money to compensate for some benefit the defendant
has received from [the plaintiff]," the claim, however characterized by the plaintiff, is
treated as a claim for legal remedy. Id.
{¶ 15} Appellants' argument in this case is that their complaints state claims for
equitable restitution, rather than legal claims for money damages. For example, in
addition to the claims for declaratory and injunctive relief, appellants argue that claims
seeking reimbursement from ODJFS for funds wrongfully withheld by ODJFS, in
violation of federal statutes and regulations pertaining to Medicaid reimbursement, are
equitable in nature, even though the complaints seeks the payment of money. However,
even if we were to agree with appellants that the complaints allege claims for equitable
restitution, Count III of TLC's complaint in this case provides, in relevant part, as follows:
42. Pursuant to the provider agreements ("Provider
Agreements") entered into between the Department and
Plaintiff, Defendants are obligated to comply with all
applicable state and federal laws and regulations. True and
accurate copies of the Agreements are attached hereto and
incorporated herein as Exhibits A and B.
43. Plaintiff has complied with all its terms and obligations
under the Provider Agreements.
44. The Department has failed to comply with the terms and
obligations and has breached the Provider Agreements with
Plaintiff.
Nos. 17AP-181 and 17AP-182 8
45. Plaintiff is entitled to the reasonable and adequate
adjustment to the Medicaid reimbursement rate for medical
transport providers.
(Emphasis added.) (TLC Compl. at 7.)
{¶ 16} TLC's prayer for relief states in pertinent part:
C. That Plaintiff be awarded just compensation for Medicaid
reimbursement monies taken to which it is entitled, but which
have been withheld in violation of state and federal law and in
breach of contract, in an amount to be proven at trial, but in
excess of Twenty Five Thousand Dollars ($25,000.00).
(Emphasis added.)2 (TLC Compl. at 9.)
{¶ 17} In Ohio Hosp. Assn. v. Ohio Dept. of Human Servs., 62 Ohio St.3d 97, 103
(1991), the defendant-appellant, Ohio Department of Human Services ("ODHS"),
appealed a judgment from the Court of Claims, which was entered in favor of the
plaintiffs-appellees, hospitals and hospital associations, on their claim for injunctive,
declaratory, and monetary relief. The complaint in that case alleged the plaintiffs-
appellees incurred monetary damages as a result of newly implemented Ohio Adm.Code
5101:3-2-20, which reduced the period of time Medicaid reimbursed hospitals for
outpatient services. According to the complaint, prior to the implementation of the new
rule, ODHS reimbursed participating hospitals for outpatient services under a "cost-based
reimbursement" method, which entailed reimbursing each hospital for the costs of the
resources directly and indirectly utilized in providing health care services. Ohio Hosp.
Assn. v. Ohio Dept. of Human Servs., 10th Dist. No. 88AP-1034 (June 21, 1990). Among
the claims asserted in the complaint was a claim for reimbursement of monies withheld
by ODHS pursuant to an invalid administrative rule.
{¶ 18} On appeal to this court, ODHS argued the Court of Claims did not have
jurisdiction of the claims alleged in the complaint because the claims fell outside the
state's waiver of immunity under R.C. 2743.02 and, in particular, because the claim
reimbursement of monies withheld pursuant to an invalid administrative rule sounded in
equitable restitution rather than monetary damages at law. This court affirmed the
2 Count III of the complaint filed by Medcorp contains the very same allegations and the same prayer for
relief.
Nos. 17AP-181 and 17AP-182 9
judgment of the Court of Claims. ODHS appealed from this court's judgment to the
Supreme Court of Ohio.
{¶ 19} In the decision of the Supreme Court in Ohio Hosp. Assn., one of the issues
for the court was whether the Court of Claims Act waived sovereign immunity with
respect to plaintiffs-appellees' claims alleging ODHS violated the Social Security Act and
related federal regulations by enacting the new administrative rule. On this question, the
court held that "reimbursement of monies withheld pursuant to an invalid administrative
rule is equitable relief, not money damages, and is consequently not barred by sovereign
immunity." Id. at 105. Appellants here argue this holding in Ohio Hosp. Assn. supports
their contention that the complaints against appellees contain equitable claims for relief,
even though the complaints also seek the payment of money. However, a determination
that appellants' complaints contain equitable claims for relief against appellees does not
resolve the question of jurisdiction presented herein. Of significance to the question of
the Court of Claims' jurisdiction in this case is the following holding in Ohio Hosp. Assn.:
We hold that this suit is within the jurisdiction of the Court of
Claims because of the nature of the claims raised and the
relief sought. The hospitals initially sought relief for
violations of their provider agreements and an earlier
settlement agreement between certain of the parties, as well
as for violations of federal law, state law, the United States
Constitution, and the Ohio Constitution. The complaint
sought declaratory, injunctive, and monetary relief. The
claims for violation of the provider agreements and an
earlier settlement agreement are within the exclusive
jurisdiction of the Court of Claims to the extent that the
hospitals allege that their contractual rights have been
violated and seek monetary relief. R.C. 2743.02 and 2743.03.
(Emphasis added.) Id. at 104.
{¶ 20} In light of the allegations in Count III of appellants' complaints, we find the
decision of the Supreme Court in Ohio Hosp. Assn. disposes of this appeal. Under Ohio
Hosp. Assn., the dispositive jurisdictional issue is whether the complaints state a claim for
money damages at law. Id. at 104. If so, jurisdiction of the complaints is exclusive to the
Court of Claims. Id. See also R.C. 2743.03(A)(1); Cristino at ¶ 12; Interim HealthCare at
¶ 13. It is axiomatic that a claim for money damages sounding in breach of contract is an
Nos. 17AP-181 and 17AP-182 10
action at law. Cheap Escape at ¶ 20; Stout v. M. Aron Corp., 10th Dist. No. 92AP-1179
(May 13, 1993) ("Since laches is an equity defense, it is inapplicable to an action at law to
recover damages for a breach of contract."). Appellants' complaints in this case seek
recovery of money damages to compensate appellants for a loss of revenue resulting from
allegedly inadequate reimbursement rates paid under the terms of the provider
agreements. Pursuant to Ohio Hosp. Assn., these allegations foreclose the common pleas
court from exercising jurisdiction of the complaints in this case. Id. at 104. See also
Cristino at ¶ 12, citing Interim HealthCare at ¶ 13; Bla-Con Industries v. Miami Univ.,
12th Dist. No. CA2006-06-127, 2007-Ohio-785, quoting State ex rel. Ferguson v.
Shoemaker, 45 Ohio App.2d 83, 96 (10th Dist.1975) ("Regarding contract claims against
the state, Ohio case law establishes that '[a] direct action on a contract with the state,
seeking monetary relief from the state, must be commenced and prosecuted in the Court
of Claims and cannot be brought in the Court of Common Pleas.' "). Accordingly, even if
the allegations in appellants' complaints seeking reimbursement from ODJFS for funds
wrongfully withheld by ODJFS in violation of federal Medicaid statutes and regulations
are considered equitable in nature, when such claims are pleaded in conjunction with
legal claims for breach of contract and arise out of the same operative facts, the
complaints are within the exclusive jurisdiction of the Court of Claims, which has full
equity powers in all actions within its jurisdiction. Ohio Hosp. Assn. at 104; Cristino at
¶ 12; Interim HealthCare at ¶ 13.3 Because there is no question in this case all the claims
alleged in the complaints arise out of the same operative facts, the Court of Claims has
exclusive jurisdiction of the complaints in this matter. Ohio Hosp. Assn. at 104; Cristino
at ¶ 12; Interim HealthCare at ¶ 13.
{¶ 21} For the foregoing reasons, we hold the trial court did not err when it
dismissed the complaints for lack of subject-matter jurisdiction. Furthermore, to the
extent appellants contend the unavailability of a jury trial in the Court of Claims violates
due process and equal protection, such a contention has been previously rejected by the
Supreme Court. Botkin v. Univ. of Cincinnati College of Medicine, 10th Dist. No. 04AP-
3 Given our determination that the Court of Claims has exclusive jurisdiction of the complaints in this case,
we express no opinion whether the complaints state viable claims for restitution based on appellees' alleged
violations of federal Medicaid statutes and regulations, the United States and Ohio Constitutions, and the
Ohio Revised Code.
Nos. 17AP-181 and 17AP-182 11
228, 2005-Ohio-1122, citing Conley v. Shearer, 64 Ohio St.3d 284, 292 (1992).
Accordingly, appellants' first assignment of error is overruled.
B. Second Assignment of Error
{¶ 22} Appellant's second assignment of error challenges the trial court's decision
to exercise venue of this action. Having determined the trial court did not err when it
dismissed the complaints in this case for lack of subject-matter jurisdiction and having
further determined that the Court of Claims has exclusive jurisdiction of this action,
appellants' second assignment of error is moot.
V. CONCLUSION
{¶ 23} Having overruled appellants' first assignment of error and having
determined appellants' second assignment of error is moot, we affirm the judgment of the
Franklin County Court of Common Pleas.
Judgment affirmed.
TYACK, P.J., and LUPER SCHUSTER, J., concur.
_______________________