Title: GUTHRIE v DEPT OF SOCIAL REHABI

State: montana

Issuer: Montana Supreme Court

Document:

No. 13317 IN THE SUPREME COURT OF THE STATE OF MONTANA RALPH GUTHRIE GERTRUDE GUTHRIE, husband and wife, d/b/a Guthrie Centers Company, Plaintiffs and Respondents, DEPARTMENT OF SOCIAL AND REHABILITATION SERVICES OF THE STATE OF MONTANA, Defendant and Appellant. Appeal from: District Court of the First Judicial District, Honorable Peter G. Meloy, Judge presiding. Counsel of Record: For Appellant: Thomas H. Mahan argued, Helena, Montana For Respondents: Smith, Smith and Sewell, Helena, Montana Chadwick H. Smith argued, Helena, Montana Submitted: January 20, 1977 Decided: Filed : APR 2 1 195T Clerk M r . J u s t i c e Gene B. Daly delivered the Opinion of the Court. The Department of Social and Rehabilitation Services of the s t a t e of Montana (SRS) appeals from the order of the d i s t r i c t court, Lewis and Clark County, granting p l a i n t i f f s ' motion f o r summary judgment. P l a i n t i f f s sought a declaratory judgment under section 93-8901, R.C.M. 1947, and a determination of reasonable costs and p r o f i t allowance allegedly due them. P l a i n t i f f s , doing business a s Guthrie Centers Company, own and operate the Libby Convalescent Center, a nursing home located i n Libby, Montana, licensed by the s t a t e of Montana t o provide s k i l l e d nursing care and related services t o i t s residents. The Center commenced operation i n February 1971, and has been under ~ d ~ r t r a c t with SRS since March 1971 t o provide s k i l l e d and i n t e r - mediate nursing home care t o welfare recipients. The f i r s t contract which p l a i n t i f f s executed with SRS, d a t i ~ l e d Annual Agreement, provided t h a t p l a i n t i f f s would receive $12.00 per day f o r each patient requiring s k i l l e d nursing care and $10.00 per day f o r each patient requiring intermediate care f o r the period March 1, 1971 through February 29, 1972. The contract  548 P.2d 613, 33 St.Rep. 363, for a discussion of summary judgment under Rule 56(c), M.R.Civ.P. The grounds upon which the d i s t r i c t court granted p l a i n t i f f s ' motion for summary judgment were: 1. There was no genuine issue as t o any material fact. 2. Financial statements and cost reports were timely sub- mitted by plaintiffs. 3. The Libby Convalescent Center reached an 80% patient capacity by the end of the 1971 calendar year, a f t e r more than s i x months operation. 4. Plaintiffs were entitled to review and adjustment of the interim daily reimbursement rates based upon p l a i n t i f f s ' reasonable costs as shown by t h e i r financial statements and cost reports. 5. The Federal Economic Stabilization Program did not prevent SRS from increasing rates as a result of the increase i n the size of the p l a i n t i f f s ' work force and increased outlay for supplies and equipment a t stabilized wages and prices. 6. Reimbursement rates for providing nursing home services t o m$dicaid patients were not limited t o the r a t e p l a i n t i f f s charged private patients a t the Libby Convalescent Center i n 1971, 1972 and 1973, such reasonable costs being limited by the amount p l a i n t i f f s charged private patients i n 1974, i.e. $16.00 per day for skilled nursing care and $15.00 per day for inter- mediate carer - . 7. That p l a i n t i f f s were entitled t o judgment a s a matter of law. The d i s t r i c t court then concluded, as a matter of law: a) That SRS Guidelines for Reimbursement provided for retro- active r a t e increases; b) p l a i n t i f f s were entitled t o a r a t e increase a f t e r s i x months operation, since the Libby Convalescent Center was opera- ting a t 80% occupancy and had incurred increased costs of operation; and c) reasonable reimbursement rates for nursing home care for welfare recipients could exceed those rates charged private patients i n the years 1971,1972 and 1973. Plaintiffs contend the d i s t r i c t court correctly granted summary judgment a s a matter of law and should be affirmed on appeal. One of the principal disagreements between the parties i s whether reimbursement rates can be increased and given retroactive effect. SRS contends the original contract between the parties provided a negotiated interim rate which was t o be reevaluated annually or upon receipt of bona fide evidence establishing a variation of costs by a minimum of 10%. Lee v. Laitinen, 152 Mont. 230, 4 4 8 ~ . 2 d 154. SRS argues once reevaluation occurred any increase in rates would apply prospectively with the exception of the 60 day period allowed for the filing of financial state- ments and cost reports. Plaintiffs, on the other hand, contend the SRS Guidelines for Reimbursement and the second contract provide for fiscal retroactive treatment of rate increases. The applicable language of the contract reads: "* * * Reports received after 60 days will forfeiture any right for retroactive increase to the beginning of your fiscal year." Since this language standing alone does not appear to'support the conclusion that rate- increases could be retroacti'vely applied to prior fiscal years, a genuine issue as to a material fact re- mains unresolved and therefore evidence should be taken concerning the intent of the contracting parties at the time the agreement was executed and past business practices involving rate increases and their effect. Kober & Kyriss v. Billings Deac.Hosp., 148 Mont. 117, 417 P.2d 476. Second, SRS questions the determination that the Libby Convalescent Center was operating at 8 0 % occupancy and thus entitled to a rate increase. SRS contends the 8 0 % ,occupancy level pertained to each individual class of service, not the total occupancy level of the facility. Plaintiffs, in their answers to request for admissions, stated the occupancy level for skilled nursing care at the Libby Convalescent Center never reached 80% for the three years in question. Plaintiffs contend that total occupancy level controls and they are only able to satisfy the 8 0 % ,occupancy level by combining the occupancy level of skilled nursing with the occupany level of intermediate care. T-he Guidelines for Reimbursement provides: "* * * New facilities commencing operations for which no cost data is available will be afforded a negotiated interim rate subject to subsequent review based on reasonable costs after a minimum period of six months operation and a minimum of 80 ~ercent occupancy.'' (Emphasis added. ) The general language of the Guidelines for Reimbursement is open to interpretation when coupled with the consideration that rates for nursing care are increased for specific levels of care and not for care in toto. SRS should have been allowed the opportunity to present evidence construing the meaning of "80 percent occupancy". Gropp v. Lotton, 160 Mont. 415, 503 P.2d 661. A third issue resolved by the district court was the question of whether reimbursement rates for nursing home care could exceed the rates charged private patients at the Libby Convalescent Center. A genuine and material question of fact arises as to the reason- ableness of rates for the nursing care of welfare recipients when those rates exceed the rates charged private patients. Genuine: issues of material fact remain that have not been resolved and plaintiffs are not entitled to summary judgment as a matter of law, therefore this action is remanded to the district court for further proceedings consistent with this opinion. I Justice We Concur: