Centennial Healthcare Investment Corp. v. Commissioner of the Division of Medical Assistance
Centennial Healthcare Investment Corp. v. Commissioner of the Division of Medical Assistance
Opinion of the Court
This case involves a health care provider’s challenge to the eligibility of one of its patients for benefits under the Massachusetts medical assistance program, pursuant to G. L. c. 118E. The plaintiff, Centennial Healthcare Investments Corporation (Centennial), doing business as Charlwell House, a skilled care nursing facility in Norwood, appeals from the dismissal of its complaint against the division of medical assistance (division) and Paul Donovan, the guardian of Thomas Columbo, a senior citizen resident at Charlwell House.
1. Background. We summarize the facts, taken from the pleadings, the administrative record, and Centennial’s and the division’s joint statement of agreed facts submitted in connection with Centennial’s appeal of sanctions to the division’s board of hearings.
Thomas Columbo was admitted to Charlwell House in Janu
Shortly thereafter, Paul Donovan, an attorney, was appointed Columbo’s guardian and arranged to pay Centennial from Columbo’s cash assets and, later, from the sale of portions of Columbo’s real estate. In April, 1997, Donovan stopped paying Centennial, claiming that Columbo’s cash assets were depleted and that he was attempting to sell additional real estate to cover the nursing home expenses. After unsuccessful negotiations between Donovan and Centennial, and a failed attempt by Donovan to obtain a court injunction to prevent Centennial from discharging Columbo, Centennial filed a complaint in Norfolk Superior Court in September, 1998, to recover over $90,000 for unpaid services.
That case was settled on February 18, 1999. Centennial and Donovan, in his capacity as Columbo’s guardian, executed an agreement for judgment, pursuant to which Donovan agreed to pay Centennial $71,573, less any payments received after that date, for services provided through February 28, 1999.
As a result, the division issued a notice approving Columbo’s Medicaid application on September 22, 1999.
By letter dated December 8, 1999, the division, taking Columbo’s side, notified Centennial that it was in violation of the law and its provider agreement for its failure to reimburse Donovan, and threatened the imposition of sanctions. Centennial responded that it was investigating the matter. On January 24, 2000, the division sent Centennial a sanction notice, imposing a
Centennial filed this action in Suffolk Superior Court on July 5, 2001, alleging breach of contract, constitutional violations, and civil conspiracy; seeking declaratory and injunctive relief; and requesting a review of the board’s decision under G. L. c. 30A, § 14, affirming the imposition of sanctions. Donovan filed a motion to dismiss, and the division joined in the motion. Centennial moved for judgment on the pleadings on count VEI of its complaint, for c. 30A review of the sanctions. The judge allowed the defendants’ motion to dismiss as to all counts except count VIII; as to that count, the judge ruled that the board’s decision was supported by substantial evidence and correct as matter of law. Judgment was entered for the defendants on all counts, and Centennial filed this appeal.
2. Standing to challenge eligibility. The statute and regulations governing the Massachusetts medical assistance programs do not provide a mechanism for a provider to challenge the grant of medical assistance to one of its patients. General Laws c. 118E, § 47, provides a right of appeal to an applicant or recipient, or his or her legal representative, aggrieved by the division’s failure to grant medical assistance or a decision to withdraw such assistance. Such appeals are to follow the procedure for fair hearing set out in c. 118E, § 48.
In addition, the regulations, expanding on the fair hearing procedure, provide a right to a hearing for “applicants, members, residents, and employers,” seeking review of “certain actions or inactions on the part of the Division.” 130 Code Mass. Regs. § 610.012 (2002).
As to providers, the statute expressly requires that, as a condition for participation, they must “agree to accept, as payment in full, the amounts paid in accordance with the fee schedules provided for under this chapter.” G. L. c. 118E, § 36(3). The regulations further require that the provider must refund to the patient, upon the patient’s request, all sums paid by the patient at the private rate, retroactive to the date of eligibility. 130 Code Mass. Regs. § 450.203 (2002). The statute does expressly afford providers the right to seek review of certain payment decisions made by the division; G. L. c. 118E, § 38, provides for the establishment of procedures for providers wishing to appeal the division’s denials of a provider’s claim for payment. Providers are also afforded standing to challenge the division’s rate determinations. See G. L. c. 118E, § 7. But Centennial points to no statute or regulation that confers standing on a provider to challenge the division’s determination that one of its patients is entitled to benefits under the medical assistance program. See Local 1445, United Food & Commercial Workers Union v. Police Chief of Natick, 29 Mass. App. Ct. 554, 558 (1990). See generally Hagen v. Commonwealth, 437 Mass. 374,
Indeed, Centennial concedes in its reply brief that the statute and regulations provided no right for Centennial to intervene or otherwise participate in Columbo’s application process or to request a hearing on the issue.
“When a statute confers standing in relation to particular subject matter, that statute, rather than more general ideas about standing, governs who may initiate legal action in relation to the subject matter. Boston Edison Co. v. Boston Redev. Authy., 374 Mass. 37, 46 (1977). Bello v. South Shore Hosp., 384 Mass. 770, 780 (1981).” Local 1445, United Food & Commercial
In this instance, we cannot ignore the import of Federal and State law in determining a provider’s contractual rights. In our view, issues directly involving administration of the medical assistance program, including the determination of eligibility, the amounts of payments to providers, and the contractual relationship between the provider and the division, are governed by c. 118E and the standing requirements enunciated therein. As an example, in Athol Memorial Hosp. v. Commissioner of the Div. of Med. Assistance, 437 Mass. 417, 421-422 (2002), the Supreme Judicial Court rejected the providers’ common-law claim for breach of contract where the regulations governing the providers’ contract established a procedure for administrative review of denials of payment under c. 118E, § 38. As the court observed, “[tjhere is no indication that the Congress, the Legislature, or even the parties intended the [providers] to have a common law remedy for payment of claims under Medicaid.” Id. at 422.
Along those same lines, we think a determination here of whether the division breached its contract with Centennial by finding Columbo eligible for assistance cannot be viewed as distinct from the statute and regulations that limit the review of eligibility to the applicants themselves. We are also mindful of the overriding design and purpose of the medical assistance laws and the broad authority afforded the division in implementing the Legislative objectives:
*328 “In administering the medical assistance program established under this chapter, the division shall formulate such methods, policies, procedures, standards and criteria, except medical standards and criteria, as may be necessary for the proper and efficient operation of those programs in a manner consistent with simplicity of administration and the best interests of recipients.”
G.L. c. 118E, § 12, first par.
Pursuant to the statutory and regulatory scheme, the division has been given broad authority to determine the question of eligibility for medical assistance, with an eye toward administrative simplicity and the recipient’s best interest, subject only to limited administrative and judicial review. The contractual issue alleged in Centennial’s complaint requires a determination whether the division properly awarded benefits to Columbo in accordance with the eligibility requirements of the controlling law. As we see it, the issue inescapably centers on Columbo’s eligibility, the review of which is governed by statute. “[Wjhen an issue involves an area of law governed by a specific statute with a standing requirement, that issue is governed by the standing requirements of the particular statute and not by a general grant of standing.” Bello v. South Shore Hosp., 384 Mass. at 780, quoting from Boston Edison Co. v. Boston Redev. Authy. 374 Mass. at 46.
Accordingly, Centennial cannot rely upon more forgiving common-law notions of standing to circumvent the standing requirements in the controlling statute and regulations that limit the appeal of eligibility to the applicant. Moreover, Centennial’s lack of standing to challenge Columbo’s eligibility disposes of much of Centennial’s complaint, as the judge so ruled. Beyond Centennial’s breach of contract claim, the issue at the core of several counts of Centennial’s complaint is Columbo’s eligibility, regardless of the legal theory alleged and the context in which it appears.
This holds true, then, for those counts of Centennial’s complaint that require for their resolution a ruling that the division erred in determining that Columbo was entitled to receive benefits. Specifically, in addition to count V for breach of contract against the division, dismissal was proper for those
3. Effect of the prior judgment. Centennial brought claims for breach of contract against Donovan, as well as constitutional and civil conspiracy against Donovan and the division, asserting, among other things, that the February 18, 1999, agreement for judgment in the Norfolk Superior Court action, providing for Donovan’s payment to Centennial at the private pay rate, gave Centennial a protected property interest in the judgment. The agreement for judgment, which required Donovan to pay Centennial the amount of $71,573 for services through February 28, 1999, also provided that it would be reduced by any payments received on or after February 18, 1999.
As previously explained, Centennial was obligated, pursuant to its provider agreement and controlling law, upon its patient’s eligibility to accept the amount paid by Medicaid as payment in full and to reimburse to the patient the amount paid at the private rate, retroactive to the date of eligibility. We discern no inconsistency between the judgment establishing the amount due pursuant to the private payment rate as of February 18, 1999, which Donovan paid, and the division’s subsequent determination that Columbo was eligible for benefits, which triggered Centennial’s obligation to return the amount paid to Donovan and to seek payment from the division instead. See, e.g., Young v. Department of Pub. Welfare, 416 Mass. 629, 632-634 (1993) (Probate Court had jurisdiction to determine a trustee’s discretion to make distributions under the terms of a trust, without affecting the division’s authority to determine Medicaid eligibility for the trust beneficiary).
On this score, we agree with Donovan that, regardless of the means by which Centennial procured private payment of its bill for services, whether by voluntary payment or through a collection action, Centennial was still obligated, pursuant to G. L. c. 118E, § 36(3), to accept the Medicaid rate as payment in full and to reimburse Donovan once Columbo was found eligible,
Centennial also claims that Donovan waived all rights to pursue Medicaid benefits on Columbo’s behalf by executing the agreement for judgment in the Norfolk Superior Court action, so that Donovan’s continued pursuit of benefits after that agreement was signed constituted breach of contract. For factual support, Centennial relies only on the dismissal of Donovan’s counterclaim in the Norfolk Superior Court action. That counterclaim alleged G. L. c. 93A violations against Centennial for its failure to inform Donovan of rights and procedures for pursuing Medicaid benefits. Centennial points to no theory of law that persuades us that Donovan’s agreement to dismiss the c. 93A counterclaim against Centennial, for allegedly violating its duty to disclose the availability of Medicaid benefits to a patient, constituted a waiver of Donovan’s right to pursue Medicaid benefits.
4. Review of sanctions under G. L. c. 30A. In count VIII, Centennial timely sought judicial review, under c. 30A, § 14, of the division’s decision following an adjudicatory hearing, which affirmed in part the imposition of sanctions against Centennial for its failure to refund to Donovan the amount he had paid Centennial at the private pay rate. The hearing officer reduced the amount of sanctions so that the penalty was calculated from the date Centennial received notice of Columbo’s eligibility, rather than from the date of eligibility.
But to the extent that Centennial’s c. 30A appeal sought review of the division’s underlying determination that Columbo was eligible for benefits, the hearing officer refused to address the eligibility issue for lack of standing.
On appeal, Centennial argues that in order to review the sanction, it was necessary for the hearing officer to review the division’s underlying action to determine if the sanction was
The statute and regulations required Centennial to refund Donovan his private rate payment upon notice of Columbo’s eligibility, and to accept the Medicaid rate as payment in full. The regulations, as interpreted by the division, did not permit Centennial to seek administrative review of that determination. The sanction was imposed when Centennial failed to abide by the statutory mandate that it accept the Medicaid rate of payment as payment in full and refund the private payment amount to Donovan. Centennial’s challenge in this context is more appropriately addressed to the regulations that denied it a right to a hearing on Columbo’s eligibility. Centennial has not pressed such a claim, and so we do not reach it.
The judge affirmed the board’s decision as supported by the evidence that Centennial violated its statutory obligations, and as correct as matter of law. On this record, we affirm.
5. Claim for payment after Medicaid eligibility expired. As a final matter, Centennial argues that the judge wrongly dismissed that portion of its breach of contract claim against Donovan for amounts owed for nursing care after October, 1999. Reading the complaint broadly, as we must, see Nader v. Citron, 372 Mass. 96, 98 (1977); Harvard Law Sch. Coalition for Civil Rights v. President & Fellows of Harvard College, 413 Mass. 66, 68 (1992), our review of the record on appeal confirms that the claim for payment was sufficiently pleaded in Centennial’s complaint, and was adequately preserved in Centennial’s opposition to Donovan’s motion to dismiss. We accordingly reverse and remand for further proceedings on count VI of Centennial’s complaint against Donovan, seeking recovery of amounts owed for nursing home and health care services from October, 1999, through 2001.
So ordered.
The division of medical assistance is the State agency responsible for administering the medical assistance program, commonly known as Medicaid, a joint Federal and State program designed to provide medical services to persons in financial need. G. L. c. 118E, § 1. See Athol Memorial Hosp. v. Commissioner of the Div. of Med. Assistance, 437 Mass. 417, 418 n.3 (2002). As Massachusetts law is in conformity with the Federal statute, Title XIX of the Social Security Act, 42 U.S.C. §§ 1396 et seq. (2000), we shall rely primarily on the State statute and regulations in our discussion. See G. L. c. 118E, § 9.
The provider agreement in effect at the time of Centennial’s complaint was executed on February 26, 1999.
The agreement for judgment further provided that the parties waived “all rights to vacate, appeal from and to any stay of execution on this Judgment.”
By way of background only, we note from the administrative record that it appears that the change in the division’s position was related to Donovan’s attempt to sell Columbo’s real estate, which was held in trust and so originally not deemed an exemption from countable assets by the division. Pursuant to 130 Code Mass. Regs. § 610.051 (2002), which allows for the division to make an adjustment in the matters at issue before or during a hearing, the division reached an agreement with Donovan regarding Columbo’s eligibility without the need for a further hearing. We also note that while Centennial complains throughout its brief of the seeming incongruity of a well-to-do individual such as Columbo receiving Medicaid benefits, Centennial acknowledged below that the division could recoup those benefits from the eventual sale of Columbo’s real estate.
Subsequent notices revised the amount of assistance and the date of eligibility.
It is undisputed that Centennial is none of these.
Presumably, Centennial’s attempt to participate in Columbo’s eligibility proceedings was denied on this basis.
Centennial’s complaint did not challenge the division’s fair hearing regulations themselves, nor did Centennial seek judicial review as an aggrieved person, pursuant to G. L. c. 30A, § 14, of the division’s approval of Columbo’s application for Medicaid benefits within thirty days of notice. We therefore do not address the question whether a provider could properly resort to an action in the Superior Court under c. 30A, § 14, to obtain judicial review of an eligibility determination rendered in an adjudicatory proceeding initiated by the Medicaid applicant.
Centennial's provider agreement is not a part of the record on appeal. We note that providers must agree to comply with all State and Federal laws and regulations governing the medical assistance program. See c. 118E, §§ 36, 37. See also Athol Memorial Hosp. v. Commissioner of the Division of Med. Assistance, 437 Mass. 417, 419 (2002) (statute and regulations governing the Medicaid program were incorporated into the standardized provider agreement).
The joint statement of agreed facts submitted by Centennial and the division, stating that Donovan had waived the right to apply for Medicaid benefits, was not binding on Donovan, who was not a party in the sanction proceedings.
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