GAB Decision 385
Docket No. 82-36-OH-HC
January 31, 1983
Ohio Department of Public Welfare;
Ford, Cecilia; Teitz, Alexander Garrett, Donald
The Ohio Department of Public Welfare (ODPW, State) appealed a
disallowance of $260,336 by the Health Care Financing Administration.
The $260,336 was paid to the State based on expenditure reports for the
quarters ended December 31, 1977 through June 30, 1981, and represented
federal financial participation (FFP) claimed in payments to the Cuy-La
Nursing Home for services to Medicaid recipients under Title XIX of the
Social Security Act.
Background
Title XIX authorizes FFP in payments to nursing homes which have been
certified by a state as meeting the requirements for participation as a
provider of services to Medicaid recipients. In Ohio Department of
Public Welfare, Decision No. 173, April 30, 1981 (Ohio I) the Board held
that under 45 CFR 205.10(b)(3), promulgated in 1973, and a December 1970
Program Regulation Guide (PRG-11), interpreting the regulations then in
effect, FFP was available subsequent to termination or non-renewal of
certification where a facility contests the termination or nonrenewal
(provider appeal) and by state law or court order a state is required to
continue payments pending the adjudication of the adverse action. The
availability of FFP in payments for services to Medicaid recipients
during a provider appeal is limited to a maximum of 12 months from the
decertification or nonrenewal. Ohio I, supra, pp. 8-12; see also
Michigan Department of Social Services, Decision No. 290, April 30,
1982, pp. 8-12.
Cuy-La's certification expired on March 31, 1977, but was validly
extended by the State to May 31, 1977. HCFA disallowed FFP from June 1,
1977 through September 30, 1980. Cuy-La was recertified October 1,
1980.
On August 5, 1977, the State notified Cuy-La that its certification
would not be renewed. On September 28, 1977, Cuy-La brought an action
in State court against ODPW and the Ohio Department of Health (ODH)
attacking the validity of the State's denial of certification. ODPW
Exhibit X, Complaint filed 9/28/77 and Amended Complaint filed 10/7/77.
On October 11, 1977, the Court issued a temporary restraining order
(TRO) enjoining ODPW from refusing to make Medicaid payments.
(2) On October 28, 1977, Cuy-La attempted to add the Secretary of the
Department of Health, Education, and Welfare (predecessor to HHS) as a
party. Exhibit X. HEW removed the case to the United States District
Court for the Southern District of Ohio, which dismissed the action
against the Secretary of HEW and remanded the case to State court, on
November 30, 1977. HCFA Exhibit 1.
The State court extended the TRO indefinitely in December, 1977, with
the consent of the State. ODPW Exhibit VII; HCFA Exhibit 2. The State
court dismissed the Cuy-La action in April 1979. ODPW Exhibit III.
Another action against the State and HEW was brought by Medicaid
recipients at Cuy-La in federal court in April 1979. Both defendants
were ordered by the Court to continue Medicaid payments, but the federal
court of appeals reversed. On remand, the federal district court
dismissed the action without prejudice to the rights of the parties to
recoup any sum paid pursuant to the Court's orders.
Issue
The issue in this appeal is whether and to what extent the State is
entitled to FFP in payments to Cuy-La following expiration of Cuy-La's
certification and during a time when the State was under State and
federal court orders to make payments to Cuy-La. We find that FFP is
available from September 1, 1977 to December 1, 1977, or such other date
in December as the State can prove to HCFA to be applicable. Our
holding is based on the parties' submissions, the Board's Notice of
Teleconference dated December 23, 1982, and the telephone conference on
January 14, 1983.
Discussion
1. The action brought by Cuy-La in State court was a provider appeal,
but the State is not entitled to FFP in payments for services rendered
after an extension of the TRO obtained with the State's consent and
based solely on the Cuy-La's need for more time to achieve compliance.
a. The TRO
HCFA argued that Cuy-La's action in State court was merely an attempt
to gain time to achieve compliance and thus not a true "provider appeal"
entitling the State to FFP under 45 CFR 205.10(b)(3) and PRG-11. In
addition, HCFA contended that as of the time the State consented to the
extension of the TRO, it was (3) no longer continuing payments as a
result of a provider appeal because the admitted basis for its consent
was the prospect that Cuy-La would shortly achieve compliance. The
State argued that Cuy-La did seek review of the State's decision not to
renew Cuy-La's certification and cited Board decisions in support of its
contention that FFP is available even if Cuy-La might also have been
seeking time to achieve compliance. /1/
In Ohio Department of Public Welfare, Decision No. 368, December 20,
1982, (Ohio II), the Board discussed the Pennsylvania and Wisconsin
decisions relied on by the State here and held:
... where the pleadings showed on their face that a facility was
merely seeking additional time to come into compliance--essentially a
plea to the court to use its powers of equity--there was no provider
appeal within the meaning of PRG-11 and 45 CFR 205.10(b)(3). And, as
indicated in the New York decision, we hold that where the pleadings
showed on their face that the court was asked to determine whether the
State had a proper legal and factual basis to decertify, there was a
provider appeal.
We note that the pleadings filed by Cuy-La, similar to those of Bond
Manor and some of the other facilities in Ohio II which the Board found
to have provider appeals, admitted that the facility was in the process
of completing repairs required by State and federal health and safety
regulations. Paragraph 5 of affidavit attached to State court
complaint, ODPW Exhibit X. In an amended complaint filed prior to the
issuance of the State court TRO, Cuy-La characterized its original
complaint as contesting the validity of its decertification. ODPW
Exhibit X. In a second amended complaint filed on October 28, 1977,
approximately two weeks after the TRO, Cuy-La alleged that the HEW
regulations and the ODH finding of noncompliance were arbitrary,
unreasonable, and capricious. ODPW Exhibit X.
We find that these pleadings on their face show that Cuy-La was not
merely seeking time to achieve compliance. Accordingly, in keeping with
Ohio II, we hold that the TRO was the result of a provider appeal, thus
entitling the State to FFP in payments for services while that appeal
was pending.
(4) b. The extension of the TRO
We reach a different result, however, with respect to the
availability of FFP after the TRO was extended with the consent of the
State. A copy of the extension was not submitted, so that we do not
know the exact date, but both parties submitted documents from federal
court proceedings in 1979 showing that there was an extension in
December 1977. In a memorandum opinion and order entered May 31, 1979,
the federal court found that counsel for the State had agreed to an
extension of the TRO upon Cuy-La's representation that corrections
necessary to bring it into compliance would be completed. ODPW Exhibit
VII. That finding was based on a May 2, 1979 hearing at which an Ohio
Assistant Attorney General testified that the State consented because
counsel for Cuy-La wrote asking for "a little more time and our home
will be in compliance." HCFA Exhibit 2, p. 10.
The State argued that its consent did not change the status of the
facility's action from that of a provider appeal to one where the sole
reason for the court's order was to give the facility more time to
achieve compliance. It cited the Board's holdings in Pennsylvania,
supra, Wisconsin, supra, and California Department of Health Services,
Decision No. 203, July 31, 1981.
We find that Pennsylvania and Wisconsin are distinguishable. The
testimony of the Assistant Attorney General in federal court and the
court's finding outweigh our assumption that the extension was given to
permit the facility to stay in operation while it maintained its
provider appeal. By consenting to the extension, the State no longer
was actively defending its decertification of Cuy-La and was agreeing to
make payments to a facility which was not in compliance.
In California there was a court order (in an action brought by
patients in a decertified nursing home) entered at the consent of the
parties "requiring the State to pay certain amounts..." p. 2. The
Board
held that FFP was available in payments made pursuant to the court
order, under 45 CFR 205.10(b)(3), because the consent order merely
modified an earlier order by changing the rate of payment and thus there
was "a continuing obligation imposed by the Court, accompanied by some
agreement of the parties, (rather) than... an agreement of the parties
alone." p. 6. By contrast, here the only basis shown by the record was
the State's representation that the facility needed an extension of the
TRO to give it more time to achieve compliance.
(5) PRG-11 and 45 CFR 205.10(b)(3) entitle a State to reimbursement
for a limited time where it is compelled by its law or by a court to
make payments to a facility during the decertification review process.
Here, by its consent to the extension, the State in effect is making the
payment voluntarily and is thus not entitled to FFP.
2. The State is entitled to FFP in payments for services rendered prior
to the TRO.
The State argued that FFP should be available in payment for services
rendered from September 1, rather than September 28, the date of the
TRO. Under the system by which the State reimbursed nursing homes,
claims were presented on the 15th of each month for services rendered
during the preceding month. Addressing an identical situation, the
Board held in Ohio II, supra, p. 9:
... FFP is available for all payments affected by a court order, even
payments for services rendered prior to the date of the order, except
where the State gave a facility notice of cancellation or nonrenewal
during the period covered by the order. Then FFP is available only from
the date of the notice.
Here, the State gave the facility notice in August, so that factor is
not relevant. The State paid the October 15 claim pursuant to the court
order entered September 28, and thus FFP is available for services
rendered on and after September 1.
3. The State is not entitled to FFP in payments made pursuant to
federal court order in 1979 or in payments for any services rendered
more than 12 months after expiration of Cuy-La's certification.
In Ohio I, the Board found that both PRG-11 and 44 CFR 205.10 (b)(3)
were limited by statutory and regulatory provisions which make FFP
available during a provider appeal for no more than 12 months following
termination or nonrenewal or until the next survey/certification cycle,
whichever comes first. If the State had certified the facility, the new
term could not have been longer than 12 months and thus a court order
could not give constructive certification greater effect than regular
certification. Ohio I, supra, pp. 8, 12. See also Michigan supra, pp.
8-12; (6) Tennessee Department of Public Health, Decision No. 267,
March 25, 1982; and Colorado Department of Social Services, Decision
No. 377, January 27, 1983.
The State contended it was entitled to FFP in payments made pursuant
to the order of the federal court in 1979. The State expressed its lack
of agreement with the Board's holding in Ohio I, and distinguished the
1979 action here on the grounds that this was a action brought by
recipients and that HEW was a party. The State argued that the 12 month
limitation is tied to PRG-11, which is not a factor in the availability
of FFP pursuant to a court order in a recipient action, under 45 CFR
205.10(b)(3).
The Board previously decided this issue in New York Department of
Social Services, Decision No. 181, May 29, 1981, pp. 14-20. There the
Board held that New York was entitled to FFP, in a recipient-brought
action, only for the 12 months following expiration of certification,
even though New York continued under court order to pay for services
rendered after that 12 month period. The reasons were those articulated
in Ohio I, supra.
As for HEW being a party, the Agency pointed to the terms of the
dismissal of the recipient action by the District Court in March 1981.
The Court dismissed the action without prejudice to the rights of the
parties, in any proceeding in which recoupment would be sought, to any
sums paid by HEW or the State pursuant to the Court's orders. HCFA
Exhibit 3, submitted June 14, 1982. We find on the basis of this
language that the federal court order in effect directing HEW to pay FFP
is not a bar to the subsequent disallowance.
Conclusion
For the reasons discussed above, we uphold the disallowance in part
and reverse it in part. We hold that the State is entitled to FFP in
payments to Cuy-La for services rendered from September 1, 1977 to
November 30, 1977. If the State furnishes HCFA with a copy of the
December 1977 order extending the TRO, or other acceptable proof of the
date, it would also be entitled to FFP for services rendered during that
part of December prior to the extension. /1/ Pennsylvania Department of
Public Welfare, Decision No. 217, September 30, 1981, and
Wisconsin Department of Health and Social Services, Decision No. 276,
March 31, 1982.
SEPTEMBER 22, 1983