Thompson v. Hayes, 2006 Ohio 6000 (Ohio App. 11/14/2006)

• Decision Date: 14 November 2006
• Docket Number: No. 05AP-476.,05AP-476.
• Citation: 2006 Ohio 6000
• Parties: Nickolaus B. Thompson et al., Plaintiffs-Appellees/Cross-Appellants, v. Thomas J. Hayes, Director, Ohio Department of Job and Family Services, Defendants-Appellants/Cross-Appellees, and Fairfield County Board of MRDD et al., Defendants-Appellees/Cross Appellants.
• Court: Ohio Court of Appeals

Page 1

2006 Ohio 6000

Nickolaus B. Thompson et al., Plaintiffs-Appellees/Cross-Appellants, v. Thomas J. Hayes, Director, Ohio Department of Job and Family Services, Defendants-Appellants/Cross-Appellees, and Fairfield County Board of MRDD et al., Defendants-Appellees/Cross Appellants.

No. 05AP-476.

Court of Appeals of Ohio, Tenth District, Franklin County.

Rendered on November 14, 2006.

APPEAL from the Franklin County Court of Common Pleas, C.P.C. No. 03CVH-06-7022.

Vorys, Sater, Seymour and Pease, LLP, G. Ross Bridgman and Suzanne K. Richards, for plaintiffs-appellees/cross-appellants, Nickolaus B. Thompson, Ohio Provider Resource Association, Guernsey Residential, Inc., St. John's Villa, and Champaign Residential Services, Inc.

Jim Petro, Attorney General and Ara Mekhjian; Kegler, Brown, Hill & Ritter, Charles A. Miller, R. Kevin Kerns and Rasheeda Khan, for appellant Ohio Department of Job and Family Services.

Bricker & Eckler, LLP, James J. Hughes, III, Susan B. Greenberger, Warren I. Grody, and Jennifer A. Flint, for defendants-appellees/cross-appellants, Fairfield County Board of MRDD, Summit County Board of MRDD, Pickaway County Board of MRDD, and Mid-East Ohio Regional Council.

OPINION

SADLER, J.

{¶1} Defendant-appellant, Ohio Department of Job & Family Services ("ODJFS"), appeals from the April 14, 2005 judgment of the Franklin County Court of Common Pleas, in which that court entered judgment as a matter of law in favor of plaintiffs-appellees/cross-appellants, Nickolaus B. Thompson ("Thompson"), Ohio Provider Resource Association ("OPRA"), Guernsey Residential, Inc., St. John's Villa, and Champaign Residential Services, Inc. (referred to collectively hereinafter as "the plaintiffs"), on their claims for declaratory judgment and injunctive relief against ODJFS, the Ohio Department of Mental Retardation and Developmental Disabilities ("ODMRDD"), and defendants-appellees/cross-appellants, Fairfield County Board of Mental Retardation and Developmental Disabilities ("MRDD"), Summit County Board of MRDD, Pickaway County Board of MRDD, and Mid-East Ohio Regional Council (referred to collectively hereinafter as "the boards").

{¶2} This case involves an examination of the administrative roles of ODJFS and the boards with respect to the provision of MRDD services to Medicaid-eligible Ohio recipients through Ohio's Medicaid plan and through federally-approved waivers.

{¶3} Medicaid is a cooperative federal-state program through which the federal government "provides financial assistance to participating States to aid them in furnishing health care to needy persons." Harris v. McRae (1980), 448 U.S. 297, 308, 100 S.Ct 2671, 65 L.Ed.2d 784. Medicaid provides assistance to certain uninsured low-income and medically vulnerable people by providing medically necessary care at no cost. Pursuant to Section 1396d(a)(15), Title 42, U.S.Code, the term "medical assistance" includes payment of part or all of the costs of services in an intermediate care facility for the mentally retarded.

{¶4} States, such as Ohio, that elect to participate in Medicaid must submit for approval a plan that will be effective "in all political subdivisions of the State, and, if administered by them, be mandatory upon them." Section 1396a(a)(1), Title 42, U.S.Code. This is referred to as the "statewideness" requirement. In addition, a state Medicaid plan must "* * * provide for the establishment or designation of a single State agency to administer or to supervise the administration of the plan * * *." Section 1396a(a)(5), Title 42, U.S.Code. This is referred to as the "single state agency" requirement.

{¶5} Pursuant to regulations promulgated under the foregoing statutes, each plan must "be in effect throughout the State" and "in operation statewide through a system of local offices, under * * * standards * * * that are mandatory throughout the State." Section 431.50(a)-(b)(1), Title 42, C.F.R. As well, each state plan must, "[s]pecify a single state agency established or designated to administer or supervise the administration of the plan[.]" Section 431.10(b)(1), Title 42, C.F.R.

{¶6} To this end, R.C. 5111.01 provides, in part:

The department of job and family services shall act as the single state agency to supervise the administration of the medicaid program. As the single state agency, the department shall comply with 42 C.F.R. 431.10(e). The department's rules governing medicaid are binding on other agencies that administer components of the medicaid program. No agency may establish, by rule or otherwise, a policy governing medicaid that is inconsistent with a medicaid policy established, in rule or otherwise, by the director of job and family services.

(Emphasis added.)

{¶7} In 1981 Congress amended the Social Security Act¹ to permit states to apply for waivers that allow them to deliver services under a relaxed set of regulatory strictures, including home and community-based services ("HCBS") for mentally retarded or developmentally disabled individuals who would otherwise require institutional care. See Section 1396n(c)(1), Title 42, U.S.Code. Under a Section 1396n(c) waiver, certain obligations that otherwise attach to states' provision of Medicaid services are waived in order to allow long-term care services to be delivered in community settings. See Section 1396n(c)(3), Title 42, U.S.Code (detailing the requirements that may be waived under a Section 1396n(c) waiver); see, also, Section 1396n(c)(4)(B) (explaining the services that may be provided under a Section 1396n(c) waiver). State Medicaid agencies submit applications for waivers for review by the Centers for Medicare and Medicaid Services and the applications may be approved for an initial three-year period, followed by renewal for additional five-year periods. Section 1396n(c)(3), Title 42, U.S.Code.

{¶8} "Waivers are intended to provide the flexibility needed to enable States to try new or different approaches to the efficient and cost-effective delivery of health care services, or to adapt their programs to the special needs of particular areas or groups of recipients. Waivers allow exceptions to State plan requirements and permit a State to implement innovative programs or activities on a time-limited basis, and subject to specific safeguards for the protection of recipients and the program." Section 430.21(b), Title 42, CFR.

{¶9} HCBS waivers may include waivers of numerous provisions of Section 1396a, Title 42, U.S.Code, including the statewideness requirement. Section 1396n(c)(3), Title 42 U.S.Code. Importantly, however, HCBS waivers will not be granted unless the state provides satisfactory assurances that necessary safeguards have been taken to protect the health and welfare of individual recipients of services under the waiver, and to assure financial accountability for funds expended with respect to those services. Section 1396n(c)(2), Title 42 U.S.Code.

{¶10} Ohio's statutory scheme includes provisions for controlling the quality of "state plan" (or non-waiver) MRDD services and HCBS waiver services. Among these provisions are those requiring that providers satisfy certain prerequisites in order to be considered a "qualified" provider. For example, a provider must enter into a Medicaid provider agreement with ODJFS. R.C. 5111.21(A)(1). In addition, ODMRDD must certify each provider's credentials. R.C. 5123.045. Finally, a provider must enter into a separate direct service contract ("DSC") with a county board of MRDD respecting each individual recipient of services; furthermore, these service contracts must identify the consumer to be served and the type and quantity of services to be provided. R.C. 5126.05 and 5126.035.

{¶11} The record reveals that Guernsey Residential, Inc., St. John's Villa and Champaign Residential Services, Inc., are parties to provider agreements with ODJFS. These provider agreements do not identify the specific type or quantity of services that each provider will render for any specific individual. The boards' DSCs, however, do contain this type of information. Section 42(B) of H.B. 405, effective December 13, 2001, required that county boards of MRDD and providers revise old service contracts, to the extent that those contracts were inconsistent with federal or state law, in order to comply with the procedural requirements of R.C. 5126.035. That statute contains an extensive list of requirements for DSCs entered into between county boards and providers. The bill required that the revisions be completed no later than July 1, 2002. In response to that mandate the boards developed a standardized model service contract ("MSC").

{¶12} According to the complaint, plaintiff Thompson is an individual Medicaid beneficiary and recipient of Medicaid-funded MRDD services. OPRA is a private, non-profit corporation representing 150 Ohio providers of MRDD services. This case began when Thompson, along with the three aforementioned MRDD service providers and OPRA, brought this action against ODJFS, ODMRDD, and the boards.²

{¶13} The plaintiffs generally alleged that: (1) ODMRDD and ODJFS violated Ohio law by not promulgating administrative rules governing DSCs by July 1, 2002; and (2) the boards were without authority to enter into or enforce DSCs until ODMRDD adopted such rules pursuant to R.C. 5126.035(E). The plaintiffs further alleged that, in the absence of those rules, and until such rules were promulgated, any DSC then in existence or implemented in future, would be unlawful.

{¶14} The plaintiffs sought several forms of relief. In Count One, they sought a declaratory judgment that ODJFS and ODMRDD had violated their legal duty to promulgate rules governing DSCs between qualified Medicaid providers and local boards of MRDD, and that, until those rules are promulgated, ODJFS' Medicaid provider agreements constitute valid DSCs and are the only precondition for a provider to be eligible to receive Medicaid reimbursement...