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 
Mr. Justice Gene B. Daly delivered the Opinion of the Court. 

The Department of Social and Rehabilitation Services of the 

state of Montana (SRS) appeals from the order of the district 

court, Lewis and Clark County, granting plaintiffs' motion for 

summary judgment. Plaintiffs sought a declaratory judgment under 

section 93-8901, R.C.M. 1947, and a determination of reasonable 

costs and profit allowance allegedly due them. 

Plaintiffs, doing business as Guthrie Centers Company, 

own and operate the Libby Convalescent Center, a nursing home 

located in Libby, Montana, licensed by the state of Montana to 

provide skilled nursing care and related services to its residents. 

The Center commenced operation in February 1971, and has been under 

~d~rtract with SRS since March 1971 to provide skilled and intermediate nursing home care to welfare recipients. 

The first contract which plaintiffs executed with SRS, 

dati~led Annual Agreement, provided that plaintiffs would receive 

$12.00 per day for each patient requiring skilled nursing care and 

$10.00 per day for each patient requiring intermediate care for 

the period March 1, 1971 through February 29, 1972. The contract 

<stated the rates would be reevalua t~d annually, or upon receipt 

or bona fide evidence indicating costs had varied a minimum of 

10X or more, within the limitations and availability of SRS funds. 

This contract was executed in compliance with SRS'S "GUIDELINES 

FUK REIMBURSEMENT FOR SKILLED NURSING HOME CARE AND INTERMEDIATE 

CAKE BASED ON REASONABLE COST", effective June 1, 1970, which 

provided that new facilities, commencing operation where no cost 

data was available, would 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% occupancy. 

On August 15, 1971, the government initiated Phase I of its 

bconomic Stabilization Program. SRS, purportedly in compliance with 

the wage-price freeze, refrained from increasing the rates for 

nursing home care. On July 1, 1972, upon removal of wage-price 

restrictions, SRS increased the rate for skilled nursing care to 

$13.31 per day and increased the rate for intermediate care to 

$12.30 per day. 

Subsequent to the increase in rates and removal of wage-price 

restrictions, the parties entered into a second agreement for 

nursing home care covering the period December 22, 1972 through 

December 22, 1973. On May 1, 1973, SRS again increased the rates 

for nursing home care to $14.27 per day for skilled care and $13.24 

per day for intermediate care. These increased rates were maintained for the remainder of the time period contemplated in the 

instant suit. SRS contends these rates are the same rates plaintiffs charged their private patients. 

On November 29, 1974, plaintiffs filed a complaint in the 

district court seeking (1) a determination of plaintiff's rights 

pursuant to the agreements between the parties, statutes and rules 

and, (2) a determination of reasonable costs and profit allowance 

due plaintiffs for the period March 1, 1971 through December 31, 1973. 

Subsequently, plaintiffs filed a motion for summary judgment, 

granted by the district court and entered on December 31, 1975. 

The controlling issue on appeal is whether the entry of 

suliunary judgment for plaintiffs was error. We find the granting 

01 summary judgment was error. The judgment is vacated and the 

cause remanded to the district court for further proceedings. 
Rule 56(c), M.R.Civ.P., states that summary judgment shall 

be rendered only if: 

"* * * the pleadings, depositions, answers to interrogatories, and admissions on file show that there is no 

genuine issue as to any material fact and that the moving 

party is entitled to a judgment as a matter of law." 

The general purpose underlying Rule 56, M.R.Civ.P., is to promptly 

dispose of actions which have no genuine issue of fact, thereby 

encouraging judicial economy through the elimination of unnecessary 

trial, delay and expense. Silloway v. Jorgenson, 146 Mont. 307, 

406 P.2d 167. Nev-ertheless, summary judgment is not a substitute 

for a trial. Johnson v. Johnson, Mont . Y P.2d Y 

34 St.Rep. 162. See: Harland v. Anderson, Mont . > 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 district court granted plaintiffs' 

motion for summary judgment were: 

1. There was no genuine issue as to any material fact. 

2. Financial statements and cost reports were timely submitted by plaintiffs. 

3. The Libby Convalescent Center reached an 80% patient 

capacity by the end of the 1971 calendar year, after more than 

six months operation. 

4. Plaintiffs were entitled to review and adjustment of the 

interim daily reimbursement rates based upon plaintiffs' reasonable 

costs as shown by their financial statements and cost reports. 

5. The Federal Economic Stabilization Program did not 

prevent SRS from increasing rates as a result of the increase in 

the size of the plaintiffs' work force and increased outlay for 

supplies and equipment at stabilized wages and prices. 
6. Reimbursement rates for providing nursing home services 

to m$dicaid patients were not limited to the rate plaintiffs 

charged private patients at the Libby Convalescent Center in 

1971, 1972 and 1973, such reasonable costs being limited by the 

amount plaintiffs charged private patients in 1974, i.e. $16.00 

per day for skilled nursing care and $15.00 per day for intermediate carer - . 

7. That plaintiffs were entitled to judgment as a matter 

of law. 

The district court then concluded, as a matter of law: 

a) That SRS Guidelines for Reimbursement provided for retroactive rate increases; 

b) plaintiffs were entitled to a rate increase after six 

months operation, since the Libby Convalescent Center was operating at 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 in the years 1971,1972 and 1973. 

Plaintiffs contend the district court correctly granted 

summary judgment as a matter of law and should be affirmed on 

appeal. 

One of the principal disagreements between the parties is 

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 to 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, 448 ~.2d 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 statements 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 remains 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 80% occupancy and thus 

entitled to a rate increase. SRS contends the 80% ,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 80% ,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 reasonableness 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: