Glendive Medical Center, Inc. v. DPHHS, 01-239.

• Decision Date: 18 June 2002
• Docket Number: No. 01-239.,01-239.
• Parties: GLENDIVE MEDICAL CENTER, INC., Petitioner and Appellant, v. MONTANA DEPARTMENT OF PUBLIC HEALTH AND HUMAN SERVICES, Respondent and Respondent.
• Court: Montana Supreme Court

49 P.3d 560

2002 MT 131

310 Mont. 156

GLENDIVE MEDICAL CENTER, INC., Petitioner and Appellant, v. MONTANA DEPARTMENT OF PUBLIC HEALTH AND HUMAN SERVICES, Respondent and Respondent.

No. 01-239.

Supreme Court of Montana.

Submitted on Briefs September 6, 2001.

Decided June 18, 2002.

Lorraine A. Schneider, Schneider Law Offices, Glendive, Montana, For Appellant.

Gregory G. Gould, Luxan and Murfitt, Helena, Montana, John C. Koch, Department of Public Health and Human Services, Helena, Montana, For Respondent.

Justice JIM RICE delivered the Opinion of the Court.

¶ 1 Glendive Medical Center, Inc. (GMC), appeals from an order of the Montana Seventh Judicial District, Dawson County, affirming the Findings of Fact and Conclusions of Law of the Board of Public Assistance of the State of Montana. We affirm.

¶ 2 We restate the issue on appeal as follows:

¶ 3 Did the District Court err in determining that the decision of the Board of Public Assistance was legally correct?

BACKGROUND

¶ 4 The following relevant facts are taken from the undisputed findings of the hearings officer for the Montana Board of Public Assistance. Additional facts will be included in the discussion as necessary.

¶ 5 GMC operates a hospital, nursing home, and the Eastern Montana Veterans Home (EMVH), in Glendive, Montana. EMVH is a state-owned, 80-bed health care facility licensed by the Montana Department of Public Health and Human Services (DPHHS) to participate in the Montana Medicaid program as a skilled nursing facility for the sole use of veterans and their spouses. GMC originally contracted with the former Department of Corrections and Human Services (DCHS) to operate EMVH on behalf of DCHS. Since the July 1, 1995, effective date of an agency reorganization mandated by the 1995 Legislature, DPHHS has succeeded DCHS as the state agency party to the contract with GMC for the operation of EMVH.

¶ 6 GMC began management and operation of the newly-constructed EMVH in July 1995. GMC receives revenue from several sources for the operation of EMVH, including Veterans Administration (VA) per diem payments, Medicaid reimbursements, payments made by patients from their own resources, workers' compensation, and private insurance. Soon after assuming management and operation of EMVH, GMC applied for enrollment of EMVH in the Montana Medicaid program as a provider of skilled nursing facility services. GMC executed a provider enrollment form and a Medicaid nursing facility provider agreement on behalf of EMVH, and began submitting claims to Medicare and Medicaid in August 1995, after receiving its certification from the state.

¶ 7 GMC initially received Medicaid payments on behalf of EMVH based upon an interim, temporary Medicaid rate, until it filed a cost report with DPHHS based upon at least six months of participation in the Medicaid program. Upon receiving the cost report, DPHHS then calculates the proper Medicaid rate through an adjustment process based upon the reported costs submitted by EMVH. However, prior to submission of the six-month cost report, due in February 1996, GMC and DPHHS initiated discussions regarding the correct method of reporting the VA per diem payments.

¶ 8 GMC asserted that the Administrative Rules of Montana did not require it to report its receipt of the monthly VA per diem payment as anything other than a subsidy to offset against its general operating expenses. The rate at which Medicaid reimburses a participating medical facility is based upon operating costs reported in the facility's annual cost report. Medicaid reimbursement rates therefore differ from facility to facility. Under GMC's suggested method of reporting the per diem payments, the rate at which Medicaid reimbursed GMC would be lower as a result of lower reported operating costs.

¶ 9 DPHHS, however, argued that the administrative rules required GMC to report the monthly VA per diem payment as a third-party liability payment. Reporting the per diem payments as a third-party payment would reduce GMC's Medicaid reimbursements by the aggregate amount of the VA per diem payment for each month, resulting in a steeper reduction of Medicaid reimbursement payments than under GMC's suggested method of reporting.

¶ 10 GMC subsequently submitted its cost report to DPHHS, reporting the VA per diem payments as an offset against operating expenses. DPHHS rejected this method of reporting and refused to release the Medicaid reimbursement payment to GMC unless GMC submitted a second cost report reflecting the VA per diem payment as a third-party liability payment. GMC submitted a second cost report under protest, reporting the monthly VA per diem payments as a third-party liability and requested an administrative hearing to determine the issue.

¶ 11 A fair hearing was subsequently held by a Hearing Examiner from the Agency Legal Services Division of the Montana Attorney General's Office. The Hearing Examiner entered findings of fact and conclusions of law, concluding that, according to the Administrative Rules of Montana, the VA is a third party as defined by Rule 46.12.304(2)(a), ARM, and that its per diem payments defray part of the cost of medical-related services. The Hearing Examiner concluded, therefore, that the VA per diem payments received by GMC were to be reported as a third-party payment on Medicaid reimbursement claims forms.

¶ 12 The Montana Board of Public Assistance (Board) adopted the Hearing Examiner's conclusions, and GMC filed a Petition for Judicial Review challenging the Board's interpretation and application of the laws concerning third-party liability. The District Court affirmed the conclusions of the Board and determined that the policy of DPHHS to treat VA per diem as third-party liability was supported by its adopted rules. GMC appeals the order of the District Court and requests that this Court reverse the District Court and remand this matter to the DPHHS to reconcile GMC's Medicaid reimbursement claims to conform to its suggested interpretation of the law, requiring DPHHS to accept GMC's initial cost reporting method.

¶ 13 Did the District Court err in determining that the decision of the Board of Public Assistance was legally correct?

¶ 14 When reviewing an agency decision, we apply the same standard as did the district court. Montana Power Co. v. Montana Public Serv. Com'n, 2001 MT 102, ¶ 18, 305 Mont. 260, ¶ 18, 26 P.3d 91, ¶ 18. Where an agency's interpretation has stood unchallenged for a considerable length of time, it will be regarded as a great importance in arriving at the proper construction. Montana Power, ¶ 24. However, even "where a particular meaning has been ascribed to a statute by an agency through a long and continued course of consistent interpretation, resulting in an identifiable reliance, ... such administrative interpretations are not binding on the courts; rather, they are entitled to `respectful consideration.'" Montana Power, ¶ 25 (citing Doe v. Colburg (1976), 171 Mont. 97, 100, 555 P.2d 753, 754).

¶ 15 This Court generally applies the same principles in construing administrative rules as are applicable to our interpretation of statutes. State v. Incashola, 1998 MT 184, ¶ 11, 289 Mont. 399, ¶ 11, 961 P.2d 745, ¶ 11 (citation omitted). The function of the court with respect to statutory construction is to interpret the intention of the statute or rule, if at all possible, from the plain meaning of the words, and if the meaning of the statute or rule can be determined from the language used, the court is not at liberty to add or to detract from the language therein. Incashola, ¶ 11; Paulsen v. Bonanza Steak House (1987), 225 Mont. 191, 197, 733 P.2d 335, 339. Additionally, absent ambiguity in the language of the statute or rule, this Court may not consider legislative history or any other means of statutory construction. McKirdy v. Vielleux, 2000 MT 264, ¶ 22, 302 Mont. 18, ¶ 22, 19 P.3d 207, ¶ 22 (citation omitted).

¶ 16 Rule 46.12.304(2)(a), ARM (1995) [renumbered 37.85.407(2)(a) ], provides:

A third party is defined as an individual, institution, corporation, or public or private agency that is or may be liable to pay all or part of the cost of medical treatment and medical-related services for personal injury, disease, illness, or disability of a recipient of medical assistance from the department or a county and includes but is not limited to insurers, health service organizations, and parties liable or who may be liable in tort. Indian health services is not a third party within the meaning of this definition.

¶ 17 Rule 46.12.304(1), ARM [renumbered 37.85.407(1)], provides in part:

No payment shall be made by the department for any medical service for which there is a known third party who has a legal liability to pay for that medical service....

¶ 18 Rule 46.12.309(1)(c), ARM [renumbered 37.85.415], provides in part:

(1) Medicaid will pay only for medical expenses:

...

(c) for which third party payment is not available.

¶ 19 The Hearing Examiner concluded and the Board agreed that the Veterans Administration is a public agency liable to pay part of the cost of medical-related services of qualified veterans and spouses of veterans, and is therefore a third party as defined by Rule 46.12.304(2)(a), ARM. The VA per diem payments, thus characterized as third-party liability payments, reduced GMC and EMVH's Medicaid reimbursement payment under Rules 46.12.304(1) and 46.12.309(1)(c), ARM.

¶ 20 GMC asserts that this interpretation is legally incorrect, and argues that there are legally relevant distinctions between the payments made by the specified third parties in Rule 46.12.304(2)(a), ARM (insurers, health service organizations, and parties who may be liable in tort), and the per diem payments made by the VA. GMC notes that the liabilities identified in Rule 46.12.304(2)(a), ARM, are instances where liable third parties make payments which are paid directly to and assignable by the patient...