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 SOCIALAND 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: 

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ClerkMr. 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 declaratoryjudgment under section 93-8901, R.C.M. 1947, and a determination of reasonable costs and profit allowance allegedly due them. Plaintiffs, doing business asGuthrie Centers Company,

own and operate the Libby Convalescent Center, a nursing home located inLibby, Montana, licensed by the stateof Montana to provide skilled nursing care and related services to itsresidents. The Center commenced operation inFebruary 1971, and has been under ~d~rtract with SRS sinceMarch 

### 1971 to provide skilled and intermediate nursing home care towelfare recipients. The firstcontract which plaintiffs executed with SRS, dati~led Annual Agreement, provided that plaintiffs would receive $12.00 per day for each patient requiring skillednursing care and $10.00 per day for each patient requiring intermediate care for the period March 1, 1971through February 29, 1972. The contract <statedthe rates would be reevaluat~d annually, or upon receipt

or bona fide evidence indicating costs had varied a minimum of 10X ormore, within the limitations and availability of 

### SRS funds. This contract was executed incompliance with SRS'S "GUIDELINES FUK REIMBURSEMENT FOR SKILLED NURSING HOME CARE AND INTERMEDIATE CAKE BASED ON REASONABLE COST", effectiveJune 1, 1970, which provided that new facilities, commencing operation where no cost data was available, would be afforded a negotiated interimrate subject to subsequent review, based on reasonable costs, after aminimum period of sixmonths operation and a minimum of 80%occupancy. On August 15, 1971, the government initiated Phase I of 

### its bconomic StabilizationProgram. SRS, purportedly incompliance with thewage-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 skillednursing care to $13.31 per day and increased the rate for intermediate care to $12.30 per day. Subsequent to the increase inrates 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 rateswere maintained for the remainder of the time period contemplated inthe instant suit. SRS contends these rates are the same rates plaintiffs charged theirprivate patients. On November 29, 1974, plaintiffs filed a complaint inthe 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, 1971through December 31, 1973. Subsequently, plaintiffs fileda motion for summary judgment, granted by the district court and entered on December 31, 1975. The controlling issue on appeal iswhether the entry of suliunary judgment forplaintiffs was error. We find the granting 01summary judgment was error. The judgment isvacated 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 

### isno genuine issue as to any material fact and that the moving party 

### isentitled to a judgment as a matter of law." The general purpose underlying Rule 56, M.R.Civ.P., 

### is topromptly dispose of actionswhich have no genuine issue of fact, thereby encouragingjudicial economy through the elimination of unnecessary trial, delay and expense. Silloway v. Jorgenson, 146Mont. 307, 406 P.2d 167. Nev-ertheless, summaryjudgment isnot 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 capacityby the end of the 1971calendar year, aftermore than sixmonths 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 StabilizationProgram didnot 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 stabilizedwages and prices.6. Reimbursement rates forproviding nursing home services tom$dicaid patients were not limited to the rate plaintiffs charged private patients atthe Libby Convalescent Center in 1971, 1972 and 1973, such reasonable costs being limitedby the amount plaintiffs charged private patients in 1974, i.e. $16.00 per day for skillednursing care and $15.00 per day for intermediate carer 

### - . 

### 7. That plaintiffswere entitled tojudgment 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 toa 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 fornursing home care forwelfare recipients could exceed those rates charged private patients inthe years 1971,1972 and 1973. Plaintiffs contend the district court correctly granted summary judgment asa matter of law and should be affirmed on appeal. One of the principal disagreements between the parties 

### is whether reimbursement rates canbe increased and given retroactive effect. SRS contends the original contract between the parties provided a negotiated interim ratewhich was tobe reevaluated annually or upon receipt of bona fide evidence establishing a variation of costsby a minimum of 10%. Lee v. Laitinen, 152Mont.

### 230,

### 448 ~.2d 154. SRS argues once reevaluationoccurred any increase in rates would apply prospectivelywith the exception of the 60day period allowed for the filing of financial statements and cost reports. Plaintiffs,on the otherhand, contend the SRSGuidelines for Reimbursement and the second contractprovide for fiscal retroactive treatment of rate increases. The applicable language of the contract reads: 

# "*

# ** Reports received after 

### 60dayswill forfeiture any right for retroactive increase to the beginning ofyour fiscalyear." Since this language standing alone doesnot appear to'support the conclusion that rate- increases could be retroacti'vely applied to prior fiscalyears,a genuine issue as to a material fact remains unresolved and therefore evidence shouldbe 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 Centerwas operating at 

### 80% occupancy and thus entitled to a rate increase. SRS contends the 

### 80% ,occupancy levelpertained 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 Centernever reached 80% for the threeyears inquestion. Plaintiffs contend that total occupancy level controls and they are only able to satisfy the 

### 80% ,occupancy levelby combining the occupancy level of skilled nursingwith the occupany level of intermediate care.

### T-heGuidelines forReimbursementprovides: 

# "*** New facilities commencing operations forwhich no cost data is availablewill be afforded a negotiated interim rate subject to subsequent reviewbased on reasonable costs after a minimum period of sixmonths operationand a minimum of 80 

### ~ercent occupancy.'' (Emphasis added.) 

### The general language of the Guidelines for Reimbursement is open to interpretationwhen coupledwith 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". Groppv. Lotton, 160Mont. 415,503 

### P.2d 661. 

### A third issue resolved by the district courtwas the question ofwhether reimbursement rates fornursing home care could exceed the rates charged private patients at the Libby ConvalescentCenter. 

### A genuine and material question of fact arises as to the reasonableness of rates for the nursing care ofwelfare recipientswhen those rates exceed the rates charged private patients. Genuine: issues ofmaterial fact remain thathave 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 consistentwith this opinion.

I 

### Justice

### We Concur: