Wilkinson Cnty. Senior Care, LLC v. Miss. Div. of Medicaid & Drew Snyder

Decision Date30 June 2022
Docket Number2020-SA-01332-SCT
Citation341 So.3d 932
Parties WILKINSON COUNTY SENIOR CARE, LLC v. MISSISSIPPI DIVISION OF MEDICAID and Drew Snyder, In his Official Capacity as Executive Director of the Mississippi Division of Medicaid
CourtMississippi Supreme Court

ATTORNEYS FOR APPELLANT: JULIE BOWMAN MITCHELL, PHILIP JOSEPH CHAPMAN, Ridgeland

ATTORNEYS FOR APPELLEES: JANET McMURTRAY, MAUREEN BURKE SPEYERER SAMUEL, PHILIP GOFF

BEFORE KING, P.J., CHAMBERLIN AND ISHEE, JJ.

KING, PRESIDING JUSTICE, FOR THE COURT:

¶1. After Wilkinson County Senior Care changed ownership, it received the maximum per diem rate from the Mississippi Division of Medicaid (DOM) for a period of twenty months. The DOM notified Wilkinson County Senior Care multiple times that the maximum per diem rate it received during this time period was subject to adjustment based on its initial cost report. The DOM did not seek recoupment of the overpayment based on the adjustment until 2011. Wilkinson County Senior Care argues that this delay forecloses the DOM from recouping the overpayment it received. The DOM and the chancery court both affirmed that the recoupment was allowable. Because no legal or equitable principles provide that the delay in this case forecloses recoupment, this Court affirms the decisions of the chancery court and the DOM.

FACTS AND PROCEDURAL HISTORY

¶2. On May 1, 2002, Wilkinson County Nursing Center, now known as Wilkinson County Senior Care, LLC (collectively, "Wilkinson"), had a change of ownership (CHOW). When a nursing facility undergoes a CHOW, it must "file a cost report from the date of the change of ownership through the end of the third month of ownership." Medicaid State Plan 4.19-D(M). This is generally referred to as the CHOW cost report. The DOM pays a facility that has changed ownership the maximum per diem rate "until the rate is adjusted based on this initial cost report." Id. The per diem rate ultimately calculated based on the CHOW cost report is retroactive to the CHOW date. Id. ("The rate computed based on the initial cost report of the new owner will be effective the same date the change of ownership was effective."). Additionally, the DOM's Provider Policy Manual at the time provided that new facilities would "be paid the maximum established class rate[ ]" "[p]ending receipt of a cost report." DOM Provider Policy Manual 5.05. It further stated that, upon receipt of the CHOW cost report, "a per diem rate will be established based on a desk review and will be effective retroactively to the first day of certification." Id.

¶3. The DOM sent Wilkinson an enrollment letter that informed Wilkinson that it had been approved as a Medicaid provider effective May 1, 2002. The enrollment letter informed Wilkinson that "the rate for the new provider number has been calculated based on the maximum rate." The enrollment letter also informed Wilkinson that its CHOW cost report would be required for the period of May 1, 2002 through July 31, 2002, and would be due on December 31, 2002. The enrollment letter specifically informed Wilkinson that "[t]he rates will be adjusted retroactively to May 1, 2002 based on the initial cost report filed for this facility." In a January 31, 2003 letter, the DOM informed Wilkinson of its per diem rate for the period of January 1, 2003 through March 31, 2003. The letter noted that "[t]he rate will be adjusted based on a cost report submitted by your facility."

¶4. In a January 28, 2004 letter, the DOM informed Wilkinson that it had reviewed Wilkinson's CHOW cost report for the period of May 1, 2002 through July 31, 2002. It sent the letter to Wilkinson's then accountant, David Stewart. It made downward adjustments to some of Wilkinson's reported costs. Thus, the costs that ultimately would be used to calculate the per diem would be less than what Wilkinson reported in the CHOW cost report. The DOM does not calculate the per diem rate based on the adjusted cost report until the report is final—either after the time to appeal has run or after an appeal is complete. Wilkinson did not appeal this decision regarding its CHOW cost report. Sometime in approximately 2008, Wilkinson changed accounting firms, retaining Horne. Stewart did not recall ever receiving the 2004 desk review.1 Wilkinson claims that it and "its accountant" destroyed the desk review along with other records after five years.

¶5. On October 11, 2011, the DOM sent Wilkinson a letter providing the per diem rate adjustments that had been made for the May 1, 2002 through December 31, 2003 time period based on Wilkinson's adjusted CHOW cost report. The total overpayment that the DOM attempted to recoup from Wilkinson was $701,856.53. The detailed cost analyses that the DOM attached to the 2011 letter reflected a printout date of August 9, 2005. Those analyses calculated the per diem rates for various time periods within the overall May 1, 2002 through December 31, 2003 time period, but did not calculate the total overpayment, i.e., they did not apply the per diem rate to the previously paid claims (the rate for each period multiplied by the number of beds and the number of days in each period, then subtracted from what was actually paid for each of those smaller time periods). Wilkinson appealed the October 11, 2011 recoupment letter.

¶6. In 2002, the DOM changed fiscal agents. The new fiscal agent had software incompatibilities with the software used by the previous fiscal agent, which resulted in the DOM having issues handling claims and, particularly, with retroactively adjusting claims. ("The system was incapable of" retroactively adjusting claims based on new rates.). Then, due to new federal regulations, another new system for claims had to be created by October 2003. During this time, the DOM established monthly meetings for providers so that the DOM could communicate the problems, issues, and delays it was experiencing with its systems to the providers. Bruce Kelly, one of Wilkinson's co-owners, participated in at least some of these meetings, as did an accountant for Wilkinson, Shane Hariel.2 Hariel testified that rate adjustments were a recurring item during the meetings. Hariel stated that delays in rate adjustments were discussed in general terms, without specific facilities being mentioned. Hariel did state that, based on the 2004 desk review, an accountant for Wilkinson would have been able to calculate the rate and recoupment amount.

¶7. In appealing the October 11, 2011 recoupment attempt, Wilkinson argued that the DOM failed to offer sufficient support for the computations, and made various arguments that the recoupment violated record retention standards.3 A hearing was held on September 12, 2012. The hearing officer found that no statutory or regulatory provisions required the DOM to issue rate adjustments within any set period of time and that Wilkinson knew it was subject to a rate adjustment. The hearing officer found that equitable estoppel did not apply and that the delay did not violate due process. The hearing officer therefore upheld the DOM's recoupment action. However, the hearing officer ordered the DOM to provide Wilkinson with the data the DOM had used to calculate Wilkinson's patient days.4 On April 17, 2013, the DOM's executive director adopted the hearing officer's findings and recommendations. The letter adopting the findings provided Wilkinson with the data the DOM had used to determine Wilkinson's patient days and provided Wilkinson fourteen days to challenge the final calculation based on that data.5 Wilkinson appealed the DOM's decision to the chancery court on May 16, 2013. On July 25, 2013, Wilkinson and the DOM entered an agreed order to stay the proceedings pending this Court's determination regarding a jurisdictional issue in a separate case. In September 2019, the parties entered into a scheduling order and the appeal resumed in chancery court.

¶8. The chancery court entered its opinion and order affirming the DOM's decision on November 3, 2020. While the court expressed sympathy for "Wilkinson's frustration and indignation[,]" it found no statutory or regulatory provision establishing a statute of limitations on recoupment actions by the DOM. It further found that Wilkinson received due process and that equitable estoppel did not apply because Wilkinson knew it was subject to a final adjustment.

¶9. Wilkinson appeals to this Court. It argues that 1) recoupment should be equitably estopped due to the doctrine of estoppel by silence; 2) the decision was arbitrary and capricious, clearly erroneous, and not supported by substantial evidence; and 3) the decision violated Wilkinson's substantive due process rights.

ANALYSIS
1. Standard of Review

¶10. In reviewing a chancellor's opinion regarding a DOM decision, this Court reviews the agency's order to determine whether it "1) was supported by substantial evidence, 2) was arbitrary or capricious, 3) was beyond the power of the agency to make, or 4) violated some statutory or constitutional right of the complaining party." Cent. Miss. Med. Ctr. v. Miss. Div. of Medicaid , 294 So. 3d 1121, 1125 (Miss. 2020) (internal quotation mark omitted) (quoting Adams v. Miss. State Oil & Gas Bd. , 139 So. 3d 58, 62 (Miss. 2014) ). Acts are arbitrary or capricious when done without reason or judgment. Id.

Miss. Methodist Hosp. & Rehab. Ctr., Inc. v. Miss. Div. of Medicaid , 319 So. 3d 1049, 1054 (Miss. 2021). This Court reviews agency interpretations of statutes, rules, and regulations de novo. Id. at 1054-55.

2. Estoppel

¶11. Wilkinson argues that the DOM is barred from recouping the money based on the doctrine of estoppel by silence. It argues that the chancery court only addressed equitable estoppel and failed to address estoppel by silence. The parties treat estoppel by silence as if it is a different type of estoppel than equitable estoppel. Yet caselaw makes clear that what the parties call estoppel by silence is indeed equitable estoppel. Caselaw simply provides...

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