Rehabilitation & Community Providers Assoc. v. DHS Office of Dev. Programs ( 2021 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Rehabilitation and Community :
Providers Association, and :
Westmoreland County Blind :
Association, and Associated :
Production Services, Inc., and United :
Cerebral Palsy of Central Pennsylvania, :
Inc. and Scott Howard Schwartz by and :
through Theodore A. Schwartz, Co :
Guardian, and Ryan Brett by and :
through His Guardian Francis Brett, :
Petitioners :
:
v. : No. 543 M.D. 2019
: SUBMITTED: October 9, 2020
Department of Human Services :
Office of Developmental Programs, :
Respondents :
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge1
HONORABLE ANNE E. COVEY, Judge
HONORABLE ELLEN CEISLER, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE CEISLER FILED: February 3, 2021
Before this Court are Preliminary Objections filed by the Department of Human
Services Office of Developmental Programs (DHS) to the First Amended Petition for
Review in the Nature of a Complaint/Equity Action for Declaratory and Injunctive
Relief (Petition for Review) filed by Rehabilitation and Community Providers
Association, Westmoreland County Blind Association, Associated Production
Services, Inc., United Cerebral Palsy of Central Pennsylvania, Inc., Scott Howard
Schwartz by and through his co-guardian, Theodore A. Schwartz, and Ryan Brett by
1
This case was assigned to the opinion writer before January 4, 2021, when Judge Leavitt
completed her term as President Judge.
and through his guardian, Francis Brett (together, Petitioners), in this Court’s original
jurisdiction. Also before this Court are Petitioners’ Preliminary Objections to DHS’s
Preliminary Objections in the Form of a Motion to Strike DHS’s Preliminary
Objections under Pa. R.C.P. No. 1028(a)(2) and (3).
Petitioners, with the exception of Mr. Schwartz and Mr. Brett, are providers of
community participation support (CPS) services to individuals with intellectual
disabilities that receive reimbursement from DHS for their services. Mr. Schwartz and
Mr. Brett are intellectually disabled individuals who receive CPS services from one of
the provider Petitioners. Petitioners allege that in May 2019, DHS improperly
implemented a new rate reimbursement system under which the provider Petitioners
will no longer receive the necessary funding to keep their CPS programs operational.
Petitioners seek both declaratory and injunctive relief to invalidate DHS’s new
payment methodology.
For the reasons that follow, we sustain DHS’s Preliminary Objection challenging
Petitioners’ failure to exhaust administrative remedies, overrule Petitioners’
Preliminary Objections, and dismiss the Petition for Review.
Background
CPS services are services for individuals with intellectual disabilities or autism
that are funded under the Consolidated Waiver, the Person/Family Directed Supports
Waiver, and the Community Living Waiver (together, Waivers). The Waivers are
home- and community-based waivers approved by the United States Department of
Health and Human Services, Centers for Medicare and Medicaid Services, pursuant to
Section 1915(c) of the Social Security Act, 42 U.S.C. § 1396n(c). Through the
Waivers, individuals who are eligible to receive services in an intermediate care facility
may instead receive services in their homes and communities. The Waivers are
designed to help individuals with intellectual disabilities and autism live more
2
independently. DHS is responsible for administering the Waivers and setting rates for
Waiver services, including CPS services.
On November 13, 2019, Petitioners filed the instant Petition for Review, alleging
that on May 25, 2019, DHS published a Final Notice of Fee Schedule Rates for CPS
Services (Final Notice) in the Pennsylvania Bulletin. Petitioners allege that the Final
Notice instituted new reimbursement rates for Petitioners’ services that do not cover
the actual costs of the services they provide. Specifically, Petitioners aver:
By publishing [the] Final Notice in the Pennsylvania Bulletin,
DHS[] [has] instituted a new reimbursement system by which [CPS]
services are to be provided to people with intellectual disabilities. The
rates under this new system do not reflect the costs to provide [CPS]
services. First quarter fiscal year [20]19-[20]20 actual costs incurred by
efficient and economically run providers are between 106.87% and
153.98% of the rates set in the Final Notice. The difference between rates
and actual costs is unsustainable.
....
[I]f declaratory and injunctive relief is not forthcoming, program
beneficiaries will suffer irreparable harm because damage to the provider
base will curtail essential services, especially in rural areas, and especially
with respect to beneficiaries requiring the highest level of support. . . .
Pet. for Rev. ¶¶ 10, 12. On July 1, 2019, DHS implemented the new rate structure
announced in the Final Notice. Id. ¶ 85.
According to Petitioners, DHS uses a reimbursement system called a “unit of
service,” and one unit equals 15 minutes of a certain type of service. Id. ¶ 17. Each
type of service has a corresponding code, called a “W code,” that is used for billing and
reimbursement. Id. ¶ 18. The Final Notice reduced the number of W codes from 54 to
15. Id. ¶ 19. Each new W code provides a fixed reimbursement amount per unit of
3
service. Id. ¶ 20. Petitioners allege that the new W codes fail to reflect the costs
actually incurred by the providers. Id. ¶¶ 22-43.
With regard to DHS’s publishing of the Final Notice, Petitioners allege:
104. The . . . Final Notice is an unpromulgated regulation insomuch
as it creates a binding norm and does not comply with the Commonwealth
Documents Law, [Act of July 31, 1968, P.L. 769, as amended,] 45 P.S. §§
1102-[1602, and 45 Pa. C.S. §§ 501-907]; the Regulatory Review [A]ct,
[Act of June 25, 1982, P.L. 633, as amended,] 71 P.S. §§ 745.1[-745.15];
and the Commonwealth Attorneys Act, [Act of October, 15, 1980, P.L.
950, as amended,] 71 P.S. §§ 732[-]101[ to 732-506].
105. The rate structure methodology manifested in the . . . Final
Notice was not submitted to [the United States Department of Health and
Human Services, Centers for Medicare and Medicaid Services,] for
approval and incorporation into the [Waivers] prior to the July 1, 2019
effective date.
106. The rate structure methodology manifested in the . . . Final
Notice does not reflect costs that are reasonable, necessary, and related to
the delivery of the service and sufficient to ensure access, encourage
provider participation, and promote provider choice as required by federal
law and the [Waivers].
Id. ¶¶ 104-06 (internal case citation omitted); see id. ¶¶ 109-11 (asserting the same
averments).
Petitioners seek from this Court: (1) a declaration that DHS’s Final Notice is an
unpromulgated regulation and inconsistent with federally approved payment
methodologies; and (2) an injunction prohibiting DHS from implementing the new rate
system and requiring DHS to establish rates that are sufficient to meet reasonable
provider costs. Id. at 31-32.
4
On November 14, 2019, Petitioners filed an Application for Partial Summary
Relief (Application) under Pa. R.A.P. 1532(b),2 to which DHS filed an Answer on
December 13, 2019. In their Application, Petitioners seek a partial judgment declaring
that the Final Notice is an unpromulgated regulation. By Order dated February 14,
2020, this Court deferred the establishment of a briefing schedule for the Application
until final disposition of both parties’ Preliminary Objections. On March 4, 2020, this
Court also entered an Order staying discovery until further order of this Court.
On December 13, 2019, DHS filed Preliminary Objections to the Petition for
Review, asserting that the Petition for Review should be dismissed for failure to
exhaust administrative remedies, lack of standing, and failure to state a claim upon
which relief can be granted. Thereafter, Petitioners filed Preliminary Objections in the
Form of a Motion to Strike DHS’s Preliminary Objections under Pa. R.C.P. No.
1028(a)(2) and (3), asserting that DHS’s Preliminary Objections lack specificity and
fail to conform to the pleading requirements of the Pennsylvania Rules of Civil
Procedure.3 The parties have now fully briefed their respective Preliminary Objections.
On December 7, 2020, Petitioners also filed an Application to Expedite Ruling
on Preliminary Objections, asking this Court to expedite its ruling on both parties’
Preliminary Objections because the provider Petitioners “have struggled to maintain
their programs despite unsustainable rates.” Appl. to Expedite ¶ 15. This Court granted
the Application to Expedite on December 22, 2020.
2
Pa. R.A.P. 1532(b) provides: “At any time after the filing of a petition for review in an . . .
original jurisdiction matter, the court may on application enter judgment if the right of the applicant
thereto is clear.”
3
Pa. R.C.P. No. 1028(a)(2) and (3) provides that a party may file preliminary objections to
any pleading on the grounds of “failure of a pleading to conform to law or rule of court” and
“insufficient specificity in a pleading.”
5
Analysis
In ruling on preliminary objections, this Court must “accept as true all well-
pleaded material allegations in the petition for review and any reasonable inferences
that [it] may draw from the averments.” Highley v. Dep’t of Transp., 195 A.3d 1078,
1082 (Pa. Cmwlth. 2018). However, we are “not bound by legal conclusions,
unwarranted inferences from facts, argumentative allegations, or expressions of
opinion encompassed in the petition for review.” Id. This Court should sustain
preliminary objections only where “the law makes clear that the petitioner[s] cannot
succeed on [their] claim[s].” Id. at 1083. “[W]here any doubt exists as to whether the
preliminary objections should be sustained, the doubt must be resolved in favor of
overruling the preliminary objections.” Pa. State Lodge, Fraternal Ord. of Police v.
Dep’t of Conservation & Nat. Res., 909 A.2d 413, 416 (Pa. Cmwlth. 2006), aff’d, 924
A.2d 1203 (Pa. 2007).
1. Petitioners’ Preliminary Objections
We will first address Petitioners’ Preliminary Objections because they seek to
strike DHS’s Preliminary Objections for lack of specificity and failure to conform to
rules of court. Petitioners contend that under the Pennsylvania Rules of Civil
Procedure, any pleading, including preliminary objections, may be stricken for “failure
of a pleading to conform to law or rule of court” and for “insufficient specificity in a
pleading.” Pa. R.C.P. No. 1028(a)(2) and (3). Specifically, Petitioners assert that
DHS’s Preliminary Objections violate Pa. R.C.P. Nos. 1019(a) and 1028(b) because
they include only general, boilerplate averments and fail to allege the material facts
upon which the objections are based. We disagree.
DHS raises eight enumerated objections to the Petition for Review, as follows:
1. Petitioners Westmoreland County Blind Association, Associated
Production Services, Inc., and United Cerebral Palsy of Central
6
Pennsylvania have improperly invoked the original jurisdiction of this
Court pursuant to 42 Pa.[]C.S. § 761 because they have failed to exhaust
their administrative remedies.
2. Petitioner Associated Production Services is at the same time
seeking to raise claims similar to those asserted in the Petition for Review
before the Department of Human Services[,] Bureau of Hearing and
Appeals [(BHA)], and has filed a Motion to File Request for Hearing
Nunc Pro Tunc under 55 Pa. Code § 41.[31].
3. Petitioners Rehabilitation & Community Providers Association,
Scott Howard Schwartz and Ryan Brett do not have standing to maintain
this action.
4. Petitioners do not have standing to seek relief on behalf of any
other provider of services delivered in the [Waivers].
5. Petitioners have failed to state a claim on which relief can be
granted because the [Final Notice] does not violate the Commonwealth
Documents Law, . . . the Regulatory Review Act, . . . or the
Commonwealth Attorneys Act[] . . . .
6. Petitioners have failed to state a claim on which relief can be
granted because the [Final Notice] does not violate [any] federal statute or
regulation.
7. Petitioners have failed to state a claim on which relief can be
granted because they do not have a privately enforceable right to challenge
[DHS’s] administration of a program that operates under a waiver granted
by the federal government.
8. Petitioners have failed to state a claim on which relief can be
granted because they failed to allege the elements necessary for injunctive
relief.
DHS’s Prelim. Objs. ¶¶ 1-8 (internal headings omitted).
Petitioners contend that in its Preliminary Objections, DHS was required to aver
the material facts supporting the grounds for each objection raised. Petitioners rely on
Rule 1019(a), which provides that “[t]he material facts on which a cause of action or
7
defense is based shall be stated in a concise and summary form.” Pa. R.C.P. No.
1019(a). However, the plain language of Rule 1019(a) applies to pleadings averring “a
cause of action or defense,” i.e., a complaint or petition for review or an answer and
new matter. Id. Contrary to Petitioners’ assertion, the “material facts” requirement of
Rule 1019(a) does not explicitly apply to preliminary objections to a petition for
review.
Petitioners also rely on Rule 1028(b), which provides that preliminary objections
“shall state specifically the grounds relied upon.” Pa. R.C.P. No. 1028(b). Petitioners
argue that DHS’s Preliminary Objections violate this rule because they include only
general, boilerplate averments and fail to include the facts and case law supporting each
objection.
While DHS’s Preliminary Objections are undoubtedly succinct, we decline to
strike them for lack of specificity. We conclude that DHS’s Preliminary Objections
are sufficiently specific to apprise both Petitioners and this Court of its bases for
objecting to the Petition for Review, in compliance with Rule 1028(b). See Pa. R.C.P.
No. 1028(b); see also Pa. R.C.P. No. 1022 (stating that each numbered paragraph in a
pleading “shall contain as far as practicable only one material allegation”). This is not
a situation where a preliminary objection merely avers that a petition for review “fails
to state a claim” without specifying why the petition is inadequate. Cf. Michael
Facchiano Contracting, Inc. v. Pa. Tpk. Comm’n, 621 A.2d 1058, 1061 (Pa. Cmwlth.
1993) (“Pa.[]R.C.P. [No.] 1028(b) provides that preliminary objections must
specifically set forth the basis for the objection, and that general averments merely
alleging that the complaint ‘failed to state a claim’ are insufficient.”). Rather, each of
DHS’s objections asserting a demurrer specifies why DHS believes the Petition for
Review is legally insufficient to state a claim for relief. See DHS’s Prelim. Objs. ¶¶ 5-
8. There is also no requirement in our Rules of Civil Procedure that preliminary
8
objections must include citations to statutes or case law in the pleading itself. DHS
properly filed a Brief in Support of its Preliminary Objections, wherein it addresses
each of its bases for objecting to the Petition for Review and cites relevant law in
support of those objections.
In any event, this Court has the discretion to overlook a procedural defect in a
pleading that does not affect the parties’ rights. Pa. R.C.P. No. 126 expressly states:
The [R]ules [of Civil Procedure] shall be liberally construed to secure the
just, speedy and inexpensive determination of every action or proceeding
to which they are applicable. The court at every stage of any such action
or proceeding may disregard any error or defect of procedure which does
not affect the substantial rights of the parties.
Pa. R.C.P. No. 126 (emphasis added). Here, Petitioners do not allege that they are in
any way prejudiced or unable to adequately respond to the objections asserted. In fact,
Petitioners have thoroughly addressed each objection in their Brief in Opposition to
DHS’s Preliminary Objections.
Accordingly, we overrule Petitioners’ Preliminary Objections and deny their
request to strike DHS’s Preliminary Objections.
2. DHS’s Preliminary Objections
Preliminarily, DHS alleges that the provider Petitioners failed to exhaust their
administrative remedies before filing this action and, thus, this Court lacks subject
matter jurisdiction over the Petition for Review.
A petitioner “may not seek judicial resolution of a dispute until he or she has
exhausted available statutory or administrative remedies.” Martel v. Allegheny Cnty.,
216 A.3d 1165, 1172 (Pa. Cmwlth. 2019), appeal denied, 222 A.3d 1128 (Pa. 2020).
If a petitioner fails to pursue a statutory remedy, a court “is without power to act until
the statutory remedies have been exhausted, even in cases where a constitutional
question is presented.” Id. The failure to exhaust administrative remedies precludes
9
this Court from hearing claims for declaratory or injunctive relief with respect to an
administrative agency’s action. Keystone ReLeaf LLC v. Pa. Dep’t of Health, 186 A.3d
505, 513 (Pa. Cmwlth. 2018) (en banc). There are, however, narrow circumstances in
which exhaustion is not required for this Court to consider a claim for declaratory or
injunctive relief. Id. at 514.
In this case, Petitioners seek to invoke the exception for a substantial
constitutional question. Pet’rs’ Br. in Opp’n to Prelim. Objs. at 16-17. Petitioners
assert that they were not required to exhaust administrative remedies in this case
because the Petition for Review raises a substantial constitutional question and the
available administrative remedy is inadequate. Id. at 16, 21.
Our Court recently explained the “substantial constitutional question” exception
to the exhaustion requirement as follows:
A party seeking to avoid exhaustion must demonstrate a “substantial
question of constitutionality (and not a mere allegation) and the absence
of an adequate statutory remedy.” The exception applies to facial
challenges “made to the constitutionality of the statute or regulation as a
whole, and not merely to the application of the statute or regulation in a
particular case.”
Keystone ReLeaf, 186 A.3d at 514 (internal citations omitted) (emphasis in original);
see also Martel, 216 A.3d at 1176 (explaining that “the exercise of equity jurisdiction
is appropriate when a ‘substantial frontal attack’ to [a] statute is brought[,] but it is not
appropriate when the challenge pertains to the application of the statute”). To fall
within this “extraordinarily narrow” exception, the petitioner “must show that the
challenged statute or regulation clearly and unambiguously violates a
constitutionally[]secured right.” St. Clair v. Pa. Bd. of Prob. & Parole, 493 A.2d 146,
153 (Pa. Cmwlth. 1985).
10
Here, Petitioners do not assert a “frontal constitutional attack” on a statute or
regulation, nor do they seek to have a statute or regulation declared unconstitutional.
Rather, in their Petition for Review, Petitioners seek only a declaration that the “Final
Notice [is] an unpromulgated regulation and inconsistent with the federally approved
payment methodology” and an injunction prohibiting DHS from implementing the new
rate system “and requiring [DHS] to implement a new or different system.” Pet. for
Rev. at 31-32. In their Brief in Opposition to DHS’s Preliminary Objections,
Petitioners contend they have raised a substantial question regarding the
constitutionality of the Act of June 30, 2011, P.L. 89, No. 22 (Act 22), which they claim
is “the legal authority by which DHS[] purported to issue the . . . Final Notice.” Pet’rs’
Br. in Opp’n to Prelim. Objs. at 20. We disagree.
The only reference to a constitutional issue in the Petition for Review is an
allegation that “the purported delegation [of authority to DHS in Act 22] is a violation
of Article II, Section 1 of the Pennsylvania Constitution, which vests the law-making
power with the Legislature because it does not contain any legislative standards (except
for ‘budget neutrality’) that constrain DHS and guide courts as to the legislative intent.”
Pet. for Rev. ¶ 67. However, as Petitioners concede, Act 22 was not the stated legal
authority for DHS’s issuance of the Final Notice. Id. ¶ 58 (“According to the Final
Notice, the operative legal authority for issuing this notice is 55 Pa. Code Ch[apter]
51.”); see DHS’s Brief in Support of Prelim. Objs. at 25. Petitioners further allege that
“if DHS[] had legal authority to issue the Final Notice, that authority must come from
Act 22.” Id. ¶ 58. These averments do not amount to a “frontal constitutional attack”
on Act 22 or the Final Notice as a whole; they merely challenge DHS’s “purported”
application of Act 22 in this case, which does not satisfy the narrow exception to the
exhaustion requirement. See Martel, 216 A.3d at 1176; Keystone ReLeaf, 186 A.3d at
514.
11
Moreover, the Petition for Review does not seek a declaration from this Court
that Act 22 is unconstitutional, further demonstrating that the Petition does not raise a
substantial constitutional question.4 See Keystone ReLeaf, 186 A.3d at 518 (dismissing
cause of action for failure to exhaust administrative remedies, where the issues
“involve[d] . . . the [agency’s] interpretation and application of the [statute at issue]
and temporary regulations” and, absent a facial constitutional challenge to the statute
or regulations, “there [was] no aspect of [the petitioner’s] claims that [was] not suitable
for disposition by the administrative tribunal”); see also Borough of Green Tree v. Bd.
of Prop. Assessments, Appeals & Rev., 328 A.2d 819, 826 n.14 (Pa. 1974) (noting that
“statutorily[]prescribed [administrative] remedies may [not] be aborted simply by an
allegation in a complaint in equity[] of a constitutional issue”).
We also conclude that Petitioners have not shown the absence of an adequate
remedy. An administrative remedy is inadequate if it either “does not allow for
adjudication of the issue raised” or would allow irreparable harm “during the pursuit
of the statutory remedy.” Com. ex rel. Nicholas v. Pa. Lab. Rels. Bd., 681 A.2d 157,
161 (Pa. 1996). A party claiming this exception must make a “clear showing that the
remedy is inadequate.” Dep’t of Pub. Welfare v. Eisenberg, 454 A.2d 513, 515 (Pa.
1982).
In their Petition for Review, Petitioners plainly acknowledge that there is an
administrative remedy available to them, averring that “these providers have the right
to appeal the sufficiency of their [reimbursement] rates via the [BHA].” Pet. for Rev.
4
Petitioners rely extensively on National Solid Wastes Management Association v. Casey,
580 A.2d 893 (Pa. Cmwlth. 1999), to support their argument that they satisfied the substantial
constitutional question exception by challenging the constitutionality of Act 22 and the Final Notice.
Pet’rs’ Br. in Opp’n to Prelim. Objs. at 19-20. In National Solid Wastes, the petitioner filed a
declaratory judgment action seeking to have an executive order declared unconstitutional as a
violation of the separation of powers doctrine. 580 A.2d at 896. We conclude, however, that
Petitioners’ reliance on National Solid Wastes is inapposite, because they do not seek to have Act 22
or the Final Notice declared unconstitutional.
12
¶ 15. Petitioners argue that, despite this available administrative remedy, they should
still be allowed to proceed with this action because the BHA lacks jurisdiction to
provide the relief they seek.
However, DHS avers that at least one Petitioner has filed an administrative
action with the BHA challenging the legality of the Final Notice and the new
reimbursement rates, which Petitioners do not dispute. See DHS’s Prelim. Objs. ¶ 2;
DHS’s Br. in Support of Prelim. Objs. at 18-19; Pet’rs’ Br. in Opp’n to Prelim. Objs.
at 27-29. DHS also alleges that in its appeal before the BHA, the provider raises the
same issues as those asserted in this case. DHS’s Prelim. Objs. ¶ 2.5
We agree with DHS that the BHA has authority to determine whether DHS’s
new reimbursement methodology is an unpromulgated regulation or otherwise violates
state and federal laws. See Millcreek Manor v. Dep’t of Pub. Welfare, 796 A.2d 1020,
1025 (Pa. Cmwlth. 2002) (recognizing that administrative agencies may rule on the
validity of their own guidelines and statements of policy, including whether a guideline
or policy is an unpromulgated regulation). Moreover, under DHS’s regulations, a
medical assistance provider may request declaratory relief in an appeal before the
BHA. See 55 Pa. Code § 41.42(a), (b); 55 Pa. Code § 41.31(4); 1 Pa. Code § 35.19.65
DHS has appended to its brief two documents in support of its averments that two of the
provider Petitioners have filed appeals with the BHA challenging the legality of the Final Notice.
Petitioners object to our consideration of these documents, arguing that DHS should have attached
them to its Preliminary Objections rather than to its brief because a brief is not a pleading. We agree
with Petitioners. We note, however, that Petitioners do not dispute that certain provider Petitioners
have filed appeals with the BHA challenging the new reimbursement rates and seeking monetary
damages.
6
The regulation at 55 Pa. Code § 41.42 states:
(a) A provider may include a request for declaratory relief in a petition for relief only
if the relief sought by the provider would not modify or alter an agency action
involving the provider.
(Footnote continued on next page…)
13
In short, Petitioners cannot sidestep the exhaustion requirement simply by
including a claim for declaratory or injunctive relief in their Petition for Review. See
Dep’t of Gen. Servs. v. Frank Briscoe Co., 466 A.2d 1336, 1341 (Pa. 1983) (“[T]he
declaratory judgment procedure may not be used to prejudge issues that are committed
for initial resolution to an administrative forum, any more than it may be used as a
substitute to establish in advance the merits of an appeal from that forum.”); Faldowski
v. Eighty Four Mining Co., 725 A.2d 843, 846 (Pa. Cmwlth. 1998) (sustaining
preliminary objection and dismissing a declaratory judgment action for failure to
exhaust administrative remedies, because “[t]o hold otherwise would mean that . . . in
most administrative cases, a declaratory judgment could be used to short-circuit the
administrative process and have the law determined without the benefit of the
administrative agency first reviewing the matter”).
(b) If the requested relief would modify an agency action involving the provider, the
provider may only seek the relief in the context of a request for hearing filed in
accordance with [55 Pa. Code] § 41.31 (relating to request for hearing).
55 Pa. Code § 41.42(a), (b) (emphasis added). The regulation at 55 Pa. Code § 41.31(4) states in
relevant part:
(i) If the provider is challenging the validity of a regulation or statement of policy in
its provider appeal, the provider shall state the challenge expressly and with
particularity and identify the regulation or statement of policy involved.
....
(iii) A provider may not request a declaratory order or an order that [DHS] should be
required to promulgate, amend or repeal a regulation as relief in a request for hearing.
The requests shall be set forth in a petition for relief in accordance with 1 Pa. Code
§§ 35.18 and 35.19 (relating to petitions for issuance, amendment, waiver or deletion
of regulations; and petitions for declaratory orders).
55 Pa. Code § 41.31(4)(i), (iii) (emphasis added).
14
Furthermore, this Court has applied the exhaustion requirement in other cases
where medical assistance program providers have challenged the legality of DHS’s rate
reimbursement methods. See, e.g., Keystone Indep. Living, Inc. v. Dep’t of Pub.
Welfare (Pa. Cmwlth., No. 1492 C.D. 2014, filed June 4, 2015), slip op. at 8 (stating
that this Court initially dismissed the petitioners’ action challenging the legality of
DHS’s change to its rate reimbursement methodology for waiver services for failure to
exhaust administrative remedies);7 Pa. Pharmacists Ass’n v. Dep’t of Pub. Welfare,
733 A.2d 666, 673 (Pa. Cmwlth. 1999) (dismissing pharmacies’ action for failure to
exhaust administrative remedies where they “sought a declaration that the outpatient
pharmacy rates under a managed-care program were implemented in violation of the
law” and “an order enjoining [DHS] from permitting continued reimbursements to
providers” under the program and “directing [DHS] to require reimbursement at a prior
rate”).
Finally, we reject Petitioners’ contention that requiring them to exhaust their
administrative remedies will result in irreparable harm. According to Petitioners, it
will take “at least 24 months” for the BHA to decide their administrative appeals, and
7
In Keystone Independent Living, this Court explained:
[W]hile the instant BHA appeals were pending, the [p]etitioners filed an action
against [DHS] in this Court seeking a declaratory judgment and injunctive relief on
the ground that [its] Revenue Reconciliation was an invalid regulation because it was
not issued in compliance with the requirements of . . . the Commonwealth Documents
Law . . . . Th[is] Court dismissed that action, noting that the allegations that [the]
Revenue Reconciliation was invalid for failure to comply with the [Commonwealth]
Documents Law “appear to have merit,” but concluding th[is] Court lacked
jurisdiction because [the p]etitioners had failed to exhaust their administrative
remedies in their appeals before the BHA.
Slip op. at 7-8 (footnote omitted) (emphasis added). We may cite an unreported decision of this Court
as persuasive authority. See Cmwlth. Ct. Internal Operating Procedure Section 414, 210 Pa. Code §
69.414 (stating that an unreported panel decision of this Court, issued after January 15, 2008, may be
cited for its persuasive value).
15
“[t]aking into consideration time for the release of [year-end] audits (late 2020/early
2021) and the speed of the [BHA’s] docket and adjudication timeline, decisions on
appeals of the . . . Final Notice will likely not be rendered until, at [the] earliest, May
2021.” Pet’rs’ Br. in Opp’n to Prelim. Objs. at 24; Pet. for Rev. ¶¶ 12, 15. Petitioners
claim that they cannot wait for the BHA to adjudicate these matters because they “will
be required to materially scale back or shut down their [CPS] programs if they do not
obtain lawful rates this 2019-2020 fiscal year.” Pet’rs’ Br. in Opp’n to Prelim. Objs.
at 25; Pet. for Rev. ¶ 15. However, Petitioners cannot avoid the exhaustion requirement
simply because they believe their administrative appeals will not be resolved in a timely
manner. See Mercy Hosp. v. Pa. Hum. Rel. Comm’n, 451 A.2d 1357, 1359 (Pa. 1982)
(recognizing that a more expeditious judicial resolution of a dispute “does not warrant
[judicial] intrusion where there is a statutory process designed for its resolution”).
Furthermore, as discussed above, Petitioners can file an appeal with the BHA
challenging the legality of the rate changes announced in the Final Notice. Petitioners
also acknowledge that they “have the right to appeal the sufficiency of their
[reimbursement] rates via the [BHA]” to attempt to recover the allegedly deficient
funds. Pet. for Rev. ¶ 15; see Pet’rs’ Br. in Opp’n to Prelim. Objs. at 29 (stating that
the relief requested in the BHA appeals is monetary damages). Therefore, we conclude
that Petitioners have not clearly shown that the available administrative remedy is
inadequate. See Eisenberg, 454 A.2d at 515.
Conclusion
Accordingly, because we conclude that Petitioners were required to exhaust their
administrative remedies before filing this action, we sustain DHS’s Preliminary
Objection on this basis and dismiss the Petition for Review. See Jackson v. Centennial
Sch. Dist., 501 A.2d 218, 221 n.5 (Pa. 1985) (“[E]xhaustion of administrative remedies
is a prerequisite to the court’s exercise of subject[]matter jurisdiction.”); Hughes v. Pa.
16
State Police, 619 A.2d 390, 393 (Pa. Cmwlth. 1992) (“[W]henever a court discovers
that it lacks jurisdiction over the subject matter or a cause of action, it is compelled to
dismiss the matter under all circumstances. . . .”) (emphasis in original); Beluschok v.
Peoples Nat. Gas Co., 470 A.2d 196, 198 (Pa. Cmwlth. 1984) (“[I]f a preliminary
objection raising a question of jurisdiction is sustained, the court is then without power
or authority to act further in the proceedings.”).8 We also overrule Petitioners’
Preliminary Objections and deny as moot Petitioners’ Application for Partial Summary
Relief.
__________________________________
ELLEN CEISLER, Judge
8
Because we sustain DHS’s Preliminary Objection with regard to the exhaustion of
administrative remedies, we need not address its remaining Preliminary Objections.
17
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Rehabilitation and Community :
Providers Association, and :
Westmoreland County Blind :
Association, and Associated :
Production Services, Inc., and United :
Cerebral Palsy of Central Pennsylvania, :
Inc. and Scott Howard Schwartz by and :
through Theodore A. Schwartz, Co :
Guardian, and Ryan Brett by and :
through His Guardian Francis Brett, :
Petitioners :
:
v. : No. 543 M.D. 2019
:
Department of Human Services :
Office of Developmental Programs, :
Respondents :
ORDER
AND NOW, this 3rd day of February, 2021, we hereby: (1) SUSTAIN the
Preliminary Objection filed by the Department of Human Services Office of
Developmental Programs (DHS) based on the failure to exhaust administrative
remedies; (2) OVERRULE the Preliminary Objections in the Form of a Motion to
Strike DHS’s Preliminary Objections filed by Rehabilitation and Community
Providers Association, Westmoreland County Blind Association, Associated
Production Services, Inc., United Cerebral Palsy of Central Pennsylvania, Inc., Scott
Howard Schwartz by and through his co-guardian, Theodore A. Schwartz, and Ryan
Brett by and through his guardian, Francis Brett (together, Petitioners); (3) dismiss
Petitioners’ First Amended Petition for Review; and (4) DENY AS MOOT
Petitioners’ Application for Partial Summary Relief.
__________________________________
ELLEN CEISLER, Judge