Palm Manor Nursing Home, Inc. v. Rate Setting Commission

• Decision Date: 14 June 1971
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: PALM MANOR NURSING HOME, INC. v. RATE SETTING COMMISSION.

Page 823

270 N.E.2d 823

359 Mass. 652

PALM MANOR NURSING HOME, INC. v. RATE SETTING COMMISSION.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued April 7, 1971.

Decided June 14, 1971.

Colette Manoil, Boston, for petitioner.

Gregor I. McGregor, Asst. Atty. Gen. (Alan G. Macdonald, Asst. Atty. Gen., with him), for respondent.

Before TAURO, C.J., and SPIEGEL, REARDON, QUIRICO and BRAUCHER, JJ. BRAUCHER, Justice.

The Rate Setting Commission (the commission) allowed the plaintiff nursing home a per diem rate of $10.46 for 1967 to be paid by various agencies of the Commonwealth. The plaintiff sought judicial review of the commission's decision under G.L. c. 30A, § 14. The judge made rulings and an order for decree, and the final decree affirmed the decision of the commission. The plaintiff appeals under G.L. c. 30A, § 15.

Early in 1967, before opening, the plaintiff applied to the Board of Rate Setting for Convalescent or Nursing Homes and Rest Homes (the board) for the establishment of a per diem rate for publicly aided patients, and a temporary rate of $8.82 was set in March, 1967. The plaintiff promptly appealed and requested a hearing pursuant to G.L. c. 7, § 30L. On April 17, 1967, the board notified the plaintiff that it and other nursing homes listed were entitled to a rate of $9.43. The plaintiff opened late in April and was licensed by the Department of Public Health to accept a total of three public and private patients. The licensed number of patients was increased five times, reaching a total of seventy-nine patients late in November, 1967. The capacity of the home is 115 or 120 patients.

New rules and regulations effective July 1, 1967, provided a $10 rate for new homes. Nevertheless, the board on December 29, 1967, notified the plaintiff that it would be allowed a rate of $10.46, retroactive to the date of opening. The plaintiff again requested a hearing, and after a hearing in May, 1968, a hearing officer of the board submitted his finding in August, 1968, sustaining the $10.46 rate for 1967. Effective September 12, 1968, the board was abolished and the commission established. St.1968, c. 492. On November 18, 1968, the commission approved the $10.46 rate over the written objections of the plaintiff, and the bill for judicial review followed.

1. The governing statute was G.L. c. 7, § 30L, as amended through St.1963, c. 809, § 1: '* * * (The) board shall, after hearing, determine at least as often as annually the per diem rate or rates to be paid to * * * nursing homes * * * by the various departments, boards or commissions of the commonwealth * * * and may establish fair and reasonable classification or classifications of such rate or rates. Such rates shall be adequate and reasonable. The determination of the per diem rate or rates as provided in this section shall be deemed a 'regulation' as defined in paragraph (5) of section one of chapter thirty A * * *. If a person conducting a * * * nursing home * * * believes that the rate established under this section is inadequate or unreasonable as to such home, he may, within sixty days after the date such rate was established, file an appeal with the board for a determination of a rate for such * * * nursing home * * *.'

By St.1968, c. 492, § 3, these provisions and others were struck out and six new sections, G.L. c. 7, §§ 30K--30P, were inserted. Pending proceedings before the board were to be turned over to the newly created commission. St.1968, c. 492, § 25. Subsequent proceedings before the commission and judicial review in the Superior Court were conducted under the law as it stood before the 1968 revision, and we therefore do not consider the effect of the new G.L. c. 7, § 300, providing for an 'exclusive method of review of all rates.' See Massachusetts Gen. HOSP. V. RATE SETTING COMMN., MASS. , 269 N.E.2D 78^A.

As to the judge ruled, the provisions of § 30L quoted above describe two types of administrative action. First, the board is to determine annual per diem rates, using fair and reasonable classifications and setting adequate and reasonable rates. The determination is to be treated as a 'regulation' under G.L. c. 30A, § 1(5), and may thus be reviewed under G.L c. 30A, § 7, through a petition for declaratory relief under G.L. c. 231A. Compare, Massachusetts Gen. Hosp. v. Cambridge, 347 Mass. 519, 522, 198 N.E.2d 889; Springfield Hosp. v. Commissioner or Pub. Welfare, 350 Mass. 704, 710, 216 N.E.2d 440; Massachusetts Gen. Hosp. v. Commissioner of Admn., 353 Mass. 369, 374, 231 N.E.2d 543. Second, an individual nursing home may appeal for a determination of an individual rate for that home, claiming that the rate established generally is inadequate or unreasonable 'as to such home.' Such a determination is an adjudication rather than a regulation, and is reviewable under G.L. c. 30A, § 14.

2. We agree with the judge that the adjudicatory proceeding here under review was not held for the purpose of determining the validity of the board's regulations or the adequacy or reasonableness of the rates applicable to nursing homes generally. We therefore do not consider the plaintiff's general assault on the board's classification system, based largely on a study by the United States General Accounting Office. The plaintiff also asserts that various regulations of the board were invalid because not properly filed with the Secretary of State under G.L. c. 30, § 37, and c. 30A, § 5, or because there was no notice or hearing under G.L. c. 30A, § 2 or § 3. The fact that a regulation was not effective because not properly promulgated would prevent its use as a basis for the rate determination here under review. Massachusetts Gen. Hosp. v. Cambridge, 347 Mass. 519, 522--523, 198 N.E.2d 889. Massachusetts Gen. Hosp. v. Commissioner of Admn., 353 Mass. 369, 375, 231 N.E.2d 543. But the 'Rules and Regulations Governing the...