Schmidt v. Apple Valley Health Care Center, Inc.

• Decision Date: 11 September 1990
• Docket Number: C0-90-646,Nos. C8-90-37,s. C8-90-37
• Citation: 460 N.W.2d 349
• Parties: Robert L. SCHMIDT, Special Administrator for the Estate of Beryl M. Schmidt, and on behalf of a class of all persons similarly situated, Respondents, v. APPLE VALLEY HEALTH CARE CENTER, INC., Appellant.
• Court: Minnesota Court of Appeals

Page 349

460 N.W.2d 349

Robert L. SCHMIDT, Special Administrator for the Estate of Beryl M. Schmidt, and on behalf of a class of all persons similarly situated Respondents, v. APPLE VALLEY HEALTH CARE CENTER, INC., Appellant.

Nos. C8-90-37, C0-90-646.

Court of Appeals of Minnesota.

Sept. 11, 1990.

Review Denied Oct. 25, 1990.

Syllabus by the Court

1. The nursing home rate equalization law requires a nursing home to retroactively equalize rates paid by private paying residents to rates paid by the state on behalf of medical assistance recipients.

2. The trial court properly found there were no genuine issues of material fact when the only remaining issues concerned interpretation of the law.

3. Appellant lacks standing to challenge the court's award of a percentage of the class damages as attorney fees; however, in a case where the trial court abused its discretion in making such an award, this court may choose to review the award.

Samuel D. Orbovich, Susan M. Schaffer, Broeker, Geer, Fletcher & LaFond Ltd., Bloomington, and Howard A. Knutson, Knutson, Hird, Ilstrup & Knutson, Burnsville, for appellant.

Richard L. Wolff, Law Office of Richard M. Bell, Blooming Prairie, and William E. Ahlberg, Ahlberg Law Firm, Ltd., Apple Valley, for respondents.

Considered and decided by HUSPENI, P.J., and SCHUMACHER and DAVIES, JJ.

OPINION

DAVIES, Judge.

Apple Valley Health Care Center challenges the trial court's determination that it is liable to a class of plaintiffs for failing to retroactively equalize rates paid by private paying residents to those paid by the state on behalf of medical assistance recipients. We affirm.

FACTS

Appellant Apple Valley Health Care Center opened on June 29, 1983. It participated in medical assistance programs in which the state reimbursed the home for residents who received public assistance. The state required appellant, as a new nursing home, to set interim rates to use in reimbursing appellant for public assistance recipients. These rates were $75 a day for skilled nursing care and $65 a day for intermediate care. The law directed appellant to charge private paying residents these same interim rates, which remained in effect until September 30, 1985. The state Department of Human Services then established, from cost reports filed with the state as required by law, "settle-up" rates for appellant. The state compared the settle-up rates with the interim rates. Because the settle-up rates were $5 to $10 per day lower than the interim rates, the state received $530,597.22 in refund payments from appellant. Appellant made no such refunds to private paying residents.

Respondent, Robert Schmidt as Special Administrator for the Estate of Beryl Schmidt, requested that appellant refund the differential. Beryl Schmidt resided at the home during all relevant periods and received no public assistance for the costs of her stay. After appellant refused, respondent filed a complaint in December 1986 alleging appellant, by failing to refund the differential to private paying residents, charged private paying residents more than it charged public assistance residents. Respondent charged this action violated Minn.Stat. Sec. 256B.48, subd. 1 (1986) (nursing home rate equalization law). ¹ Respondent sought treble damages and certification of the suit as a class action. The trial court certified the class on May 17, 1987 to include all private paying residents of the home between June 29, 1983 and September 30, 1985, the 27-month period during which the interim rates were in effect. The class contains approximately 200 members.

The court granted respondent's motion for partial summary judgment on the issue of liability on June 24, 1988. In the order for judgment, the court found the facts as described above. It concluded there were no issues of material fact and that each member of the class was entitled to,

a full refund from the defendant of the differential existing between the initial payments made under the interim Medical Assistance rates established for defendant's operation * * * for the period June 29, 1983, to September 30, 1985 * * * and the lower settle-up payments made under the rates established by the State after a history-of-operations period had been established, together with treble damages pursuant to the statute.

The court ordered further discovery to enable determination of the amount of damages. In March 1989, pursuant to respondent's motion, the court ordered the Department of Human Services (DHS) to audit appellant's records. Specifically, the court required DHS to provide the names of all residents with information including dates of stay and method of payment.

The court granted respondent's motion for final summary judgment on November 29, 1989. In its order for judgment, the court awarded attorney fees of $60,424.73 plus 20% of damages actually paid to class members. The court further concluded that appellant's practice of charging private paying residents for the dates of discharge and admission while only charging public assistance residents for the date of admission violated section 256B.48, subd. 1. Several days later, the court amended its order for judgment to add a damage award of $690,120.45. Thus, the total judgment is $750,545.18. In reaching this figure, the court apparently relied upon the data DHS provided and information in the record, but the court did not state the basis for its calculation. Judgment was entered December 7, 1989.

On December 22, 1989 respondent moved to clarify the award. On January 4, 1990, appellants filed a notice of appeal from the December 7 judgment. On February 16, the court entered an amended order and findings in which it merely stated the basis for its damage award: base damages (actual overcharges) of $151,980.61, damages for charging private paying residents for the day of discharge of $6,485.00, damages for insurance-paid residents of $5,495.20 and interest at 7.86% of $66,079.34, for a total of $230,040.15. The final award is treble that amount. Finally, the court provided a rationale for its ruling that residents insured by private insurance companies are private paying residents.

Appellant appealed from the February order on March 22, and this court consolidated the appeals on March 27.

ISSUES

1. Did the trial court correctly interpret the nursing home rate equalization law?

2. Did the trial court correctly find there are no genuine issues of material fact?

3. Was the court's award of attorney fees within its discretion?

ANALYSIS

In this appeal from a summary judgment, we must decide whether the trial court correctly interpreted the law and whether any genuine issues of material fact exist. Betlach v. Wayzata Condominium, 281 N.W.2d 328, 330 (Minn.1979). We view the evidence favorably to the nonmoving party. Nord v. Herreid, 305 N.W.2d 337, 339 (Minn.1981). Appellant argues the court misinterpreted applicable law and ignored material issues of fact. Appellant also argues the court abused its discretion in awarding attorney fees.

The February order to amend the judgment occurred after the filing of the appeal. Only the December 7 judgment and amended judgment is reviewable here. See Amatuzio v. Amatuzio, 431 N.W.2d 588, 589 (Minn.App.1988), pet. for rev. denied (Minn. July 27, 1989) (filing of appeal before decision on motion to amend findings divests trial court of jurisdiction). Although the post-appeal amended judgment is without effect, this court may take "cognizance of it for the insight it affords." Evans v. Blesi, 345 N.W.2d 775, 780 (Minn.App.1984), pet. for rev. denied (Minn. June 12, 1984). Here, the February order clarified the basis for the damage calculation, and this court has considered it for that limited purpose only.

(A) Interpretation of the Law

Appellant argues the trial court made four errors in interpreting the applicable law. First, the court required retroactive refunds for private paying residents. Second, it included residents whose insurance companies paid the care costs within the definition of private paying residents. Third, the court required appellant to refund charges to private paying residents for the dates of discharge. Fourth, the court awarded treble damages.

(1) Retroactive Refunds

The court ruled that appellant must refund the differential between the amounts it charged each private paying resident between June 29, 1983 and September 30, 1985 and the amount the state reimbursed the home for each medical assistance recipient during that period. Under the regulations governing nursing homes, a home must file cost reports with the state for the report year, which runs October 1 to September 30. Minn.Stat. Sec. 256B.421, subd. 12 (1988); Minn. R. 9549.0020, subpt. 41 (1989). After receiving the report, DHS sets the rate for the following rate year, which runs July 1 to June 30. Minn.Stat. Sec. 256B.421, subd. 11 (1988); Minn. R. 9549.0020, subpt. 36 (1989). The process of setting this rate is called the "desk audit," Minn. R. 9549.0020, subpt. 19 (1989), and the result is called the "desk audit rate."

Appellant care center opened June 29, 1983. DHS at that time set interim rates for reimbursing appellant for medical assistance recipients pursuant to Minn.Stat. Sec. 256B.431, subd. 4 (Supp.1983). These rates remained in effect until DHS, on the basis of cost reports, calculated the "retroactive cost settle-up" rates. Minn.Stat. Sec. 256B.431, subd. 4. The settle-up rates, which were calculated after September 30, 1985, were lower than the interim rates, so DHS required appellant to refund the difference for medical assistance recipients.

When appellant refused to refund the differential to each private paying resident, respondent commenced this action. The action is based on Minn.Stat. Sec. 256B.48, subd. 1(a) (1986), which gives a private paying resident, or the resident's legal representative, a cause of action for civil damages against a nursing home that...