Senn Park Nursing Center, a Div. of Mid-States Health Centers, Inc. v. Miller

• Decision Date: 28 September 1983
• Docket Number: No. 81-2781,MID-STATES,81-2781
• Citation: Senn Park Nursing Center, a Div. of Mid-States Health Centers, Inc. v. Miller, 455 N.E.2d 162, 118 Ill.App.3d 733, 74 Ill.Dec. 132 (Ill. App. 1983)
• Court: Appellate Court of Illinois
• Parties: , 74 Ill.Dec. 132, 3 Soc.Sec.Rep.Ser. 1048, Medicare & Medicaid Guide P 33,494 SENN PARK NURSING CENTER, A DIVISION OFHEALTH CENTERS, INC., an Illinois corporation; Royal Gardens Nursing Center, an Illinois limited partnership; and Coventry Terrace Nursing Center, an Illinois limited partnership, Plaintiffs-Appellants, v. Jeffrey C. MILLER, Director, Illinois Department of Public Aid, Defendant- Appellee.

Page 162

455 N.E.2d 162

118 Ill.App.3d 733, 74 Ill.Dec. 132,

3 Soc.Sec.Rep.Ser. 1048,

Medicare & Medicaid Guide P 33,494

SENN PARK NURSING CENTER, A DIVISION OF MID-STATES HEALTH CENTERS, INC., an Illinois corporation; Royal Gardens Nursing Center, an Illinois limited partnership; and Coventry Terrace Nursing Center, an Illinois limited partnership, Plaintiffs-Appellants, v. Jeffrey C. MILLER, Director, Illinois Department of Public Aid, Defendant- Appellee.

No. 81-2781.

Appellate Court of Illinois First District, Third Division.

Sept. 28, 1983.

Richard F. Zehnle, Vedder, Price, Kaufman & Kammholz, Chicago, for plaintiffs-appellants.

Neil F. Hartigan, Atty. Gen., Chicago (William A. Wenzel, Sp. Asst. Atty. Gen., Jennifer Rice, Senior Law Clerk, Chicago, of counsel), for defendant-appellee.

RIZZI, Justice:

Plaintiffs, Senn Park Nursing Center, Royal Gardens Nursing Center and Coventry Terrace Nursing Center, are the owners and operators of licensed skilled nursing facilities for the elderly and disabled. Defendant, Jeffrey C. Miller, is the director of the Illinois Department of Public Aid (IDPA), which is responsible for administering the Medicaid program in Illinois, including prospective reimbursement of facilities such as those owned and operated by plaintiffs. On July 25, 1980, IDPA published a notice of emergency rulemaking along with the text of the rule (Emergency Rule 4.14221), to be effective July 16, 1980. The purpose of the emergency rule was to change the method of updating allowable reported health care costs for inflation. Defendant had previously attempted to change the method of calculating the inflation update factor by amending the state Medicaid plan, but on July 9, 1980, in a mandamus proceeding brought by these plaintiffs (Senn Park I ), ¹ the amendment was held to be invalid due to defendant's failure to comply with notice and comment requirements. After defendant caused the notice of emergency rulemaking to be published, plaintiffs filed a complaint for declaratory judgment in which they sought a declaration that Emergency Rule 4.14221 was void and of no effect because there was no emergency as that term is defined by statute (Ill.Rev.Stat.1979, ch. 127, par. 1005.02) and the rule was promulgated in violation of the applicable federal notice requirements (42 C.F.R. § 447.205 (1979)).

On December 30, 1980, Emergency Rule 4.14221 was withdrawn. The parties subsequently filed cross-motions for summary judgment. In its order granting defendant's motion for summary judgment and denying plaintiffs' motion for summary judgment, the trial court found that (1) Emergency Rule 4.14221 was valid; (2) the action was not moot; and (3) plaintiffs' monetary claims must be brought in the Illinois Court of Claims. On appeal plaintiffs contend that the trial court erred in finding that Emergency Rule 4.14221 was valid and that their monetary claims must be brought in the Illinois Court of Claims. Defendant contends that this matter is moot. We affirm in part, reverse in part and remand.

Initially, we address defendant's argument that this case is moot because (1) the emergency rule was withdrawn, (2) IDPA's appropriations for fiscal years 1980 and 1981 have lapsed and (3) this action will be mooted by a reversal in Senn Park I.

A case is moot when it does not involve any actual controversy. Where the issues involved in the trial court no longer exist, an appellate court will not review a case merely to decide moot or abstract questions, to establish a precedent, or to determine the right to, or the liability for, costs, or in effect, to render a judgment to guide potential future litigation. La Salle National Bank v. City of Chicago, 3 Ill.2d 375, 378-79, 121 N.E.2d 486, 488 (1954). According to defendant, there is currently no actual controversy between the parties because the emergency rule was withdrawn on December 30, 1980, and was replaced by a duly promulgated rule which incorporated the challenged inflation update procedure. Plaintiffs, however, argue that the withdrawal of the emergency rule did not ipso facto render the controversy moot since monetary relief is also in issue. Plaintiffs contend that a decision regarding the validity of the emergency rule is still necessary in order to determine the amount of reimbursement they will be entitled to under the writ of mandamus to be issued in Senn Park I. We agree with plaintiffs.

If Emergency Rule 4.14221 is found to be invalid, then plaintiffs will be entitled to seek monetary relief from the date the rule went into effect until the date that it was withdrawn. On the other hand, if the emergency rule is found to be valid, plaintiffs will not be entitled to any recovery for that period. Thus, it is clear that there is an actual controversy and that a determination of the validity of Emergency Rule 4.14221 will affect substantial rights of the parties. See Ashland Chemical Co. v. The Pollution Control Board, 57 Ill.App.3d 1052, 1056, 15 Ill.Dec. 480, 483, 373 N.E.2d 826, 829 (1978); Gribben v. Interstate Motor Freight System Co., 18 Ill.App.2d 96, 102-03, 151 N.E.2d 443, 447 (1958). Therefore, the trial court correctly determined that this action should not be dismissed as moot for want of an actual controversy.

In addition, we reject defendant's contention that this action is moot because defendant's appropriations for fiscal years 1980 and 1981 have lapsed. In support of its position, defendant relies upon West Side Organization Health Services Corp. v. Thompson, 79 Ill.2d 503, 38 Ill.Dec. 784, 404 N.E.2d 208 (1980). In West Side Organization, plaintiffs sought to compel state officials to expend funds appropriated by the General Assembly for the use of the Dangerous Drugs Commission. Plaintiffs also sought relief which would have prevented the appropriation from lapsing, but the relief was denied. As a result, the appropriation lapsed according to statutory mandate (Ill.Rev.Stat.1977, ch. 127, par. 161) while the appeal of the case was pending. The relevant portion of the lapse statute states:

All appropriations shall be available for expenditure for the fiscal year or for a lesser period if the Act making that appropriation so specifies. A deficiency or emergency appropriation shall be available for expenditure only through June 30 of the year when the Act making that appropriation is enacted unless that Act otherwise provides.

Outstanding liabilities as of June 30, payable from appropriations which have otherwise expired, may be paid out of the expiring appropriations during the three-month period ending at the close of business on September 30.

* * *

* * *

Ill.Rev.Stat.1977, ch. 127, par. 161.

The supreme court ruled that the appellate court erred in refusing to dismiss the appeal as moot in view of the unavailability of funds necessary for the granting of effectual relief to the parties involved. 79 Ill.2d at 508, 38 Ill.Dec. at 787, 404 N.E.2d at 211.

The situation here, however, is distinguishable from West Side Organization. The statute relating to the lapse of appropriations contains a third paragraph which was not at issue in West Side Organization. This paragraph states:

However, medical payments may be made by the Department of Public Aid from its appropriations for that purpose for any fiscal year, without regard to the fact that the medical services being compensated for by such payment may have been rendered in a different fiscal year. Ill.Rev.Stat.1979, ch. 127, par. 161.

Defendant does not argue that the reimbursement which plaintiffs seek is not for medical services. He does, however, contend that IDPA has discretion as to whether or not payments for medical services rendered in prior years should be made. This contention is untenable under the facts of this case. Even if we were to assume that the use of the word "may" in the statute generally means that medical payments for services rendered in prior years are discretionary with defendant, defendant cannot be permitted to escape his obligation to plaintiffs by simply exercising his discretion to the detriment of plaintiffs. As will be discussed later in this opinion, defendant was required to reimburse plaintiffs in accordance with the formula in effect prior to his attempts to amend the method of calculating the inflation update factor. Such payments, of course, are not discretionary. Accordingly, we reject defendant's argument that this case is moot because IDPA's appropriations have lapsed.

Defendant's additional contention that this case will be mooted by a reversal of the circuit court's decision in Senn Park I must be rejected in view of our affirmance of that decision as modified in a separate opinion being issued today. See Senn Park Nursing Center v. Miller, 118 Ill.App.3d 504, --- Ill.Dec. ----, 455 N.E.2d 153 (1983).

We next address the issue of whether the trial court properly concluded that Emergency Rule 4.14221 was valid. Plaintiffs argue that there was no emergency which justified enactment of the emergency rule. Section 5.02 of the Illinois Administrative Procedure Act (IAPA) (Ill.Rev.Stat.1979, ch. 127, par. 1005.02) defines an emergency and governs the manner in which emergency rules shall be promulgated. The statute provides:

§ 5.02. Emergency rulemaking. "Emergency" means the existence of any situation which any agency finds reasonably constitutes a threat to the public interest, safety or welfare. Where any agency finds that an emergency exists which requires adoption of a rule upon fewer days than is required by Section 5.01, and states in writing its reasons for that finding, the agency may adopt an emergency rule without prior notice or hearing, upon filing a notice of emergency rulemaking with the Secretary of State pursuant to Section 6.01 of this Act. Such notice shall include the text of the emergency rule and shall be published in the Illinois Register. Subject to applicable constitutional or statutory...