Henry L. Campbell v. Barry Kohn
| Decision Date | 20 July 1983 |
| Docket Number | 83-LW-1926,CA81-10-0102 |
| Parties | HENRY L. CAMPBELL, et al., Plaintiffs-Appellees, v. BARRY KOHN, et al., Defendants-Appellants. CASE |
| Court | Ohio Court of Appeals |
G Michael Kirkman, Ohio Legal Rights Service, 8 East Long Street, 6th Floor, Columbus, Ohio 43215, for Plaintiffs-Appellees.
Geoffrey E. Webster, Suite 2610, 50 West Broad Street, Columbus, Ohio 43215; H. Vincent Walsh, Front & Ludlow Streets, P. O. Box 187, Hamilton, Ohio 45012; and Nancy J. Marakas, Assistant Attorney General, 26th Floor, 30 East Broad Street, Columbus Ohio 43215, for Defendants-Appellants.
This cause came on to be heard upon the appeal, the transcript of the docket, journal entries and original papers from the Court of Common Pleas of Butler County, Ohio, the transcript of the proceedings, and the briefs and oral arguments of counsel.
Now therefore, the assignments of error having been fully considered, are accordingly passed upon in conformity with App. R. 12(A) as follows:
Tri-County Extended Care Facility is an Ohio Corporation certified as a Medicaid provider by the Ohio Department of Health. Under the Medicaid program, Tri-County furnishes health care services to patients with various disabilities placed in the facility by the Ohio Department of Mental Retardation and Developmental Disabilities (DMR). Tri-County is certified as a dual facility for Medicaid purposes under R.C. Chapter 3721, which means it is qualified as a skilled nursing care (SNC) facility and as an intermediate care facility (ICF). Although Tri-County cares for a number of mentally retarded patients and has indicated a desire to become certified as an intermediate care facility for mentally retarded patients (ICF-MR), it has never applied for or received such certification.
In filling its role of health care provider, Tri-County has entered into two contracts with two Ohio state agencies. First, Tri-County and the Ohio Department of Public Welfare (DPW) have between them a contract known as a "provider agreement". DPW is authorized to make rules for the administration and distribution of Medicaid funds. These funds are distributed, through provider agreements, on a prospective reasonable cost basis, based on 90 day cost reports submitted by participating health care facilities. If the prospective rate submitted by the provider fails to cover the actual costs incurred by the institution during the period of time covered by the provider agreement, it may not be amended. Further, Medicaid funds are subject to a "payment in full provision", which means that the provider may not charge any other source for services covered under the Medicaid program. Second, Tri-County has contracted with DMR via what is known as a "purchase of service agreement". This type of agreement is routinely used to reimburse providers who do not participate in the Medicaid program operated by DPW. As Tri-County was receiving Medicaid funds, the purchase of service agreement was contemplated by the parties to cover only those services furnished by Tri-County not covered by Medicaid payments.
On or about August 8, 1980, Tri-County notified all of its mentally retarded patients that they would be transferred from the facility within thirty (30) days. The reasons for the transfers, as specified in the notice, were (1) nonpayment of charges due the home, and (2) misrepresentation of facts material to admission by representatives of DMR. The patients responded to the notice by initiating the instant litigation in the form of a declaratory judgment action and motion for a temporary restraining order filed on September 11, 1980. Named as defendants were Barry Kohn, individually and in his capacity as Administrator of Tri-County; Tri-County; Rudy Magnone, individually and in his capacity as Director of DMR; Kenneth Creasey, individually and in his capacity as Director of DPW; and Thomas Ferguson, individually and in his capacity as State Auditor. The suit sought a judgment declaring the right of the patients as a class to remain at Tri-County, and asked the court to resolve the financial differences between Tri-County, DMR, and DPW, which were stated by Tri-County to be the cause of the discharge action complained of.
Defendant Rudy Magnone filed an answer and cross-claim against co-defendants Barry Kohn and Tri-County stating that DMR had paid Tri-County all monies due under the purchase of service agreement, and that Tri-County had received additional duplicative payments from DMR for services that were already covered by Medicaid funds furnished by DPW. Relief was requested in the amount of $85,000 plus interest as damages for Tri-County's breach of the contract.
Defendants Barry Kohn and Tri-County also filed an answer and cross-claim to the plaintiffs' complaint. The cross-claim asserted that DMR Director Magnone breached the purchase of service agreement between DMR and Tri-County by failing to pay for services rendered by Tri-County to mentally retarded patients not covered by Medicaid funds received from DPW. The cross-complaint further alleged that Barry Kohn and Tri-County relied to their detriment on representations made by Magnone and his staff to the effect that DMR would pay the facility a per diem rate above what was being received from DPW. Based on these assurances, Tri-County continued to provide care and habilitation services to mentally retarded patients. Relief requested included a declaratory judgment stating that the purchase of service agreement was valid and enforceable, and a mandatory injunction ordering Magnone to pay the declarants the sum of $700,000.
The trial court held that the plaintiff patients had a right to remain at Tri-County Facility. After segregating the above cross-claims from the original action pending further proceedings, the trial court further found that $239,657 was due Tri-County from DMR under the purchase of service agreement for services not covered by Medicaid provided to mentally retarded residents. DMR filed a notice of appeal on October 19, 1981, and Tri-County cross appealed six (6) days later. A motion by DMR to stay execution of the judgment pending this appeal was granted.
The following assignments of error have been presented: BY APPELLANT (DMR):
BY CROSS-APPELLANTS (Barry Kohn and Tri-County):
THE LOWER COURT ERRED AS A MATTER OF FACT AND LAW IN NOT FINDING APPELLANT, THE OHIO DEPARTMENT OF MENTAL RETARDATION AND DEVELOPMENTAL DISABILITIES LIABLE FOR THE FULL AMOUNT OF ACTUAL AND PROVEN DAMAGES OF $613,420.29 AS REIMBURSEMENT DUE TRICOUNTY EXTENDED CARE CENTER, INC., PURSUANT TO THE TERMS OF THE CONTRACT.
This Appellate Court, after hearing oral argument of the assignments of error above, requested supplemental briefs on the issue of subject matter jurisdiction. This request produced the following supplemental assignment of error:
The threshold question which must be addressed before the various assignments of error can be considered is jurisdiction. Because several state agencies are defendants in the instant litigation, there is a possibility that this suit falls within the exclusive jurisdiction of the Court of Claims. Upon careful consideration of this issue we conclude that the original complaint was properly within the jurisdiction of the Butler County Court of Common Pleas, but the cross-claims were not because they involve state funds.
Ignoring for the moment the cross-claims filed by various defendants, it is clear that the original suit was a proper action for declaratory relief properly brought in a court of common pleas. A declaratory judgment is a ruling that states the rights of parties or expresses the opinion of the court without ordering performance of any kind from either party. Miami Valley Paper Co. v. Intercontinental Paper Corp., Warren County No. 66 (12th Dist. April 27, 1983). Declaratory relief is properly granted when (1) a real controversy exists between adverse parties, (2) the controversy is justifiable in character, and (3) speedy relief is necessary for the preservation of rights which would otherwise be impaired or lost. American Life and Accident Ins. Co. v. Jones (1949), 152 Ohio St. 287, 296, 89 N.E.2d 301, 306.
In the action below, plaintiffs, who are patients at Tri-County Extended Care Facility, received notices indicating that they were to be discharged from the facility in thirty (30) days. The patients, who considered Tri-County their home, brought a declaratory judgment suit to determine the nature of their right to remain at the facility. It was known to the plaintiffs that the several defendants had...
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