Pentucket Manor Chronic Hosp., Inc. v. Rate Setting Com'n

• Decision Date: 12 March 1985
• Citation: 475 N.E.2d 1201,394 Mass. 233
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: , Medicare & Medicaid Guide P 34,567 PENTUCKET MANOR CHRONIC HOSPITAL, INC. et al. 1 v. RATE SETTING COMMISSION et al. 2

Page 1201

475 N.E.2d 1201

394 Mass. 233, Medicare & Medicaid Guide P 34,567

PENTUCKET MANOR CHRONIC HOSPITAL, INC. et al. ¹ v. RATE SETTING COMMISSION et al. ²

Supreme Judicial Court of Massachusetts,

Suffolk.

Argued Nov. 5, 1984.

Decided March 12, 1985.

Ellen L. Poster (Stanley M. Poster, Boston, with her), for plaintiffs.

Ellen L. Janos, Asst. Atty. Gen., for defendants.

Before HENNESSEY, C.J., and WILKINS, LIACOS, ABRAMS and LYNCH, JJ.

LIACOS, Justice.

We granted further appellate review to the plaintiffs, three proprietary chronic-care hospitals (hospitals). They claim error in the issuance of an Appeals Court order which summarily dismissed their appeal on the ground that the filing of the appeal was untimely. In addition, the hospitals allege error by the judge of the Superior Court in his determination of the merits of their claim.

The defendant Rate Setting Commission (commission) had reduced previously set rates of Medicaid reimbursement for the plaintiff hospitals. The hospitals appealed the commission's action to the Division of Hearings Officers (division). See G.L. c. 6A, § 36. After the division affirmed the rate reductions, the hospitals sought review in the Superior Court. See G.L. c. 6A, § 36; G.L. c. 30A, § 14. On January 4, 1983, a Superior Court judge entered a judgment for the commission, based upon a recommendation by a special master that the decision of the division be affirmed. ³

The hospitals moved to vacate the judgment on January 12, 1983. The judge denied the motion on April 4, 1983. On April 29, 1983, the hospitals filed a notice of appeal. The Appeals Court declined to reach the merits of the hospitals' claims because the hospitals had failed to file their notice of appeal within sixty days of the entry of judgment on January 4, 1983.

The Appeals Court treated the hospitals' motion to vacate as a motion under Mass.R.Civ.P. 60(b), 365 Mass. 828 (1974), ⁴ the filing of which does not toll the running of the sixty-day appeal period under Mass.R.A.P. 4(a), as amended, --- Mass. --- (1985). The hospitals contend that their appeal was timely filed within ten days after entry of judgment, and that their motion falls under Mass.R.Civ.P. 59(e), 365 Mass. 827 (1974), ⁵ which tolls the running of the sixty-day appeal period.

There are no Massachusetts decisions which address the issue whether a motion to vacate, if served within ten days of judgment, should be treated as a rule 59(e) motion to alter or amend judgment, or as a rule 60(b) motion for relief from judgment. The only decision of this court which has touched upon this issue assumed a motion to reconsider was a rule 60 motion. Wolfberg v. Hunter, 385 Mass. 390, 392 n. 4, 432 N.E.2d 467 (1982). In the instant case, both the trial judge and the Appeals Court treated the hospitals' motion to vacate as one for reconsideration, and cited Wolfberg, supra, to place it under rule 60.

The Reporters' Notes to rule 59(e) state that the rule encompasses a motion for rehearing, reconsideration, or vacation. Reporters' Notes to Mass.R.Civ.P. 59(e), Mass.Ann.Laws, Rules of Civ.P. at 560 (Law.Co-op.1982). ⁶ We believe the better approach, and that taken by some Federal courts, is that substance, not labels, should control in determining whether a postjudgment motion is a rule 59(e) motion or a rule 60 motion. See, e.g., Sunstream Jet Express, Inc. v. International Air Serv. Co., 734 F.2d 1258, 1273 (7th Cir.1984); Smith v. United States Parole Comm'n, 721 F.2d 346, 348 (11th Cir.1983). ⁷ The hospitals alleged that (1) the master's report adopted by the Superior Court judge was deficient in some findings, (2) the master misunderstood the purpose of the audit procedure, and (3) the master's conclusions were not supported by the record. The hospitals had raised these same errors in a prejudgment motion. The only provision of rule 60(b), into which the motion to vacate arguably could fit, is rule 60(b)(6), which provides for motions for "any other reason justifying relief from the operation of the judgment." See note 4 supra.

"As a general principle, we apply to our rules of civil procedure the construction given to the cognate Federal rules." Chavoor v. Lewis, 383 Mass. 801, 806 n. 5, 422 N.E.2d 1353 (1981). Rule 60 does not provide for general reconsideration of an order or a judgment. Blair v. Delta Air Lines, Inc., 344 F.Supp. 367, 368 (S.D.Fla.1972). Nor does it provide an avenue for challenging supposed legal errors, nor for obtaining relief from errors which are readily correctible on appeal. Id., citing Barron & Holtzoff, 3 Federal Practice and Procedure § 1322 (1958). Roque v. Redlands, 79 F.R.D. 433, 435 (C.D.Cal.1978). Relief under rule 60(b)(6) will be granted only in extraordinary circumstances. Artco, Inc. v. DiFruscia, 5 Mass.App. 513, 517, 365 N.E.2d 832 (1977). Larsen v. International Business Machs. Corp., 87 F.R.D. 602, 604 (E.D.Pa.1980). Roque, supra. 7 Moore's Federal Practice par. 60.27, at 60-274 (2d ed. 1982). 11 C.A. Wright & A.R. Miller, Federal Practice and Procedure § 2864, at 219 (1973), and cases cited therein. The circumstances of the instant case cannot be considered so extraordinary as to bring them within the purview of rule 60(b)(6).

Where doubt exists as to the proper characterization of a postjudgment motion, some courts simply treat all timely-filed motions which call into question the correctness of a judgment as rule 59(e) motions. See Western Indus., Inc. v. Newcor Canada Ltd., 709 F.2d 16, 17 (7th Cir.1983); Dove v. Codesco, 569 F.2d 807, 809 (4th Cir.1978); Foman v. Davis, 292 F.2d 85, 87 (1st Cir.1961). Cf. Seshachalam v. Creighton Univ. School of Medicine, 545 F.2d 1147 (8th Cir.1976). We find this approach consistent with our view described in Page v. New England Tel. & Tel. Co., 383 Mass. 250, 252, 418 N.E.2d 1217 (1981), that rule 59(e) is designed to correct judgments which are erroneous because they lack legal or factual justification. ⁸ We conclude that, because the hospitals' motion to vacate was served within ten days of judgment and because the relief sought was correction of errors of law, it properly can be considered a rule 59(e) motion. Thus, the appeal was timely. We proceed to consider the merits of the plaintiff's appeal.

We give a brief summary of the facts and of the Medicaid program, necessary to an understanding of the substantive issues. Although the Federal government and each participating State jointly fund the Medicaid program, each State designs its own program within certain Federal guidelines. See 42 U.S.C. § 1396 et seq. (1976 & Supp. III 1979). Massachusetts participates in the Medicaid program, and the Department of Public Welfare is charged with the responsibility to ensure that the program is administered in accordance with Federal law. See G.L. c. 118E, §§ 4, 6. During the years relevant to this appeal, participating States submitted plans for approval by the Secretary of the Department of Health and Human Services, which were required to conform to the requirements of 42 U.S.C. § 1396a and regulations promulgated thereunder. Federal regulations established the following criteria for States electing not to adopt Title XVIII of the Social Security Act (Medicare) systems of repayment: ⁹ Incentives for efficiency and economy; reimbursement on a reasonable cost basis; and reimbursement not exceeding that allowable under Title XVIII standards and principles of cost reimbursement. See 45 C.F.R. 250.30(a)(2) (1969). ¹⁰

In 1974, the commission adopted a new system of reimbursement for hospitals through the promulgation of Regulation 74-1, under the authority of G.L. c. 6A, § 32. Under the regulation, the commission separately calculates a rate for each hospital prior to the beginning of the rate year. The rate is based on operating costs reported by each hospital for its "base" year (two years prior to the rate year), and increased by an inflation factor. Added to this figure are a hospital's base year "non-operating" expenses and any additional allowance resulting from administrative adjustments. ¹¹ If a hospital's actual rate year expenses are less than projected, it need not return the overage. On the other hand, if its actual expenses are more than projected, it is not reimbursed for the difference.

The commission originally adopted the rates here at issue by using cost information contained in forms known as HCF-100 and HCF-400 submitted by each hospital to the commission. After the rates were set, the commission conducted audits on every HCF-100 and HCF-400 submitted by the hospitals during the four-year period of 1974-1977. The commission had received information from the Department of Public Health that the hospitals' administrative salaries included in the administrative expense category on the forms exceeded maximums set by Federal guidelines. ¹² See 20 C.F.R. 405 et seq. (1968); Provider Reimbursement Manual. ¹³ The commission determined that the owner-administrators salaries as reported by the hospitals on HCF-100 were excessive, reduced each allowance for "administration" cost, and reissued the rates at lower amounts. ¹⁴

The hospitals do not contest the finding of excessiveness of their administrative costs claims, nor do they contest the power of the commission to establish reasonable levels of compensation for owner-administrators. Rather, they argue that, for a variety of reasons, redetermination of their Medicaid payment rates was improper. ¹⁵ They first contend that redetermination violates the prospective system of rate setting established in G.L. c. 6A, § 32. Section 32, by its plain words, establishes a "prospective" system for rate setting. The statute is silent, however, as is the legislative history, as to whether or when rate redeterminations such as the one here at issue may be made. ¹⁶

When the meaning of a statute is brought into question, a court properly should read other sections and should construe them together, ...