Present: All the Justices
DEPARTMENT OF MEDICAL
ASSISTANCE SERVICES
OPINION BY
v. Record No. 032313 JUSTICE LAWRENCE L. KOONTZ, JR.
September 17, 2004
BEVERLY HEALTHCARE OF
FREDERICKSBURG, ET AL.
FROM THE COURT OF APPEALS OF VIRGINIA
In this appeal, we consider whether Code § 2.2-4030, which
provides in subsection (A) that an award of attorneys’ fees
“shall not exceed $25,000” in a civil case successfully
contesting the action of an agency of the Commonwealth, permits
parties whose claims are combined in a single action by
operation of Rule 2A:3(b) to recover individual awards of
attorneys’ fees up to the statutory maximum. We also consider
whether certain claims in the present case were barred by a
regulatory limitations period for challenging an agency action
under the Administrative Process Act (APA). Code § 2.2-4000 et
seq.
BACKGROUND
This appeal arises from a judgment of the Court of Appeals
of Virginia affirming a judgment of the Circuit Court of
Spotsylvania County (the trial court) that the Virginia
Department of Medical Assistance Services (DMAS) had improperly
determined that eight nursing home facilities1 in Virginia were
not entitled to increased Medicaid reimbursement for their
expenses under a higher cost ceiling applicable under 12 VAC
§ 30-90-20(C) to such facilities in Northern Virginia for
several years at issue. Department of Medical Assistance
Services v. Beverly Healthcare, 41 Va. App. 468, 484-85, 585
S.E.2d 858, 867 (2003). The Court of Appeals also affirmed the
trial court’s judgment that a determination by DMAS that five of
the claims for increased reimbursement by four of the providers
were time barred under the regulatory limitations period
applicable to those claims. Id. at 490, 585 S.E.2d at 869.
Additionally, the Court of Appeals affirmed the trial court’s
judgment that, pursuant to Code § 2.2-4030, the providers were
entitled to recover reasonable costs and attorneys’ fees and
that the $25,000 cap on attorneys’ fees provided by that statute
did not apply to any claim for costs. Id. at 491-95, 585 S.E.2d
at 870-72. However, the Court of Appeals rejected the
1
The nursing home facilities were Beverly Healthcare of
Fredericksburg, located in Spotsylvania County; Carriage Hill
Nursing Home, located in Spotsylvania County; Heritage Hall-
Front Royal, located in Warren County; Heritage Hall-King
George, located in King George County; Lynn Care Center, located
in Warren County; Oak Springs of Warrenton, located in Fauquier
County; Rose Hill Nursing Home, located in Clarke County; and
Warrenton Overlook Health and Rehabilitation, located in
Fauquier County. Each of these facilities was participating in
Virginia’s Medicaid program. For convenience, we will hereafter
refer to these parties collectively as “the providers.”
2
determination of the trial court that the $25,000 cap should be
applied on a per case basis, rather than a per party basis. Id.
at 495, 585 S.E.2d at 872.
In appealing from the judgment of the Court of Appeals to
this Court, DMAS has not assigned error to the determination
that the providers are entitled to the increased reimbursement
or that they are entitled to recover reasonable costs and
attorneys’ fees. Rather, DMAS has limited its appeal to the
question whether the Court of Appeals correctly determined that
Code § 2.2-4030 sets the cap for an award of attorneys’ fees at
$25,000 per party, rather than $25,000 for all parties who
contested the agency’s action in the case. By assignment of
cross-error, four of the providers challenge the determination
that five of their claims were time barred by the regulatory
limitations period. Because the Court of Appeals has fully
summarized the factual and procedural history of the case, id.
at 473-81, 585 S.E.2d at 861-65, we will confine our discussion
of the facts here to those directly relevant to the resolution
of the two issues before us.
DMAS is the agency of the Commonwealth responsible for
administering Virginia’s Medicaid program and has the specific
task of determining reimbursement rates for providers of nursing
home services to Medicaid recipients. Under the Virginia
Medicaid program, each participating provider receives periodic
3
payments during a fiscal year and then submits a corresponding
annual cost report to DMAS detailing the actual costs incurred
by the facility for the care and services provided to its
Medicaid patients. DMAS then reviews the provider’s cost report
and issues a “Notice of Program Reimbursement” (NPR) stating
which expenses are to be reimbursed and calculating the amount
of any overpayment or underpayment during the year. If the
provider disagrees with DMAS’s annual reimbursement
determination, it may appeal the determination under provisions
of the APA and “the state plan for medical assistance.” Code
§ 32.1-325.1(B).
The rate of reimbursement for a provider is determined, in
part, by its location in a particular geographic region or “peer
group” within the Commonwealth. Pursuant to 12 VAC § 30-90-
20(C), the Commonwealth is divided by DMAS into three such peer
groups: the Virginia portion of the Washington DC-MD-VA
Metropolitan Statistical Area (Northern Virginia MSA) peer
group, the Richmond-Petersburg MSA peer group, and the “rest of
the state” peer group. In general terms, the rate of
reimbursement for each peer group is based upon differing costs
of operation in each region of the Commonwealth. The eight
providers in this case were originally located in the “rest of
the state” peer group, which has a lower rate of reimbursement
than the Northern Virginia MSA peer group.
4
On June 30, 1993, the federal Office of Management and
Budget, which for statistical purposes designates certain
political jurisdictions that make up a particular metropolitan
area, updated the definition of the Northern Virginia MSA to
include the jurisdictions in which each of the eight providers
are located. The expanded definition of the Northern Virginia
MSA was subsequently adopted effective October 1, 1993 by the
Healthcare Financing Administration (HCFA), which administers
the federal Medicare program and determines reimbursement for
Medicare service providers in much the same way as DMAS
calculates Medicaid reimbursement. However, due to a
congressionally mandated freeze on additional federal spending,
it was further determined that the expansion of the Northern
Virginia MSA would not result in increased reimbursement for
Medicare providers within the newly added jurisdictions until
October 1, 1997. Relying on this determination, DMAS concluded
that Medicaid reimbursements also would not be affected by the
change in the Northern Virginia MSA until that date.
On September 26, 1996, the providers wrote to the Director
of DMAS requesting that he issue a “case decision” implementing
the June 30, 1993 expansion of the Northern Virginia MSA peer
group effective for all reimbursements for the cost of Medicaid
reimbursable services incurred by them on or after October 1,
1993. By letter dated October 4, 1996, the Director declined to
5
rule on the request and advised the providers that decisions
regarding reimbursement were appealable under the provisions of
the APA. In response, the providers advised DMAS that, while
they disputed the assertion that changes in peer group
classifications were appealable under the APA, they would appeal
the reimbursement amounts determined under NPRs for services
provided by them on and after October 1, 1993.
Following an informal fact-finding conference, DMAS
determined that the providers were not due additional
reimbursement and issued a letter ruling to that effect on May
1, 1998. The providers appealed this decision and a formal
hearing was held October 26, 1999. The hearing officer issued a
recommendation in favor of the providers on November 10, 2000.
However, the Director of DMAS rejected that recommendation in a
final case decision rendered on April 27, 2001. In rejecting
the hearing officer’s recommendation, the Director determined
that the delay in implementing the expanded definition of the
Northern Virginia MSA by HCFA for Medicare reimbursement
justified DMAS’s determination that Medicaid reimbursement would
also not be affected by the change until October 1, 1997. The
Director further determined that even if the peer group change
should have been made in 1993 so as to include the providers in
the Northern Virginia MSA, five of the NPRs had not been
appealed in a timely fashion because they were not appealed
6
within 90 business days of the NPRs being issued as required by
former 12 VAC § 30-90-131(3).2
The providers noted separate appeals of the Director’s
action to the trial court. However, pursuant to Rule 2A:3(b),
the appeals were consolidated in “the [trial] court having
jurisdiction that is named in the [first] notice of appeal . . .
filed.” As noted above, the trial court reversed the
determination by DMAS that the providers were not entitled to
increased reimbursement based upon the 1993 expansion of the
Northern Virginia MSA, but upheld the determination that five of
the claims were time barred. Finding that the providers had
“substantially prevailed” in their appeals, the trial court
ruled that they were entitled to recover costs and attorneys’
fees from DMAS. However, the court further ruled that “the
instant case constitutes a single civil case for purposes of the
$25,000 limit on the award of [attorney’s] fees pursuant to
. . . Code § 2.2-4030” and, thus, awarded each provider only
$3,125 for attorneys’ fees.
On appeal to the Court of Appeals, DMAS challenged the
trial court’s determination that the providers were entitled to
increased reimbursement, with the providers assigning cross-
2
12 VAC § 30-90-131 has subsequently been repealed. The
provisions governing appeals by nursing home facilities of
DMAS’s adjustments to NPR’s are currently set forth in 12 VAC
§ 30-20-540.
7
error to the determinations that five of the claims were time
barred and that Code § 2.2-4030 capped attorneys’ fees at a
total of $25,000 for all parties. As noted above, the Court of
Appeals’ holdings that the parties were each entitled to recover
up to $25,000 in attorneys’ fees and that five of the claims
were time barred are the issues to be addressed in this appeal.
DISCUSSION
We first consider DMAS’s assertion that the Court of
Appeals erred in holding that Code § 2.2-4030 permits each
prevailing party to recover up to $25,000 in attorneys’ fees,
rather than providing for a cap of $25,000 on attorneys’ fees
for all prevailing parties in a given case contesting the action
of an agency of the Commonwealth. Code § 2.2-4030(A), in
relevant part, provides that:
In any civil case . . . in which any person
contests any agency action, such person shall be
entitled to recover from that agency . . . reasonable
costs and attorneys’ fees if such person substantially
prevails on the merits of the case and the agency’s
position is not substantially justified, unless
special circumstances would make an award unjust. The
award of attorneys’ fees shall not exceed $25,000.
DMAS contends that because there was only one case before
the trial court, with one central issue common to each provider,
and only one agency case decision from which the providers
appealed, the trial court correctly decided that “the instant
case constitutes a single civil case” under Code § 2.2-4030 and
8
properly limited the providers’ overall award of attorneys’ fees
to a maximum of $25,000. Focusing on the first phrase of the
statute, “[i]n any civil case,” DMAS contends that the Court of
Appeals’ interpretation of Code § 2.2-4030 ignores the plain
language of the statute. We disagree.
It is well established that a statute should be read and
considered as a whole, and the language of a statute should be
examined in its entirety to determine the intent of the General
Assembly from the words contained in the statute. Colchester
Towne Condominium Council of Co-Owners v. Wachovia Bank, N.A.,
266 Va. 46, 51, 581 S.E.2d 201, 203 (2003). In doing so, the
various parts of the statute should be harmonized so that, if
practicable, each is given a sensible and intelligent effect.
Id. Thus, “[a] statute is not to be construed by singling out a
particular phrase; every part is presumed to have some effect
and is not to be disregarded unless absolutely necessary.”
Commonwealth v. Zamani, 256 Va. 391, 395, 507 S.E.2d 608, 609
(1998); accord Jeneary v. Commonwealth, 262 Va. 418, 430, 551
S.E.2d 321, 327 (2001). By focusing only on the opening phrase
of Code § 2.2-4030, it is DMAS, and not the Court of Appeals,
that has disregarded the plain language of the statute.
The plain language of Code § 2.2-4030 provides that “[i]n
any civil case . . . in which any person contests any agency
action, such person shall be entitled to recover from that
9
agency . . . reasonable costs and attorneys’ fees if such person
substantially prevails.” (Emphasis added). The clear import of
this language is that each person, including a corporate person,
who challenges an agency action in an appeal to the circuit
court under the APA and substantially prevails in that action is
entitled to recover attorneys’ fees under the statute. The
statute limits the recovery to “reasonable . . . attorneys’
fees” of not more than $25,000 and further permits the court to
deny relief where “special circumstances would make an award
unjust.” These limitations clearly apply to the award of
attorneys’ fees to “any person,” and are not in any way related
to or limited by the preliminary reference to “any civil case.”3
Accordingly, we hold that the Court of Appeals did not err in
reversing the judgment of the trial court limiting the total
recovery of attorneys’ fees to $25,000 for all of the providers.
We turn now to the assignment of cross-error by four of the
providers whose claims for increased reimbursement at the rate
3
DMAS contends that the Court of Appeals’ interpretation of
the statute will lead to absurd results and excessive awards in
cases where there are many parties represented by the same
counsel. However, broad discretion afforded to the trial court
by the statute to determine the award based upon what is
reasonable and just alleviates any concern that parties would be
awarded excessive fees or receive multiple recoveries for the
same fees. Indeed, in this case, the record shows that counsel
for the eight providers submitted a joint claim for attorneys’
fees well below the $200,000 maximum liability of the combined
potential limit to their claims.
10
applicable to the Northern Virginia MSA peer group for 1994 and
1995 were held to be time barred pursuant to former 12 VAC § 30-
90-131.4 In pertinent part, that regulation gave these providers
the right to appeal “within 90 business days following the date
of a DMAS notice of program reimbursement that adjustments have
been made to a specific cost report.” DMAS had concluded that
such a notice of program reimbursement “triggers the payment
dispute” and, accordingly in the present case, these providers
had 90 business days to file their appeals from the date on
which DMAS issued an NPR to them for each of the five claims in
question. It is undisputed that this was not done.
The providers assert, however, that the time limitation of
former 12 VAC § 30-90-131 has no application to their
administrative appeal because they were contesting the failure
of DMAS to include them in the Northern Virginia MSA peer group
for purposes of calculating the rate of reimbursement to them
rather than contesting the amount of reimbursement under each
NPR. In making this assertion, they note that former 12 VAC
§ 30-90-130(B)(2) provided that the “organization of
participating [nursing home facilities] into peer groups
according to location as a proxy for cost variation across
4
These four providers are Beverly Healthcare of
Fredericksburg, Oak Springs of Warrenton, Rose Hill Nursing
Home, and Warrenton Overlook Health and Rehabilitation.
11
[state] facilities with similar operating characteristics” was a
“[n]onappealable” issue. In essence, these providers assert
that their request for the Director of DMAS to issue a “case
decision” implementing the expansion of the Northern Virginia
MSA peer group as of October 1, 1993, and the Director’s
subsequent refusal to do so, invoked their right of appeal
without the time limitations applicable to a dispute involving
an NPR. We disagree.
Initially, we note that these providers can point to no
provision of the APA or the regulations promulgated by DMAS
regarding the Virginia Medicaid Program that would permit them
to request, or require the Director of DMAS to make, a “case
decision” concerning the organization of nursing home facilities
into peer groups. DMAS clearly has the authority to organize
nursing home facilities into peer groups in carrying out its
responsibility to administer the Virginia Medicaid program. It
is in this context that the provisions of former 12 VAC § 30-90-
130(B)(2) provided that the organization of nursing home
facilities into peer groups was not appealable. It then becomes
self-evident that the proper method for asserting that DMAS has
improperly applied the regulations regarding the assignment of a
particular nursing home to a particular peer group is to
challenge the calculation of an NPR, which the nursing home
asserts establishes an improper rate of reimbursement.
12
More to the point, these providers’ contention that their
claims do not arise from the adjustments of their reimbursement
in their annual NPRs because the failure to include them in the
Northern Virginia MSA peer group was not express in those NPRs
is simply not a credible interpretation of the basis for their
claims. The essence of these providers’ claims is that their
reimbursement for Medicaid services provided beginning October
1, 1993 should have been higher because of the expanded
definition of the Northern Virginia MSA, whereas the NPRs they
received for services rendered beginning October 1, 1993 were
based upon the “rest of the state” peer group reimbursement
rate. It was not necessary for DMAS to expressly exclude these
providers from the Northern Virginia MSA peer group, because
DMAS had already, though erroneously, determined that there
would be no adjustment of the peer groups until October 1, 1997.
These providers’ receipt of the NPRs in which DMAS failed to
make the disputed peer-group adjustment to their cost reports
triggered their right to appeal and the running of the
limitations period set forth in former 12 VAC § 30-90-131.
Accordingly, we hold that the Court of Appeals did not err in
affirming the judgment of the trial court denying these
providers relief for the five untimely claims.
CONCLUSION
13
For these reasons, we will affirm the judgment of the Court
of Appeals and remand the case to that Court with directions to
remand the case to the trial court for a determination of the
reasonable attorneys’ fees to be awarded each of the individual
providers up to a maximum of $25,000.
Affirmed and remanded.
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