In re Chase Home for Children

• Decision Date: 08 June 2007
• Docket Number: Nos. 2006–070,2006–219.,s. 2006–070
• Citation: 155 N.H. 528,926 A.2d 287
• Parties: Petition of CHASE HOME FOR CHILDREN & a. (New Hampshire Department of Health and Human Services).
• Court: New Hampshire Supreme Court

155 N.H. 528

926 A.2d 287

Petition of CHASE HOME FOR CHILDREN & a. (New Hampshire Department of Health and Human Services).

Nos. 2006–070

2006–219.

Supreme Court of New Hampshire.

Argued: Jan. 11, 2007.

Opinion Issued: June 8, 2007.

Orr and Reno, P.A., of Concord (Lisa Snow Wade on the brief and orally), for the petitioners.

Kelly A. Ayotte, attorney general (Suzan M. Lehmann, senior assistant attorney general, on the brief and orally), for the New Hampshire Department of Health and Human Services.

DUGGAN, J.

The petitioners, Chase Home for Children, Child and Family Services, Hannah House, NFI North, Odyssey House, Orion House and Pine Haven Boys Center, filed two petitions for writ of certiorari, see Sup.Ct. R. 11, challenging decisions by two RSA 170–G:4–a Hearing Panels (hearing panels) pertaining to their state fiscal year (FY) 2004 and 2005 rate appeals. We affirm in part and reverse in part.

I. Factual Background

The following facts are contained in the record. The petitioners are New Hampshire residential childcare providers who furnish residential placements for children who are delinquents, see RSA ch. 169–B (2002 & Supp.2006); children who have been abused, see RSA ch. 169–C (2002 & Supp.2006); and children in need of services, see RSA ch. 169–D (2002 & Supp.2006). The New Hampshire Department of Health and Human Services (DHHS) is obligated to set annual rates at which such residential childcare providers will be compensated by the State for the services they provide. See RSA 170–G:4, XVII, XVII-a (2002). In order to meet this obligation, the commissioner of DHHS adopted Residential Child Care Facilities Rate Setting Rules (rate setting rules). See RSA 170–G:5 (2002); N.H. Admin. Rules, He–C 6422. Although the rate setting rules were adopted in 2002, they did not become effective until the start of FY 2004.

The New Hampshire Division for Children, Youth & Families (DCYF) computes the residential childcare facility rates pursuant to the methodology set forth in Rule 6422.22. See N.H. Admin. Rules, He–C 6422.04. After the rates are computed, they take effect at the beginning of the next state fiscal year, and remain in effect for twelve months. Id. 6422.22(b)-(c). Providers may challenge the rates by filing an appeal. See RSA 170–G:4–a (2002); N.H. Admin. Rules, He–C 6422.25.

A. The FY 2004 Rate Appeals

After DCYF set the FY 2004 residential rates, the petitioners appealed their FY 2004 rates, arguing that DCYF did not calculate the rates in accordance with Rule 6422.22. Pursuant to RSA 170–G:4–a, a three-person panel was convened to hear the petitioners' rate appeal. On August 30 and 31, 2004, the panel held an evidentiary hearing to determine whether DCYF properly set the rates for the petitioners.

On December 15, 2004, the panel issued a decision and determined that the petitioners had proved by a preponderance of the evidence that DCYF failed to comply with various provisions of Rule 6422. In particular, the panel concluded that DCYF erred by simply carrying forward the FY 2003 rates instead of calculating new rates in accordance with newly enacted Rule 6422. The panel directed DCYF to recalculate the FY 2004 rate for each petitioner by February 4, 2005, and provided the petitioners with a deadline for requesting a supplemental hearing to challenge DCYF's recalculated rates.

On February 18, 2005, the petitioners requested a supplemental hearing because: (1) they disagreed with DCYF's recalculation of the rates; and (2) DCYF indicated that it would not actually pay the petitioners based upon the recalculated rates due to "fiscal and legal constraints on the Department's ability and authority to expend funds in excess of those that were appropriated by the legislature." Accordingly, a supplemental hearing was held on April 4 and 6, and May 23, 2005.

On August 17, 2005, the panel issued its supplemental and final decision on the petitioners' FY 2004 rate appeals. With respect to each petitioner, the panel reviewed the evidence and determined the correct FY 2004 rate, in accordance with Rule 6422. For each petitioner the rate was increased. The panel further concluded that the revised FY 2004 rates should have become effective at the beginning of FY 2004. However, the panel determined that it did not have the legal authority to order DCYF to make retroactive payments at the recalculated rate levels. The panel stated:

The relevant statutes ( RSA 170–G:4, XVII and XVII-a, and RSA 170–G:4–a ), the He–C 6422 Rules, and the scope of this panel's authority have not yet been interpreted by the [New Hampshire] Supreme Court. Consequently, the Panel is constrained from ordering retroactive relief in these consolidated appeals. Any such relief must be sought by [the petitioners] through the New Hampshire courts or legislature.

The petitioners filed a joint motion for reconsideration on September 14, 2005. Although the petitioners did not challenge the amount of the FY 2004 rates the panel had determined for each of them, the petitioners argued that the panel should have ordered retroactive application of the recalculated rates, and that the failure to do so amounted to an unconstitutional taking of their financial resources. The panel denied the motion.

B. The FY 2005 Rate Appeals

While the petitioners were pursuing the appeal of their FY 2004 rates, DCYF set the FY 2005 residential rates. Thereafter, the petitioners appealed their FY 2005 rates, arguing that DCYF did not set the rates using the methodology required by Rule 6422, but instead simply carried over the FY 2004 rates without analyzing the petitioners' FY 2005 budget requests. As with the FY 2004 rate appeal, a three-person panel conducted a hearing in January 2005. At the hearing, the parties stipulated that DCYF did not fully comply with certain provisions of Rule 6422 when it established the FY 2005 rates for the petitioners.

On March 9, 2005, the panel issued a written decision ruling that the FY 2005 rates set by DCYF were not calculated in accordance with Rule 6422, and ordering DCYF to recalculate them for each petitioner by March 24, 2005. Thereafter, the panel ordered the parties to meet to determine whether the differences—if any—in their rate proposals could be resolved. The panel stated that supplemental hearings would be held on April 11 and 18, 2005, if the parties failed to reach an agreement by April 1, 2005.

The parties were not able to reach an agreement regarding the FY 2005 rates by April 1. However, on April 7 they informed the panel that they had reached an agreement regarding what the FY 2005 rates would have been had DCYF fully complied with Rule 6422. In spite of this agreement, DCYF informed the panel that it had no intention of waiving any arguments pertaining to its ability or authority to reimburse the petitioners at the agreed-upon rates. On April 11, 2005, a brief hearing was held to permit the parties to introduce the agreed-upon rate revisions into evidence and to hear offers of proof and testimony regarding calculation of "units of service" for each petitioner.

On May 26, 2005, the panel issued its final decision on the petitioners' FY 2005 rate appeals. It determined that the agreed-upon FY 2005 rates were calculated in accordance with Rule 6422. Further, it ruled that it did not have the legal authority to order DCYF to make retroactive payments at the revised rate levels. However, it concluded that it did have the authority to order DCYF to reimburse the petitioners at the revised rate levels for services performed during June 2005, which was the final month of FY 2005, provided that sufficient funds appropriated to DCYF for residential services were available. If, however, the available funds were insufficient to fully reimburse the petitioners at the revised FY 2005 rate levels for June, the panel directed DCYF to establish a "reasonable priority or classification system" to facilitate the distribution of available funds among the petitioners. The petitioners filed a motion for reconsideration on June 24, 2005, which the hearing panel denied on December 28, 2005. In spite of the hearing panel's decision, DCYF neither paid the petitioners for services provided in June 2005 at the recalculated rate, nor established a "reasonable priority or classification system" to facilitate the distribution of available funds to the petitioners.

The petitioners then filed the two petitions here at issue, which were consolidated. The petitioners argue that: (1) the hearing panels erred when they determined that they were not authorized to order DHHS to make retroactive rate payments; (2) the 2005 hearing panel erred when it determined that the petitioners' remedy was limited to reimbursement at the revised FY 2005 rate levels for one month only, contingent upon whether there were sufficient appropriations available; and (3) they were unconstitutionally deprived of financial resources. The petitioners also seek costs and reasonable attorney's fees.

II. Discussion

Review on certiorari is an extraordinary remedy, usually available only in the absence of a right to appeal, and only at the discretion of the court. Petition of State of N.H. (State v. Campbell), 152 N.H. 515, 517, 880 A.2d 397 (2005). Because there is no statutory provision for appellate review of the hearing panels' decisions on the petitioners' rate appeals, a petition for a writ of certiorari is the proper vehicle for obtaining review. Petition of Perkins, 147 N.H. 652, 653–54, 798 A.2d 596 (2002). Our review of an administrative agency's decision on a petition for certiorari is limited to determining whether the agency has acted illegally with respect to jurisdiction, authority or observance of the law or has unsustainably exercised its discretion or acted arbitrarily, unreasonably or capriciously. Id. at 654, 798 A.2d 596; cf. State v. Lambert, 147 N.H. 295, 296, 787 A.2d 175 (2001) (explaining the "unsustainable exercise of discretion" standard). We exercise our power to...