G I FhDLVF, MFDICAI, CEh TER, IYC .
Petitioner and Appellant,
MONTANA DEPARTMENT OF PC'BLIC
HEALTH AND HCMAX SERVICES.
Respondent and Respondent.
APPEAL FROM: District Court of the Seventh Judicial District,
In and for the County of Dawson,
Honorable Richard G. Phillips, Judgc Presiding
COUXSLL OF RECORD:
For Appellant:
Lonaine A. Schneider, Schneider Law Offices, Glendive, Montana
For Respondent:
Greg07 G Could. Luxan and Murfitt, Helena, Montana
John C Koch, Department of Pubhc Health and Human S ~ I - ~ I C C S ,
Helena. Montai~a
Subm~tted Briefs. September 6, 2001
on
Dec~ded June 18, 1002
Justice Jim Rice delivered the Opinion of the Court.
,, I
- Glcndi-.e Medical C'entcr, inc. (GMC:), appeals iYom an order ofehs Moi~tana
Seventh
Judicial District, Dabvson County, affinziing thc Findings of Fact and Conclusions of Law
of the Board of Public Assistance of the State of Montana. We affirm.
"1 We restate the issue on appeal as follows:
23 Did the District Court err in determining that the decision of the Board of Public
Assistance was legally correct?
BA CKC;ROUND
14 The following relevant facts are taken from the undisputed findings of the hearings
officer for the ~Montana
Board of Public Assistance. Additional facts will he included in the
discussion as necessary.
715 GMC operates a hospital, nursing home, and the Eastern Montana Veterans Home
(EMVH), in Glendive, Montana. EMVH is a state-owned, 80-bed health care facility
licensed by the ,Montana Department of Public Health and Human Services (DPHI-IS) to
participate in the Montana Medicaid program as a skilled nursing facility for the sole use of
veterans and their spouses. GMC originally contracted with the fonner Department of
Comections and Human Services (DCHS) to operate EMVH on behalf of DCHS. Since the
July 1; 1905, effective date of an agency reorganization mandated by the 1995 Legislature.
DPFIFiS has succeeded DCHS as the state agency party to the contract with GMC for the
operation of EMVH.
!:6 GMC began manageme~tt
and operation of the newly-constructed EMVI-I in July
5 . GMC receives revenue froin several sources for this operation of EMVI-?: including
Vetclans Administration (VA) pcr diem payments. Medicald rc~mbursemenrs,payments
made by patients from their own resources, workers' cornpensatlon, and prihatc insurance.
Soon after assuming management and operation of EMVH. GMC applied for enrollment of
EMVH in the Montana Medicaid program as a proTider of skilled nurslng faciltty services.
GMC executed a provider enrollment form and a Medicaid nursing facility provider
agreement on behalf of EMVH. and began submitting claims to Medicare and Medicatd in
August 1995, after receiving its ceriification from the state.
:,7 GMC initially leeeibcd Mcdicard payments on behalf of EMVH based upon an
tnterlm, temporary Medicaid rate. until it filed a cost report with DPHt-ISbased upon at least
six months of participation in the Medicaid program. Upon receiving the cost report,
DPHHS then calculates the proper Medicaid rate through an adjustment process based upon
the reported costs submitted by EMVH. However, prior to submission of the six-month cost
report, due in February 1996, GMC and DPHHS initiated discussions regarding the correct
method of reporting the VA per diem payments.
78 GMC asserted that the Administrative Rules of Montana did not require it to report
its receipt of the monthly VA per diem payment as anything other than a subsidy to offset
against its general operating expenses. The rate at which Medicaid reimburses aparticipatiug
medical facility is based upon operating costs reported in the facility's annual cost report,
Medicaid reimbursement rates therefore differ from facility to facility. Under GMC's
3
3u!.taa~a y , ~.s33!~.1aspale1a~-1ea!pawJO $so3 ayl jo ued Le~jap r u a d e d waip iad sq
s
'~ JO
$ey$pue 'nav ' ( e ) ( z ) p ~ t1'9b a[na Aq paugap se Sjred p.~!y$e s! vtii\ ayl 'eue~uom s a ~ n t j
a2t!$e.uslulmpv aq) 01 Zu!p.~oaae 'leyj 8~1pn[auoa JO suo!sn~auoapue laej $0 sZu~pug
. . 'fie1
a
paia$ualau!ur.exs Z u ! ~ e a ~ q , ~ a g ~ s,[e~auat)Latuo~)v
a o eueiuoyq ayljo UO!S!A!-J saD!.raS
[&a7 kaua4v aq) uroy nu!urerg - I u u e a ~ Lq play Alluanbasqns s e Zu!raaq lrej
e ~ 1ljL
'anss!
aql au!wralap 01 Zu!.ieay a~g-c.qs!u!wpe ue palsanbar pue Ll~[tqer[ e
. . . Aped-p~ryl se s ~ u a d e d
warp ad vtii\ L[q$uow ayl Zu!podar $so3
'lsalord rapun i ~ o d a ~ puoaas e pallttuqns 3 ~ 9
a~
w a d v d Xl![!qs!l Lped-p.t!y$ s se l u a d e d wa!p rad vtii\ ayl 8 u ! l a a ~ pedal $so3puoaas e
pa~)!u~qns ssalun 3 1 %01 ~uauriCedluauras~nqur!a~
3~4'3 ~ p!ea!pan; ayl asealal o$pasnjar pue
Zuypoda~jo l $sureZelasjjo ue se sluauiLed
poylaur s ~ ypalaafa~ W H ~ - .sasuadxa Zur$z.~ado
S J
ua!p rad j ~ 0)
f aq$ ~ U ! & I O ~ ~ " S H H ~ - J pod31 $so3 sl! pal$!wqns X~luanbasqns ~ 9
3 ()~b
.Zu;uoda~
jo poqlaur pa~saZZns . .
s,c)l/tt) lapun ueql sluawAed )uawas.~nqw;alprearpajq jo ~011anpa.1
~adaals u! Zu!l[nsal
e 'L[)~OLU yaw .toj l u a d e d watp .lad VA ayj JO junoue a$eZa~48e
aql Lq sluawas.mqw!a.i p1e3rpam s,3lqt) aanpa~
. . is
plnont $uawLzdLued-p~rql se sluaur&ed
warp lad ay$ %!podax A$rlxqerl
~ l u a d e d . . . Lped-p.~!yi il se l u a d e d warp rad F.A iC[q$uo~u
"a~a:~%oq H H ~ ~6ir
ayt 3loda.i 03 3 ~ paqnba sa[nmallle.ijsju!wpr? aqj ley3 panz~e
9 ' S
-sison 2ui;v;ado pauodai . i a . q jo ijnsai F! ss ia.uol aq pjnc.i. ~ d q i )
. , 1-c UI~!P1313
pasmqwlal plearpayd q 3 ! q ~ 31813tp "tua~d13d 3yl 9ug.10da.1j o poq]aur palsa88ns
Examiner concluded, thereibre, that the VA per diem payments received by GMC were to
be reported as a third-party payl-ncnr on Prledicaid reimbursement ciairns forms.
712 The ;Montana Board of Public Assistance (Board) adopted the Hearing Examiner's
conclusions, and GMC filed a Petition for Judicial Review challenging the Board's
interpretation and application of the laws concerning third-patty liability. The District Court
affirmed the conclusions of the Board and determined that the policy of DPHHS to treat VA
per diem as third-party liability was supported by its adopted rules. CMC appeals the order
of the District Court and requests that this Court reverse the District Court and remand this
matter to the DPHHS to reconcile GMC's Medicaid reimbursement claims to conform to its
suggested interpretation of the law, requiring DPHHS to accept GMC's initial cost reporting
method.
7\13 Did the District Court err in determining that the decision of the Board of Public
Assistance was legally correct?
7\14 When reviewing an agency decision, we apply the same standard as did the district
Power Co. V . Monturlu Public Serv. Con2 '12; 200 1 MT 102, fi 18, 305 Mont.
court. il/iorzt(~na
260, j' 18; 26 P.3d '91,Ii 18. Where an agency's interpretation has stood unchallenged for a
considerable length of time, it will be regarded as a great importance in arriving at the proper
1
1
Po~t'er, 24. However, even "where a particular meaning has been
construction. ~Clontirna
ascribed to a statute by an agency through a long and continued course of consistent
interpretationl resulting in an identifiable relianec, . . such adn-iinistrativeinterpretations are
;
not binding on the courts: rather, they arc entitled to kcspcctfuLirl consideration."' !%4oixtana
Iic;tvcrl 7 25 (cixing Doe v. irolbtrrg (i976), 171 Mont. 97:100, 555 P.2d 753: 754;).
q115 This Court generally applies the samc principles in construing administrative rules as
are applicable to our interpretation of statutes. Stute v, lncaslzola, 1998 MT 184,B 11,289
Mont. 399, 1' 11,961 P.2d 745,lj 11 (citation omitted). The function of the court with respect
to statutory construction is to interpret the intention of the statute or rule, if at all possible,
from the pla~nmeanrng of the words, and if the meaning of the statute or rule can be
deterinined from the language used, the court is not at liberty to add or to detract from the
language therein. Incusfiola,1' 1 1: l'caulsen v. Bonarlza Steak House ( 1 987), 225 Mont. 191,
197,733 P.2d 335,339. Additionally, absent ambiguity in the language of the statute or rule,
thls Court may not cons~der
legislative history or any other means of statutory construction.
McKiirdy v, Vielleux, 2000 MT 264,Y 22, 302 Mont. 18,1/ 22, 19 P.3d 207.1 22 (citation
omitted).
116 Rule 46.12.304(2)(a), '4RM (1995) [renumbered 37.85.407(2)(a)], provides:
A third party is defined as an individual, institution, co~poration, public or
or
private agency that is or may be liable to pay all or part of the cost of medical
treatment and medical-related services for personal injury, disease, illness, or
disability of a recipient of medical assistance from the department or a county
and includes but is not limited to insurers, health senice organizations, and
parties liable or who may be liable in tort. Indian health services is not a third
party within the meaning of this definition.
117 Rule 46.12.304(1), ARM [renumbered 37.85.407(1)], pro~ides part:
in
No payment shall be madc by the department for any medical senrice for
which there is a known third party who has a legal liability to pay for that
medical service. . . .
7/18 Rule 46.12.309(lJjc), ARM [renumbered 37.85.4151, provides in pa&
(1 j Medicaid \\-ill pay 0.114. for medical expenses:
(c) for v,h~chthird party payment 1s not a\ailable.
7jt9 The Hearing Examiner concluded and the Board agreed that the Veterans
Administration is a public agency liable to pay part of the cost of medical-related sen,iees
of qualified veterans and spouses of veterans, andis therefore a third party as defined by Rule
46.12.304(2)(a), ARM. The VA per diem payments, thus characterized as third-party
liability payments, reduced GMC and EMVH's Medicaid reimbursement payment under
Rules 46.12.304(1) and 46.12.309(1)(c), A M .
7j20 GMC asserts that this intepretation is legally incorrect, and argues that there are
legally relevant distinctions between the payments made by the specified third parties in Rule
46.12.304(2)(a), ARM (insurers, health service organizations, and parties who may be liable
in tort), and the per diem payments made by the VA. GMC notes that the liabilities identified
in Rule 46.12.304(2)(a), ARM, are instances where liable third parties make payments which
are paid directly to and assignable by the patient to the health care provider. The VA per
diem payment, however, is an aggregate, lump sum payment from the VA made directly to
GMC and is neither receivable nor assignable by an itidividual veteran. An additional
distinction noted by GMC is that thc VA per dieni payments are not portable. and therefore
will not follow a particular veteran if he or she were to transfer to another medical facility.
'j21 Citing no authority or alternative definition other than Rule 46.12.304(2)(aj7ARM,
GMC argues that the essence of a third-patty liability consists of an obligation owed to the
7
patient, cnibrceable by the patient, dircciiy payable to the patient (similar to workers'
compenv~tion Socia! Securit:y), assip~akkle the patient, and one that is portable ( o
and by n:
eonringent on facility).
7/22 DPHHS responds that the above distinctions between the identified third parties in
Rule 46.12.304(2)(a). PIRM, and VA per diem payments are legally insignificant when
considering the plain definition of "third party" and the non-exclusivity of the parties listed
within thc rule. DPHHS argues that the VA qualifies as a third party under a plain reading
of the rule because the VA is a public agency liable to pay pat? of the cost of medical
treatment and medical-related services to eligible veterans. DPHHS argues that nothing more
than this is required to qualify as a third party under the rule's plain language.
7/23 DPHHS notes that the record stands undisputed that VA per diem payments are made
on behalf of particular eligible vcterans toward the cost of actual patient days of medical
treatment and medical-related services provided at EMVH for each veteran's injury, disease,
illness or disability. The aggregate, lump sum VA per diem payment is therefore attributable
to services provided to a particular resident for a particular patient day at EMVH. DPHHS
further notes that the V.4 will not remit the per diem payment to GMC unless GMC subrnits
medical records accurately reflecting the number of days of care provided at EMVH to each
particular eligible veteran.
1/21 Initially we note that neither party argued in the District Court or on appeal that the
language in the administrative rules is ambiguous; nor did eitller party assert that the rules
impermissibly exceeded the enabling statute or were improperly adopted by the agency. See
8
5 2-4-305(6)?MGA; Hnizc~~hi'czhoney, 2001 MT 201. >/";
v. 306 Mcnt. 288. 6, 32 P.3d
i254,T 4; 730
Rick v. State ijept. qfJus;ice (!(iKG), 224 .%lent. 455,458-59, P.2d 418,421.
Because we conclude that the language ofRule 46. i 2.304(2')(a), ARM, defining 'third party"
is unambiguous, this Court needs to look no further than its plain meaning to determine
whether the District Court erred as a matter of law when it concluded tkat the VA was a third
party as defined in Rule 46.12.304(2j(a), ARM. McKirdj., 1 22; Iizcnshola, 1I I ; Paulsen,
1
225 Mont. at 197, 733 P.2d at 339.
qj25 The relevant part of Rule 46.12.304(2)(a), ARM, in the instant matter defines "third
partynin part as: a public agency that is or may be liable to pay all or part of the cost of
medical treatment and medical-related sewices for personal injury, disease, illness, or
disability. The language of the rule does not require that a third-party liability be directly
payable to the patient, assignable by the patient, enforceable by the patient, nor portable, as
argued by GMC.
126 As noted by DPHHS, the undisputed record reflects that the VA per diem payment is
remitted to GMC only on behalf of particular eligible veterans toward the cost of actual
patient days of medical treatment and medical-related services for the veteran's injury,
disease or illness. More specifically, the record reflects that only eligible veterans are
permitted to be admitted to EMVH and that, as long as eligibility requirements are met, GMC
is cntitled to receive the VrZ per diem payinent for that particular patient for his or her
n~edical
treatment and services. For the purposcs of defining "third party,' it is therefore
irrelevant that GMC receives the per diem payment as a lump sun1 payment and that no
patient is entitled to receive ihe per diem Scnefit individually.
fi27 Furtl~ermore~
pursuant to Rules 46.12.304(1) and 46.L2.309(1)(c)l ARM, neither
DPHHS nor Medicaid will make payment for medical treatment or medical-related services
for which a third party is liable. If GMC did not offset the VA per diem payment on its
Medicaid reimbursement claims fonns, GMC would receive partial duplicate payment for
medical services rendered to the same patient for the same disability, injury, disease or
illness. This is precisely what the administrative rules are intended to prevent. Moreover,
DPHHS's practice and policy treating the VA per diem payments as third-party liability
payments "con3porls with the general principle that 'Medicaid is intended to be the payer of
last resort, that is, other available resources must be used before Medicaid pays for the care
of an individual enrolled in the Medicaid program."' Estate qf Kruege~ Ki~lzla~zd
v. Co.
Social Services (N.D. 19941, 526 U.W.2d 456,464 (citing New Yor-k Sfate Dept. of Social
Services v. Nowen (2nd Cir. 1988), 846 F.2d 129, 133).
'128 GMC also argues that DPHHS has no authority to interpret its own rule to require VA
per diem to be reported as third-party liability in the absence of an express authorization or
requirement within the rule. Essentially, GMC argues that nothing in the rule puts GMC on
notice that it must deduct VA per diem payments from Medicaid reimbursement claims for
individual veterans because DPHI-IS did not adopt a rulc specifically requiring that VA per
diem be '"treated like" third-party liability.
712NUPPIHS i s enabled to adopt rr~ies
necessary for thc adm~nrstrationof the Montana
Medicaid program pursuant to ,tj 53-6-1 i 3 ?MCA. The definition oi'"ruie" is provided in the
Montana Administrative Procedure Act, 5 2-4-1 02(1 I ), MCA. That section provides in part:
"Rule" means each agency regulation, standard, or statemcrit of general
applicabiltty that implements, interprets, or prescribes law or poltcy or
describes the organization. procedures, or practice requirements of an agency.
A valid and enforceable agency rule cannot exceed its enabling statute and must be properly
adopted pursuant to the requirements in $: 2-4-301, et seq., MCA. See, e.g., Northwest
AirLines, Itic., v. Sfare Tax .4ppenl B o n d (1986), 221 Mont. 441,445, 720 P.2d 676, 678.
730 GMC does not assert that Rule 46.12.304(2)(a), ARM, exceeds its enabling statute or
was improperly adopted, but that it does not provide specific notice that a third-party liability
will be something other than an obligation owed to the patient, enforceable by the patient,
directly payable to the patient, assignable by the patient and portable. In other words, GMC
argues that the definition of a third party in Rule 46.12.304(2)(a), ARM, is inconsistent with
its own suggested definition and?as such, provides no notice that VA per diem payments are
a third-party liability.
731
1 However, the plain language of Rule 46.12.304(2)(a), ARM, provides specific notice
that a public agency will be considered a third party if it is liable to pay all or part of the cost
of medical treatment and medical-related services for a person's personal injury, disease or
illness. VA is a public agency contributing per diem payments for medical services to
individual veterans at EMVt-L. Under a reasonable interpretation permitted by the wording
of the rule, this is sufficient for the VA to qualify as a third party. This Court will not
11
conclude that the rule is invalid or unenforceable simply because GMC subnriis an alternative
definition o f third party bascd on the i~onexciusive
examples niihin the rule. V i e conclude
that Rule 46.1 2.304(2)!a), ARM, provides notice. or a "statement of general applicability,"
pursuant to $ 2-4-102, MCA, which sufficiently identifies those considered third parties.
732 Based upon the undisputed facts and a plain reading of the administrative rule, we
conclude that DPHHS's interpretation of Rule 46.12.304(2)(a), ARM, is not plainly
inconsistent with the spirit nor the plain language of the rule, but lies within the range of
reasonable interpretation permitted by the wording. Consequently, DPHHS was correct in
concluding that Rule 46.12.304(2)(a), ARM, when read in conjunction with Rules
ARM, requires GMC toreporl the VAper diem payments
46.12.304(1) and 46.12.309(1)(~),
as third-party liability payments for purposes of Medicaid reimbursement. We conclude,
therefore, that the District Court did not e n in determining that the decision of the Board of
Public Assistance was legally correct.
733 Affirmed.
Wc concur: