IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI NO. 2016-CC-01034-COA CLC OF BILOX I, LLC D/B/A BILOX I COMMUNITY LIVING CENTER APPELLANT

v. MISSISSIPPI DIVISION OF MEDICAID AND DAVID J. DZ IELAK, IN HIS OFFICIAL CAPACITY AS EX ECUTIVE DIRECTOR OF THE DIVISION OF MEDICAID APPELLEES

DATE OF JUDGMENT: 06/21/2016 TRIAL JUDGE: HON. PATRICIA D. W ISE COURT FROM W HICH APPEALED: HINDS COUNTY CHANCERY COURT, FIRST JUDICIAL DISTRICT ATTORNEYS FOR APPELLANT: JAMES RAY MOZINGO LYDIA QUARLES HORACE HUNTER TW IFORD IV ATTORNEYS FOR APPELLEES: JANET MCMURTRAY LAURA L. GIBBES NATURE OF THE CASE: CIVIL - STATE BOARDS AND AGENCIES DISPOSITION: AFFIRMED: 02/13/2018 MOTION FOR REHEARING FILED: MANDATE ISSUED: BEFORE GRIFFIS, P.J., BARNES AND FAIR, JJ. FAIR, J., FOR THE COURT: ¶1. C L C Biloxi sought a per diem reim bursem ent f

r om the M issi s s i p p i D i v i s i o n o f Medicaid (DOM) f

o r their respiratory -therapist expenses. The DOM d enied C LC Biloxi’s request. A f

ter a n adm inistrative hearing, t he D OM executive d ire c t o r a f f irm ed the DOM.
CLC Biloxi then a

ppealed to Hinds County Chancery Court, w hich also af f i rm ed t he DOM. Finally , CLC appealed t o this Court. Af t er review, we f

i nd the DOM’s decision t o deny CLCreim

bursem ent f

or respiratory -therapist expenses on a per diem basis was s upported by substantial evidence. Accordingly , we af f irm

. FACTS ¶2. CLC Biloxi is a long-term skilled nursing f acility that entered i nto a contract with the
DOM to prov i d e nursing-hom e services to Mississippi residents. In turn, the costs of the services provided by CLC B iloxi were reim bursed by t he DOM in two way s : (1) as an
expense could be billed directly to Medicaid f or reim bursem e nt of a specif

ic service; and (2)
CLC B iloxi could f

ile an annual c o s t report with the DOM, which c ould include certain allowable costs or services that have been incurred to provide reasonable care to Medicaid patients; the cost report would be used to ca l c u l a t e a per diem cost o f care f or Medicaid patients. ¶3. Am ong the num erous services C LC Biloxi provided to Medicaid p atients, respiratory therapy was utilized to treat nursing-hom e patients who suf f ered f rom a pulm onary illness. Although m ost respiratory

- therapy services could be treated by a regular nursing staf f , CLC
B i l o x i e m p l o y e d “ r e s p iratory therapists” to provide certain respiratory treatm ents t o p a t i e n t s . 1 ¶4. On May 2 9 , 2 0 0 9 , CLC Biloxi f i led its annual cost report f or a llowable expenses incurred during 2008. It listed i ts re s p i r a t ory therapists’ salaries on Form 6, Line 2, under therapy expenses. In response to CLC Biloxi’s original 2008 cos t r e p o rt, t he DOM

1 S p ecif ically , C L C B ilo x i u tilized resp irato ry th erap ists to assist in t h e treatm en t o f p atien ts w h o h ad u n d erg o n e trach eo to m ies. 2perf

orm ed a “desk review,” to ensure that necessary adjustm ents were m ade bef ore the DOM reim bursed CLC Biloxi f

or ser v i c e s rendered. Upon review of the cost report, the DOM determ ined not to reim

burse CL C B iloxi f

or the respiratory -therapist salaries once it calculated the appropriate per diem to be provided. O n August 2, 2010, CLC Biloxi f iled an

am ended cost report with the DOM. Unlike t he o riginal 2008 cost report, CLC Biloxi sought reim bursem ent f

or the respiratory -therapist salaries a s a direct care e xpense on Form 6, Line
1. In contrast to the initial d esk r eview of the original 2008 CLC Biloxi cost reports, the f irst

am ended desk review h a n d e d d own by the DOM on January 12, 2011, allowed the respiratory therapists’ salaries to be used to calculate CLC Biloxi’s per diem

. Accordingly , approxim a tely $82,000 in salaries f or respiratory therapists was included in C LC’s per d iem calculation. 2 ¶5. Upon discovery of the im proper classif

ication m ade b y C LC Biloxi, t he DOM issued

a s e c o n d a me n ded desk review on March 2, 2012. Consequently , the D O M rem oved the

res piratory -therapist salaries f rom CLC Biloxi’s per diem calculation, as was done in the original desk r eview. As a result, the DOM sought to recoup the $ 82,000 that had been paid to CLC Biloxi f

or the inclusion of

respiratory -therapist salaries in their per diem r ates. ¶6. In r esponse, on March 3 0, 2012, CLC Biloxi r equested an adm inistrative appeal of the

2 It sh o u l d b e n o ted , h o w ev er, th at th e D O M ’s f irst am en d ed d e sk rev iew e x p licitly stated , “[ y ] o u r co st rep o rt i s su b j ect to ad d itio n al ad

j u stm en ts b ro u g h t to th e a t ten tio n o f th e [ D O M ] an d m ay b e selected f o r f i eld rev iew , w h ich co u ld resu lt in ch an g e s an d ad d itio n al ad j u s tm en ts.” T h e ref

o re, t h e D O M m ad e it c l ear to C L C B ilo x i th at t h e p er d iem rate co u ld b e ad j u sted at an y

g iv en tim e. 3adjustm ents handed down by the DOM in the second am e nded d esk review. Le s s t h a n a

m onth later, the DOM denied the appeal. Upon denial of t he appeal, CLC Biloxi requested

an adm inistrative hearing. Following the hearing, the hearing of f icer recom m ended and the
DOM executive director af f irm ed the DOM’s d isallowance o f t he respiratory therapists’ salaries as part of

CLC Biloxi’s per diem

calculation. ¶7. On Octobe r 2 3 , 2 0 1 3, C LC Biloxi f iled a com

plaint in the Hinds County Chancery
Court seeking declaratory a nd inju n ctive relief to prevent the DOM f rom breaching its

contract with CLC B iloxi and f rom adopting what CLC Biloxi believed to be “an arbitrary and c apricious i nterpretation of its controlling regulations.” The DOM then f iled a m otion

to dism iss the c om

plaint and challenged the c h a n c e r y court’s jurisdiction to hear

a d mi n i strative appeals f

rom the D OM. The case was stay ed pending the outcom e of th e interlocutory appeal in Mississippi Division of Medicaid v. Alliance Health Center , 174 So. 3d 254, 263 (¶26) (Miss. 2015), in w hich the Mississippi Su p r e me C ourt a f f irm ed the jurisdiction of

the chancery

court over appeals f

rom the DOM. ¶8. On M a r c h 2 9 , 2 0 1 6 , t h e c h a n c e r y c o urt heard oral argum e nts on the dispute. Ultim a tely , on June 21, 2016, the court af f i rm e d the DOM’s f

inal decision and held that the language f

ound in the State Medicaid Plan ( State Plan), its p olicy provider m anual, and cost report “does not include respiratory therapists within those categories of therapists that are

a l lowed to e nroll as Medicaid providers and thus r eceive direct reim bursem ent f

or t h e i r services.” Further, the court f o und that CLC B iloxi did n ot f all within the categories of

4m edical f

acilities that are allowed a per diem reim bursem e n t f

or respir a t o r y t h e rapists’ salaries. 3 ¶9. CLC Biloxi f

iled the instant appeal.

STANDARD OF REVIEW ¶10. W e will reverse the decision of an adm inistrative agency only if t he decision (1) was unsupported by substantial e v i d e n c e ; (2) was arbitrary or capricious; (3) w as bey ond the
power of the adm inistrative agency to m ake; or ( 4) violated the com p laining party ’s statutory

or constitutional right. Hinds Cty. Sch. Dist. Bd. of Trs. v. R.B. ex rel. D.L.B. , 10 So. 3d 387,
394-95 (¶17) (Miss. 2008). An agency m ay not adopt rules and regulations that are contrary
to statutory provisions, or that exceed or conf lict with the a

uthority granted by statute. Miss. Pub. Serv. Comm’n v. Miss. Power & Light Co. , 593 So. 2d 997, 1000, 1 004 (Miss. 1991). ¶11. “ A n a g e n c y ’ s interpretation of a rule or statute governing the agency ’s operation is

a m atter of law that is rev i e w e d d e n ovo, but w ith great def erence to the agency ’s interpretation.” B u

f fington v. M

iss. State Tax Comm’n , 4 3 So. 3d 450, 4 54 ( ¶12) (Miss. 2010). This “duty of def

erence d e rives f

rom our r ealization that the every day experience of the a dm inis t r a t i ve agency gives it f am iliarity w i th the particularities and nuances of the

3 T h e co u rt h eld th at u n d er th e co n tro llin g S tate P lan , o n ly th ree ty p e s o f f acilities are en titled to reim

b u rsem en t o f th erap y ex p e n ses as p art o f th eir p er d iem c alcu latio n : p riv ate n u rsin g f acilities f o r t h e sev erely d isab led ( NFSD) ; ps y c hi a t r i c r e s i de nt i a l t

r eatm en t f

acilities (P R T F ) ; an d in term ed iate care f acilities f o r th e in tellectu ally c h allen g ed (IC F /IID ). S in ce C L C B ilo x i w a s classif

ied a s a l arg e n u rsin g f

acility (L N F ), th e co u rt f

o u n d th at it w as n o t en titled to claim

resp irato ry -th erap y

ex p e n ses as p art o f

its p er d iem

calcu l atio n . 5problem s com m itted to its care which no court can hope to replicate.” Gill v. Miss. Dep’t of

W ildlife Conservation , 574 S o. 2 d 586, 5 93 (Mi s s . 1 9 9 0 ). An agency ’ s interpretation will

not be upheld i f “ i t i s so plainly erroneous or s o inconsistent with either the underly ing regulation or statute a s to be arbitrary , capricious, an abuse of discretion[ ,] or otherwise not in accordance with law.” B u elow v. Glidewell , 757 So. 2d 216, 219 (¶10) (Miss. 2000).
DISCUSSION ¶12. Mississippi C ode Annotated section 43-13-117(A) (Rev. 2015) requires the DOM to

“ i n c lude pay

m ent of part o r all of the costs

. . . of the f ollowing ty

pes of care and s e r v i c e s rendered to eligible applicants who have been determ ined to be eligible f o r that care and services, within the lim its of state appropriations and f ederal m atching f

unds.” Section 43- 13-117(A)(4)(a)-(f

) specif ies the re q u i r e d assistance and pay m ent m e thods f

or nursing
f acility s ervices. Miss. Code Ann. 43-13-117(A)(4). Mississippi Cod e A n n o tated section 43-13-121(1) (Rev. 2015) grants the DOM the f ollowing adm inistrative authority over the Medicaid program : (1) The division shall adm inister the Medicaid p rogram under the provisions of this article, and m ay do the f ollowing: (a) A dopt and prom

ulgate reasonable rules, r egulations and standards, with approva l o f the Governor, and in accordance with the Adm inistrative Procedures Law, Section 25-43-1.101 et seq.: (i) Establishing m ethods and procedures as m a y be n ecessary f or the proper and ef

f icient adm inistration of

this article; (ii) P r o v i ding Medicaid to all qualif i ed recipients under the provisions of this article as the division m ay determi n e a n d

6within the lim its of appropriated f

unds; (iii) Establishing reasonable f ees, charges a n d rates f

or m edical services and drugs; in doing so, the division shall f i x all of those f ees, charges and rates at the m inim um levels absolutely necessary to provide the m edical a s sistance authorize d b y t his article, and s hall not change any of those f e es, charges or rates except as m a y

be authorized in [ s]ection 43-13-117 . . . .
1. Denial of Reim bursem ent ¶13. To f

ully understand b ot h C LC Biloxi and the DOM’s argum ents, it is im portant to

exam ine all relevant portions o f the State P lan, policy provi d e r ma n u a l, and cost-report instructions. The State Plan i s p r o m ulgated and adm inistered by the DOM. It is then approved by

the Mississippi attorney

general and the governor, and ultim ately checked f

or

com pliance with f

ederal Medicaid regu lations by the f ederal C enters f

or Medicare and Medic a i d

. A n y p r oposed changes or adoptions m ust b e approved by the sam e respective parties. ¶14. Attachm e nt 4.19-D of the State Plan p rovides g u i d e l i n es f or the reim

bursem ent f

or

m edical-assistance benef

iciaries of long-term

care f acilities:
A f acility ’s direct care costs, therapy costs, care related costs, adm inistrative and o perating costs and property costs r e l a t e d to covered services will be considered in the f

in d i n g s a n d a llocation of costs to the Medical A ssistance Program f or its eligible recipients. C o sts i ncluded i n the per diem rate will be tho s e n ecessary to b e incurred by ef f iciently and econom i cally operated nursing f acilities that c o mp l y with all requirem ents o f participation in the Medicaid program w ith the exception of services provided that a re reim bursed on a f ee f or service basis or as a direct pay m e n t outside of

the per diem

rate. CLC B iloxi originally f

iled its cost report by reporting its respiratory -therapist salaries under

7Section 2 Therapy E xpenses on Form 6, Line 2 , as provided in Attachm ent 4.19-D, Section

A(18):
Costs a ttributable to the adm inistering of therapy services should be reported on Form 6, Line 2. T herapy expenses will be included i n the p er diem r ate f or NFSD, PRTF and ICF/IID pr o v i d e r s. Therapy e xpenses f or Sm all Nursing Facilities and Large Nursing F acilities will b e reim bursed on a f

ee f or service basis. The cost-report instructions f or including therapy

expenses are specif

ied in Form

6: Line 2 Therapy Expense Costs attributable to the adm inistering of therapy services m

u st be included in Section 2, Lines 2-01 through 2-16 . . . . Line 2-01, Salaries

- Occupational Therapists[ :] G ross salaries of occupational therapists Line 2-02, Salaries - Phy sical Therapists[ :] Gross salari es of phy sical therapists Line 2-03, Salaries - Speech Therapists[ :] Gross salaries of s peech therapists Line 2-04, S alaries

- Other Therapists[:] Gross salaries of therapists other t h a n occupational therapists, phy sical therapists and speech therapists , including but not lim ited to, respiratory therapists

. . . . (Em phasis added). ¶15. U n d e r S e c t i o n A ( 1 8), only three ty pes o f f acilities, all of which are high ac u i t y f acilities, are allowed to claim respiratory -therapy e x p enses as part of their per d iem calculation: (1) NFSD: private nursing f a cility f or the severely disabled; (2) PRTF:
psy c h iatric residential treatm ent f acility ; and (3) ICF/IID: interm ediate care f acility f or the intellectually challenged. CLC Biloxi, as a large nursing f acility , does not q

ualif y f or p e r diem reim

bursem ent. R ather, S ection (A)(18) state s that “[ t]herapy expenses f or [ s]m all
8[ n]ursing [ f ]acilities a nd [ l]arge [ n]ursing [ f ]acilities will be r eim

bursed on a f

ee f or service basis.” ¶16. CLC Biloxi originally placed t he respiratory -therapist salaries on Form 6, Line 2, a s required in S ection (A)(18). T he DOM claim s it denied reim bursem ent because respiratory therapy is not r eim

bursable o n a f

e e -f or-service basis f

or respiratory therapists w orking in

sm all and large nursing f

acilities. The DOM explains that, although respiratory therapy in

sm all and large nursing f

acilities i s “allowable,” it is not “coverable” because Section 50.02 of the policy provider m anual specif ically states t h a t D O M “does not enroll respiratory the r a p i st[ s ] as eligible providers and does not directly reim burse respiratory t herapists f or services p rovided to Medicaid benef iciaries.” In other wo r d s, since respiratory therapists cannot be “providers,” their salaries cannot be covered on a f ee-f or-service basis. ¶17. Af ter the DOM denied r eim

bursem ent f

or the salaries o n Form 6, Line 2, CLC Biloxi did not appeal. I nstead, it am ended its cost report to include its respiratory -therapist salaries under Section 1, Direct C are E xpenses, on Form 6, L ine 1-01: “Salaries - Aides[ ,] Gross salary of certif

i ed nurse aids a nd nurse aides in training.” CLC Biloxi c laim s t his was proper because respiratory therapists are not actually “therapists” f or purposes of t he State Plan, but instead a re “salaried d irect care staf f ” under Attachm ent 4.19-D Chapter 2, Section A(15) of the State Plan:
15. Salaries and F ringe Benef its. Allowable costs include pay me n t s f or salaries and f

ringe b enef

its f o r t h o se em

ploy ees who provide s ervices in the norm al conduct of operations related to patient care. These em ploy e e s i nclude, but are not lim ited to, registered nurses, licensed practical nurses, nurses aides,
9o t her salaried d irect care staff , d irector of nursing, d ietary e m ploy ees , house keeping em

ploy e es, m aintenance staf f , laundry em

p loy ees, activities staf f , pharm a cy em

ploy ees, social workers, m edical records staf f , non-owner a d m i n i s t r a t o r , n o n - o w n e r a s s i s t a

n t a d m inistrator, a c countants an d b o o k k e e p e r s and other clerical and secretarial staf f

. (Em phasis added). ¶18. To support its argum ent, CLC Biloxi c i tes the Mississippi Respiratory Care Practice
Act ( M R C P A ) , M i s s i s s i p p i C o d e A n n o t a ted section 73-57-5(e) ( Rev. 2017), which states that the “[ p]ractice of respiratory care shall include, but not be lim ited to: direct and indirect respiratory care services

. . . .” However, CLC B iloxi disregards t hat 4 2 U

. S

. C

. § 1396a (e)(9 ) ( C ) ( 2 0 1 7), the f

e deral s tatute governing state plans f or m edical assistance, ref ers to

r e s p i r a tory therapists a s “therapists.” Further, t he MRCPA itself ref ers to persons who practice respiratory

care as therapists:
An applicant f

or a license to practice respiratory care shall subm i t to the board written evidence, verif

ied by oath, t h at the applicant holds a credential, conf erred by t he National Board o f Respiratory Care, a s a C ertif ied Respiratory Technician (CRT) and/or as a Registered Respiratory Therapist (RRT) , o r their s u ccessor credentials, providing such credential has not been suspended or revoked, or at the tim e of application has not lapsed. Miss. Code Ann. § 73-57-17(1) ( Rev. 2017) ( e mp h a sis added). D OM’s d eterm ination of how to allocate f

unding is entirely within its d iscretion. Based on o ur reading of the statutes listed above, we agree with the DOM t hat respiratory therapists are “therapists” f or purposes of the State Plan. W e also agree that Section ( A ) ( 1 8 ) r equires sm all and large nursing
f acilities to report respiratory -therapy expenses on Form 6, Line 2. ¶19. T h e DOM has no statutory requirem ent t o p rovide f unds f or r es p i r a t o r y t h e r a p y . 1 0Nevertheless, it chooses t o provide f u nding f or respiratory s e rvices on a per diem basis f or three dif f e rent ty pes of long-term

care f acilities – private nursing f acilities f or the severely disabled (NFSD); psy chiatric residential treatm ent f acilities (PRTF); and i nterm ediate care f acilities f or the intellectually challenged (ICF/IID). A s a large n ursing f acility , CLC Biloxi does not f all into any of those categories. Nor do respiratory therapists f all into t he category of salaried direct-care s taf

f in Attachm ent 4.19-D C hapter 2, Section A(15). Accordingly ,

we af f irm the DOM’s f

inding that C LC Biloxi was not allowed to plac e i t s r e s p i r atory therapists’ salaries on Line 1-01 of the cost report.
2. Freedom of Choice ¶20. CLC Biloxi next a rgues that the DOM’s prohibition of respiratory therapists in sm all and large nursing f

acilities, but approval of the sam e i n hospitals and higher acuity nursing
f acilities, violates the “f

reedom of choice” provision in Mississippi Code Annotated section
43-13-5 (Rev. 2015). S ection 43-13-5 a ddresses m edical a s s i s t ance f or the a ged and provides that “no regulation s hall be prom ulgated [ that] lim its or abridges the recipient’s f ree choice of the provider of m edical a nd r em edial care or service.” As the DOM points out, the

term “[ m ]ed i c a l a s s i s t ance f or t he aged” is def

ined to m e an “pay

m ent o f part or all of the
cost” of a specif

ically d ef ined scope of care and services, as set f orth in t h e s t a t u t e . Miss. Code Ann. § 43-13-3(1)(a)-(l) (Rev. 2015) (em phasis added). ¶21. C o n trary to CLC’s contention, section 43-13-5 is not so broad t o i mp l y t h a t t h e DOM’s d e cision to l im it p ay m ent f or respiratory therapy lim its a recipient’ s f r e e d o m of

1 1choice. As p r e viously stated, t he DOM has no s tatutory requirem ent, through 42 U.S.C.

§ 1396a (e)(9)(C) (2017) or s ection 43, to provide f unding f or respiratory therapy

. Even so, the DOM does provide f

unding f or respiratory therapy in som e f acilities; although sm all and large nursing f

acilities a r e not included, those patients have the choice to s e ek respiratory

care a t a h ospital, w here r espiratory -therapy expenses are included f o r i npat i ent hospital reim bursem ent. S

ee State Plan Attachm ent 4.19-A.
3. Due Process ¶22. Finally , CLC Biloxi asserts that its due-process rights have b een violated because the
DOM is allowed t o recoup the $82,000 i n respiratory -therapist salaries that CLC Biloxi was erroneously paid. Both the United States and Mississippi Constitutions guarantee a right to due process bef

ore a n adm inistrative agency . See U.S. Const. am end XIV § 1 ; Miss. Const.

art. 3, § 1 4. Adm inistrative p roceedings are to be “conducted i n a f a ir and im partial m anner, f ree f rom any just suspicion o r prejudice, unf airness, f raud, or oppression.” Miss. State Bd. of Health v. J

ohnson , 197 M iss. 417, 417, 1 9 S o. 2 d 4 45, 447 (1944). The m inim um procedural due-process requirem ents an adm inistrative board m ust a f f o rd parties a re notice and an opportunity to be heard. Booth v. Miss. Emp’t Sec. Comm’n , 5 8 8 S o . 2 d 422, 428 (Miss. 1991). Here, CLC Biloxi has been af f orded all the due-process protections provided by the DOM’s adm inistrative process and has availed itself of the appeals af f orded by both the chancery c ourt and t his Court. Accordin g l y , w e f i nd no due-process v iolation has occurred.

1 2¶23. AFFIRMED.

LE E , C .J., IRVING AND GRIFFIS, P.JJ., B ARNES, CARLTON, WILSON, GREENLEE, WESTBROOKS AND TINDELL, JJ., CONCUR.

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