Perkins v. Dept. of Medical Assistance

• Decision Date: 12 October 2001
• Docket Number: No. A01A2505.,A01A2505.
• Parties: PERKINS et al. v. DEPARTMENT OF MEDICAL ASSISTANCE.
• Court: Georgia Court of Appeals

555 S.E.2d 500

252 Ga. App. 35

PERKINS et al. v. DEPARTMENT OF MEDICAL ASSISTANCE.

No. A01A2505.

Court of Appeals of Georgia.

October 12, 2001.

Ralph S. Goldberg, Decatur, for appellants.

Thurbert E. Baker, Atty. Gen., Dennis R. Dunn, Deputy Atty. Gen., William C. Joy, Senior Asst. Atty. Gen., Per B. Normark, Asst. Atty. Gen., for appellee.

ELDRIDGE, Judge.

In 1996, Larry Perkins d/b/a Royal Lion Transportation and Diane Finney d/b/a Executive Nonemergency Transportation were contract providers of nonemergency medical transportation services for indigents with the Georgia Department of Medical Assistance.¹ These plaintiffs sued DMA over the method used by it to calculate amounts owed for such transportation. In 1996, the plaintiffs were audited using a "straight line" audit method, which resulted in the denial of payment of some of their charges. Royal Lion previously brought suit to adjudicate DMA's use of the straight line audit, which resulted in an award of $26,526.93.² Executive neither used the administrative appeal process nor otherwise challenged the results of the 1996 audit then, but seeks to do so now in this action.

DMA answered and moved for either summary judgment or dismissal. The trial court granted summary judgment as to both plaintiffs. Executive failed to exhaust administrative remedies available below, and therefore, the superior court lacked subject matter jurisdiction to consider any suit against DMA. The trial court should have dismissed Executive under OCGA § 9-11-12(b)(1) for lack of subject matter jurisdiction as a defense in abatement rather than grant summary judgment on the merits; therefore, the judgment as to Executive is ordered vacated and an order of dismissal without prejudice entered instead. As to Royal Lion, it previously litigated the same issues and won a substantially smaller damage award than it seeks now; res judicata bars the relitigation of such issues; and the grant of summary judgment is affirmed as to Royal Lion.

1. "[A] party aggrieved by a state agency's decision must raise all issues before that agency and exhaust available administrative remedies before seeking any judicial review of the agency's decision" by seeking equitable or declaratory relief. Cerulean Cos. v. Tiller, 271 Ga. 65, 66(1), 516 S.E.2d 522 (1999); see also OCGA § 50-13-19(a); Brogdon v. State Bd. of Veterinary Medicine, 244 Ga. 780, 781, 262 S.E.2d 56 (1979); Irvin v. Jenkins, 233 Ga. 16, 209 S.E.2d 610 (1974). It must be remembered that the constitutional separation of powers between the executive branch and the judicial branch prevents courts from involvement in review of administrative decisions unless there exists specific legislative empowerment for the judiciary to act regarding executive branch functions; when such delegation of power exists, appeals to the courts must follow such statutory procedures as a condition precedent to obtaining subject matter jurisdiction, because such conferred powers over executive branch functions are statutorily circumscribed. See Bentley v. Chastain, 242 Ga. 348, 349-352(1), 249 S.E.2d 38 (1978); Moreton Rolleston, Jr. Living Trust v. Glynn County Bd. of Tax Assessors, 240 Ga.App. 405, 408-409(2)(a), 523 S.E.2d 600 (1999); see also Dept. of Transp. v. City of Atlanta, 260 Ga. 699, 702-703(1), 398 S.E.2d 567 (1990).

Where there are constitutional or other statutory rights that give the courts original jurisdiction over a matter in which the executive branch has acted, the courts may act independently from appeals. See Bentley v. Chastain, supra at 352, 249 S.E.2d 38; Rolleston v. Glynn County Bd. of Tax Assessors, supra at 408, n. 2, 523 S.E.2d 600. "The mere existence of an unexhausted administrative remedy does not, standing alone, afford a defendant an absolute defense to the institution of a legal action." Hunnicutt v. Ga. Power Co., 168 Ga.App. 525, 526(1), 309 S.E.2d 862 (1983). When the administrative remedy is optional, a litigant is not required to exhaust that remedy before seeking redress in the courts of a legal cause of action. Id. at 526, 309 S.E.2d 862; see also Motor Finance Co. &c. v. Harris, 150 Ga.App. 762, 765(4), 258 S.E.2d 628 (1979). However, "`[w]here the question involved is within the jurisdiction of an administrative agency and the question demands the exercise of administrative discretion requiring the special knowledge and experience of the agency, no action for damages will lie prior to a decision by the agency.'" Bailey v. Wilkes, 162 Ga. App. 410, 414(2), 291 S.E.2d 418 (1982); see also Douthit v. State of Ga., 180 Ga.App. 464, 466, 349 S.E.2d 493 (1986).

Dismissals for failure to exhaust administrative remedies may only be "based upon statutes which by express terms or necessary implication give to the administrative board exclusive jurisdiction or which make the exhaustion of administrative remedies a condition precedent to judicial action." (Citations, punctuation, and emphasis omitted.) Hunnicutt v. Ga. Power Co., supra at 526(1), 309 S.E.2d 862 (citing Evans v. Louisville &c. R. Co., 191 Ga. 395, 401-402(1), 12 S.E.2d 611 (1940)). Under the Georgia Administrative Procedure Act, appeal from decisions of the Department of Community Health, regarding a denial, nonpayment, or determination of the amount of reimbursement paid or payable requires an administrative appeal filed with the Department of Community Health.³ A timely judicial review of a final agency decision after an administrative appeal can be made to the superior court only if the condition precedent of exhaustion of an administrative appeal has first been completed. OCGA §§ 49-4-153(c); 50-13-19. Such procedures provided an adequate, direct, and timely method to deal with the issues raised by Executive in this litigation. In contrast, Royal Lion achieved success in its administrative appeal, demonstrating that the administrative appeal was not futile.

Executive had to appeal the decision reducing its payments after the 1996 audit by requesting a hearing under the APA, which it failed to do. OCGA § 49-4-153(b)(2). Therefore, the trial court lacked subject matter jurisdiction, because Executive had no right to appeal to the superior court unless and until it had as a condition precedent exhausted its administrative remedies through a timely administrative appeal. See Hunnicutt v. Ga. Power Co., supra at 526, 309 S.E.2d 862. Executive cannot avoid the requirement for exhaustion of administrative remedies by claiming that its action is a mere breach of contract action seeking the recovery of damages, because the administrative procedures covered such disputes; Executive is prohibited from doing by indirection that which it is prohibited from doing directly, i.e., bypassing the exhaustion of administrative appeals. See Dept. of Human Resources v. Lewis, 217 Ga.App. 399, 400, 457 S.E.2d 824 (1995); see also Mayor &c. of Savannah v. Savannah Cigarette &c. Svcs., 267 Ga. 173, 174, 476 S.E.2d 581 (1996); Krasaeath v. Parker, 212 Ga.App. 525, 527(1), 441 S.E.2d 868 (1994).⁴

2. Royal Lion litigated successfully to judgment the same damage issues that it seeks to raise in this litigation; therefore, it is barred from the relitigation of such issues in the face of a...