Williams v. Hank's Ambulance Service, Inc.

• Decision Date: 18 April 1997
• Citation: 699 So.2d 1230
• Parties: , Medicare & Medicaid Guide P 45,194 Gwendolyn WILLIAMS, et al. v. HANK'S AMBULANCE SERVICE, INC., et al. 1950683.
• Court: Alabama Supreme Court

Page 1230

699 So.2d 1230

54 Soc.Sec.Rep.Ser. 421, Medicare & Medicaid Guide P 45,194

Gwendolyn WILLIAMS, et al. v. HANK'S AMBULANCE SERVICE, INC., et al.

1950683.

Supreme Court of Alabama.

April 18, 1997.

Rehearing Denied July 18, 1997.

Bill Pryor, atty. gen.; William O. Butler and J. Richard Piel, asst. attys. gen., Medicaid Agency; Herman H. Hamilton, Jr., deputy atty. gen.; and James H. McLemore of Capell, Howard, Knabe & Cobbs, P.A., Montgomery, for appellants.

Jesse P. Evans III and Laurie Boston Sharp of Najjar Denaburg, P.C., Birmingham; and Jack G. Paden and Bill Thomason of Paden & Thomason, Bessemer, for appellees.

HOUSTON, Justice.

The defendants, Gwendolyn H. Williams, in her capacity as commissioner of the Alabama Medicaid Agency, and the State of Alabama, appeal from a partial summary judgment in favor of the plaintiffs. The plaintiffs are a class of ambulance companies and other providers of medical services to two statutorily defined groups of persons covered under the Medicare Act, 42 U.S.C. § 1395, and the Medicaid Act, 42 U.S.C. § 1396. We affirm in part, reverse in part, and remand.

The named plaintiffs in this action also filed an action in the United States District Court for the Middle District of Alabama, Northern Division, challenging the legality of the rate of reimbursement established by the commissioner for certain medical services provided to the two groups referred to above (known as "qualified Medicare beneficiaries" (or "QMBs") and "dual eligibles"), and seeking declaratory and injunctive relief. Approximately two months later, the plaintiffs filed the present class action in a state court. The state action challenged the legality of the commissioner's reimbursement plan on the same grounds alleged in the federal action and, in addition, it sought to require the commissioner to authorize retroactive payment to the plaintiffs for previous services they had provided to "QMBs" and "dual eligibles." The plaintiffs also sought to stay proceedings in the state action until the federal action had been concluded. The federal district court ruled in favor of the defendants; however, the Eleventh Circuit Court of Appeals reversed the district court's judgment, holding that the commissioner's reimbursement plan was not in accordance with federal law. For an explanation of what "QMBs" and "dual eligibles" are, and to better understand the facts and issues surrounding this dispute, see Haynes Ambulance Service, Inc. v. Alabama, 36 F.3d 1074 (11th Cir.1994), and Pennsylvania Medical Society v. Snider, 29 F.3d 886 (3d Cir.1994), which was relied on by the Haynes court. Relying on the Eleventh Circuit's decision, the plaintiffs moved in the state court for a partial summary judgment as to liability. The trial court granted their motion, stating:

"This cause came to be heard upon the Plaintiffs' Class Motion for Summary Judgment as to Liability. The Defendant Gwendolyn Williams, as Commissioner of the Alabama Medicaid Agency, filed an Objection to Plaintiffs' Motion for Summary Judgment. Therefore, the court heard oral argument on November 6, 1995.

"Upon consideration of the motion, argument of counsel, the briefs filed, and the opinion of the Eleventh Circuit Court of Appeals in Haynes Ambulance Service, et al. v. State of Alabama, et al., 36 F.3d 1074 (11th Cir.1994), the Court is of the opinion that the Plaintiffs' motion is due to be granted.

"It is further ORDERED, ADJUDGED and DECREED that since January 1, 1989, the State Medicaid Plan has limited payment of Medicare Part B Cost-Sharing to the Medicaid rate in violation of federal law. Defendants are enjoined henceforth from limiting payment of claims by members of the certified class to the Medicaid rate, and the Court directs the Defendants to apply the Medicare rate in determining reimbursement for Part B Cost-Sharing.

"The Court further finds that Defendants are liable for all claims submitted by the members of the certified class for services rendered since January 1, 1989, for Part B Cost-Sharing reimbursement the class members would have received but for the application of the unlawful Medicaid rate cap, subject to the Court's later review of whether these claims otherwise comply with applicable laws and the Medicaid Administrative Code, including limitations periods for submitting claims or appeals from claims, and what amount of reimbursement is due.

"The Court has determined that there are no genuine issues of material fact as to the Commissioner's liability and there being no just reason for delay, a Final Judgment pursuant to Rule 54(b) of the Alabama Rules of Civil Procedure is hereby GRANTED as to the liability of the Defendants as to the claims set out in Plaintiffs' Complaint, and the Clerk is directed to enter such judgment."

After a thorough consideration of the record, the briefs, the parties' oral arguments, and the Eleventh Circuit's decision in Haynes, we find no basis upon which to reverse the trial court's judgment insofar as that judgment is based on the Eleventh Circuit's interpretation of federal law. Therefore, we affirm the following portion of the trial court's order:

"It is further ORDERED, ADJUDGED and DECREED that since January 1, 1989, the State Medicaid Plan has limited payment of Medicare Part B Cost-Sharing to the Medicaid rate in violation of federal law. Defendants are enjoined henceforth from limiting payment of claims by members of the certified class to the Medicaid rate, and the Court directs the Defendants to apply the Medicare rate in determining reimbursement for Part B Cost-Sharing."

However, we find persuasive the defendants' contention that the trial court lacked subject matter jurisdiction to order the commissioner to retroactively reimburse the plaintiff class for services rendered by that class since January 1, 1989.

In Gunter v. Beasley, 414 So.2d 41, 48 (Ala.1982), this Court stated the general Alabama rule with respect to sovereign immunity:

"Section 14 prohibits the State from being made a defendant in any court of this state and neither the State nor any individual can consent to a suit against the State. Aland v. Graham, 287 Ala. 226, 250 So.2d 677 (1971). The application of Section 14 to suits against officers of the State was treated in Ex parte Carter, 395 So.2d 65 (Ala.1980), as follows:

" '... In determining whether an action against a state officer is barred by § 14, the Court considers the nature of the suit or the relief demanded, not the character of the office of the person against whom the suit is brought. Wallace v. Board of Education of Montgomery County, 280 Ala. 635, 197 So.2d 428 (1967). This Court has held that § 14 prohibits suit against State officers and agents in their official capacity or individually when a result favorable to the plaintiff would directly affect a contract or property right of the State. Southall v. Stricos Corp., 275 Ala. 156, 153 So.2d 234 (1963).

" 'There are four general categories of actions which in Aland v. Graham, 287 Ala. 226, 250 So.2d 677 (1971), we stated do not come within the prohibition of § 14: (1) actions brought to compel State officials to perform their legal duties; (2) actions brought to enjoin State officials from enforcing an unconstitutional law; (3) actions to compel State officials to perform ministerial acts; and (4) actions brought under the Declaratory Judgments Act, Tit. 7, § 156, et seq., [Ala.Code of 1940,] seeking construction of a statute and its application in a given situation. 287 Ala. at 229-230, 250 So.2d 677. Other actions which are not prohibited by § 14 are: (5) valid inverse condemnation actions brought against State officials in their representative capacity; and (6) actions for injunction or damages brought against State officials in their representative capacity and individually where it was alleged that they had acted fraudulently, in bad faith, beyond their authority or in a mistaken interpretation of law. Wallace v. Board of Education of Montgomery County, supra, 280 Ala. at 639, 197 So.2d 428; Unzicker v. State, 346 So.2d 931, 933 (Ala.1977); Engelhardt v. Jenkins, 273 Ala. 352, 141 So.2d 193 (1962).' "

(Emphasis in original.)

The summary judgment in the present case would no doubt require the state to pay millions of dollars to qualified members of the plaintiff class in the form of reimbursement for services rendered since January 1, 1989. Therefore, applying well-established principles of state sovereign immunity, we conclude that the judgment would "directly [affect] a ... property right of the State." Consequently, unless this action can be fairly placed in one of those categories this Court has recognized as not coming within the prohibition of § 14, then that portion of the judgment requiring the retroactive reimbursement to the plaintiffs is unconstitutional and must be set aside.

Relying primarily on State of Alabama Highway Department v. Milton Construction Co., 586 So.2d 872 (Ala.1991); Gunter v. Beasley, supra; Curry v. Woodstock Slag Corp., 242 Ala. 379, 6 So.2d 479 (1942); and Horn v. Dunn Brothers, Inc., 262 Ala. 404, 79 So.2d 11 (1955), the plaintiff class "seeks for the Alabama Department of Medicaid to perform a clear ministerial or legal duty in reimbursing [the class] with monies that are due and owing for services rendered to the State which the State failed to pay under a mistaken interpretation of the law." In Milton, supra, this Court, holding that the State Highway Department was under a legal duty to pay for road construction work that the department had duly contracted for, stated:

"Ala.Code 1975, § 23-1-40, states that it is the Highway Department's duty to maintain the roads of this state, and § 23-1-53 authorizes the Highway Department to make contracts for the construction or maintenance of highways, roads, or bridges in the state. Section 23-1-62(b) provides that the Highway Department [is to] use a portion of the funds...