Southern Concepts, Inc. Volunteers of America Texas, Inc. Knob Oak, Inc. Silver Quail, Inc. Community Access, Inc. And Creative Community Care, Inc. v. Texas Department of Aging and Disability Services

ACCEPTED
03-17-00712-CV
21562262
THIRD COURT OF APPEALS
AUSTIN, TEXAS
1/2/2018 4:33 PM
JEFFREY D. KYLE
CLERK
CAUSE NO. 03-17-00712-CV
(consolidated with 03-17-00711-CV)
FILED IN
3rd COURT OF APPEALS
AUSTIN, TEXAS
INTHE
1/2/2018 4:33:36 PM
COURT OF APPEALS
JEFFREY D. KYLE
for the Clerk
THIRD DISTRICT OF TEXAS
at
AUSTIN, TEXAS
CAUSE NO. 03-17-00712-CV
Southern Concepts, Inc., Volunteers of America Texas, Inc., Knob
Oak, Inc., Silver Quail, Inc., Community Access, Inc., and Creative
Community Care, Inc., Appellants
V.
Texas Department of Aging and Disability Services, Appellee.
Original Proceeding from the 353rd District Court
Final order signed by Darlene Byrne, Presiding in the 126th Judicial District
CAUSE NO. 03-17-00711-CV
CALAB, Inc., Mosaic Inc., Mosaic Martin Luther Home, Mosaic of
Bethphage, The Center Serving People with Mental Retardation,
Unified Care Group, Appellants
V.
Texas Department of Aging and Disability Services, Appellee.
Original Proceeding from the 261st District Court
Final order signed by Gisela D. Triana, Presiding in the 200th Judicial
District
Appellants' Brief on the Merits
ORAL ARGUMENT REQUESTED
1
Counsel for Appellant
Joanalys B. Smith
State Bar No. 05719200
Gay L. Bonorden
State Bar No. 00785708
Smith & Associates
900 Ranch Road 620 South
Suite C101-159
Austin, TX 78734
2
IDENTITY OF PARTIES AND COUNSEL
Pursuant to Texas Rule of Appellate Procedure 38.1 (a),
Appellant presents the following list of all parties and names and
addresses of its counsel:
Appellants SOUTHERN CONCEPTS, INC., VOLUNTEERS OF
AMERICA TEXAS, INC., KNOB OAK, INC., SILVER QUAIL, INC.,
COMMUNITY ACCESS, INC., AND CREATIVE COMMUNITY
CARE, INC., CALAB, INC., MOSAIC INC., MOSAIC MARTIN
LUTHER HOME, MOSAIC OF BETHPHAGE, THE CENTER
SERVING PEOPLE WITH MENTAL RETARDATION, UNIFIED
CARE GROUP
Counsel
Joanalys B. Smith
State Bar No. 05719200
Gay L. Bonorden
State Bar No. 00785708
Smith & Associates
900 Ranch Road 620 South, Suite C101-159
Austin, TX 78734
Telephone: (512) 261-9990
Facsimile: (512) 261-9971
E-mail: Joanalys@LawOfficesJBS.com
Appellee TEXAS DEPARTMENT OF AGING AND DISABILITY
SERVICES
Counsel
Eugene A. Clayborn, Deputy Chief
State Bar No. 00785767
Andrew Lutostanski
State Bar No. 24072217
Assistant Attorneys General
Office of the Attorney General of Texas
P.O. Box 12548, Capitol Station
Austin, Texas 78711-2548
3
Eugene.clayborn@oag.texas.gov
Andrew. lutostanski@oag.texas.gov
4
TABLE OF CONTENTS
IDENTITY OF PARTIES AND COUNSEL. ....................................... 03
TABLE OF CONTENTS .................................................................. 05
TABLE OF AUTHORITIES ............................................................... 07
STATEMENT OF THE CASE ........................................................... 09
STATEMENT REGARDING ORAL ARGUMENTS ......................... 10
ISSUES PRESENTED ..................................................................... 11
STATEMENT OF FACTS .................................................................. 12
A. THE TAC RULES DID NOT ALLOW APPELLEE TO
COLLECT ADDITIONAL QAF TAXES AS
UNDERPAYMENTS FROM APPELLANTS DURING THE
RELEVANT TIME .................................................. 12
8. IN 2009 THE FEDERAL CENTERS FOR MEDICARE
AND MEDICAID SERVICES DETERMINED THAT
APPELLEE VIOLATED FEDERAL
LAW ................................................................... 18
C. AMENDMENT OF THE TAC (EFFECTIVE 2008)
FINALLY ALLOWED FOR QAF UNDERPAYMENTS TO
BE COLLECTED ................................................... 20
D. APPELLEE'S ACTIONS IN RESPONSE TO ITS
VIOLATION OF FEDERAL LAW.............................. 23
SUMMARY OF THE ARGUMENT .................................................. 23
ARGUMENT ......................................................................................27
A. AS A MATTER OF LAW, APPELLEE CANNOT
RECOVER ADDITIONAL OAF TAXES AS
UNDERPAYMENTS FOR THE RELEVANT TIME
BECAUSE THE GOVERNING LAW DID NOT PROVIDE
5
FOR THEIR RECOVERY AND THE QAF TAX WAS PAID
ACCORDING TO EXISTING LAW ........................... .27
B. AS A MATTER OF LAW, FEDERAL AND TEXAS LAW
PROHIBITS RETROACTIVE APPLICATION OF QAF
TAXES .............................................................. .41
PRAYER ......................................................................................... .46
APPENDIX ....................................................................................... .46
CERTIFICATE OF COMPLIANCE .......................................... .48
CERTIFICATE OF SERVICE ................................................. .48
6
TABLE OF AUTHORITIES
Cases
1. Bowen v. Georgetown Univ. Hospital, 488 U.S. 204 (1988); ...... .42
2. In re General Elec. Co., 271 S.W.3d 681 (Tex. 2008) .................. .43
3. Jasterv. Comet II Constr., Inc., 438 S.W.3d 556,562
(Tex. 2014) ........................................................................................37
4. Landgraf v. US/ Film Prods., 511 U.S. 244, 280 ....................... 42
5. Stanford v. Butler, 142 Tex. 692, 181 S.W.2d 269,273 (1944) .... 33
6. State Office of Risk Management v. Berdan, 335 S.W.3d 421 (Tex.
App. Corpus Christi 2011 ), reh'g overruled, (Mar. 9, 2011) and
petition for review filed, (May 25, 2011 )........................................... 43
7. Sw. Pharmacy Solutions, Inc. v. Tex. Health & Human Servs.
Comm'n, 408 S.W.3d 549, 557-558 (Tex.App.--Austin 2013, pet.
denied) ...............................................................................................29
Statutes
42 CFR Sec. 433.68 .............................................................. .45
SSA Sec. 1903(w)(1 )(A)(ii) ............................................................... .45
7
Tx Govt. Code Sec. 2001.174 ........................ 10, 24, 25, 26, 34, 36
Tx Health & Safety Code 252.202(b) ......................................... 27, 43
Rules
1 TAC 352.1-352.9(2003) ...................................................... 13, 14, 27
1 TAC 351.1-352.9(2008) ...................................................... 20, 30, 44
1 TAC 352.3{c)(2003) ............................................................ 15, 16, 30
1 TAC 352.5(1 ).................................................................................. 14
1 TAC 357.483(c) ............................................................................. .44
Other Authorities
28 TexReg 9235 ................................................................... 13
32 TexReg 7789 at 7790 ..............................................27, 30, 41
33 TexReg 667 ....................................................................20
Tex. Const. Art. 1, § 16 ..................................................... 27, 42
8
STATEMENT OF THE CASE
This case is Appellants' appeal from a judicial review in which
the district court entered a final order signed July 21, 2017 in favor of
Appellee, granting summary judgment for Appellee and affirming
Final Agency Orders entered in the Appeals Division of the
Administrative Law Court (ALC) of the Texas Health and Human
Services Commission. The district court further denied Appellant's
motion for summary judgment. The Final Agency Orders held that
Appellee could recoup additional Quality Assurance Fee (QAF) taxes
from each Appellant.
This case is also a consolidation with Appeal Cause No.
03-17-0711-CV, which is also an appeal from a judicial review in the
district court. The identical issues are presented for each Appellant
and Appellee, and this Court granted consolidation upon Appellants'
motion for "purposes of briefing and consideration only."
9
STATEMENT REGARDING ORAL ARGUMENTS
This case raises significant issues related to the
appropriateness of Appellee's rights to recoup additional Quality
Assurance Fee (QAF) taxes in light of the calculation rules in place at
the time each QAF tax was imposed and collected. At issue is
whether such recoupment is permissible now, when not due and
owing under the law in place at the relevant time. Both lower courts
have failed to apply clear, controlling Texas law and legal precedent
under Texas Gov't Code Sec 2001.17 4, containing the Substantial
Evidence Rule. In particular, the courts have allowed the Appellee
the right to recoup additional QAF taxes by allowing Appellee to
re-interpret the applicable 2003 law which was in effect during the
relevant time at issue here.
The inclusion of oral arguments will significantly aid the
decision of this Court.
10
II. ISSUES PRESENTED
1. Whether the lower courts properly interpreted the law or
committed error regarding the applicable law, particularly the law that
defined the QAF tax and how it was to be calculated. More
specifically, Appellee is not now authorized to re-interpret the law to
collect additional QAF taxes based upon the 2003 law that was
settled and in effect during the relevant time period. The Final Order
should be reversed.
2. Whether the lower courts committed error by retroactively
applying the law that came into effect after the relevant time period.
More specifically, the lower courts committed error by retroactively
applying law that came into effect in 2008, which was after the
relevant time period for calculation of the additional QAF taxes at
issue. The Final Order should be reversed.
II
Ill. STATEMENT OF FACTS
A. THE TAC RULES DID NOT ALLOW APPELLEE TO COLLECT
ADDITIONAL QAF TAXES AS UNDERPAYMENTS FROM
APPELLANTS DURING THE RELEVANT TIME
Appellants are providers which provide care to consumers
pursuant to individual Provider Agreements (Agreements) between
Appellants and Appellee. AR93. 1 Appellee pays each Appellant for its
various services to consumers as authorized under the Agreements,
less authorized taxes or other authorized deductions. Authorized
taxes and other deductions are calculated by rule based upon data
mandated in Appellee's published rules, regulations, policies and
practices. Providers paid OAF taxes to Appellee in the manner and
time dictated by Appellee according to its rules, regulations and
policies in place at the time. AR25-27.
The fundamental dispute in this case arises because
Appellee's current demand for additional QAF taxes is based upon its
own re-interpretation of the 2003 Law that was in effect during the
relevant time. At the time, Appellee defined the QAF tax to be
calculated and assessed on a cash basis as 6% of the gross receipts
1
All of the Appellants have virtually identical Adminstrative Records ("ARs"), and each AR is individually
numbered. Thus, cites to the AR will be to the record for Appellant Southern Concepts, Inc. for simplicity.
12
actually received by Appellant from Appellee in a particular month,
reconciled every six months to refund overpayments of the tax by
Appellants. At issue here is Appellee's current demand for additional
QAF taxes calculated and assessed on an accrual basis as 6% of
revenue accrued in a particular month, reconciled years later to
recoup underpayments of the tax by Appellants.
It is undisputed that the rule in place at the relevant time based
the QAF tax on a cash basis and not an accrual basis. AR25-27. It is
further undisputed that Appellants paid all QAF taxes as calculated by
Appellee during the relevant time. AR22, 44. It is Appellee's current
re-interpretation of the law and resulting recalculation of past taxes
due that is at issue here.
The applicable 2003 Rules, 1 TAC §§ 352.1-352.9 (effective
October 24, 2003), governed the QAF tax and were in effect during
September 1, 2004 to December 31, 2007 (the "Relevant Time"). See
28 TexReg 9235. Throughout the proceedings in the lower courts,
Appellee repeatedly bases its current claims to additional QAF taxes
13
on an accrual recalculation years after assessment, which was not
the law until the 2008 Amendments.
During the Relevant Time, Appellee required providers to
submit specific census data at the beginning of each month, which
Appellee then used to calculate the QAF tax due by a provider every
month. AR25-27, 44-45. The record is undisputed and
uncontroverted that each Appellant faithfully followed this procedure
and made payment. Appellee defined its QAF tax by this method of
calculations on its own accord and required providers to act
according to its published rules and policies. Id. 1 TAC 352.5(1 ), as
amended in 2003, was in effect during the Relevant Time and
required Appellants to "pay the amount of the [QAF] in accordance
with the instructions of the commission or its designees not later than
the 30th day after the last day of the month for which the fee is
assesse d .... "
Each month the OAF was paid on cash actually received.
AR25-26. In the present case, it is undisputed that Appellants
accurately made their monthly payments in accordance with
14
Appellee's instructions during the Relevant Time. AR22, 44. There
is no evidence that any Appellant, whether a large provider or a small
provider, whether a for-profit or charitable organization (as Appellants
run the gamut of such types of organizations) in any way submitted
erroneous, inaccurate or incomplete data or acted in any manner that
was dishonest or in any other way attempted to violate or manipulate
any obligation it had to Appellee. The only evidence before this Court
is that Appellants accurately and properly paid their QAF tax each
month on a cash basis, and not on the accrual basis which became
law with the 2008 Amendments. AR25-26.
Periodically during the Relevant Time, Appellee internally
audited or "reconciled" its own QAF tax calculations. 1 TAC 352.3(c)
(2003). The 2003 Rules required Appellee to perform these
reconciliations for the QAF tax every six months. Id. In other
program areas with periodic reviews or reconciliations and rules for
reimbursement, Appellee regularly collected or "recouped" any
underpaid amounts from the providers in accordance with rules which
expressly granted such authority. It is undisputed that, during the
Relevant Time (which lasted three years) and according to Appellee's
15
own practices for these three years and its internal policies and the
2003 Rules, if Appellee determined during its 6-month reconciliation
that Appellee had calculated a provider's QAF tax as too low (a.k.a.
"QAF underpayment"), Appellee would not attempt to collect or
recoup the additional QAF tax difference from the provider. AR26.
However, if the Appellee calculated a provider's QAF as too high
(a.k.a "QAF overpayment"), the Rules dictated that Appellee would
refund the difference between the reconciled QAF tax and the
amount overpaid by a provider. AR36. The Rules mandated this
reconciliation occur every six months. 1 TAC 352.3(c) (2003).
1 TAC 352.3(c) (2003) provided that "A facility's liability for the
[QAF] may be adjusted following this review to ensure that the [QAF]
does not exceed six percent of annual revenue .. " There was no
provision allowing for adjustment if QAF was less than six percent,
and Appellee's practices were consistent with this interpretation of the
Rule. Appellee continued this practice of not collecting QAF
underpayments over the entire three-year Relevant Time period.
16
AR35 ("[Appellee] indicated that underpayments were never
collected since the inception of the QAF program.").
Appellee based this deliberate policy regarding underpayments
on several bases. First, the Rules governing OAF taxes in effect
during the Relevant Time did not allow for collection of additional
QAF taxes as being "underpayments". AR26, 32, 36. Indeed, the
definition of the QAF tax in place during the Relevant Time as
interpreted and practiced by Appellee did not include the factor of
"underpayments," nor the collections of such additional taxes. Thus,
the only evidence before the Court now is that Appellants paid their
QAF tax as it was defined by law during the Relevant Time.
Appellee had no authority or procedures for the collection of
QAF underpayments until the 2008 Rule amendments, after the
Relevant Time, when the Rules relating to the definition of gross
receipts, reconciliation, and enforcement were amended. AR25-26,
32.
Furthermore, "[Appellee] felt that the previous TAC language [in
effect during the Relevant Time] was too vague in order to enforce
17
the repayment of underpayments to [Appellee] and therefore
underpayments were not collected." AR32. "Again, [Appellee] did not
enforce the collection of these underpayments because they felt that
the TAC language was too vague and unenforceable." AR36.
B. IN 2009 THE FEDERAL CENTERS FOR MEDICARE AND
MEDICAID SERVICES DETERMINED THAT APPELLEE
VIOLATED FEDERAL LAW
Appellee is also under contract with The Centers for Medicare
and Medicaid Services (CMS) which provides the federal funding for
the provision of services to consumers. CMS periodically performed
"compliance reviews" to ensure Appellee was complying with federal
law.. One such review resulted in a Final Report dated August 31,
2009, which found that during the Relevant Time, Appellee had
deficiencies in its process for determining OAF taxes. Appellee and
stated that before 2008, Appellee "was not performing a proper
reconciliation process." AR28, 35.
Additionally, Appellee "violated" Section 1903(w) of the Social
Security Act which "requires that ... taxes must: ... be uniform, such
that all providers within a class must be taxed at the same rate; ....
18
." AR21. Therefore, because Appellee's OAF taxes were not applied
uniformly to providers, CMS stated that the entire OAF tax could be
rendered impermissible. AR39. Consequently, if the OAF tax was
rendered impermissible, Appellee would lose the matching federal
Medicaid funds provided by CMS under federal law, indisputably an
enormous sum.
CMS reasoned that Appellee's actions caused providers to be
non-uniformly taxed because of Appellee's practice of refunding OAF
taxes to providers if they overpaid the OAF tax but not collecting any
underpayments of OAF taxes. AR21. This caused providers to pay
different OAF tax rates .. " AR21, 36 (Providers underpayments
"would appear to directly violate the uniformity requirement where all
providers within a class must be taxed at the same rate").
Again, it was Appellee's sole, deliberate decision through its
practices and its interpretation of the duly-promulgated Rules to
calculate OAF on a cash basis without factoring in underpayments,
which resulted in non-uniform taxation. AR21. Appellee explained its
actions in the Final Report: "The [Appellee] OAF program staff
19
indicated that they realize the cost reports are unreliable . . . . ."
AR37. And as noted above, Appellee deliberately chose its actions
(which resulted in non-uniform taxation) because it believed the Rules
in effect were just too vague to enforce any payments of additional
QAF taxes as underpayments. AR32, 36; see AR40 (the 2008
amendment of the TAC was "intended to correct the previous
non-uniform reconciliation process .... ").
C. AMENDMENT OF THE TAC (EFFECTIVE 2008) FINALLY
ALLOWED FOR QAF UNDERPAYMENTS TO BE COLLECTED
To remedy Appellee's situation, several suggestions made in
the CMS Final Report were put into place. First, the TAC was
amended effective January 1, 2008, which was after the Relevant
Time at issue here. See 1 TAC §§352.1-352.9, 33 TexReg 667. The
amendments show as a matter of law, that the TAC during the
Relevant Time did not provide for the collection of additional QAF
taxes as underpayments, nor was it even used as a factor in defining
and calculating the QAF tax due.
First regarding the 2008 amendments, Appellee admitted that
under the "Previous Rules", "Providers were not charged for QAF
20
underpayments when the QAF reconciliations were completed."
AR27. Thus, there needed to be "significant changes to the previous
rules governing QAF .... " AR25. A significant change found in the
new Rules was that "Providers . . . that underpay QAF will be
required to pay the outstanding amount .... " AR26. This shows that
prior to these amendments, the QAF tax was not defined or
calculated using the factor of underpayments.
Second regarding the 2008 amendments, "Enforcement [of
collection of OAF underpayments] was finally granted as of January
1, 2008 with the new TAC language." AR36. Thus, it was not until
the 2008 amendments that "underpayments" became a factor in
Appellee's calculation of the OAF tax--and consequently under the
2003 Rules, the proper, lawful QAF tax did not include the factor of
"underpayments". The proper, lawful QAF tax was that calculated by
Appellee monthly on a cash basis with any adjustments made under
the six-month reconciliation rule.
Third, CMS noted that the amendment of the TAC was
"intended to correct the previous non-uniform reconciliation process .
21
... " AR40. Thus, it was plain that the previous reconciliation process
resulted in non-uniform taxation as admitted by Appellee.
Fourth, the amendment "clearly identifies that the calculating of
QAF will no longer be performed on a cash basis . . . and that
underpayments will now be enforced and paid to [Appellee]." AR36
(emphasis added). Appellee was not collecting underpayments by its
own deliberate policy choice during the Relevant Time because it
interpreted the Rules as not authorizing such collection before the
new 2008 rules went into effect.
Fifth, the 2008 rules were considered "new". AR40. Any
resultant requirement, like collection of additional QAF taxes as
underpayments, was also new and not in effect during the Relevant
Time.
Contrary to statements in the Final Order, CMS never
"mandated" or "ordered" Appellee to collect QAF tax underpayments
in the Final Report for the Relevant Time. CMS merely "requested"
that it collect the additional QAF taxes as underpayments and
stressed that "providers will be afforded the opportunity to appeal".
22
AR21, 31,40. CMS further noted the tentivative status of Appellee's
response to the Report by stating "if you proceed". The nod to the
appeal process shows foreknowledge that Appellee's attempts to
collect underpayments could be improper under Texas law and that
providers should be given an opportunity to respond to such
collection efforts in the courts.
D. APPELLEE'S ACTIONS IN RESPONSE TO ITS VIOLATION OF
FEDERAL LAW
Despite the Rules and its own policies and interpretations in
effect during the Relevant Time, in the face of the possibility of losing
significant federal funds, Appellee demanded by letters to Appellants
that they pay additional QAF taxes as underpayments. AR21-23. In
the same letters, Appellee "acknowledges that [Appellants] followed
the practices of [Appellee] in its payment of the QAF." AR22.
In response to these letters, Appellants requested individual
informal reviews of the demand for QAF underpayments but the
Appellee upheld its position. AR21. Appellants then appealed these
determinations, which appeals landed in the ALC which upheld the
collection of additional taxes as OAF underpayments. AR343.
IV. SUMMARY OF THE ARGUMENT
23
A. The ALC committed error regarding the applicable law.
Appellee is not authorized to now re-interpret the 2003 law to collect
additional QAF taxes based upon the law that was settled and in
effect during the Relevant Time period. Several statements in the
Final Agency Order show that the ALC applied the wrong law--mixing
up the language and proper interpretation of the 2003 and 2008
Rules. Appellee did the same after 2008, and these actions
collectively prejudiced substantial rights of the Appellants because
the administrative findings, inferences, conclusions, and decisions
are capricious, arbitrary, in violation of constitutional and statutory
provisions, in excess of the agency's statutory authority, clear error of
law. and arbitrary, capricious and characterized by abuse of
discretion and clearly unwarranted exercise of discretion. Under
Texas Gov't Code Sec 2001.174, the Final Order should be reversed,
and the Court find Appellants owe no additional OAF taxes.
Further, as set forth in the facts above, Appellee correctly
interpreted the 2003 Rules for over three years to calculate the QAF
tax as exactly as compliantly paid by Appellants during the Relevant
Time. At the time, Appellee defined the QAF tax to be calculated and
24
assessed on a cash basis as 6% of the gross receipts actually
received by Appellant from Appellee in a particular month, reconciled
every six months to refund overpayments of the tax by Appellants.
Unlawful is Appellee's current demand for additional QAF taxes
calculated and assessed on an accrual basis as 6% of revenue
accrued in a particular month, reconciled years later to recoup
underpayments of the tax by Appellants. The Final Agency Order
violates Texas Gov't Code Sec 2001.174.
The interpretation and settled 2003 law did not allow for the use
of "underpayments" to recalculate the QAF tax and did not give
Appellee authority to collect additional QAF taxes that were
re-calculated using any alleged "underpayments". AR22, 26, 32, 36.
Additionally, the 2003 Rules based the QAF tax on cash receipts, not
accrued receipts. Thus, there is no legal authority for Appellee to
now make a claim to additional QAF taxes as sought herein and its
interpretation is plainly erroneous. And, the Final Agency Order
upholding such violates Texas Gov't Code Sec 2001.174.
25
Given Appellee's many admissions regarding the QAF tax
calculations and its interpretations and its policies and rules during
the Relevant Time, as a matter of law, Appellee cannot now recoup
additional QAF taxes as underpayments from the Appellants for the
Relevant Time. Its current interpretation is plainly erroneous and its
actions have no reasonable basis in the record. Substantial rights of
the Appellants have been prejudiced because the administrative
findings, inferences, conclusions, and decisions collectively are
capricious, arbitrary, in violation of constitutional and statutory
provisions, in excess of the agency's statutory authority, clear error of
law, and arbitrary, capricious and characterized by abuse of
discretion and clearly unwarranted exercise of discretion. Under
Texas Gov't Code Sec 2001.174, the Final Order should be reversed
and the Court find Appellants owe no additional QAF taxes.
B. The ALC committed plain error by retroactively applying law that
came into effect in 2008, which was after the Relevant Time period
for calculation of the additional QAF taxes at issue.
26
The Texas Constitution expressly prohibits Appellee from
applying rules to Appellants retroactively. Tex. Const. Art. 1, Sec. 16.
Appellee determined that there would be no additional cost to
providers who were required to comply with the proposed 2008
amendments. See 32 TexReg 7789, at 7790. Thus, they cannot now
add additional taxes to the 2003 QAF tax calculations due to the 2008
Amendments. There is no Texas statute that grants Appellee the
power to make retroactive adjustments to the QAF, or to demand
additional tax underpayments retroactively, as Appellee attempts
now. See TEX. HEALTH & SAFETY CODE § 252.202(b) (only
"prospective" adjustments allowed).
V. ARGUMENT
A. AS A MATTER OF LAW, APPELLEE CANNOT RECOVER
ADDITIONAL QAF TAXES AS UNDERPAYMENTS FOR THE
RELEVANT TIME BECAUSE THE GOVERNING LAW DID NOT
PROVIDE FOR THEIR RECOVERY AND THE QAF TAX WAS PAID
ACCORDING TO EXISTING LAW
As explained above, as a matter of law, the TAC rules in effect
during the Relevant Time, 1 TAC §§ 352.1-352.9, (effective 2003),
calculated the QAF tax, and that amount as calculated by Appellee
was paid by Appellants at the time, and the law as interpreted by
27
Appellee made no provision to collect additional QAF taxes as
underpayments. AR26, 32, 36. As illogical as that may sound,
Appellee justified this practice as explained above and continued this
practice unchanged for over three years during the Relevant Time.
AR26. Appellee defined its QAF tax differently during the Relevant
Time than under the 2008 Amendments and had no authority or
procedures for the collection of additional QAF taxes as
underpayments until the 2008 Amendments, when the rules relating
to the definition of gross receipts, reconciliation, and enforcement
were amended. AR25-27.
Further, the 2008 amendments and Appellee's comments
during this process and in the CMS Final Report additionally prove
that the 2003 Rules calculated the QAF tax under a different formula
and did not allow recoupment of additional QAF taxes as
underpayments. Id. These were Appellee's interpretations based
upon the Law which governed it. This is explained in depth above in
the Statement of Facts.
28
In Appellee's arguments in the lower courts, it cites the Third
Court of Appeals for the proposition that an agency's interpretation of
a statute is entitled to serious consideration as long as the
construction is reasonable and does not conflict with the statute's
language. Sw. Pharmacy Solutions, Inc. v. Tex. Health & Human
Servs. Comm'n, 408 S.W.3d 549, 557-558 (Tex.App.--Austin 2013,
pet. denied). The 2003 statute is completely neutral regarding
whether the QAF would be collected on revenue measured by
accrual or cash basis but Appellee chose to enact rules defining the
OAF tax on a cash basis and consistently for years interpreted the
2003 Rules as not allowing for recoupment of additional QAF taxes
as underpayments. AR26, 32, 35, 36, 41.
According to Appellee's interpretation and practices, the QAF
tax had been properly collected under the rules in place until 2008
Amendments. Appellee described the Rules as vague and
unenforceable when it came to QAF underpayments, and many
statements in the CMS Final Report and history of the 2008
amendments, as explained above, show that the Appellee did not
interpret the 2003 Rules as allowing for recoupment of additional
29
QAF taxes as underpayments. Id. Appellee may describe the issue
now as it chooses, with any attendant problems, but the fact remains
uncontroverted that Appellants paid the QAF tax assessed in full
under the 2003 Rules, under the definition of the OAF tax in the 2003
Rules and interpreted by Appellee. There is no evidence that any
Appellant in any way did anything devious or untoward in its payment
of the QAF tax during the Relevant Time.
Additionally, it was the 2008 rules, 1 TAC 352.1-352.9, that
provided ( 1) gross receipts were defined as accrued payments rather
than cash received, (2) new reporting and reconciliation procedures
were implemented, and (3) new enforcement procedures for audits
and (4) note to providers relating to audit findings regarding
underpayments. AR25-27, 334-8 (Proposed Rules, Nov. 2, 2007 32
TexReg 7789). See also AR34 (indicating the understanding of CMS
that the 2008 rule changes would allow Appellee's reconciliations to
address both overpayment and underpayment of the QAF).
Under the 2003 Rules, 1 TAC 352.3(c) provided only that "a
facility's liability for the [QAF] may be adjusted following this review to
30
ensure that the [OAF] does not exceed six percent of annual
revenue." Revenue was undisputedly defined as monthly cash
received. During the Relevant Time, this was the definition of the
OAF tax. As the tax was calculated on a monthly cash basis, there
was no underpayment. Appellee had no authority under any Rule to
collect additional taxes as a putative OAF underpayments, much less
to define or calculate the OAF tax differently than the 2003 Rule
provided.
Additionally, any failure to follow CMS rules or federal law is
solely attributable to Appellee, and not the providers who indisputably
complied with Appellee's rules in every respect. AR22. Appellee
disclosed to CMS that it failed to perform a proper OAF reconciliation
process during the period in question. AR35. This failure is the result
of law which failed to provide for this but in no way was the result of
any action taken by Appellants. Thus, it is patently unfair for Appellee
to attempt to use improper means now to correct its own error, which
actions were patently obvious throughout the 3-year Relevant Time.
31
Furthermore, the ALC Final Order erroneously states that the
2003 Rules "created an obligation on [Appellants] to pay a total of 6%
of its gross receipts." AR346. This interpretation flies in the face of
the plain reading of the statute, which allows for an adjustment not to
"exceed six percent." There is no requirement anywhere in the 2003
Rules mandating a flat 6% tax. It merely could not exceed 6% (unlike
the 2008 amendments which stated the adjustments should "equal"
the requisite percentage).
Further, gross receipts were the basis for each and every
payment properly made by Appellants under the 2003 Rule, defining
it as monthly cash received, rather than the definition Appellee now
uses, which is receipts on an accrual basis. AR25-26, 45. Appellee
chose to define its tax as the monthly gross revenue actually paid to
Appellants. Appellee sent Appellants a bill for this, and it is
uncontroverted that each Appellant paid this amount properly.
Appellee now contends that the amount it billed and collected under
the definition of QAF tax in place under the 2003 Rules is less than
32
6% of gross revenue calculated on an accrual basis, a basis not in
law until 2008.
In fact, the statute mandates only that the tax not exceed 6%,
and the QAF tax defined and used in 2003 complies with this
requirement. Thus, Appellee could permissibly impose under the
statute a percentage less than 6%, if it so decided. Clearly,
Appellee's actions during the Relevant Time bore this understanding
out-it did not tax all providers at 6%, but taxed them at different
rates--resulting in non-uniform taxation.
It is patently unfair for Appellee to have construed, interpreted
and applied the law for over three years during the Relevant Time
period one way, and then to re-interpret that law afterwards because
it was called out on its deliberate and knowing practice of non-uniform
taxation by CMS. It is still patently unfair to Appellants for Appellee to
re-interpret the law even when Appellee, a state actor, is at risk of
losing enormous sums of federal entitlements for its chosen course of
action. See Stanford v. Butler, 142 Tex. 692, 181 S.W.2d 269, 273
(1944) (explaining that an agency's construction of a statute it is
33
charged with enforcing is "worthy of serious consideration as an aid
to interpretation, particularly where such construction has been
sanctioned by long acquiescence").
In light of this, the Final Order is unduly deferential to Appellee
and made through error of law. As a matter of law, judgment is
appropriate that Appellee is not allowed to collect additional taxes as
underpayments for the Relevant Time because the OAF tax was
collected in accordance with valid law in effect, and there exists no
legal basis for the present requested recoupment. Appellee's current
interpretation of the 2003 law is plainly erroneous and its actions
have no reasonable bases in the record as set forth above.
1. The Final Agency Order should be reversed under Texas
Gov't Code Sec 2001.174, the Substantial Evidence Rule
The ALC's decision should be reversed to the extent it violates
the substantial evidence rule under the Texas Gov't Code Section
2001.17 4 which states:
Review Under Substantial Evidence Rule or Undefined Scope
of Review
If the law authorizes review of a decision in a contested case
under the substantial evidence rule or if the law does not define
34
the scope of judicial review, a court may not substitute its
judgment for the judgment of the state agency on the weight of
the evidence on questions committed to agency discretion but:
(1) may affirm the agency decision in whole or in part; and
(2) shall reverse or remand the case for further proceedings
if substantial rights of the appellant have been prejudiced
because the administrative findings, inferences,
conclusions, or decisions are:
(A) in violation of a constitutional or statutory
provision;
(B) in excess of the agency's statutory authority;
(C) made through unlawful procedure;
(D) affected by other error of law;
(E) not reasonably supported by substantial evidence
considering the reliable and probative evidence in the record as
a whole; or
(F) arbitrary or capricious or characterized by abuse of
discretion or clearly unwarranted exercise of discretion.
Further, the Appellee's reinterpretation of the 2003 Rules are
unreasonable and plainly erroneous.
Appellee wrongly asserts that the ALC applied the proper law
with a proper interpretation, the 2003 Rules, in the Final Order.
Several statements in the Final Order show that the ALC applied the
wrong law--mixing up the language and proper interpretation of the
2003 and 2008 Rules. Appellee did the same after 2008, and these
35
actions collectively prejudice substantial rights of Appellants and are
capricious, arbitrary, in violation of constitutional and statutory
provisions, in excess of the agency's statutory authority, clear error of
law, and arbitrary, capricious and characterized by abuse of
discretion and clearly unwarranted exercise of discretion. Under
Texas Gov't Code Sec 2001.174, the Final Order should be reversed
and judgment granted that Appellants owe no additional QAF taxes.
Further, the Final Order is not reasonable and plainly erroneous.
First, the Final Order states that "the rules in effect during the
period in question created an obligation on [an Appellant] to pay a
total of 6% of its gross receipts." AR345-6. However, the Final Order
does not address the issue of gross receipts calculated by cash basis
(as was in effect in the Relevant Time) or the accrual basis which
came into effect with the new 2008 Rules. The ALC completely
disregards the different definitions of gross receipts in the 2003 and
2008 Rules. AR25-26, 32. Thus, the Final Order conclusion is
plainly erroneous and contrary to the existing law and constitutes
abuse of discretion and clearly unwarranted exercise of discretion.
36
Furthermore, the 2008 amendments show the Final Order's
error. The 2003 Rules at 352.3(c) required reconciliation to ensure
that the "[QAF] does not exceed six percent of annual revenue".
(Emphasis added.) But, the 2008 Rules at Section 352.3 stated the
QAF tax may be adjusted "to ensure that the [QAF] equals five and
one half percent of annual gross receipts from all facilities." 2
(Emphasis added.) Clearly, the plain statutory construction,
especially in light of the change to "equal" in 2008, shows that the
2003 Rules did not mandate a 6% flat fee. Any contrary conclusion is
plainly erroneous and made by error of law.
Additionally, this change shows that in 2008, the statutory intent
was that the QAF annual reconciliation ensure QAF taxes "equal"
5.5% while the 2003 reconciliation was to ensure the QAF "does not
exceed" 6%--not that QAF should be adjusted to equal 6% for all
providers. As stated by Appellee, the courts should read the statute
contextually to give effect to every word, clause, and sentence.
Jaster v. Comet II Constr., Inc., 438 S.W.3d 556, 562 (Tex. 2014).
2
The Rules changed the requisite percentage from 6% in the 2003 Rules to 5.5%
in the 2008 Amendments, along with other changes.
37
Thus, the plain conclusion is that the 2003 Rules did not mandate a
6% flat rate on all providers based on gross receipts. Clearly, it was
permissible for the 6% QAF tax to be based upon cash receipts, as
Appellee did.
More confusion continues in the Final Order. The ALC Order
stated that Appellee was entitled to collect underpayments "up to a
total of six percent of said gross receipts .... " Granting "up to" six
percent conflicts with the prior ALC statement that the statute
"created an obligation on [a Appellant] to pay a total of 6% .... " The
Final Order contradicts itself internally, ordering an entitlement that
conflicts with its prior statement of the law. The Final Order is plainly
erroneous, capricious and arbitrary. But, Appellee's interpretation of
the 2003 Rules during the Relevant time is correct in light of its
statements, policies, practices and legal interpretation during the
Relevant Time.
Appellants do not dispute that the statutes allow Appellee to
collect the QAF tax. Nor do Appellants dispute that each facility was
to required to pay QAF taxes without any exception. Appellee did
38
collect all the OAF taxes that it asked of Appellants during the
Relevant Time, and they each paid the OAF tax as calculated and
instructed by Appellee. But, the statutes granting Appellee the
authority to collect OAF taxes does not give them the authority to
reinterpret the 2003 law years later and attempt to collect additional
OAF taxes based upon the re-interpreted law in violation of
substantial rights of Appellants. Such action is arbitrary and
capricious, made through error of law, unreasonable and plainly
erroneous.
Additionally, Appellant's agree that the 2003 Rules allowed for
an adjustment of a provider's OAF amount during reconciliation. But,
the adjustment was only allowed at the 6-month interval mandated by
the Rule. The 6-month rule does not give Appellee the power to then
re-adjust the OAF at another time according to Appellee's whims.
The plain reading of the statute provides for one adjustment---at each
6 month interval. It does not allow for multiple adjustments, possibly
years after a 6-month reconciliation period passed, as in the present
case. Such actions are capricious and arbitrary. Under Appellee's
current interpretation, it could again recalculate the OAF and demand
39
more tax from Appellants. Clearly, Appellee's actions are an abuse
of discretion and a clearly unwarranted exercise of discretion and
unlawful.
Appellants further agree that they were to pay the QAF
according to the instruction of the commission. But, Appellants did
that fully and completely. The evidence shows that Appellants
followed all of Appellee's Rules when they paid their QAF taxes
during the Relevant Time. AR22, 44. There is no evidence that any
Appellant did anything otherwise. That Rule does not allow Appellee
to change its instructions after Appellants have fully and completely
complied with its instructions. Nor does this Rule give Appellee the
power to change its instructions years after its prior instructions were
fully complied with by Appellants. Such actions are capricious and
arbitrary and an abuse of discretion and a clearly unwarranted
exercise of discretion and violate substantial rights of Appellants to be
free from unreasonable taxation, essentially civil ex post facto taxes.
Appellee's interpretation of the 2003 Rules during the Relevant
Time were correct and consistent with the plain meaning of the rules
40
and statutes and should be applied to the present case. The Final
Agency Orders should be reversed and judgment rendered that
Appellants owe no additional QAF tax.
B. AS A MATTER OF LAW, FEDERAL AND TEXAS LAW
PROHIBITS RETROACTIVE APPLICATION OF QAF TAXES
The Texas Constitution expressly prohibits Appellee from
applying rules to Appellants retroactively. Tex. Const. Art. 1, Sec. 16.
Appellee is clearly attempting to collect the taxes retroactively
because it continues to cite the 2008 Rules to support its position for
additional taxes in its briefings in the lower courts.
In making its required Small Business and Micro-Business
Impact Analysis of the 2008 Rules, Appellee determined that there
would be no additional cost to providers who were required to comply
with the proposed amendments. See 32 TexReg 7789, at 7790.
Appellee also determined that the new 2008 Rules would not restrict
or limit an owner's right to his or her property that would otherwise
exist in the absence of government action. Id. It does not appear
from the plain language of the 2008 Rules or the analyses made that
there was any intention that the new rules have a retroactive effect at
41
QAF tax is su b·ect
l to
expressly stated that
the time of adoption or to change the status quo retroactively. Thus,
Appellee's contrary actions to these determinations through its
current unlawful collections are improper and untenable, and are
unduly deferential to Appellee and made through error of law.
Appellee's informal review decision relies on the 2008 rule
amendments as a justification for recouping the additional taxes as
alleged QAF underpayments. AR21. However, under federal
precedent and the Texas and United States Constitutions, Appellee is
prohibited from retroactively applying rules where the legislature has
not expressly conveyed that power to Appellee. See generally
Bowen v. Georgetown Univ. Hospital, 488 U.S. 204 (1988); see a/so
Landgraf v. US/ Film Prods., 511 U.S. 244, 280 (absent clear
legislative intent, an agency may not give retroactive effect to statutes
or rules that impair rights a party possessed when he acted, increase
a party's liability for past conduct, or impose new duties with respect
to transactions already completed); See also Tex. Const. Art. 1, §
16 (prohibits the enactment of retroactive laws).
42
The Legislature has expressly stated that QAF tax is subject to
a "prospective adjustment as necessary." See TEX. HEALTH & SAFETY
CooE § 252.202(b) (emphasis added). Conversely, there is no Texas
statute that grants Appellee the power to make retroactive
adjustments to the QAF, or to demand additional tax underpayments
retroactively, as Appellee attempts now.
Courts must rely on the plain meaning of statutory text. See
State Office of Risk Management v. Berdan, 335 S.W.3d 421 (Tex.
App. Corpus Christi 2011 ), reh'g overruled, (Mar. 9, 2011) and
petition for review filed, (May 25, 2011 ). Every word excluded from
a statute must also be presumed to have been excluded for a
purpose. See In re General Elec. Co., 271 S.W.3d 681 (Tex.
2008). Appellee is violating the plain language of this legislative
mandate regarding the QAF tax. Further, all courts are bound by the
same legislative mandate, including the ALC.
Appellants are not asking that this Court find that any particular
rule or statute is invalid. However, the Court does have the authority
to issue "any order in the interest of justice that is necessary to
43
protect the person or party seeking relief from ... invasion of ...
constitutional rights" under 1 T.A.C. § 357.483(c). Appellants are
simply hereby requesting that the Court apply the validly promulgated
rules in effect at the Relevant Time, as U.S. Supreme Court
precedent, our state law, and the federal constitution requires. Under
the 2003 law in effect during the Relevant Time, Appellants paid the
QAF tax due, and Appellee has no authority to collect additional QAF
taxes as underpayments or otherwise.
Of significant note, CMS gave Appellee a choice about whether
or not it would seek additional QAF taxes for the Relevant Time,
albeit with a hefty consequence if chose not to seek them. CMS did
not "direct" nor demand nor mandate that Appellee collect additional
taxes as underpayments from providers, contrary to the statement in
the Final Order. AR39. In response, Appellee, a state actor, did not
promise to recoup the underpayments--it only agreed to "seek
recoupment." AR40. Appellee added the caveat that collections
"may not total" the amount of underpayments identified by CMS.
AR40. Also, the Final Order only required Appellee to "collect all
44
underpayments of [Appellant's] QAF up to a total of 6% of said gross
receipts." AR347 (emphasis added).
It is those underpayments that allegedly resulted in non-uniform
taxation, and thus, Appellee admits that its collection efforts, that are
the subject of this case, may not even result in uniform taxation. And,
the ALC does not even require Appellee to collect an amount that
results in uniform taxation. It is illogical that Appellee, a state actor,
should be allowed to seek recoupments so that it can comply with
"uniform taxation" when it admits that its actions in recouping may not
result in "uniform taxation." These actions are arbitrary and
capricious.
Further, the federal law cited by CMS in the Final Report
regarding Appellee's QAF program specifically provides that the
State, and not taxpayers (like Appellant providers), will be penalized
for "hold harmless" violations in which taxpayers are held harmless
for any portion of health-care related taxes. See 42 CFR Sec. 433.68
(setting forth federal requirements for state health care-related taxes).
See also Social Security Act Section 1903(w)(1 )(A)(ii) (providing that
45
hold harmless arrangements trigger penalties against a State's
Medicaid expenditures under the Federal Medicaid Statute). AR34
(explanation in the CMS Final Report of the federal regulations
regarding hold harmless arrangements and penalties).
Any liability for errors in the calculation of Appellants' OAF taxes
is solely attributable to Appellee, and not Appellants. As a matter of
law, Appellee has no legal basis for demanding retroactive OAF
payments from Appellants, and Appellants are entitled to judgment
that they owe no additional OAF taxes and reversal of the Final
Order. Appellee's actions have no reasonable basis in the record
and its interpretation of the Law is plainly erroneous.
VI. PRAYER
Appellants hereby seek a judgment that the Final Agency Orders
are reversed, that Appellants owe no additional OAF taxes for the
Relevant Time, that Appellee be estopped from any further collection
efforts, and such other and further relief to which Appellants may be
entitled.
VII. Appendix
1.Final Agency Order
2.District Court Final Judgment (appeal 712)
46
3. District Court Final Judgment (appeal 711)
4. 1 TAC§§ 352.1-352.9 (effective October 24, 2003)
5. 28 TexReg 9235
6. Texas Gov't Code Sec 2001.174
7. 1 TAC §§352.1-352.9 (effective Jan. 1, 2008)
8. 33 TexReg 667
9. 32 TexReg 7789-90
10. 1 T.A.C. § 357.483(c)
11. 42 CFR Sec. 433.68.
Respectfully submitted,
SMITH & ASSOCIATES
900 Ranch Road 620 South
Suite C101-159
Austin, Texas 78734
Telephone (512) 261-9990
Facsimile (512) 261-9971
Joanalys@LawOfficesJ BS. com
Gay@LawOfficesJBS.com
By: Isl Joanalys B. Smith
Joanalys B. Smith
Texas Bar Number 05719200
Gay L. Bonorden
Texas Bar Number 0785708
Attorneys For Appellants
47
CERTIFICATE OF COMPLIANCE
I certify that the brief submitted complies with Texas Rules of
Appellate Procedure 9 and the word count of this document is 7773.
The word processing software used to prepare this filing and
calculate the word count of the document was Google Docs.
Dated: December 29, 2017
/s/ Joanalys B. Smith
JOANALYS B. SMITH
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing
document has been served by electronic service or facsimile on this
the 29th day of December, 2017, to counsel for Appellee:
Eugene A. Clayborn Via e-service and/or email
Deputy Chief
State Bar No. 00785767
Andrew Lutostanski
State Bar No. 24072217
Assistant Attorneys General
Office of the Attorney General of Texas
P.O. Box 12548, Capitol Station
Austin, Texas 78711-2548
Eugene.clayborn@oag.texas.gov
Andrew.lutostanski@oag.texas.gov
Isl Joanalys B. Smith
Joanalys B. Smith
48
• •
• APPEALS DMSION
Health and fl•nnan Services Coi,iml,sil'ln
AUSTIN, TEXAS
SOtJTBERN CONCEPTS, INC.,
AppePent
vs. I CAUSE NO. UM'7'75-K
TEXAS DEPARTMENT OF AGING AND
DISABILITY SERVIOS,
Resp - !lent
PRQPQSAL fOR QICISIQN
INTRODUCTION
• Southern Concepts, Inc. (Appellant) bad an lnrennecliate Care Facility for the Mentally Retaldcd
(ICF/MR) provider agn:ement with the Department of Aging and Disability Services (DADS)
during the times relevant to this appeal. Appellant appealed the results of an Informal Review of
the calculation of Appellant's quality assurance fee (QAF) for the period of September I, 2004,
throup December 31, 2007.
JURISDICTION, NOTICE AND PROCEDURAL IDSTORY
The HHSC Appeals Division beard Ibis case under the authority of 40 Texas Administrative
Code Sections 90.3 and 90.4. The Administrative Law Judge (AU) notified the parties that
Appellant's Motion to Transfer this case to the State Office of Administrative Hearings (SOAR)
was denied, and proceeded to consider the parties' Motions for Summary Disposition and
motions in opposition thereto. The parties waived oral argument.
• 000343
2 • •
• APPLICABLE LAW
40 Texas Adroioism.tivc Code Section 90.4 provides tbat the Health and Hwnan Services
Commission Appeals Division has jurisdiction to c:ooc1uct beariop and issue Proposals for
Decisions (PFDs) io contested C11SC11 that ue oot ll'IIIISferrcd to SOAH under the provisions of 40
Tcus Aclroinistrativc Code Section 90.3.
40 Tcxu .ldroioist:rativc Code Section 90.3 docs oot provide for the ll'IIIISfcr of ao appeal of
DADS lofonnal Review of a Provider's QAF to SOAH.
1 Tcus Administrative Code Section 352.3 io effect durioa the time period from September 1,
2004, through Dcccmbcr 31, 2 QAF from Appellant
and other ICF/MR providas during the period from September l, 2004, through Dcceniber 31,
2'YJ1. CMS mandetcd t1w DADS collect all funds dial it determined were Ullderpaid.
During the time period of September l, 2007, through December 31. 2007, HHSC required
Appellllll and other ICF/MR providas to pay QAFs based OD projected gross receipts. When
IICIUll revenues fell below projections. HHSC i:efunded die overpayments, but when adUal
revenues exceeded projections, HHSC did not mplire providers to make up die underpayments.
In 2009, CMS notified DADS that DADS was required to collect all periodic QAF
underpayments that bad not t.it collected from ICF/MR providers, including Appellant, for the
period in question,
•
DADS attached die affidavit of Cathy Belliveau, a QAF Manager employed by DADS, to its
Motion for Summary Disposition. Ms. Belliveau's aff"Jclavit stiled that during the period of
Seprember l, 2004, through T)ecember 31, 2007, Appellant's annual gross receipts were
$6,421,026.81 and that this calculation was based on official billing records maintained by
DADS.
In response to DADS' summary disposition evidence. Appellant filed a copy of the November
18, 2009, DADS notice of intent to collect Appellant's QAF underpayments; a copy of an
August 1, 2008, letter to Appellant from Tommy FOR!. DADS Director of InstilUlional Senices
Section, Provider Services. in which Mr. Fold desaibed the QAF rules in place prior to January
l, 2008. IS not requiring charges for QAF underpayments by ICF/MR providers; and a copy of
an August 31, 2009. report issued by CMS which included conclusions that data it previously
obtained from DADS rqardina QAF payment reconciliations contained confusing and
conflicting infonnation. Finally. Appellant submitted an aff"Jclavit from one of its representatives
who swore dial Appellant paid its QAF in the form of 6'1> of all projected revenues
ANALYSIS
HHSC did not follow its own Nies when it failed to collect Appellant's QAF underpayments
during the time period of September I. 2004. through December 31, 2007. DADS
miscbaracleriz. the QAF Nies in effect during dial time period in its August l, 2008, letter to
Appellant in which ;I indicated lhal the prior HHSC Nies did not require HHSC to collect
underpayments of the fee when the provider made QAF payments based on projected revenues
• 000345
4
• •
• that were lower than the 8C1Ual gross receipts for the period in question. Nevertheless, the rules in
effect during the period in question created an obligation on Appellant to pay a total of 6., of its
poss receipts. This obligation was not obviated by HHSC's inability to devise a sc:bcme to
collect said .eceipts ur DADS' erroneous portrayal of the rule thll created the obligation in Mr.
Ford's August I, 2008, letter to Appellant.
Cathy Belliveau's affidavit which described Appellant's gross receipts for the period of
September l, 2004, through December 31, 20Cf1, - not controverted by the CMS report which
desc:ribed inaccuracies in DADS' records during an WISpecified time period prior to DADS'
reconciliation of Appellant's gross revenues described in the November 18, 2009, notke ofQAF
charps due, or by the affidavit of Appellant's repiaentative which included a statement tbat
Appellant paid all of its QAF fees based on projected revenues.
Bec111se Cathy Belliveau's w.conbo.-erted affidavit established thll Appellant's total gross
receipts for the period of September l, 2004, through December 31, '2007, were $6,421,026.81,
and th8l 6., of tbat amount is $385,261.60, the AU has deu:rmined tbat there are no genuine
issues of material fact in controversy, and l*uflClles thll DADS' Motion for Summuy
Disposition should be sustained, and that its authority to collect underpayments of Appellant's
QAF fees based on thll calculation should be sustained.
PROPOSED FINDINGS OF FACI'
• l. This case is adj11dicared •'Dller the provisions of 40 Texas Adminialrative Code Section 11.9,
90.3, and 90.4.
2. Appellant is m lCF/MR provider based in Granbury, Texas.
3. On November 18, 2009, DADS notified Appellant tb8I it owed underpayments for Quality
Assurance Fees (QAF) for the period from September I, 2004, througli December 31, 20Cf1.
4. Betwem September l, 2004, and December 31, 'JJX17, Appellant bad gross receipts of
$6,421,026.81.
S. Appellant's total QAF for the period in questions is $385,261.60 which is 6., of
$6,421,026.81.
PROPOSED CONCLUSIONS OF LAW
l. 40 Texas Administrative Code Section 11.9 provides th8l an ICF/MR provider may
appeal an informal review of DADS calculation of its QAF to the HIISC Appeals
Division.
2. 40 Texas Administrative Code Section 90.4 provides 1h11 the HHSC Appeals Division is
• 000346
5 • •
• to c:ooduct hearings and issue PFDs in DADS CXJOtested cases that are not tranSferred to
SOAH in accordance with 40 Texas Adminislrative Code Section 90.3.
3. 40 Texas Administrative Code Section 90.3 does not provide for the transfer of formal
appeals of Informal Reviews of QAF assessmems to SOAH.
4. 1 Texas Administrative Code Section 352.3 in effect from September 1, 2004, through
December 31, 2007, required ICF/MR providers to pay a QAF equal to 6'11 of
reimbursements for residents, up to a total of 6'11 of annual gross revenues of the facility.
5. 40 Texas 4dmiois~ve Code Section 11.5 provides that QAF assessments are to be paid
by providas acc:ording to instructions from DADS.
6. Appellant's Medicaid Provider agree111e111 in effect durio& the relevant time periods
provided that Appellant was to comply with all stare laws and regulations.
7. 1 TAC Section 357.456 provides that an AU may issue a Summary Disposition in favor
of a party if there is no genuine issue of malcria1 fact and the party is entitled to
disposition in its favor as a matter of law.
8. HHSC' s failure to collect the full QAF that was payable under its Nies did not excuse
Appellant from its obligation to pay the full amouot due it owed pursuant to those rules•
• 9. Because there are no genuine issues of malcria1 fact regarding Appellant's total gross
receipts during from September 1, 2004, through December 31, 2007, DADS is entitled
to collect all underpayments of Appellant's QAF up to a total of 6.., of said gross
receipts.
Eoterec1 this I'* day of ~tYtl))otf . 2012.
I
KeltliGraatham
Admioislnltive Law Judge
• 000347
Filed in The District Court
of Travis County, Texas
SEP 29 2017 NNR
CAUSE NO. D·l-GN-16-003653
At II os "'--- "'·
Velva L Price, District Clerk
CALAB, INC.; MOSAIC, INC.; MOSAIC § IN TIIE DISTRICT COURT OF
BETHPHAGE; MOSAIC MARTIN §
LUTHER HOMES, INC.; THE CENTER §
SERVING PERSONS WITH MENTAL §
RETARDATION; UNIFIED CARE §
GROUP; §
Plaintiffi, §
§
V. § TRAVIS COUNTY, TEXAS
§
TEXAS DEPARTMENT OF AGING §
AND DISABILITY SERVICES, §
Defendants. § 261 st JUDICIAL DISTRICT
AGREED FINAL JUDGMENT GRANTING BILL OF REVIEW
AND AFFIRMING AGENCY ORDERS
On September 25, 2017, this agreed final judgment came to be heard and considered. The
Court finds this proposed final judgment has merit and therefore orders as follows:
1. Bill of review. The Plaintiffs bill of review is granted.
2. Suits for judicial review. These suits for judicial review present the same issue as
in Innovative Outcomes, Inc. et al, v. Texas Department ofAging and Disability Services, No. D-
l-GN-13-000999 (353 Dist. Ct., Travis County, Tex.) where the Court affirmed the agency orders.
The following agency orders are hereby affirmed:
a. Calab, Inc., HHSC Appeals Cause No. 10-0617-K;
b. Mosaic, Inc., HHSC Appeals Cause No. 10-0764-K;
c. Mosaic Bethphage, HHSC Appeals Cause No. 10-0763-K;
d. Mosaic Martin Luther Homes, Inc., HHSC Appeals Cause No. 10-0762-K;
e. The Center Serving Persons with Mental Retardation, HHSC Appeals
Cause No. 10-0722-K; and
f. Unified Care Group, HHSC Appeals Cause No. 10-0578-K.
Page 1 of2
3. Costs. Each party shall bear its own costs.
4. Appeal. Plaintiffs have the right to appeal this final judgment.
5. Final judgment. All relief not expressly granted herein is denied. This judgment
disposes of all claims and all parties and is final.
IT IS SO ORDERED this "2-ct day of st~ , 2017.
~0.~
PRESIDING JUDGE
AGREED:
mZ1.1s~
SMITH & ASSOCIATES
900 Ranch Road 620 South, Suite CJ0J-159
Austin, Texas 78734
Tel: 512-261-9990
Fax: 512-261-9971
joanalys@lawofficesJBS.com
Attorney for Plaintiff
Isl Andrew Lutostanski
Andrew Lutostanski
Assistant Attorney General
SBN 24072217
Office of the Attorney General of Texas
Administrative Law Division
P.O. Box 12548
Austin, Texas 78711-2548
Phone:(512)475-4200
Fax: (512) 320-0167
andrew.lutostanski@oag.texas.gov
For Defendant DADS
Page 2 of2
CAUSE NO. D-1-GN-13-000999
INNOVATIVE OUTCOMES, INC. et al, § IN THE DISTRICT COURT
Plaintiffs, §
§
v. § TRAVIS COUNTY, TEXAS
§
TEXAS DEPARTMENT OF AGING §
AND DISABILITY SERVICES §
Defendant. § 353 rd JUDICIAL DISTRICT
MODIFIED ORDER GRANTING DEFENDANT'S MOTION FOR
SUMMARY JUDGMENT AND AFFRIMING AGENCY FINAL ORDERS
TO THE HONORABLE JUDGE OF SAID COURT:
On this the 7 th day of July, 2017 came on for consideration Defendant's
Motion for Summary Judgment. The Court, HAYING REVIEWED THE
Defendant's "Motion to Modify, Correct, or Reform Judgment" now finds that the
previous orders signed on July 11, 2017 should be and are hereby ordered to be
VACATED and the findings and orders issued on July 11, 2017 are hereby modified
and superseded as follows. After considering the same and attached appendices,
and after hearing the arguments of counsel and taking judicial notice of the file, the
Court, having first taken the matter under advisement, is now of the opinion that the
Motion should be granted.
IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that
Defendant' Motion for Summary Judgment is hereby GRANTED.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that the Final
Agency Orders issued in Innovative Outcomes, Inc. (HHSC Appeals; Cause No.
10-0710-K), Southern Concepts, Inc. (HHSC Appeals; 10-0775-K), Volunteers of
America Texas, Inc. (HHSC Appeals; 10-0689-K), SOMA Resources, Inc. (HHSC
Appeals; Cause No. 10-0628-K), Knob Oak, Inc. (HHSC Appeals; Cause No.
10-0716-K), Home at Silver Quail, Inc. (HHSC Appeals; Cause No. 10-0717-K),
Community Access, Inc. (HHSC Appeals; 10-0582-K), Reaching Maximum
Independence, Inc. (HHSC Appeals; Cause No. 10-0579-K), Creative Community
Care, Inc. (HHSC Appeals; 10-0629-K), and Premieant, Inc. (HHSC Appeals;
Cause No. 10-0719-K), (collectively referred to as "Plaintiffs") are, in all things
AFFIRMED.
IT IS FURTHER ORDERED that any other relief not granted in this final
order is DENIED. This order is final and appealable.
SIGNED this 21 st day of July, 2017
PRESIDING JUDGE
2
<>
Texas Administrative Code
'--
TITLE 1 ADMINISTRATION
PART 15 TEXAS HEALTH AND HUMAN SERVICES
COMMISSION
CHAPTER352 QUALITY ASSURANCE FEE FOR LONG-TERM
CARE FACILITIES
RULE §352.1 Purpose and Duration of Chapter
Historical Texas
Register
(a) This chapter implements the determination, assessment, collection, and
enforcement of the quality assurance fee authorized under chapter 252, Health and
Safety Code, subchapter H.
(b) The purpose of the quality assurance fee established under this chapter is to
"--improve the quality of care provided to persons with mental retardation as follows:
(1) The quality assurance fee is intended to support and/or maintain an increase
in reimbursement to licensed intermediate care facilities for the mentally retarded
and facilities operated according to the requirements of chapter 252, Health and
Safety Code and owned and/or operated by a community mental health and mental
retardation center as described in chapter 534, subchapter A, Health and Safety
Code, and a facility owned by the Texas Department of Mental Health and Mental
Retardation that participate in Medicaid program, subject to legislative
appropriation for this purpose; and
(2) The Commission or its designee may also offset allowable expenses to
administer the quality assurance fee program against revenues generated by the
collection of the quality assurance fee.
(c) This chapter will expire on September 1, 2005, unless chapter 252, subchapter
H, Health and Safety Code, is extended by the 79th Texas Legislature.
'---------------4-"Awe-'--"--\a,,'--'---'--'(1O~t.L.L...X-+Li
Source Note: The provisions of this §352.1 adopted to be effective November 18,
2001, 26 TexReg 9085; amended to be effective October 29, 2003, 28 TexReg
9235
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Texas Administrative Code
'-
TITLE 1 ADMINISTRATION
PART 15 TEXAS HEALTH AND HUMAN SERVICES
COMMISSION
CHAPTER352 QUALITY ASSURANCE FEE FOR LONG-TERM
CARE FACILITIES
RULE §352.2 Definitions
Historical Texas
Register
As used in this chapter, the following terms shall have the meanings prescribed
below, unless the context clearly indicates otherwise:
(1) "Facility" means:
....._ (A) An intermediate care facility for the mentally retarded or the corporate
parent of an intermediate care facility for the mentally retarded licensed under
chapter 252, Health and Safety Code; or
(B) A facility operated according to the requirements of chapter 252, Health and
Safety Code, and owned and/or operated by a community mental health and
mental retardation center as described in chapter 534, subchapter A, Health and
Safety Code ; or
(C) A facility owned by the Texas Department of Mental Health and Mental
Retardation.
(2) ''.Grass,~c-~pts" means m o n e ~ a facility as compensation for services
provided to patients, including clierlt--patticipation, but does not include charitable
contributions to a facility.
(3) "Total patient days" means the sum, computed on a monthly basis, of the
'--- following:
. . ~
(A) The total number or patients occupying a tacillty bed unmediately betore
midnight on each day of the month; and
' - (B) The total number of beds that are on hold on each day of the month and that
have been placed on hold for a period not to exceed three consecutive calendar
days during which a patient is on therapeutic leave during the month.
(C) The total number of days a patient is discharged from a facility are not
counted in the calculation of the total patient days under this chapter.
Source Note: The provisions of this §352.2 adopted to be effective November 18,
2001, 26 TexReg 9085; amended to be effective October 29, 2003, 28 TexReg
9235
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Texas Administrative Code
'--
TITLE 1 ADMINISTRATION
PART 15 TEXAS HEALTH AND HUMAN SERVICES
COMMISSION
CHAPTER352 QUALITY ASSURANCE FEE FOR LONG-TERM
CARE FACILITIES
RUL`` Quality Assurance Fee Determination Methodology
Historical Texas
Register
(a) Quality assurance fee on State facilities. As provided in section l(b) of the Act
of June 20, 2003, 78th Leg. R.S., (Senate Bill 1862), not later than August 31,
2003, the Texas Department of Mental Health and Mental Retardation shall pay
for each facility owned by the department the quality assurance fee for patient
days occurring between September 1, 2002, and July 31, 2003.
'-'@'buality assurance fee., Beginning September 1, 2003, the quality assurance fee
for a facility is in the amount of six percent of each reirobm:sel!!_cnt or payment
rate receiv.e.d, including those received from the resident, for each resident 1n the
!_ac1frty during a calendar month, provided the amount of all such quality assurance
fees assesseofbr the facility during the 12-month period following assessment of
the quali~ ass~ance fee_ not excee4)six percent of the facility's total annual
gross receipts 1n Texas.
(c) Not later than July 31, 2002, and every six months thereafter, the commission
or its designee will review each individual facility's quality assurance fee
calculation. A facility's liabilig_ for the quality assurance fee may be adjusted
following this review to ensure that the quality assurance fee does not exceed six
percent of annual revenue. vtur cic(:jJ1£(:f'd ft)r less 7
Source Note: The provisions of this §352.3 adopted to be effective November 18,
'- 2001, 26 TexReg 9085; amended to be effective October 29, 2003, 28 TexReg
9235
<>
Texas Administrative Code
'---
TITLE 1 ADMINISTRATION
PART 15 TEXAS HEALTH AND HUMAN SERVICES
COMMISSION
CHAPTER352 QUALITY ASSURANCE FEE FOR LONG-TERM
CARE FACILITIES
RULE §352.4 Required reports
Historical Texas
Register
(a) The following reports must be filed by a facility in accordance with the
instructions of the Commission or its designee:
( 1) The monthly patient day report required under subsection (c) of this section;
and
'--- (2) The semi-annual report of gross receipts required under subsection (d) of this
section.
(b) Amended reports.
(1) A facility may amend a report required under subsections (c) or (d) of this
section;
(2) An amended monthly patient day report must be filed no later than 10
calendar days following the filing of the report required under subsection (c) of
this section.
(3) An amended report of gross receipts must be filed no later than 10 calendar
days following the filing of the report required under subsection (d) of this section.
(c) Monthly patient day report.
'--- (1) A facility must report, not later than the 20th calendar day after the last day of
a month, the total number of patient days for the facility during the preceding
month. ---- --
Cl) A tac1llty must tlle the report required by this subsection on torms or 1n the
format and according to the instructions prescribed by the commission or its
designee.
'--(d) Reporting of gross receipts.
(1) A facility must report, not later than the 10th calendar day following the last
day of the sixth month following the effective date of this chapter, the total gross
receipts the facility received during the preceding 6-month period.
(2) A facility must file the report required by this subsection on forms or in the
format and according to the instructions prescribed by the commission or its
designee.
Source Note: The provisions of this §352.4 adopted to be effective November 18,
2001, 26 TexReg 9085; amended to be effective October 29, 2003, 28 TexReg
9235
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Texas Administrative Code
\.....,
TITLE 1 ADMINISTRATION
PART 15 TEXAS HEALTH AND HUMAN SERVICES
COMMISSION
CHAPTER352 QUALITY ASSURANCE FEE FOR LONG-TERM
CARE FACILITIES
RULE §352.5 Payment and Collection of Quality Assurance Fee
Historical Texas
Register
A facility must:
(1) Pay the amount of the quality assurance fee in accordance with the
instructions of the commission or its designee not later than the 30th day after the
\....., last day of the month for which the fee is assessed ; or
(2) Pay the amount of the quality assurance fee in accordance with the
instructions of the commission or its designee and request an informal review of
the calculation of the quality assurance fee in accordance with §352.8 of this
chapter.
(3) Not later than August 31, 2003, the Texas Department of Mental Health and
Mental Retardation shall pay for each facility owned by the department the quality
assurance fee imposed under §352.3(a) of this title for patient days occurring
between September 1, 2002, and July 31, 2003.
(4) The commission or its designee may review the calculation of the quality
assurance fee to ensure its accuracy and instruct the facility to correct its
calculation and payment.
\....., Source Note: The provisions of this §352.5 adopted to be effective November 18,
2001, 26 TexReg 9085; amended to be effective October 29, 2003, 28 TexReg
9235
<>
Texas Administrative Code
'--
TITLE 1 ADMINISTRATION
PART 15 TEXAS HEALTH AND HUMAN SERVICES
COMMISSION
CHAPTER352 QUALITY ASSURANCE FEE FOR LONG-TERM
CARE FACILITIES
RULE §352.6 Enforcement
Texas
Register
(a) The commission or its designee may audit a facility's records or the record of
any corporate parent or affiliate of a facility for the purpose of determining the
total patient days or gross receipts of the facility.
(b) The commission may not grant any exceptions from the quality assurance fee
'-- or the provision of any data necessary for the Commission or its designee to
calculate the fee.
Source Note: The provisions of this §352.6 adopted to be effective November 18,
2001, 26 TexReg 9085
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Texas Administrative Code
'-'
TITLE 1 ADMINISTRATION
PART 15 TEXAS HEALTH AND HUMAN SERVICES
COMMISSION
CHAPTER352 QUALITY ASSURANCE FEE FOR LONG-TERM
CARE FACILITIES
RULE §352.7 Penalty
Texas
Register
(a) The commission or its designee will assess a financial penalty against a facility
that:
(1) Fails to timely file the monthly facility report required under §352.4 of this
chapter;
'-' (2) Files a false, erroneous, or fraudulent monthly facility report that the
commission or its designee concludes resulted in the assessment of a quality
assurance fee that is less than the facility should have been assessed; or
(3) Fails to timely pay a quality assurance fee assessed under §352.5 of this
chapter.
(4) A penalty assessed under this section is in an amount equal to one-half the
amount of the outstanding quality assurance fee or fees, not to exceed $20,000.
(b) The commission or its designee will notify a facility in writing of the
assessment ofa penalty under this section and the amount of the penalty.
(c) The commission or its designee may make a referral to an appropriate authority
in cases where the commission or its designee makes a good faith determination
that a facility has:
\,..., (1) Committed fraud in the submission of information to the commission or its
designee;
CL) Wllltully submitted erroneous intormatlon to the commission or its ctesignee;
or
\_. (3) Violated a requirement of its license or Medicaid certification.
(d) The commission or its designee may report a facility that fails to pay the
quality assurance fee to the Comptroller of Public Accounts or other appropriate
authority for purposes of implementing a suspension of payments to the provider.
(e) The assessment of a penalty under this section does not relieve a facility from:
(1) Providing services to patients in accordance with its obligations under
contract or the law;
(2) Paying additional quality assurance fees that may be assessed to the facility;
or
(3) Otherwise complying with licensure and certification requirements.
"--- Source Note: The provisions of this §352.7 adopted to be effective November 18,
200 l, 26 TexReg 9085
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Texas Administrative Code
"---
TITLE 1 ADMINISTRATION
PART 15 TEXAS HEALTH AND HUMAN SERVICES
COMMISSION
CHAPTER352 QUALITY ASSURANCE FEE FOR LONG-TERM
CARE FACILITIES
RULE §352.8 Informal review
Texas
Register
(a) A facility that believes the commission or its designee incorrectly calculated
the amount of a quality assurance fee as defined in this chapter may request an
informal review from the commission or its designee in accordance with this
section.
"-- (b) The purpose of an informal review is to provide for the informal and efficient
resolution of the matters in dispute. An informal review is not a formal
administrative hearing, but is a prerequisite to obtaining a formal administrative
hearing and is conducted according to the following procedures:
(1) The facility must request an informal review in writing to the commission or
its designee, delivered by United States mail or special mail delivery within 20
calendar days of the date on the written notification of any of the actions described
in subsection (a) of this section.
(2) A facility's written request for an informal review must include:
(A) A concise statement of the specific actions or determinations the facility
disputes;
(B) The facility's recommended resolution; and
(C) Any supporting documentation the facility deems relevant to the dispute. It
'-' is the responsibility of facility to submit all pertinent information at the time of its
request for an informal review.
l c) Un receipt ot a request tor intormal review, the commission or its ctesignee
assigns the review to appropriate staff.
'-- ( 1) The lead staff member coordinates a review by appropriate staff of the
information submitted by the interested party.
(2) Staff may request additional information from the facility, which the facility
must submit in writing to the lead staff member within 14 calendar days of the
request for additional information. Information received after 14 days may not be
used in the panel's written decision unless the interested party receives approval of
the lead staff member to submit the information after 14 days .
.(d) Within 30 days of the date the request for informal review is received by the
commission or its designee or the date additional requested information is received
by the commission or its designee, the lead staff member must send the interested
party its written decision by certified mail, return receipt requested.
Source Note: The provisions of this §352.8 adopted to be effective November 18,
2001, 26 TexReg 9085
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Texas Administrative Code
'--
TITLE 1 ADMINISTRATION
PART 15 TEXAS HEALTH AND HUMAN SERVICES
COMMISSION
CHAPTER352 QUALITY ASSURANCE FEE FOR LONG-TERM
CARE FACILITIES
RULE §352.9 Formal Appeal of Penalty
Texas
Register
A facility that wishes to appeal the assessment of a penalty under §352.8 of this
chapter may request a formal appeal from the Texas Department of Human
Services in accordance with 40 T.A.C. §90.236.
------------------------------
Source Note: The provisions of this §352.9 adopted to be effective November 18,
2001, 26 TexReg 9085
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TI·,. \S Rf CISTFR Tf \: \S \fl'\II\ISTR,\Tl\'E COPE <)Pl'-, '\II E TI\<;s
Texas Register, Volume 28, Number 43, Pages 9133-9326, October 24, 2003 Page: 9,235
TITLE I, ADMINISTRATION
--·
F•edwllhtheOfficeofthe 5eaetary o15tale on0clober9, 2003.
PART 15. TEXAS HEALTH AND
HUMAN SERVICES COMMISSION
CHAPrER 352. QUALITY ASSURANCE FEE
FOR LONG-TERM CARE FACILITIES
I TAC HJ52.l • 351.5
-=-
"'"'"'"''''''
T9ul HNIIII #Id Humart ~ Oommi11ion
at«:t1wc:1ut: °'*"* n,
2003
Pfopc:,u,I p u ~ dll9: Aug,.- 211, 2003
forlwtMr"lnt;lrlrrdon. - - cal; (512)42+6578
Th• Htallh and Human ServiCea Commlalon (HHSC) ad0pts
lhe amendmen1' 10 9352.1, concerning tht purpoeo and dlJ.
•
TITLE 4. AGRICULTURE
• •
ratlOn ol ctiapt.- 352. §352.2, concerning def~ltlons. §352.3,
collOIWl'ling QUlllly auuranco tee, §352,4, concerning ~ PART I. TEXAS DEPARTMENT OF
raport&. and §352.5, conoeming payment and c:ollecliOn of the
quallly aauranca IN, without changes to tha proposed 1IIXt u AGRICULTURE
publllhed in thfl AuQoat 211, 2003, lsaue of Iha ».as
RftOicte,
CHAPTER JO. SEED CERTIFICATION
(28 TexReg 7060). The text of these arnendmllnts will not be nt-
publllhed. In adelldon, thee• amendmentl were adopted on an STANDARDS
ornsgencybul1 in the August 29, 2003, luueallhe TOUIIR8g-
lcMr'(28 Tex Reg 7050). The emergency adoption i1 Ming with- SUBCHAPTER A. GENERAL RF.QUIRE-
drawn eleewta'e in ttUI luue of !he Texas ~ - ii ii eu· MENTS
perMded biJ the adoptiol'I of lhMft proposed arMndments. The
withdnMal ol the · ~ amenmienta will be effective Qc.- 4 TAC 116.3
~ 29. 2003. The Tuai &ate Seed and Plant Board {the Baan:I) adopta an
The .adope;,cl ame11dme11ts ~ a et.wtorily ~ ~ to §10.3, COl1C»mlnQ appnMJ of an ~ 1or
change that mai.s the quality asslA'al1C8 laa 8'll)licatll& to seed certificaliOn, without chl!lngee to the proposal published In
lacilllles owned by the T.,... 0epertrnant of t.4ental HNllh and June 27, 2003. IUueotlhe "TelrM~(28 TexReg-t760).
Mental Retardation (MHMR) beginning with the state fl&cal year The amencment ii adopted IO incn,aae tees tor lioensing U a
ending on Augutt 31, 2003, Reglmrtd Plant Bl'Mdlr. The.._ lncreued by thi& adoptlOn
haveno1: been increuedbr the Board since 1987. The increase
The arnondmenlSareadopledto~wllh SB 1862, 78th Leg- In fNs will alloW the&o,td and the Ta,,:aa ~olAgriall-
islature, Regular Seaion, which~- payment by MHMR of ture (the de$)BrbT"lent) to recover costs l!IHOciated with enforc-
1eel fDf !hole facillltel t\t that date; expends the poaible UEI of ing the atandatdl adopled ~ the Baan:I, u direoled b)' the 78th
the tundl; dianges the dllfinition ot patient days; and. c:hangn Legislature, Aegular SessiOn, 2003. The amenctnent to §10.3
1he time lor faclllties to Ille required reports from the 1oth IO the irlCRNIMa from $100 to $120 the licenee ile lor licenaing u a
20th day after the last day of a month. The ,amendments also Registered Plant Breeder.
lnaHN the quality asnnnce tee from 5.5 to 6 peroBm beOJn.
ning S.,:-mber 1, 2003, in aceordance with projected reverus Comments were recalv9d r8Q(trdng the propoaed tee increue
and l9lal9d ,._. matching funds spedlled In !he Ganeral Ap- and other iJ"ICl'eMN made to Ned cartlftcdon IHI from Texu
propriation• Act for the 2004-2005 biennium. Farm Bureau (TFB) and the T. . 5eed Tia Auodatlon
(TSTA), Th9 TFB, through II• Praldent. Kenneth Oierachke,
During the pimlic oonment periOcl, whictJ included public hear- commenlfld that It ~ and appreciates the dapartment'a
ingl on August 29, 2003 and s.ember 25, 2003, no oommentc functlong and Hl"'ril»B, but that It teela the lnoreaNd f9ee are
were re(l9Mlld regan;tng the prtlOClS&I. not IIR)r0Pf1ate and do not rwft9ct the lnstructiona of the - e
The amandmlntS ani Dpted under !he Texa& Government leadership not to IBM tu:ee. The TFB further staled itB belle!
Code, §531.033, which authorizw the C o m ~ of HHSC that feel c:aladed ~ the department ltloold be uaed ID IUld
lo adOpt MN neoauary to CllrT)' out the oorrmlaion's dutieSI: the NNiale pn:widlld lo the sei,ner,t of the population paying
and unct.r §252.205 Health &l'ld Safety Code. the fees and not to fund NMCH kl the general public, Md
that IIQOr1CY Nrviooa ll'l0lMI be fl.ncllld by ~ revenue.
This IQ8f1C)' heret1f certifies that the adoption hu been reviewed The TSTA. through ita E,oeoutn,e Director, Charles Lea.mona.
by legal COOONI and found to be a valid ~ ol the agency's al&O voc:ed similar conceme regarding ttio toe lnaeaeea,
legal auttlority.
Texas. Secretary of State. Texas Regist~ll8, iil11~-,fiit.:1*3, ~9183-9326, October 24,
2003, periodical, October 24, 2003; Austin, Texas.
(texashistory.unt.edu/ ark:/ 6 7531/ metapth l 01071/ m1/101/?
utm_source=email&utm_medium=client&utm_content=ark_sidebar&utm_campaign=ark_permanent:
accessed June 28, 2017), University of North Texas Libraries, The Portal to Texas History,
texashistory.unt.edu; crediting UNT Libraries Government Documents Department.
12/29/2017 GOVERNMENT CODE CHAPTER 2001. ADMINISTRATIVE PROCEDURE
Sec. 2001.174. REVIEW UNDER SUBSTANTIAL EVIDENCE RULE OR UNDEFINED
SCOPE OF REVIEW. If the law authorizes review of a decision in a contested
case under the substantial evidence rule or if the law does not define the
scope of judicial review, a court may not substitute its judgment for the
judgment of the state agency on the weight of the evidence on questions
committed to agency discretion but:
(1) may affirm the agency decision in whole or in part; and
(2) shall reverse or remand the case for further proceedings if
substantial rights of the appellant have been prejudiced because the
administrative findings, inferences, conclusions, or decisions are:
(A) in violation of a constitutional or statutory provision;
(B) in excess of the agency's statutory authority;
(C) made through unlawful procedure;
(D) affected by other error of law;
(E) not reasonably supported by substantial evidence
considering the reliable and probative evidence in the record as a whole;
or
(F) arbitrary or capricious or characterized by abuse of
discretion or clearly unwarranted exercise of discretion.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993.
http://www.statutes.legis.state.tx.us/Docs/GV/htm/GV.2001.htm 1/1
<>
Texas Administrative Code
TITLE 1 ADMINISTRATION
PART 15 TEXAS HEALTH AND HUMAN SERVICES
COMMISSION
CHAPTER352 QUALITY ASSURANCE FEE
RULE §352.1 Purpose of Chapter
Repealed Date: 03/01/2010
Historical Texas
Register
(a) This chapter implements the determination, assessment, collection, and
enforcement of the quality assurance fee authorized under chapter 252, Health and
Safety Code, subchapter H.
(b) The purpose of the quality assurance fee established under this chapter is to
I\,,,..., improve the quality of care provided to persons with mental retardation as follows:
(1) The quality assurance fee is intended to support and/or maintain an increase
in reimbursement to facilities that participate in the Medicaid program, subject to
legislative appropriation for this purpose; and
(2) The Department of Aging and Disability Services (DADS) may also offset
allowable expenses to administer the quality assurance fee program against
revenues generated by the collection of the quality assurance fee.
Source Note: The provisions of this §352.1 adopted to be effective November 18,
2001, 26 TexReg 9085; amended to be effective October 29, 2003, 28 TexReg
9235; amended to be effective February 3, 2008, 33 TexReg 667
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Texas Administrative Code
TITLE 1 ADMINISTRATION
PART 15 TEXAS HEALTH AND HUMAN SERVICES
COMMISSION
CHAPTER 352 QUALITY ASSURANCE FEE
RULE §352.2 Definitions
Repealed Date: 03/01/2010
Historical Texas
Register
As used in this chapter, the following terms shall have the meanings prescribed
below, unless the context clearly indicates otherwise:
(1) "DADS" means: The Department of Aging and Disability Services.
"- (2) "Facility" means:
(A) An intermediate care facility for the mentally retarded or the corporate
parent of an intermediate care facility for the mentally retarded licensed under
chapter 252, Health and Safety Code; or
(B) A facility operated according to the requirements of chapter 252, Health and
Safety Code, and owned and/or operated by a community mental health and
mental retardation center as described in chapter 534, subchapter A, Health and
Safety Code; or
(C) A facility owned by DADS.
(3) "Gross receipts" means money paid to a facility as compensation for services
provided to residents, including resident participation, but does not include
charitable contributions to a facility. Gross receipts are defined as accrued
payments and not as cash received. · ------
\......'
(4) "Total patient days" means the sum, computed on a monthly basis, of the
following:
{A) The total number ot residents occupying a tacillty bed nmnediately betore
midnight on each day of the month; and
'-- (B) The total number of beds that are on hold on each day of the month and that
have been placed on hold for a period not to exceed three consecutive calendar
days during which a resident is on therapeutic leave during the month.
(C) The total number of days a resident is discharged from a facility are not
counted in the calculation of the total patient days under this chapter.
Source Note: The provisions of this §352.2 adopted to be effective November 18,
2001, 26 TexReg 9085; amended to be effective October 29, 2003, 28 TexReg
9235; amended to be effective February 3, 2008, 33 TexReg 667
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Texas Administrative Code
\....,
TITLE 1 ADMINISTRATION
PART 15 TEXAS HEALTH AND HUMAN SERVICES
COMMISSION
CHAPTER352 QUALITY ASSURANCE FEE
RULE §352.3 Quality Assurance Fee Determination Methodology
Repealed Date: 03/01/2010
Historical Texas
Register
;ffa) Quality assurance fee. Effective January 1, 2008, the quality assurance fee for a
~cility is five and one half percent of a facility owner's gross receipts.
(b) Quality assurance fee review. Every twelve months on a schedule determined
by DADS, DADS will review each facility owner's quality assurance fee payments
'---' from all of the owner's facilities combined. A facility owner's liability for the
quality assurance fee may be adjusted following this review to ensure that the
quality assurance fee equals five and one half percent of annual gross receipts
from all facilities.
Source Note: The provisions of this §352.3 adopted to be effective November 18,
2001, 26 TexReg 9085; amended to be effective October 29, 2003, 28 TexReg
9235; amended to be effective February 3, 2008, 33 TexReg 667
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'- - Tl \\SR!CISTf-R TF \. c\S .\D'\l!'<;JSTR \ TI\'f-~ COi if OPF '-, ill I Tl'S:CS
<>
Texas Administrative Code
\,,_.,
TITLE 1 ADMINISTRATION
PART 15 TEXAS HEALTH AND HUMAN SERVICES
COMMISSION
CHAPTER352 QUALITY ASSURANCE FEE
RULE §352.4 Required reports
Repealed Date: 03/01/2010
Historical Texas
Register
(a) The following reports must be filed by a facility in accordance with DADS
instructions:
(1) The monthly patient day report required under subsection (c) of this section;
and
"-
(2) The annual report of gross receipts required under subsection (d) of this
section.
(b) Amended reports.
(1) A facility may amend a report required under subsections (c) or (d) of this
section;
(2) An amended monthly patient day report must be filed no later than 20
calendar days after the last day of the month for which the report was filed.
(3) An amended report of gross receipts must be filed no later than 10 calendar
days after the filing of the report required under subsection (d) of this section.
(c) Monthly patient day report.
(1) A facility must report, not later than the 10th calendar day after the last day of
"- a month, the total number of patient days for the facility during the preceding
month.
CL) A tacllity must tile the report required by this subsection on torms or m the
format and according to the instructions prescribed by DADS .
...__, (d) Reporting of gross receipts.
(1) A facility must report, no later than October 31 of each year, money paid to
the facility by private-pay residents and money paid to the facility for bed-hold
fees for the period of September 1 through August 31 immediately preceding the
report. DADS will use the Durable Medical Equipment and Applied Income
amounts on file with the Claims Management System and the amounts reported by
the facility for private-pay and bed-hold to determine the total gross receipts.
(2) A facility must file the report required by this subsection on forms or in the
format and according to the instructions prescribed by DADS.
Source Note: The provisions of this §352.4 adopted to be effective November 18,
2001, 26 TexReg 9085; amended to be effective October 29, 2003, 28 TexReg
9235; amended to be effective February 3, 2008, 33 TexReg 667
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- Tf ·,.\SRI GISTER TEXAS \Di\I!\JISTK \ Tl"I conr OP!\ "\II I Tr·,,;s
<>
Texas Administrative Code
TITLE 1 ADMINISTRATION
PART 15 TEXAS HEALTH AND HUMAN SERVICES
COMMISSION
CHAPTER352 QUALITY ASSURANCE FEE
RULE §352.5 Payment and Collection of Quality Assurance Fee
Repealed Date: 03/01/2010
Historical Texas
Register
(a) A facility must:
(1) Pay the amount of the quality assurance fee in accordance with DADS
instructions not later than the 30th day after the last day of the month for which
the fee is assessed; or
'-'
(2) Pay the amount of the quality assurance fee in accordance with DADS
instructions and request an informal review of the calculation of the quality
assurance fee in accordance with §352.8 of this chapter.
(b) DADS may review the calculation of the quality assurance fee to ensure its
accuracy and instruct the facility to correct its calculation and payment.
Source Note: The provisions of this §352.5 adopted to be effective November 18,
2001, 26 TexReg 9085; amended to be effective October 29, 2003, 28 TexReg
9235; amended to be effective February 3, 2008, 33 TexReg 667
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TL\. \S RLGISTER TE :\.\S .\D"\11'\ISTR.\ TJ\'L COUL UPI'-, "Ill l Tl'\1;s
<>
Texas Administrative Code
\.-
TITLE 1 ADMINISTRATION
PART 15 TEXAS HEALTH AND HUMAN SERVICES
COMMISSION
CHAPTER352 QUALITY ASSURANCE FEE
RULE §352.6 Enforcement
Repealed Date: 03/01/2010
Historical Texas
Register
(a) DADS monitors a facility's records or the record of any corporate parent or
affiliate of a facility for the purpose of determining the total patient days and gross
receipts of the facility.
(b) The Health and Human Services Commission (HHSC) and DADS may not
1o,,....,grant any exceptions from the quality assurance fee or the provision of any data
necessary for DADS to calculate the fee.
(c) HHSC or its designee audits quality assurance fee determinations in
accordance with this subsection.
( 1) HHSC or its designee periodically audits the records of a facility and, if
necessary, the corporate parent or affiliate of a facility to verify the amount of the
quality assurance fee owned by the facility. The facility must allow HHSC or its
designee to review and photocopy any records necessary to conduct the audit.
(2) If a facility fails to maintain records or fails to allow HHSC or its designee to
review and photocopy any records necessary to conduct an audit, an audit will be
conducted with the records available.
(3) HHSC or its designee provides the facility with a report of the final audit
findings.
'-- (4) If the final audit findings show the facility owes additional amounts for the
quality assurance fee, DADS notifies the facility of the amount due. If the final
... ,... ...
audit t1nd1ngs show the tac1llty 1s owed money due to overpayment ot the quallty
assurance fee, DADS refunds the amount owed to the facility owner.
\._-------------------------------
Source Note: The provisions of this §352.6 adopted to be effective November 18,
2001, 26 TexReg 9085; amended to be effective February 3, 2008, 33 TexReg 667
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- Tl·,\~ In <~ISTF I--" Tl•. -\S c\lll\lI'~ISTI< \Tl\'! COl•l
<>
Texas Administrative Code
\.....,
TITLE 1 ADMINISTRATION
PART 15 TEXAS HEALTH AND HUMAN SERVICES
COMMISSION
CHAPTER352 QUALITY ASSURANCE FEE
RULE §352.7 Penalty
Repealed Date: 03/01/2010
Historical Texas
Register
(a) DADS will assess a financial penalty against a facility that:
(1) Fails to timely file the monthly facility report required under §352.4 of this
chapter;
\....., (2) Files a false, erroneous, or fraudulent monthly facility report that DADS
concludes resulted in the assessment of a quality assurance fee that is less than the
facility should have been assessed; or
(3) Fails to timely pay a quality assurance fee assessed under §352.5 of this
chapter.
(b) A penalty assessed under this section is an amount equal to one-fourth the
amount of the quality assurance fee for each month the quality assurance fee is
late, not reported or unpaid.
(c) DADS will notify a facility in writing of the assessment of a penalty under this
section and the amount of the penalty.
(d) DADS may make a referral to an appropriate authority in cases where it makes
a good faith determination that a facility has:
(1) Committed fraud in the submission of information to DADS;
(2) Willfully submitted erroneous information to DADS; or
,_.,. ,. .... ..
(.i) Violated a requirement ot its llcense or Medicaid certitication.
(e) DADS may suspend payments to a facility that fails to pay or report the quality
\...,assurance fee.
(f) The assessment of a penalty under this section does not relieve a facility from:
(1) Providing services to residents in accordance with its obligations under
contract or the law;
(2) Paying additional quality assurance fees that may be assessed to the facility;
or
(3) Otherwise complying with licensure and certification requirements.
Source Note: The provisions of this §352.7 adopted to be effective November 18,
2001, 26 TexReg 9085; amended to be effective February 3, 2008, 33 TexReg 667
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Tl·,. \SRI (;!STFR TF\. \S \1)1\ll"JISTR \Tl\·~ CODI (,Pl\ '\ll f T1,.,;s
<>
Texas Administrative Code
'-
TITLE 1 ADMINISTRATION
PART 15 TEXAS HEALTH AND HUMAN SERVICES
COMMISSION
CHAPTER352 QUALITY ASSURANCE FEE
RULE §352.8 Informal review
Repealed Date: 03/01/2010
Historical Texas
Register
(a) A facility that believes DADS incorrectly calculated the amount of a quality
assurance fee as defined in this chapter may request an informal review from
DADS in accordance with this section.
(b) The purpose of an informal review is to provide for the informal and efficient
'-resolution of the matters in dispute. An informal review is not a formal
administrative hearing, but is a prerequisite to obtaining a formal administrative
hearing and is conducted according to the following procedures:
(1) The facility must request an informal review in writing to DADS, delivered
by United States mail or special mail delivery to DADS no later than 20 calendar
days after the date on the written notification of a calculation described in
subsection (a) of this section.
(2) A facility's written request for an informal review must include:
(A) A concise statement of the specific actions or determinations the facility
disputes;
(B) The facility's recommended resolution; and
(C) Any supporting documentation the facility deems relevant to the dispute. It
is the responsibility of facility to submit all pertinent information at the time of its
'-' request for an informal review.
tc) Un receipt ot a request tor intormal review, UAU:S assigns the review to
appropriate staff.
"-' ( 1) DADS coordinates a review by appropriate staff of the information submitted
by the facility.
(2) DADS may request additional information from the facility, which the facility
must submit in writing to DADS within 14 calendar days after the request for
additional information. Information received after 14 days may not be used in
DADS written decision unless the interested party receives approval from DADS
to submit the information after 14 days.
(d) Within 30 days after the date the request for informal review is received by
DADS or the date additional requested information is received by DADS, DADS
sends the facility its written decision by certified mail, return receipt requested.
Source Note: The provisions of this §352.8 adopted to be effective November 18,
2001, 26 TexReg 9085; amended to be effective February 3, 2008, 33 TexReg 667
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- Tl•. \S REGISTER T[•._.\S \1)1\IJ'\,ISTP -\TI\T cnr,1 OPI \ '\Tl I Tf\1 ;s
<>
Texas Administrative Code
TITLE 1 ADMINISTRATION
PART 15 TEXAS HEALTH AND HUMAN SERVICES
COMMISSION
CHAPTER352 QUALITY ASSURANCE FEE
RULE §352.9 Appeal of an Informal Review Decision
Repealed Date: 03/01/2010
Historical Texas
Register
A facility that wishes to appeal an informal review decision under §352.8 of this
chapter may request a hearing from the Health and Human Services Commission
in accordance with Chapter 357, Subchapter I of this title (relating to Hearings
Under the Administrative Procedure Act).
'-'
Source Note: The provisions of this §352.9 adopted to be effective November 18,
2001, 26 TexReg 9085; amended to be effective February 3, 2008, 33 TexReg 667
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Tf ·,. \S Rf CISTf P Tl\. \S \IJ'\Jl'\ISTP .\ Tl\ t COi ,1
Texas Register, Volume 33, Number 4, Pages 635-808, January 25, 2008 Page: 667
cAJ~PTEDAdopted rules include new rules, amendmenG to e,ustmg .. rules. and repeals of 7x.1s:1~g
..
LES rules. A ruletheadopted ofa state agency takes effectis20 days after the date on which. Lt 1s
filed with Secretary
by
State 1.mless a later date required by statute or spe<:ified in
the rule (Government Code, §2001.036). If a rule is adopted without change to the texl of the proposed rule, then the
Texas Register does not republish the rule text here. (fa rule is adopted with cllllnge to the text of the proposed rule, then
the final rule text is included here. The final rule text will appear in the Texas Administrative Code on the effective date.
TITLE I. ADMINISTRATION The 30-day comment period ended December 2, 2007, and
HHSC did not rucelve any comments on the proposed amend-
PART 15. TEXAS HEALTH AND ments.
HUMAN SERVICES COMMISSION The amendments are adopted undef the Texas Government
Code, §531.033, which provkleS the Executive Commis-
CHAPTER 352. QUALITY ASSURANCE FEE sioner of HHSC with brClad r,Jlemaklng authorl!y: and lhe
Human Resource Code §32.021 and Texas Government Cooe
1 TAC H352.t • 352.9 §531.021(a), which provide HHSC with the authority to adminis·
The Texas HaalJh and Human Services Commission (HHSC) ter lhe federal macical assistance (Medicaid) program in Texas.
aoopts amendments to §§352.1 . 352.9, concerning the quality This agency hereby certifies that the adoption has been reviewed
assurance tee for the Intermediate Gare Facilities tor Pefsons by legal counsel and found to be a valid exercise of the agency·s
with Mental Retardation (ICFIMA) program, without changes to legal authority.
the proposed text as published in the November 2, 2007, issue
of the Texas Register (32 Tex Reg TT89) and will not be repub- Filed with the Office of the Secretary of State cm January 14,
lished.
2008.
Theamelldments update the ICFIMRqua~ty assu-aoce tee rules
by reviSing the quality assurance fee perceotage to reflect the TR[).200800150
maximum 5.5 percent fee alloWed under the 1ederal Tax Relief Steve AfaQOn
and Health care Act of 2006 (TRHCA). P.L. 109-432, Section Chle!Counsel
403, which amended Section 1903(w)(4)(C) of lhe Social Secu- Texas Health anti Human services CommiBSIOn
rity Act (42 U.S.C. 1398b(w)(4)(C)). This law took effect on Jan- Elfdve dale: February 3, 2008
uary 1, 2008. The 5.5 percent maximum allowed for ICF/MR Pmposal publlC&lion date: Novembsl" 2, 2007
facmtlfi In the TRHCA repr6NmS a 0.5 percent reooctlol1 In For further ll'lformation. please can: {512) 424--6800
matchable ICFIMR quality assurance lees. The effect of this law
is that contraCled ICF!MA providers will pay less ln quality as-
surance "lffS to the state than they currently pay. tn addition. the
amendment8 update adminiStrative procedures relating to the CHAPTER 355.
• •
REIMBURSEMENT RATES
•
quality assurance fee, remove ouldated language. and update The Texas Health and Human Services Comml&siOn (HHSC)
references to reflect that the Department of Aging and Olsabllty aoopl8 arneoctnents to §355.503, conce,ning Reimbursement
Serviees (DADS) has administraUve responsibility for the quality
Mdiodology for the Community-Based Altemalivas (CBA)
assurance lee. Waiver Program and the Integrated Gare Managemenl-Home
The purpose of the amendment& are to revise the ICF/MRquality and Community Support Services and Assisted Living/Resi-
usurance fee rules to reflect the new maximum qualty USIJr- dential care PrOQtams; §355.505. concetning Reimbursement
anoe lee allowed under the TRHCA and to provide clear guid- Methodology tor the Community Living Assistance and &Jpport
ance to agency staff and providefs on quallty assurance fee Services (CLASS) Waiver Program; and §355.5902, concerning
reporting requirements and calculations, monitoring and audil- Reimbursement Mathodology !or Primary Home Gant (PHC),
ing responsibilities, penalties. informal review andfonnal appeal without changes to the proposed text as pubBshtld In the
rights and responsibilities. As part of upctating am\iniStrativ& November 9, 2007, Issue of the ~XS$ Register {32 Te~Reg
procedures, the &mendmen1s clarify how penalties for non-pay- 8073) and wlU not be republished.
ment of the lea wlU be calculated and require DADS to collact
One amendment to §355.503(d)j2) adds subparagraph (0),
underpayments and refund overpayments of fees. In addition.
which sets out a relrmursement methodology for Personal Care
the deadlines r&Qaroing the submittal of required reports are
Ill Iha.I: (1) models the direct care portiofl of the payment rate
changed or clarified, and the definition ol •gross receipts" is clar-
using program staffing reQUlrements; and (2) ties the non-direct
ified to mean 'accrued payments" and not "cash received• A-
care portion of the rate to the non-attendant portion ot the
nally, language is added to allow DADS to reconcile overpay-
non-apartment assisted living rate for a provider that does not
ments and underpayments of the fee to 5.5 percent of annual
~ in receiving rate add-ons in the Attendant Compen-
gross receipts at the corporate eniity level for those entitles that
sation Rate Enhancement.
control more than 01"18 facility.
A second amendment to §355.503 adds subSeetion (f)(3J; Iha
amendment lo §355.505 amends subsection (c)(2); and Iha
amendment to §355.5902 amends 81.bSeCtion (b)(1). Th898
ADOPTED RVLES January 25, 2008 33 TexReg 667
Texas. Secretary of State. Texas Register, Volume 33, Number 4, Pages 635-808, January 25, 2008,
periodical, Jonuary 25, 2008; Austin, Texas. (texashistory.unt.edu/ark:/6753l/metapth90778/ml/3l/?
q=texas%20register%20volume%2033%20, accessed December 29, 2017), University of North Texas
Libraries, The Portal to Texas History, texashistory.unt.edu; crediting UNT Libraries Government
Documents Department.
Texas Register, Volume 32, Number 44, Pages m7-8060, November 2, 2007 Page: 7,789
PART 15. TEXAS HEALTH AND 12-monlhl: ac1C1 !anguage to allow DAOS to make adiUltmentl
lo erlllUl'II that the quallty ueurance tee equals 5.5 percent ol
HUMAN SERVICES COMMISSION each facillty's groa receipts; and add language to indcale that
CHAPTER 352.
1 TAC tfMZ.l • 351.'
QUALITY ASSURANCE FEE
The H..ith and Human Services CommiUlon (HHSCJ propoae1
...,
for entitlN controlling mor. then one lacillty, quality auurance
fee revlaws are conduc:led at the entity, rather than the facility
The propoeed amenctment rOVllea f352.4 to:
~ to ff352.1 - 352.9, conoemlng tha quality anur- Replaee relerenoes to the "Commission or Its deslgnee" with ref-
ance IM lor the l~meoiatlt care Facilltles Mental Relafdallon erenoea to DAO$, which 11 1Wponalble !or the acminislralion o1
(ICF!MR) program. the Quality assurance lee.
~ d and Justification Revise subNc:ticin (a)(2) to rwqui!'II annual reports of groM r&-
Th8li8 rule proposal; establish the quallty assurance lee for fa- 01iptl instead ot semi-annual reports.
olll!IN in 11w ICFIMR program. HHSC, Ulder hs authority and Rmse th• due dale for submitting amended monthly Datient day
r.spor,5ibility to admlnieter and implement rates. 1$ updating the reportS in subNction (b)(2) from 10 calendar days following the
quailr81A1tatX» IN NIN by re,,ising t h e ~ ueu,ar,011 IN fling of the report to 20 eallllndllr days after the last day ot the
percentage to rellect'tta maximl.ffl 5.5 percent let aJloWed under month for which the report WU tied.
1he llderal Tax Re11e1 and Health Care Ad. of 2006 (TRHCA), P.L..
109-432. 8cK1iorl 403, Whid'I amended Sedtorl 1903(w)(4)(C) RIIYile the we date tor 11.timHng amended f9POltS to grosa
of !hi Social S.Wrtty Id (42 U,S.C. 1396b(w)(-4)(C)J. This laW receipts in subNc::1:lon (b)(3) from 10 calendar days "following"
take$ etleot on Janusy 1, 2008. The 5.5 percent maximum al- llling the report to 10 days "after" lllng the r.port.
lowed kit !Cf/MR lacilillN in the TAHCA ~ a 0.5 per. Revile the ck» date for •tlmltttno the monthly pdlent day report
oen1: Nalction in matchable ICF/MR quaMty aPU'8IICe tHI. The in 11.JbMCtiOn (c:~1) from 20 calendar days after the last Clay of
affec;t 01 lflll law ia ltlal contract«t ICfJMR provider& wil pay less the month to 1Dcalender days aftar 1h11 lut day of the month.
,_
In quality assurance fe• to the state than !hay c:u,qntty pay. 1n
acldillOn, NI propoeal Updatea admlnillralMI l)l'OCedurN re<- A..... tubNalon (cl)(1) to lndloale thel facilitlN muat report
ing to t h e ~ aaut11r1Ce felt. removes outtated' langUlga, mo,wy paid to the 'lac:illty b y ~ /"8lkfenlr and tor baCS-
and updateg referencN to reflect that the Department OI Aging hold !wt during Reh ttm "9oa.l year by Oc:lober 31 each year
and Dlubillty Servloes (DADS) hU admlnlllrative msponsibllity and lo indicD that DADS will UN this intorrnatlon, along wi\h the
for 11'111 quality &1&Urance tea. Durable Medical Equipment and Applied Income emounu on fie
with the Claims ManagernW Syatem, to detarmine total grou
SectiOn~-sectiOn summary
The proposed amendment revises §352. 1 to: The proposed amen::ment rewses §352.5 10:
~ from IUbNc;tiOn (b)(1) extran.out Language eu'"1tly
R8place Nleranoea to the "Commiuion or Ila deelgrMta" with ref·
al8o Included In §352.2( 1) in tne dallnltlon o1 faclllly. er'9llCe8 toDADS, which It re&ponllble for the 9'*nlni8lratlon of
Replace in aublection (b)(2) reference• to the "Commission or the quality usuranca tee.
its dealgnee'' With references to DADS, which is tha agency re- Delete panl!18ph (3), which Is ol..lldated.
aponsi,ie tor the administration of Iha quality auurance fee.
Add n- MJbleQliorl (a) and ra-dNignale paragraph (4) u U-
R91'nO'te lUbleetiOfl (C) beCaUH Cl'taot• 252 ol the HMfth and ~ (bl iauch that UNCtion (l) ii a liSI: of taciltty reqt.llre-
SakNy Codi wu amended by Iha 79th Legialalunl to ram0Yfl an menta and subaection (b) is ro1 a part of that 1181.
embedded expration date, making this subsection oblKllele.
The proposed amerd"nent revilN §352. 6 to:
Renamit the section to betl8r dltcri>e its contents.
Replace reterences to the "CcnvniUiOn fJlt Its dellgl"lee" with ref-
T h e ~ amendment revilH §352.2 to: erences to DADS, whictl ls responsiblll for the mninisiration of
,.,_.
Adel a paragraph defining DADS and renumber aubeeqlJent the quality &ICMIIMC8 fee.
/nctcatettwlt DADS monltlnlacilltie1' recofdt butcloesnotaJClil
Replace In the newly renumbered paragrarit, {2)(C) 1hl refer. lham.
ence to the "Tuu Departmen1 of MerGI Health and Mental fle- lncicata that HHSC or its deeigflM &I.ICit& quality auuranoe fee
tardatiOn {TOMHMR)" with a raference to DADS. cleteminatlons for accincy.
Clarify In the newly Nnumbared peragrapt, (3) that i,na1 reoEMptS The pr0pOl8d amendment reviaeB f352.7 to:
are defined as accruedpaymentc and not as cut, racelv8d.
Replace refer8f"l0N lo the "Commiuion or its deaignee" with ref-
The propoaed amendment l1MMI §352.3 to: arwinces to DADS, which It mponslble for the llCSTiiniltration of
Remove IUbne:tiOfl (a), whidi ii outdated, and renumber the the ~ uaurance fee.
IU00Hding 8Ubseotionc accordingly. Renumber eubeection (a)(4)aasublec:tiQn (b) and:clarllyltlalthe
~ the rule lo refl6ct that the ~ usurance fee is 5.5 fti\ln0ial penal\/ II equal to one-1oul1f'I the emoi.nt of t h e ~
percent ol a tacllty's gross rec:eipls effecllw January 1, 2008. aMtnnCe tee tor each month the quality uauranc:e lee ii late,
Ranova an ouldMed dale; replace referencN to the ''Comrrva-
not Nl)Cllted, or l.ffll*ld.
tion or !ta dnignee" with teloreoces 10 DADS; add languags to Re-designate the remailWIQ tubaeC:tion$ appropriately.
reql.lN' Iha! qualily uaurance fee reviews are conducted ...,.ry
Texas. Secretary of State. Texas Regisf/W?~, ~ - - ``l)tllf the administratiofl of
Public Comment
lhe quality assurance fee.
Chanoe an incorracl reference 10 the formal appeal rules related Oueotions elJout 111e oontent ot 111is proposal may be direoled
10 Pam McDonald in Ille HHSC Raio Analysis Dopan,-1 by
lo HHSC programs.
telephone at (512) 491-1373. Written oonvnenta on the pro-
Fiscal Note posal may be submitted 10 Ms. Mcllonald by facsimile al (512)
Gordon E. Taylor. Chief Financial Officer lot lhe Department of 491-1998, by e-mail 10 pam.modonoloril)' to admi d111ph:-r imp5cmenb lhe dek:nntna111Jn • .in~sstn1.'IU,
any changes 1n pract10e or anr addfflOOal cosl to the eon1racted CLlllcc:ut1n. and cnfo1ccmcn11 i,r 1hc 4uality ``urancc- Fee :auchori.11.'d
provider. utm t·h:apter 2'.'i2. Hcahh anJ Sa.fol)' Colle, ,_utM.·hartt!r II.
HHSC does not anticipate that !here wiR be any economic: cost lo tb) Tk ~ ol"the QUillily ilSSUl'lllK"C' I« C'SLU.bliishcJ uooef
persons who are required 10 oomply wilh this proposed •mend- lhhi chlqller .ii. to impm\·I!' the quali1y r~r care JWa\•id1--d to p::r.umi. "'ilh
menl. The amendment will not affect local employment. mt'flUII rdardiilLion tL,. folkiwis·
Public Benefit t It The qualil)' as5Ufani;c kc is intended to !iiuppon and/or
~1`` an i ~ in rcimhun&:mc-n1 10 I ~ if'Nifmaedidle aw-I
C.,oiyn Pratt, Director of Rate Analysis, has detennined Iha!, for lacttilleloo IWf "- ~ · AMHNN tMlJ fw;ilk~ ~ ill.'Q.~ 10
each of the twst ftve years the proposed rule amendments are in Hll! NqYiNIMtllli uf ~ 2,~2-. i4ffkh M i l ~ ('>
Texas Administrative Code
TITLE 1 ADMINISTRATION
PART 15 TEXAS HEALTH AND HUMAN SERVICES
COMMISSION
CHAPTER357 HEARINGS
SUBCHAPTER I HEARINGS UNDER THE ADMINISTRATIVE
PROCEDURE ACT
RULE §357.483 Powers and Duties of the Judge
Historical Texas
Register
(a) The judge is a designee of the HHSC Executive Commissioner for purposes of:
( 1) issuing default, final, and other orders, and
' - (2) ruling on any motions for rehearing.
(b) The judge shall have the authority and the duty to:
(1) regulate pre-hearing matters and the hearing;
(2) conduct a full, fair, and impartial hearing;
(3) take action to avoid unnecessary delay in the disposition of the proceeding;
and
(4) maintain order, including regulating the conduct of the parties, authorized
representatives, witnesses, observers, and other participants.
(c) The judge may issue any order in the interest of justice that is necessary to
protect the person or party seeking relief from undue burden, unnecessary
expense, harassment, or invasion of personal, constitutional, or property rights.
'--' (d) The judge has no authority to declare state statutes or rules, or federal statutes
or regulations, invalid.
A-Pfe?n DI X \0
Source Note: The provisions of this §357.483 adopted to be effective June 20,
2007, 32 TexReg 3544
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"-...,., CFR > TiUe 42 > Chapter IV > Subchapter C > Part 433 > Subpart B > Section 433.68
42 CFR 433.68 - Permissible health care-related taxes.
§ 433.68 Permissible health care-related taxes.
(a) General rule. A State may receive health care-related taxes, without a reduction in FFP, only in accordance with the requirements of this
section.
(b) Permissible health care-related taxes. Subject to the limitations specified in§ 433.70, a State may receive, without a reduction in FFP,
health care-related taxes if all of the following are met
(1) The taxes are broad based, as specified in paragraph (c) of this section;
(2) The taxes are uniformly imposed throughout a jurisdiction, as specified in paragraph (d) of this section; and
(3) The tax program does not violate the hold harmless provisions specified in paragraph (f) of this section.
(c) Broad based health care-related taxes.
(1) A health care-related tax will be considered to be broad based if the tax is imposed on at least all health care items or services in the
class or providers of such items or ~-~'YJ``- furnished by all non-Federal, non-public providers in the State, and is imposed uniformly, as
specified in paragraph (d) of this section.
(2) If a health care-related tax is imposed by a unit of local government, the tax must extend to all items or services or providers (or to all
providers in a class) in the area over which the unit of government has jurisdiction.
(3) A State may request a waiver from CMS of the requirement that a tax program be broad based, in accordance with the procedures
specified in§ 433.72. Waivers from the uniform and broad-based requirements will automatically be granted in cases of variations in
licensing and certification fees for providers if the amount of such fees is not more than $1,000 annually per provider and the total amount
raised by the State from the fees is used in the administration of the licensing or certification program.
(d) Uniformly imposed health care-related taxes. A health care-related tax will be considered to be imposed uniformly even if it excludes
Medicaid or Medicare payments (in whole or in part), or both; or, in the case of a health care-related tax based on revenues or receipts with
respect to a class of items or services (or providers of items or services), if it excludes either Medicaid or Medicare revenues with respect to a
class of items or services, or both. The exclusion of Medicaid revenues must be applied uniformly to all providers being taxed.
(1) A health care-related tax will be considered to be imposed uniformly if it meets any one of the following criteria:
(i) If the tax ls a licensing fee or similar tax imposed on a class of health care services (or providers of those health care items or
services), the tax is the same amount for every provider furnishing those items or services within the class.
(11) If the tax is a licensing fee or similar tax imposed on a class of health care items or services (or providers of those items or services)
on the basis of the number of beds (licensed or otheiwise) of the provider, the amount of the tax is the same for each bed of each provider
of those items or services in the class.
{ill) If the tax is imposed on provider revenue or receipts with respect to a class of items or services (or providers of those health care
items or services), the tax is imposed at a uniform rate for all services (or providers of those items or services) in the class on all the gross
revenues or receipts, or on net operating revenues relating to the provision of all items or services in the State, unit, or jurisdiction. Net
operating revenue means gross charges of facilities less any deducted amounts for bad debts, charity care, and payer discounts.
(iv) The tax is imposed on items or services on a basis other than those specified in paragraphs (d){1) (i) through (iii) of this section, e.g.,
an admission tax, and the State establishes to the satisfaction of the Secretary that the amount of the tax is the same for each provider of
such items or services in the class.
(2) A tax imposed with respect to a class of health care items or services will not be considered to be imposed uniformly if it meets either
one of the following two criteria:
(I) The tax provides for credits, exclusions, or deductions which have as its purpose, or results in, the return to providers of all, or a
portion, of the tax paid, and it results, directly or indirectly, in a tax program in which -
(A) The net impact of the tax and~'!!``~ is not generally redistributive, as specified in paragraph (e) of this section; and
{B) The amount of the tax is directly correlated to p_