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CLC of Biloxi, LLC v. Mississippi Division of Medicaid

Court of Appeals of Mississippi

February 13, 2018

CLC OF BILOXI, LLC D/B/A BILOXI COMMUNITY LIVING CENTER APPELLANT
v.
MISSISSIPPI DIVISION OF MEDICAID AND DAVID J. DZIELAK, IN HIS OFFICIAL CAPACITY AS EXECUTIVE DIRECTOR OF THE DIVISION OF MEDICAID APPELLEES

          DATE OF JUDGMENT: 06/21/2016

         HON. PATRICIA D. WISE COURT FROM WHICH APPEALED: HINDS COUNTY CHANCERY COURT, FIRST JUDICIAL DISTRICT

          ATTORNEYS FOR APPELLANT: JAMES RAY MOZINGO, LYDIA QUARLES, HORACE HUNTER TWIFORD IV

          ATTORNEYS FOR APPELLEES: JANET MCMURTRAY, LAURA L. GIBBES

          BEFORE GRIFFIS, P.J., BARNES AND FAIR, JJ.

          FAIR, J.

         ¶1. CLC Biloxi sought a per diem reimbursement from the Mississippi Division of Medicaid (DOM) for their respiratory-therapist expenses. The DOM denied CLC Biloxi's request. After an administrative hearing, the DOM executive director affirmed the DOM. CLC Biloxi then appealed to Hinds County Chancery Court, which also affirmed the DOM. Finally, CLC appealed to this Court. After review, we find the DOM's decision to deny CLC reimbursement for respiratory-therapist expenses on a per diem basis was supported by substantial evidence. Accordingly, we affirm.

         FACTS

         ¶2. CLC Biloxi is a long-term skilled nursing facility that entered into a contract with the DOM to provide nursing-home services to Mississippi residents. In turn, the costs of the services provided by CLC Biloxi were reimbursed by the DOM in two ways: (1) as an expense could be billed directly to Medicaid for reimbursement of a specific service; and (2) CLC Biloxi could file an annual cost report with the DOM, which could include certain allowable costs or services that have been incurred to provide reasonable care to Medicaid patients; the cost report would be used to calculate a per diem cost of care for Medicaid patients.

         ¶3. Among the numerous services CLC Biloxi provided to Medicaid patients, respiratory therapy was utilized to treat nursing-home patients who suffered from a pulmonary illness. Although most respiratory-therapy services could be treated by a regular nursing staff, CLC Biloxi employed "respiratory therapists" to provide certain respiratory treatments to patients.[1]

         ¶4. On May 29, 2009, CLC Biloxi filed its annual cost report for allowable expenses incurred during 2008. It listed its respiratory therapists' salaries on Form 6, Line 2, under therapy expenses. In response to CLC Biloxi's original 2008 cost report, the DOM performed a "desk review, " to ensure that necessary adjustments were made before the DOM reimbursed CLC Biloxi for services rendered. Upon review of the cost report, the DOM determined not to reimburse CLC Biloxi for the respiratory-therapist salaries once it calculated the appropriate per diem to be provided. On August 2, 2010, CLC Biloxi filed an amended cost report with the DOM. Unlike the original 2008 cost report, CLC Biloxi sought reimbursement for the respiratory-therapist salaries as a direct care expense on Form 6, Line 1. In contrast to the initial desk review of the original 2008 CLC Biloxi cost reports, the first amended desk review handed down by the DOM on January 12, 2011, allowed the respiratory therapists' salaries to be used to calculate CLC Biloxi's per diem. Accordingly, approximately $82, 000 in salaries for respiratory therapists was included in CLC's per diem calculation.[2]

         ¶5. Upon discovery of the improper classification made by CLC Biloxi, the DOM issued a second amended desk review on March 2, 2012. Consequently, the DOM removed the respiratory-therapist salaries from CLC Biloxi's per diem calculation, as was done in the original desk review. As a result, the DOM sought to recoup the $82, 000 that had been paid to CLC Biloxi for the inclusion of respiratory-therapist salaries in their per diem rates.

         ¶6. In response, on March 30, 2012, CLC Biloxi requested an administrative appeal of the adjustments handed down by the DOM in the second amended desk review. Less than a month later, the DOM denied the appeal. Upon denial of the appeal, CLC Biloxi requested an administrative hearing. Following the hearing, the hearing officer recommended and the DOM executive director affirmed the DOM's disallowance of the respiratory therapists' salaries as part of CLC Biloxi's per diem calculation.

         ¶7. On October 23, 2013, CLC Biloxi filed a complaint in the Hinds County Chancery Court seeking declaratory and injunctive relief to prevent the DOM from breaching its contract with CLC Biloxi and from adopting what CLC Biloxi believed to be "an arbitrary and capricious interpretation of its controlling regulations." The DOM then filed a motion to dismiss the complaint and challenged the chancery court's jurisdiction to hear administrative appeals from the DOM. The case was stayed pending the outcome of the interlocutory appeal in Mississippi Division of Medicaid v. Alliance Health Center, 174 So.3d 254, 263 (¶26) (Miss. 2015), in which the Mississippi Supreme Court affirmed the jurisdiction of the chancery court over appeals from the DOM.

         ¶8. On March 29, 2016, the chancery court heard oral arguments on the dispute. Ultimately, on June 21, 2016, the court affirmed the DOM's final decision and held that the language found in the State Medicaid Plan (State Plan), its policy provider manual, and cost report "does not include respiratory therapists within those categories of therapists that are allowed to enroll as Medicaid providers and thus receive direct reimbursement for their services." Further, the court found that CLC Biloxi did not fall within the categories of medical facilities that are allowed a per diem reimbursement for respiratory therapists' salaries.[3]

         ¶9. CLC Biloxi filed the instant appeal.

         STANDARD OF REVIEW

         ¶10. We will reverse the decision of an administrative agency only if the decision (1) was unsupported by substantial evidence; (2) was arbitrary or capricious; (3) was beyond the power of the administrative agency to make; or (4) violated the complaining party's statutory or constitutional right. Hinds Cty. Sch. Dist. Bd. of Trs. v. R.B. ex rel. D.L.B., 10 So.3d 387, 394-95 (ΒΆ17) (Miss. 2008). An agency may not adopt rules and regulations that are contrary to statutory provisions, or that exceed or conflict ...


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