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Alpine Nursing Home, Inc. v. State of Rhode Island Executive Office of Health and Human Services
Superior Court of Rhode Island, Providence
April 9, 2018
ALPINE NURSING HOME, INC., d/b/a ALPINE REST HOME; BANNISTER OPERATIONS ASSOCIATES LLC, d/b/a BANNISTER CENTER FOR REHABILITATION AND HEALTH CARE; BURRILLVILLE HEALTH CENTER ASSOCIATES LIMITED, d/b/a BAYBERRY COMMONS; BERKSHIRE PLACE, LTD.; BRENTWOOD NURSING HOME, INC.; MEDICAL HOMES OF RHODE ISLAND, INC., d/b/a BRIARCLIFFE MANOR; CHARLESGATE NURSING CENTER; CORTLAND PLACE HEALTH CENTER, INC.; 10 WOODLAND DRIVE OPERATIONS LLC, d/b/a COVENTRY SKILLED NURSING AND REHABILITATION; CRA-MAR CORPORATION, d/b/a CRA-MAR MEADOWS; CRESTWOOD NURSING & REHABILITATION CENTER, INC.; 198 WATERMAN AVENUE, LLC, d/b/a EASTGATE NURSING & REHABILITATION CENTER; 100 WAMPANOAG TRAIL OPERATING COMPANY, LLC, d/b/a ELDERWOOD AT RIVERSIDE; 981 KINGS TOWN ROAD OPERATING COMPANY, LLC, d/b/a ELDERWOOD OF SCALLOP SHELL AT WAKEFIELD AND SCALLOP SHELL NURSING AND REHABILITATION CENTER; PROSPECT CHARTERCARE ELMHURST, LLC, d/b/a ELMHURST EXTENDED CARE FACILITY; ELMWOOD HEALTH CENTER, INC., d/b/a ELMWOOD HEALTH CENTER AND ELMWOOD NURSING & REHABILITATION CENTER; LIFE CARE CENTERS OF AMERICA, INC., d/b/a EVERGREEN HOUSE HEALTH CENTER; THE FRIENDLY HOME, INC.; GRACE BARKER NURSING CENTER, INC., d/b/a GRACE BARKER HEALTH; 333 GREEN END AVENUE OPERATIONS LLC, d/b/a GRAND ISLANDER CENTER; 100 CHAMBERS STREET OPERATIONS LLC, d/b/a GRANDVIEW CENTER; 732 PUTNAM PIKE OPERATIONS LLC, d/b/a GREENVILLE SKILLED NURSING AND REHABILITATION; HARBORSIDE RHODE ISLAND LIMITED PARTNERSHIP, d/b/a GREENWOOD CENTER; HATTIE IDE CHAFFEE NURSING HOME; HEATHERWOOD RI LLC, d/b/a HEATHERWOOD REHABILITATION & HEALTHCARE CENTER; ASLC RI II, LLC, d/b/a HEBERT HEALTH CENTER; 80 DOUGLAS PIKE, LLC, d/b/a HERITAGE HILLS; HOLIDAY RETIREMENT HOME INC., d/b/a HRC CORP.; HOPKINS MANOR, LTD.; 660 COMMONWEALTH AVENUE OPERATIONS LLC, d/b/a KENT REGENCY; SHADY ACRES OPERATIONS LLC, d/b/a KINGSTON CENTER FOR REHABILITATION AND HEALTH CARE; UNITED METHODIST HEALTH CARE CENTER, d/b/a LINN HEALTH CARE CENTER; THE MANSION, INC.; RYAN HEALTH CENTER, INC., d/b/a MORGAN HEALTH CENTER; OAK HILL OPERATIONS ASSOCIATES LLC, d/b/a OAK HILL CENTER FOR REHABILITATION & HEALTH CARE AND OAK HILL REHABILITATION & HEALTH CARE CENTER; OAKLAND GROVE ASSOCIATES, L.P., d/b/a OAKLAND GROVE HEALTH CARE CENTER; ATHENA ORCHARD VIEW LLC, d/b/a ORCHARD VIEW MANOR REHABILITATION AND NURSING CENTER; HARKEN, INC., d/b/a OVERLOOK NURSING HOME; PARK VIEW OPERATIONS ASSOCIATES LLC, d/b/a PARK VIEW CENTER FOR REHABILITATION AND HEALTH CARE; 70 GILL AVENUE OPERATIONS LLC, d/b/a PAWTUCKET SKILLED NURSING AND REHABILITATION CENTER; THE BURRILLVILLE NURSING HOME, INC., d/b/a PINE GROVE HEALTH CENTER; RIVERVIEW NURSING HOME, INC., d/b/a RIVERVIEW HEALTHCARE COMMUNITY; ROBERTS HEALTH CENTRE, INC.; ROYAL MIDDLETOWN NURSING CENTER LLC; ROYAL WESTERLY, LLC; KAR LITTLE BOX, LLC, d/b/a SILVER CREEK MANOR; CPL (SOUTH COUNTY) LLC, d/b/a SOUTH COUNTY NURSING AND REHABILITATION CENTER; ALLEN'S HEALTH CENTER, INC., d/b/a SOUTH KINGSTOWN NURSING & REHABILITATION CENTER; THE SAINT CLARE HOME, d/b/a ST. CLARE-NEWPORT; SUMMIT RI SNF LLC, d/b/a SUMMIT COMMONS REHABILITATION AND HEALTH CARE CENTER; SUNNY VIEW NURSING HOME, INC.; TOCKWOTTON HOME, d/b/a TOCKWOTTON ON THE WATERFRONT; ASLC OPCO RI I, LLC, d/b/a TRINITY HEALTH AND REHABILITATION CENTER; VILLAGE HOUSE CONVALESCENT HOME, INC., d/b/a VILLAGE HOUSE NURSING & REHABILITATION CENTER; 642 METACOM AVENUE OPERATIONS LLC, d/b/a WARREN SKILLED NURSING & REHABILITATION; WATERVIEW RI SNF LLC, d/b/a WATERVIEW VILLA REHABILITATION AND HEALTH CARE CENTER; WARWICK HEALTH CENTRE, INC., d/b/a WEST SHORE HEALTH CENTER; WESTERLY HEALTH CENTER ASSOCIATES, L.P.; GREENE ACRES HEALTH CENTER, LLC, d/b/a WOODPECKER HILL HEALTH CENTER, Plaintiffs,
STATE OF RHODE ISLAND EXECUTIVE OFFICE OF HEALTH AND HUMAN SERVICES and STATE OF RHODE ISLAND DEPARTMENT OF HUMAN SERVICES, Defendants. v.
Plaintiff: Bruce Gladstone, Esq.
Defendant: Gregory Hazian, Esq.
matter is before the Court on Plaintiffs'-a group of
fifty-nine skilled nursing facilities (Plaintiffs)-appeal of
an Administrative Hearing Decision (the Decision) issued by
Appeals Officer Jane Morgan (Hearing Officer) in favor of
Defendants, the State of Rhode Island Executive Office of
Health and Human Services (EOHHS) and the State of Rhode
Island Department of Human Services (collectively, the
Defendants). Jurisdiction is pursuant to G.L. 1956 §
42-35-15 of the Administrative Procedures Act.
Facts and Travel
40-8-19 of the Rhode Island General Laws, titled "Rates
of payment to nursing facilities" (the Statute) and the
Principles of Reimbursement for Nursing Facilities,
Attachment 4.19-D to the Rhode Island Medicaid State Plan
(the Principles of Reimbursement or the Regulations) govern
nursing facility reimbursement rates. The Statute dictates
how the reimbursement rates are determined. Long-term care
facilities furnish services in accordance with the
requirements of the Principles of Reimbursement. The State
pays the participating providers of long-term care facility
services the amount determined for services furnished by the
provider under the Principles of Reimbursement.
EOHHS is responsible for the management, supervision and
regulation of state and federally funded public financial
assistance programs, including those for the funding and
reimbursement of skilled nursing facilities detailed above.
While the Medicaid reimbursement system is rather complex,
only the relevant facts regarding the Medicaid reimbursement
system need be explained herein.
overview of the Statute's history is instructive. In the
Fiscal Year 2014 Budget, the General Assembly declared that
nursing home reimbursements would be connected to an
"inflation index" which would be set on October 1st
of each year. That same year, the General Assembly declared
that there would be no rate increase occurring October 1,
2013. Specifically, that year, § 40-8-19(a)(2)(vi) read:
"Adjustment of rates by the change in a recognized
national nursing home inflation index to be applied on
October 1st of each year, beginning October 1, 2012. This
adjustment will not occur on October 1, 2013, but will resume
on October 1, 2014." P.L. 2013, ch.144, art.
2015 Fiscal Year Budget also rescinded the nursing home
reimbursement increases scheduled for October of 2014 by
deferring increases to April 1, 2015. The statute (§
40-8-19(a)(2)(vi)) then stated: "Adjustment of rates by
the change in a recognized national nursing home inflation
index to be applied on October 1st of each year, beginning
October 1, 2012. This adjustment will not occur on October 1,
2013, but will resume on April 1, 2015." P.L. 2014, ch.
145, art. 18, § 1.
2016 Fiscal Year Budget, the General Assembly enacted two
significant amendments to § 40-8-19. The first amendment
provided: "Notwithstanding any law to the contrary, for
the twelve (12) month period beginning July 1, 2015, Medicaid
payment rates for nursing facilities established pursuant to
this section shall not exceed ninety-eight percent (98%) of
the rates in effect on April 1, 2015." P.L. 2015, ch.
141, art. 5. Essentially, this amendment (hereinafter, the
98% Provision) provided for a two percent (2%) decrease in
the reimbursement rate for a one-year period. Interpretation
of this amendment gives rise to this appeal. Additionally, in
the same 2016 Fiscal Year Budget, the General Assembly also
mandated that the October 1, 2015 rate increase would not
occur: "Adjustment of rates by the change in a
recognized national nursing home inflation index to be
applied on October 1st of each year, beginning October 1,
2012. This adjustment will not occur on October 1, 2013 or
October 1, 2015 but will occur on April 1, 2015." P.L.
2015, ch. 141, art. 5.
letter dated August 26, 2015, EOHHS imposed the 98%
Provision's two percent rate deduction on Plaintiffs,
with an effective date of August 1, 2015. See
Exhibit 8, Ex. 4 thereto. On June 30, 2016-the end of the
one-year period identified in the 98% Provision-EOHHS did not
discontinue or adjust the rate. Instead, the rate reduction
implemented through the 98% Provision remained in effect
until September 26, 2016,  when the Assistant Director, Finance
and Contract Management, of EOHHS, issued a notice, with an
effective date of October 1, 2016, which incorporated
Medicaid fee-for-service per diem Nursing Facility Payment
rates (the Rate Notice). Notably, when EOHHS issued the new
rate in the Rate Notice, it adjusted the rate using the rate
in effect on August 1, 2015 as the base rate. Admin. Hr'g
Tr. 4, Mar. 24, 2017.
Plaintiffs appealed the Rate Notice, arguing that EOHHS
improperly calculated and implemented the rates contained
therein. On October 27, 2016, pursuant to § 40-8-21(b),
a Rate Review Conference was held before Deputy Medicaid
Director Darren McDonald (Director McDonald). On November 22,
2016, Director McDonald issued a decision denying
Plaintiffs' rate appeals.
then timely appealed Director McDonald's decision to the
EOHHS Hearing Officer. At the hearings on March 3, 2017 and
March 24, 2017, the Hearing Officer undertook the task of
determining whether EOHHS, in setting the reimbursement rate
for nursing facility payment rates, properly calculated and
implemented the rates in accordance with applicable law.
Additionally, the parties disputed which date EOHHS should
have used in adjusting the rate. Plaintiffs aver that at the
conclusion of the 98% Provision's one-year period, the
rate should have been restored to the rate in place on April
1, 2015-the rate in effect prior to the 98% Provision. EOHHS
posits that it properly calculated the rates based on the
rate in existence on August 1, 2015, which reflected the two
percent rate cut the 98% Provision established.
appeal revolves around interpretation of the 98% Provision.
See § 40-8-19(b)(4). At issue is the meaning of
the 98% Provision phrase, which reads: "for the
twelvemonth (12) period beginning July 1, 2015."
Plaintiffs "interpret the language of the [98%
Provision] to provide for a retroactive restoration of the
rate to that of the higher June 2015 rate, prior to enactment
of the [98% Provision.]" Admin. Hr'g Dec. at 4.
Essentially, Plaintiffs contend that EOHHS improperly
factored the two percent rate reduction into the computation
when it calculated rates after June of 2016, rather than
using the previously existing higher base rate. Plaintiffs
stressed that if the "language is clear on its face,
then the plain meaning of the statute must be given effect,
" and, as a result, the Hearing Officer impermissibly
looked elsewhere to discern legislative intent. See
id. at 14-15. Nevertheless, Plaintiffs contend that even
in considering legislative intent, "there was no need
for the General Assembly to explicitly state that rates would
return to normal once the [98% Provision] expired; because
the [98% Provision] was embedded in the very statute that
established the normal rates." Id. at 17.
Similarly, Plaintiffs maintain that adding explicit language
providing that "once this expires, existing law will
revive itself" was unnecessary because the 98% Provision
itself provided an exact time limit of twelve months.
contrary, EOHHS contends that the language of the 98%
Provision, as well as the legislative intent and history,
does not provide for restoration. Instead, EOHHS asserts that
the 98% Provision allows for an increase of the nursing home
rate that will exceed ninety-eight percent of the rates in
effect on April 1, 2015 only if EOHHS should deem it
appropriate at the next rate adjustment. Admin. Hr'g
Dec. at 5. Additionally, EOHHS contends that its
calculation of the rate for April 1, 2015 and October 1, 2016
was consistent with § 40-8-19 and the Regulations.
See id. at 9. EOHHS relies on the legislative
history and intent and asserts that it acted in conformity
with the statute and the 98% Provision. EOHHS explained that
"Petitioners [sic] argument that the Legislature
intended for the 2% Per Diem Rate cut to expire is ...