Lexington Nursing Home, Inc. v. Rate Setting Commission

• Decision Date: 29 January 1971
• Citation: 266 N.E.2d 317,358 Mass. 601
• Parties: LEXINGTON NURSING HOME, INC., et al. v. RATE SETTING COMMISSION.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 317

266 N.E.2d 317

358 Mass. 601

LEXINGTON NURSING HOME, INC., et al. v. RATE SETTING COMMISSION.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Dec. 9, 1970.

Decided Jan. 29, 1971.

Colette Manoil, Boston, for plaintiffs.

Harry P. Haveles, Sp. Asst. Atty. Gen., for defendant.

Before TAURO, C.J., and SPALDING, CUTTER, REARDON and QUIRICO, JJ.

TAURO, Chief Justice.

The plaintiffs Lexington Nursing Home, Inc. and Sudbury Nursing Home, Inc. appeal from the final decree dismissing their bill in equity which sought certain declaratory relief concerning statutes governing the Board of Rate Setting ¹ and concerning the 1968 regulations promulgated by the board. In essence the bill, which we find rather confusing, challenges the validity of certain portions of G.L. c. 7, §§ 30L and 30M, as well as the board's 1968 Regulation 2 which provides for access to information and data in the possession of the plaintiffs. ²

The trial judge found that plaintiffs without justification refused to furnish information sought by the board and wrongfully failed to comply with the board's request to make information available, and dismissed the bill. ³

An examination of the evidence clearly shows an interrelationship between the plaintiffs, the corporation which is under contract to manage the nursing homes, and the owners of the real estate occupied by the plaintiffs. The nursing homes, their management corporation and the owners of real estate occupied by the nursing homes substantially are controlled by Joseph F. Hill, Jr. A minute breakdown as to the entire ramification of this control would serve no useful purpose. Suffice it to say that in 1967 out of a gross income of $472,755 from the Lexington Nursing Home, Inc., approximately $215,500 went either to Hill individually or to his wife or to the companies that he controlled. He paid $144,000 in rent to himself as owner of the land and buildings occupied by that nursing home, $64,000 in management fees to the management corporation also controlled by him, and $7,500 to his wife. In Sudbury, Hill also exercised a substantial measure of ownership and control over the nursing home, the realty trust which owned the land and buildings occupied by the nursing home, and the corporation which managed its affairs.

We find no grounds for the plaintiffs' objections to the requirements set forth in G.L. c. 7, §§ 30L and 30M, or the 1968 regulations. The right under G.L. c. 7, §§ 30L and 30M, to investigate the cost structure of nursing homes is a power necessary for an agency established to determine a fair and reasonable rate for the Commonwealth to pay private nursing homes for publicly aided patients. Indeed, it would be unreasonable and possibly a breach of the public trust for the Commonwealth to accept at face value the alleged costs of doing business from a nursing home corporation when, as here, the transactions between the nursing home, their lessors, and their managers are not at arm's length. See Westland Housing Corp. v. Commissioner of Ins., 352 Mass. 374, 386--387, 225 N.E.2d 782. Regulation 2 and the RSB--4 and RSB--4A accounting forms to which the plaintiffs object are reasonably designed to elicit essential information pursuant to G.L. c. 7, § 30L, and we perceive no valid objection to them.

In these circumstances the trial judge correctly ruled that the plaintiffs' intentional failure to comply with the requirements of the board was wrongful. Having arrived at this decision the Superior Court, in the exercise of sound discretion correctly refused to render declaratory relief. G.L. c. 231A, § 3, provides: 'The court may refuse to render or enter a declaratory * * * decree where such * * * decree, if rendered or entered, would not terminate the uncertainty or...