Bryant Health Care Ctr., Inc. v. Ohio Dep't of Job & Family Servs.
| Decision Date | 14 January 2014 |
| Docket Number | C.P.C. No. 06CVF10-14496,No. 13AP-263,13AP-263 |
| Citation | 2014 Ohio 92 |
| Parties | Bryant Health Care Center, Inc., Appellant-Appellant, v. Ohio Department of Job and Family Services [Ohio Department of Medicaid], Appellee-Appellee. |
| Court | Ohio Court of Appeals |
(REGULAR CALENDAR)
DECISION
Webster & Associates Co., LPA, and Geoffrey E. Webster, for appellant.
Michael DeWine, Attorney General, and Rebecca L. Thomas, for appellee.
APPEAL from the Franklin County Court of Common Pleas
{¶1} Appellant, Bryant Health Care Center, Inc. ("appellant"), appeals pursuant to R.C. 119.12 from a judgment of the Franklin County Court of Common Pleas affirming an adjudication order issued by appellee, Ohio Department of Medicaid1 ("the Department"). The order required that appellant repay to the Department a sumrepresenting Medicaid overpayments made to appellant. We affirm the judgment of the trial court.
{¶2} Appellant operates a 93-bed skilled nursing facility in Lawrence County and was a party to an agreement with the Department to provide long-term care services to qualified recipients pursuant to the state's Medical Assistance Program, commonly known as the "Medicaid" program2. Under the terms of the agreement, appellant agreed to accept Medicaid payments consistent with applicable state law as full payment for services rendered to Medicaid-eligible care recipients.
{¶3} Ohio statutes governing the administration of the Medicaid program in Ohio are codified in R.C. Chapter 5111.3 R.C. 5111.21 mandates that the Department pay the reasonable costs of services provided to an eligible Medicaid recipient by a nursing facility such as that operated by appellant. Reasonable costs include the expense of delivering direct care services (such as nursing costs), indirect care costs (such as administrative costs), and capital costs (such as lease or mortgage costs), R.C. 5111.23, 5111.24, and 5111.25. Workers' compensation ("WC") premiums constitute reasonable costs and are categorized as either direct care costs or indirect care costs depending upon the work performed by the employees on whose behalf the premiums are paid. See R.C. 5111.20(G)(1)(e) and 5111.20(I).
{¶4} Pursuant to R.C. 5111.26, appellant was required to file an annual cost report with the Department within 90 days after the end of each calendar year ("CY") during which appellant participated in the Medicaid program. The statute required providers to prepare the annual cost report in accordance with administrative rules established by the Department, e.g., Ohio Adm.Code 5111-3-3-20.
{¶5} The Department used a nursing facility's annual cost report in applying a statutory formula to determine a "per resident per day rate" ("per diem rate") payable to providers for the cost of care of Medicaid residents. R.C. 5111.26 and 5111.27. In determining the total per diem rate, the Department was required to consider the facility's "desk-reviewed, actual, allowable, per diem direct care costs" for the relevant CY. (Emphasis added.) R.C. 5111.23(B)(1). The Department was also required to consider the facility's "desk-reviewed, actual, allowable, per diem indirect care costs from the calendar year preceding the fiscal year ['FY']4 in which the rate will be paid," adjusted for inflation. (Emphasis added.) R.C. 5111.24(A)(1).
{¶6} The Medicaid reimbursement system was prospective in nature in that, in determining a provider's total per diem rate for a particular FY, the Department used the cost report filed by the provider for a prior CY. For example, appellant's CY 1995 cost report was due in March 1996, and the Department used it to set the per diem rate for FY 1997. Similarly, in determining the FY 1996 per diem rates, the Department used the provider's CY 1994 cost report; in determining a provider's FY 1995 per diem rate, the Department used the provider's 1993 CY cost report, and so forth.
{¶7} In 1995, the Bureau of Workers' Compensation ("BWC") determined that appellant was entitled to a partial refund of WC premiums appellant had paid during CYs 1991 through 1995. On September 19, 1995, BWC issued appellant a refund of WC premiums for those years, apportioned as follows:
1991
$ 14,207.74
1992
20,095.77
1993
12,731.53
1994
11,189.98
1995
4,263.56
The total amount of the refund was $62,488.58.
{¶8} As noted above, appellant did not receive the refund of WC premiums for CYs 1991 through 1994 until September 1995—after it had filed its CYs 1991 through 1994 cost reports. Accordingly, appellant's CYs 1991 through 1994 cost reports reflected the pre-refund amount of WC premiums paid in each of those years, and the Departmentused the pre-refund amount of WC costs in determining the per diem rates paid to appellant for FYs 1993 through 1996. Had appellant's CYs 1991 through 1994 cost reports reflected its WC premiums as adjusted by the amounts ultimately refunded to appellant for those years, appellant's per diem reimbursement rates for FY 1993 through 1996 would have been lower, and appellant would have received less Medicaid reimbursement for care provided in FY 1993 through 1996.
{¶9} In September 1995, when appellant received the WC premium refund, the calculation of appellant's per diem reimbursement rates for FYs 1992 through 1995 had not been finally calculated and closed. Rather, the rate recalculations and final settlements for the prior FYs were still open in September 1995 when appellant received the partial refund of appellant's 1991 through 1995 WC premiums. The parties do not dispute that the per diem rates for those FYs became final on the following dates:
{¶10} On March 31, 1996, appellant filed its cost report for the 1995 CY and referenced the WC refund it had received in September 1995. It did not, however, report any portion of the WC refund as an offset to its 1995 WC costs. Nor did appellant file amended cost reports for CYs 1991 through 1994, or otherwise advise the Department that it had received a WC refund attributable to those prior years, even though the FY 1993 through 1994 per diem reimbursement rates had not been finally closed on the date of the refund nor on the date appellant filed the 1995 cost report.6 Instead, appellant reported the WC refund on a schedule included in the 1995 cost report that identified the $62,488.58 WC refund as "other revenue" received by appellant in 1995.
{¶11} Pursuant to R.C. 5111.27(A), the Department conducted a mandatory desk review of appellant's 1995 cost report to determine whether the reported costs wereallowable, as well as a desk audit. The desk auditor noted in an August 18, 1998 narrative audit summary that accompanied the desk audit report that:
[Appellant] did receive a refund from the Bureau of Worker's Compensation, $62,488.58. This was due to various rate changes that were allowed for the period January 1, 1990-through June 30, 1995. However this amount was not recognized as a cost offset but as a revenue in error.
(State's Exhibit 15, Aug. 18, 1998 summary.)
{¶12} Accordingly, the desk auditors determined that appellant's report of the refund as income was "in error." The auditors concluded that the refund should instead have been reported, in its full amount, as an offset to appellant's 1995 WC costs. The proposed offset significantly reduced appellant's 1995 WC costs from approximately $146,300 to approximately $83,600. Before the audit became final, appellant challenged the desk auditor's conclusions relative to the WC refund. The auditors, however, did not change their position.
{¶13} On September 11, 2002, and consistent with the desk audit, the Department issued a final rate recalculation and settlement for FY 1997. It recalculated appellant's 1997 per diem rate based upon appellant's 1995 cost report as audited. Offsetting the full amount of the WC refund against appellant's 1995 WC costs reduced appellant's total 1995 reasonable costs and resulted in the Department finding that its original calculation of the 1997 per diem rate (which ranged from $85.94 to $86.93) had been too high. The Department determined that the per diem rate should have ranged over the course of FY 1997 from $84.00 to $84.95. The Department determined that it had overpaid appellant Medicaid in the amount of $57,375.68 for FY 1997 and ordered appellant to repay that sum.
{¶14} Appellant requested an R.C. Chapter 119 administrative hearing, and the Department designated a hearing examiner to hear the dispute. The hearing took place on September 25, 2003, and the parties agreed to submit the case on stipulated facts, exhibits, and briefs. They stipulated that the case presented a single legal issue: whether the Department acted in conformance with law in determining that the entire WC refund received in 1995 should be used to offset appellant's 1995 WC costs. The parties furtherstipulated that, if the Department's legal position were correct, then appellant owed the Department $54,168.03.7
{¶15} On March 25, 2004, the hearing examiner issued a report and recommendation to the Director of the Department ("Director"). The hearing examiner agreed with the appellant that the Department could adjust appellant's costs only on a year-by-year basis and that applying the total amount of the 1991-1995 refund against only the 1995 WC costs was inconsistent with the statutory reimbursement scheme and controlling principles of finality. The hearing examiner recommended that the Director recalculate the FY 1997 per diem rate after offsetting only the $4,264 WC refund attributable to CY 1995.
{¶16} On May 6, 2004, the Director ordered the hearing examiner to conduct a second hearing for the presentation of further testimony and documentary evidence and to thereafter prepare a supplemental or amended report and recommendation.
{¶17} The hearing examiner conducted the second...
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