Livingston Manor, Inc. v. Department of Social Services, Div. of Family Services, WD

• Decision Date: 23 April 1991
• Docket Number: No. WD,WD
• Citation: 809 S.W.2d 153
• Parties: 1 NDLR P 321 LIVINGSTON MANOR, INC., d/b/a Livingston Manor Care Center, and Ashley Manor, Inc., d/b/a Ashley Manor Convalescent Center, Appellants, v. DEPARTMENT OF SOCIAL SERVICES, DIVISION OF FAMILY SERVICES, Division of Medical Services, State of Missouri, Respondents. 43229.
• Court: Missouri Court of Appeals

Page 153

809 S.W.2d 153

1 NDLR P 321

LIVINGSTON MANOR, INC., d/b/a Livingston Manor Care Center, and Ashley Manor, Inc., d/b/a Ashley Manor Convalescent Center, Appellants, v. DEPARTMENT OF SOCIAL SERVICES, DIVISION OF FAMILY SERVICES,

Division of Medical Services, State of Missouri,

Respondents.

No. WD 43229.

Missouri Court of Appeals,

Western District.

April 23, 1991.

Motion for Rehearing and/or Transfer to Supreme Court

Denied May 28, 1991.

Harvey M. Tettlebaum, Husch, Eppenberger, Donohue, Cornfeld & Jenkins, Jefferson City, for appellants.

Edwin F. Moats, Jefferson City, for respondents.

Before BERREY, P.J., and FENNER and ULRICH, JJ.

ULRICH, Judge.

Livingston Manor, Inc. (Livingston) and Ashley Manor, Inc. (Ashley) appeal the Administrative Hearing Commission's decision dismissing their complaints. Livingston and Ashley, two corporations operating nursing homes within Missouri, sought participation in Missouri's medicaid program. Livingston and Ashley submitted medicaid reimbursement requests to the Department of Social Services (DSS) and were granted most, but not all, of their respective requests. Both corporations later realized their facilities were encountering costs for which DSS allows reimbursement but costs that were not set forth in their previously submitted requests for reimbursement. Livingston and Ashley filed complaints with the Commission contending they were entitled to reimbursement for those allowable costs not included in their initial requests. The Commission dismissed both complaints for lack of subject matter jurisdiction. The Commission's decision is affirmed.

DSS is the state agency charged with the administration of Missouri's medicaid program pursuant to 42 U.S.C. § 301 et seq., and chapter 208, RSMo 1986. Pursuant to state regulation, DSS reimburses long-term care facilities for services rendered to medicaid recipients. 13 CSR 40-81.080. ¹ Facilities desiring to establish a reimbursement rate for providing services to medicaid recipients must submit a written request for a per diem reimbursement rate and a budget to DSS. A facility's permanent per diem reimbursement rate is then calculated based upon the allowable costs encountered by the facility as reflected in its submitted request and budget. If the facility's claim for reimbursement is denied or not acted upon with reasonable promptness by DSS, the facility is entitled to a hearing before the Administrative Hearing Commission. § 208.156.2 RSMo 1986.

Livingston is a Missouri corporation doing business as Livingston Manor Care Center, a 94-bed nursing home located in Chillicothe, Missouri. Livingston is licensed as a skilled nursing facility and operated in Missouri for fourteen years without participating in the state's medicaid program. However, as many of Livingston's residents exhausted their financial resources, Livingston recognized an increasing need to become eligible for reimbursement under Missouri's medicaid program.

Livingston is operated by Juckette Management Company (Juckette), a company that manages nursing homes located in Missouri and Iowa. Juckette's accountants were familiar with Iowa's medicaid program but allegedly had no experience with Missouri's program. Juckette's accountants assisted in preparing Livingston's budget which was submitted to DSS as required by 13 CSR 40-81.081. Livingston submitted its budget to DSS for purposes of determining the facility's permanent per diem medicaid reimbursement rate.

The budget that Livingston submitted to DSS requested a permanent per diem medicaid reimbursement rate of $37.79. DSS adjusted Livingston's proposed rate by $2.29 and approved a permanent per diem reimbursement rate of $35.50. However, Livingston's proposed rate did not include requested reimbursement for certain allowable costs, including owner's compensation/home office costs, return on equity, minimum utilization, fringe benefits, and inflation for historical costs. Thus, the permanent per diem rate established by DSS did not reflect reimbursement for these otherwise allowable costs because they were omitted from Livingston's submitted budget. According to Livingston, Juckette's accountants, familiar only with Iowa's program, did not know these costs were eligible for reimbursement under Missouri's program. Livingston alleges that, if granted, these allowable costs omitted from its initial request would result in a $2.23 increase in the facility's per diem reimbursement rate.

Ashley is a Missouri corporation doing business as Ashley Manor Convalescent Center, a 52-bed nursing home located in Boonville, Missouri. Ashley operated as an intermediate care facility in Missouri for fourteen years prior to September 1985, when the facility was licensed as a skilled nursing facility. Ashley recognized an increasing need to become eligible for medicaid reimbursement as its residents depleted their financial resources. Ashley is also operated by Juckette and Juckette's accountants similarly assisted in preparing Ashley's budget. Ashley submitted this budget to DSS to assist in establishing the facility's permanent per diem medicaid reimbursement rate.

Ashley's budget requested a permanent per diem reimbursement rate of $29.29. DSS adjusted Ashley's proposal by $2.07 and approved a permanent per diem medicaid reimbursement rate of $27.21. Subsequent to this determination, Ashley submitted additional data to DSS and the facility's rate was increased to $29.24 per diem. However, Ashley later determined that its proposed budget also omitted several allowable costs, including owner's compensation/home office expense, return on equity, real estate increase because of reassessment, commercial laundry services, minimum utilization, fringe benefits and an inflation factor. Juckette's accountants were unaware that Missouri allowed reimbursement for several of the omitted costs and others were merely overlooked by Juckette in preparing Ashley's budget. According to Ashley, these allowable costs, if granted, would result in a $4.10 increase in its permanent per diem medicaid reimbursement rate.

Livingston and Ashley filed complaints with the Administrative Hearing Commission contending they were entitled to reimbursement for the allowable costs omitted from their respective reimbursement requests submitted to DSS. The Commission, following a hearing, dismissed both parties' complaints for lack of subject matter jurisdiction. In particular, the Commission determined that it lacked jurisdiction under § 208.156.2 because the facilities had not requested that DSS reimburse them for the allowable costs which were omitted from their budgets and DSS had not denied the facilities reimbursement for these omitted costs. Livingston and Ashley appealed the Commission's decision to the Circuit Court of Cole County, Missouri. The circuit court affirmed the Commission's decision.

On appeal, Livingston and Ashley contend that the Commission is vested with subject matter jurisdiction over their complaints pursuant to § 208.156.2, which provides:

Any person authorized under section 208.153 to provide services for which benefit payments are authorized under section 208.152 whose claim for reimbursement for such services is denied or is not acted upon with reasonable promptness shall be entitled to a hearing before the administrative hearing commission pursuant to the provisions of chapter 161, RSMo.

Livingston and Ashley contend that the Commission is vested with subject matter jurisdiction because DSS denied a portion of their respective claims by making downward...