I N T H E SUPR EM E C O UR T O F M I SS I SS I PPI NO. 2 0 0 8 - CA- 0 1 5 5 8 - S CT T HE MI S S I S S I P P I M ET HODI S T HOS P I T AL AN D R EH A B IL IT A T IO N C EN T ER , IN C . d /b /a M ETHODI

S T S PEC I ALT Y CARE CENTER
v. M I S S I S S I P P I DI VI S ION OF M ED ICA I D A ND ROBERT

L. ROBI

NSON, I N H I SOFFICI

AL CAPAC I TY AS DI

REC TOR OFM

I SS I SS I PPI D IV ISIO N O F M ED IC A ID
D A T E O F JU D G M E N T : 09/ 11/ 2008 T RI AL J UDGE : HON. J . DE W AYNE T HOMAS COURT F ROM W HI CH APP EAL ED: HI NDS COUNTY CHANCERY COURT ATT ORNEYS F OR APP EL LANT: THOM AS L
. KI RKLAND, J R. T A M M Y M ID D L E T O N V O Y N IK AND Y LOW RY AL L I S ON C
. S I M P S ON AT T OR NE Y F OR AP P E L L E E S : CH AR L E S P AL M E R Q UAR T E RMAN NA TUR E OF THE C ASE: CI VI L - STATE BO AR DS A ND AG ENC I ES D I SPO SI T I O N : R E V E R SE D A N D R E M A N D E D - 09/ 24/ 2009 M OT I ON F OR RE HE AR I NG F I L E D: M ANDAT E I S S UE D:

EN BA NC. CH AND LER, J UST I CE, FOR TH E COU RT: ¶1. T he M i s s i s s i ppi D i vi s i on of M edi cai d ( D O M ) amended i t s r egul at i ons , know n as t he "St at e Pl an, " t o r educe the r ei m bur s ementr at e appl i cabl e t o pr i vat e nur s i ng f aci l i t i es f orthe
s ever el y di s abl ed ( PN FSD s )
. Speci f i cal l y, St at e Pl an A m endment2006- 006 ( SPA 2006- 006) pl ace d a ce i l i ng on the M edi cai d r ei m bur s ementof a PN FSD f

ori t s adm i nis tr at i ve and

### 2

o p e ra tin g c o s ts . T h e o n ly P N F S D in M is s is s ip p i is th e M e th o d is t S p e c ia lty C a re C e n te r, a d iv is io n o f t h e M is s is s ip p i M e th o d is t H o s p ita l a n d R e h a b ilita tio n C e n te r ( M e th o d is t)
. ¶2. A gg ri eved by the am end m ent reduci ng the rei m bu rs em ent for i t s P N F S D , M et ho dis t exhaus t ed i t s a dm i ni s tr at i ve r emedi es w i th D O M a nd then appea l ed t o the C hance ry C our tof H i nds C ount y. The c hance r y c our ta f f i r m ed D O M ' s de ci s i on, and M ethodi s tt i m el y appea l ed to this C o u rt. M e th o d ist arg u e s th a t S P A 2 0 0 6 -0 0 6 v io late d a sta tu te th a t re q u ire s D O M to
r ei m bur s e PN FSD s “as a s epar at e ca t egory of nur s i ng f

aci l i t i es . ” M i s s . C ode A nn. § 41- 13- 117( 44) ( b) ( R ev. 2004). M ethodi s tal s o ar gues t hat , becaus e D O M fa i l ed t o com pl y w i th the not i ce provi s i ons of

ei therthe A dm i ni s tr at i ve Pr ocedur es A ctorof the St at e Pl an, t he
a m e n d m e n t is in v a lid
. ¶3. T hi s C our tf

i nds M ethodi s t ’ s f

i r s ti s s ue t o be di s pos i t i ve. W e f i nd thatSPA 2006- 006 vi ol at es the s t atut ory r equi r ement thata PN FSD be r ei m bur s ed as a s epar at e ca t egory of
nur s i ng f aci l i ty; c ons equent l y, i ti s voi d a nd of no ef f ect . T her ef

or e, w e r ever s e the dec i s i ons of the cha ncery courtand D O M , and w e r emand t hi s cas e t o the chancery courtf orf ur ther pr ocee di ngs cons i s t entw i th t hi s opi ni on. F ACT S AND P ROCE DURAL HI S TORY ¶4. I n 1998, the M i s s i s s i ppi L egi s l atur e aw ar ded M ethodi s ta c ert i f i cat e of need t o pr ovi de
nur s i ng f

aci l i ty s ervi ces f

orthe s ever el y di s abl ed. In 2001, the Legi s l atur e ena ct ed a pr ovi s i on f

orthe M edi cai d r ei m bur s ementof M ethodi s t ’ s PN FSD
. T he pr ovi s i on s t at ed: M edi cai d as author i zed by thi s art i cl e s hal l i ncl ude paymentof partor all o f th e c o sts, at the d iscreti o n of th e d ivisi o n , w ith ap p rov al of the G o v ern o r, of the f ol l ow i ng types of

car e and s ervi ces re nder ed t o el i gi bl e appl i cant s w ho h a v e b e e n d e ter m in e d to b e elig ib le fo r th a t ca re an d se rv ice s, w ith in th e lim its of st at e app ropri at i on s and federal m at ching fund s:

### A sc hedul e included in there cord bre aks down a l ong-t er m caref ac il it y’s expe nse s 1 

### by cate gory: Direc t- careexpe nse s include s al arie s and bene fi ts for ai des , LPNs , RNs , and fe eding as si st ant s; drugs ; dire ct -c ar e m edica l s uppli es ; m edi ca l- was tedis posa l; and other li st ed exp enses. Care- re late d expe nse s include f ood; thesa lari es and be nefits for the dire ct or of nurs ing, theas si st ant

direc tor of nur sing, the pharm ac y, and soc ia l s er vices; care -r el at ed sup plies; the allow able costs for unifo rms andbarb er andbeauty expen ses; con sultant fees; andoth er listed expen ses. Therapi es cos ts inc ludecos ts attribut abl e t o occ upational , s pee ch, and other 3 (4 4 ) N u rs in g fa c ility s e rv ic e s fo r t h e s e v e re ly d is a b le d
. (a) Sev ere dis abil i t i es i nclude, bu tare notl i m i t ed to, spi nal cor d inj uri es, c lo s e d h e a d in

ju ri e s a n d v e n tila to r d e p e n d e n t p a tie n ts . (b ) T h o se se rv ice s m u st b e p ro v id e d in a lo n g -te rm c a re n u rsin g fa c ili ty d e d ica ted to th e c a re an d tre a tm e n t o f p e rso n s w ith se v e re d isa b ili ties , an d sh a ll b e re im b u rs e d a s a s e p a ra te c a te g o ry o f n u rs in g fa c iliti e s . M is s . C o d e A n n . § 4 3 -1 3 -1 1 7 (R e v . 2 0 0 4 ). ¶5. S ub sequen t t o the enactm ent, D O M propo sed a pay m ent m et ho do l og y forM et ho dis t thatpr ovi ded t hatno cos tcei l i ngs w oul d be appl i ed t o M ethodi s t ’ s M edi cai d r ei m bur s ement unt i l anotherPN FSD part i ci pat ed i n the M edi cai d pr ogr am. A ccor di ngl y, D O M a m ended the S tate P lan to p rov ide the foll o w ing rei m b u rsem en t for P N F S D s: “In ye ars w h en th e ra te is
c a lcu late d fo r o n ly o n e P N F S D , reim b u rse m e n t w ill b e b a se d u p o n a llo w a b le r e p o rte d c o sts of the f aci l i ty. R ei m bur s ementf ordi r ectcar e, ther api es , car e r el at ed, and adm i ni s tr at i ve and oper at i ng cos t s w i l l be made a tcos tpl us the appl i cabl e tr end f act or s . ” Thus, no cei l i ng w as appl i ed t o M ethodi s t ’ s r ei m bur s eme nt f orany of

the var i ous expens e ca t egor i es , w hi ch i ncl ude di r ect - car e cos t s , ther api es c os t s , c ar e- r el at ed cos t s , a nd admi ni s tr at i ve and ope r at i ng cost s. 1

### therap ists.

Admini strative an d o peratin g co sts inclu de administrativ e salaries andben efits, ce rt ain contra ct

expe nse s, ac counting f

ee s, aut o le ases, bank s er vic e c harges , board of direc tor s’ fe es , di et ar

y suppl ie s, depr ec iati on, due s, educ ationalse minar s and training, house keeping suppli es , profe ss ional liabilityandoth er insurance, laundry supp lies, linen and laundry a l t e rnat i ve s , m ana ge m e nt f e e s and ho m e of

f i c e c os t s , no ne m e rge nc y m e di ca l trans port ation, of

fi cesuppl ie s and subs criptions , pos ta ge, taxes and l ic ens es , t el ephoneand communicatio ns, trav el, utilities, an d o ther listedexp enses. “A n effici en tl y an d ec o n o m icall y o p era ted fac il ity is d efine d a s o n e w ith d ir ec t care 2 and ca r e r el at ed cos t s gr eat erthan 90% of the medi an and l es s than the maxi m um r at e, ther apy cos t s of

PN FSD l es s than the m axi m um r at e, admi ni s tr at i ve and ope r at i ng cos t s of l ess than the m axim um rat e, propert y co st s that do not requi re a paym ent of the ho l d h arm l ess p ro v is io n a n d a n o c c u p a n c y ra te o f 8 0 % o r m o re .” S ta te P la n , A tta c h m e n t 4 .1 9 D , 3 -1
. 

### 4 ¶6. T he St at e Pl an pr ovi des fort he use of ea ch spe ci f i c cl as s of l ong- t erm car e f aci l i t i es “as a bas i s f

oreval uat i ng the r eas onabl enes s of an i ndi vi dual pr ovi der ’ s cost s . ” S t at e Pl an, A t t achment4. 19D , 1- 2. T he s peci f i c cl as s es ar e: s m al l nur s i ng f aci l i t i es (1- 60 beds ) ; l ar ge nur s i ng f aci l i t i es ( 61 orm or e beds ) ; PN FSD s ; R es i dent i al P sychiatri c Tre atm entFaci l i t i es ( PR T F) ; and I nt erm edi at e C ar e Faci l i t i es forthe M ent al l y R et ar ded. ( I C F- M R )
. St at e Pl an, A t t achment4. 19D , 1 -2. T he St at e Pl an pr ovi des that“[ i ] ti s the i nt entof the D i vi s i on of M edi cai d t o r ei m bur s e nur s i ng f aci l i t i es ata r at e thati s adequa t e f oran ef f i ci ent l y and economi cal l y oper at ed f aci l i ty. ” St at e Pl an, A t t achment4. 19D , 3- 1. 2 ¶7 . M et hodi s tf

i l ed a r epl y br i ef

i n chanc er y c ou r t , wi th a t t a c hmen t s f r om a pr i or p ro c e e d in g , tha t su p p lies in fo rm a tio n r e le v a n t to th e c u rre n t d isp u te. M e th o d ist o p e n e d its P N F S D in F e b ru a ry 2 0 0 4 ; ite x p e rie n c e d a low initia l pa tien t oc c u p a n c y rate o f 2 6 .3 4 p e rc e n t. I n J anuary 2005, M ethodi s ts ubm i t t ed a c os tr eportt o D O M thatclai m ed $1, 106. 68 per pati ent perday
. O f this am ou nt, $4 54
. 42 w as cl ai m ed for adm i nis trat i ve an d o perat i ng cost s. M edi cai d chal l enged M ethodi s t ’ s r at e of r ei m bur s ementata N ovember21, 2005, hear i ng.

### In its rep ly b rief, M etho dist states that its reimb ursement wo uldbe sig nificantly less 3 

### tod ay th an it w as at start-up . 5 A tthe hea r i ng, a D O M empl oyee e xpr es s ed conc ern thatM ethodi s t ’ s cost s perpat i entperday
w ere too h igh
. M ed icaid so u g h t t o reim b u rse M etho d ista t a rate o f $6 5 0 p er d iem
. H o w ev er, M edi cai d s ubs equent l y per f or m ed a f

i el d au ditt hatconcl uded thata r eas onabl e perdi em
r ei m bur s ementr at e f

orM ethodi s tf

r om February 27, 2004, t o J ul y 1, 2006, r anged be tw een $989. 52 and $1, 156. 15. O n A ugus t24, 2006, D O M confi rm ed t he adj us t m entof t he 3
re im b u rse m e n t ra tes in a c c o rd a n c e w ith th e a u d it. ¶8. O n A ugus t 1, 2006, D O M pr om ul gat ed St at e Pl an A m endment 2006- 006 ( SPA 2006- 00 6) t o a mend the rul e s a pp l i c a bl e t o the r e i mbur s e mentof PN FSD s . The PN FSD
re im b u rse m e n t p ro v isio n n o w sta ted : In y e a rs w h e n the rate is ca lcu late d fo r o n ly o n e P N F S D , re im b u rse m e n t w ill be bas ed upon al l ow abl e r eport ed cos t s of the f aci l i ty. R ei m bur s ementf or d ire c t c a re , th e ra p ies , c a re -re late d , a n d a d m in istra tiv e a n d o p e ra tin g c o sts w ill b e c a lc u la te d a t c o s t p lu s th e a p p lic a b le tr e n d fa c to rs . Rei m bu rs e m e nt f or a dm in istra tive a n d

o p e ra tin gco sts w ill

b e su b jec t to the ce ili n gfo r th e fa c ili ty a s d e s c r i b e d

i n S e c t i o n 3
- 4 E. ( E m phas i s appl i ed t o am ended l anguage . ) Sect i on 3- 4E , governi ng the perdi em ra t e f or a d m in istra tiv e a n d o p e ra tin g c o sts , w a s a m e n d e d to sta te: “ F o r P N F S D ’s w ith 6 0 M e d ica id
cert i f i ed beds orl es s , the cei l i ng c al cul at ed f orthe s m al l nur s i ng f

aci l i ty cl as s w i l l be us ed. F o r P N F S D ’s w ith g re a ter th a n 6 0 M e d ica id c e rtified b e d s, th e lar g e n u rsin g fa c ili ty c las s w ill be us ed. ” Thus, SPA 2006- 006 appl i ed the r ei m bur s ementcei l i ng f orei thera s m al l ora l ar ge nur s i ng f

a c i l i ty’ s a dmi ni s tr a t i ve a nd o pe r a t i ng c os t s t o a PNFSD ’ s a dmi ni s tr a t i ve and

### Methodis t a ss erts that given i ts numbe r of beds , it is subj ec t to t

he r ei mbur se me nt 4 

### ceiling fo r the s ma llnurs ing f ac il it y cl as s. For the s akeof br evity, theCourt re fe rs to t

he sm al l nur sing facility c ei ling throughout our ana lys is , a lt

hough if Methodis t e xce ede d the si xty- bed l im it

for thesm al l nur sing fac il it

y cla ss , the n under SPA 2006-006, the c ei ling for thela rgenurs ing f

ac il it y cl as s woul d apply. 6 ope r a t i ng c os t s . A f

t e rSPA 20 06
- 00 6, DO M c a l c ul a t e d a p e rd i e m r e i mbur s e mentr at e f or 4 M e th o d is t o f $ 5 1 1 .0 1
. ¶9. D O M promul gat ed not i ce of t he am endmentby f

ol l ow i ng t he pr ocedur e pr es cr i bed by the A dm i ni s tr at i ve Pr ocedur es A ct( A PA )
. A s r equi r ed by the A PA , atl eas ttw enty- f i ve days p rio r to th e a d o p tio n o f S P A 2 0 0 6 -0 0 6 , D O M fil e d n o tice o f th e p ro p o se d ru le a d o p tio n w ith the Secr et ary of

St at e f orpubl i cat i on i n the admi ni s tr at i ve bul l et i n. M i s s . C ode A nn. § 25- 43- 3 .1 0 3 (1 ) (R e v . 2 0 0 6 ). T h e A P A als o req u ire s a n ag e n c y to m a il a co p y o f th e p ro p o se d ru le change t o any agency thathas t i m el y re ques t ed not i ce of propos ed rul e adopt i ons . M i s s . C ode A n n . § 2 5 -43 -3.10 3 (2). T h is m u st be d o n e w ith in three d ay s after filing w ith th e S ec retary
o f S ta te . I

d. M ethodi s tdi d notr eques tnot i ce of pr opos ed rul e adopt i ons . H ow ever , f ur ther
n o tice re q u ire m e n ts w e re im p o se d u p o n D O M b y th e S tate P lan , w h ic h p ro v id e s th a t all
nur s i ng f aci l i t i es w i l l r ece i ve a copy of the publ i c not i ce of

any s i gni f

i cantpr opos ed cha nge t o paymentr at es . St at e Pl an, A t t achment4. 19D , 1- 8. D es pi t e thi s r egul at i on, D O M di d not
m ai l M et ho dis ta cop y of the propo sed SP A 200 6-006 befor e i t s ado pti on . Inst ead, M et ho dis t f i r s tr ece i ved not i ce of

SPA 2006- 006 i n a J anuary 30, 2007, l ett erthatadvi s ed M ethodi s tof i t s r educe d r ei m bur s ementbegi nni ng i n J anuary 2007. ¶10
. O n F ebruary 27 , 20 07 , M et ho dis t fi l ed a request for an app eal w i th D O M . M et ho dis t
ar gued t hat : (1) S PA 2006-006 di d notcom pl y w i th S ect i on 43-13- 117( 44) , w hi ch r equi r es

### 7

D O M t o r ei m bur s e M ethodi s tas a s epar at e ca t egory of nur s i ng f

aci l i t i es , ( 2) SPA
- 2006- 006
w a s n o t a r e a so n a b le in te rp re tatio n o f th e sta tu te, a n d (3 ) S P A -2 0 0 6 -0 0 6 w a s v o id d u e to D O M ’ s f ai l ur e t o af

f or d pr opernot i ce t o M ethodi s t . O n D ece m ber7, 2007, a hea r i ng of f i cer ru led in f

a v o r o f D O M . T h e h e a rin g o ffic e r fo u n d th a t S P A 2 0 0 6 -0 0 6 a llo w e d D O M to
r ei m bur s e M ethodi s tas “a separa t e ca t egory of nur s i ng f

aci l i ty” bec aus e, unl i ke any other type of f aci l i ty, M ethodi s ts t i l l had no ce i l i ng f ord i rect -ca r e orcar e- r el at ed cos t s . T he hear i ng of

f i cerfound thatD O M ’ s admi ni s tr at i ve and ope r at i ng cos t s w er e unr eas onabl e, and that“ D O M ’ s a ct i ons a l l ow M ethodi s tt o r ecove ri t s r eas onabl e admi ni s tr at i ve and ope r at i ng cos t s by compar i ng i t s admi ni s tr at i ve and op er at i ng cos t s t o a f aci l i ty of s i m i l ars i ze. ” The hear i ng of

f i cerf ound thatD O M had pr ovi ded ade quat e not i ce of SPA 2 006- 006 undert he A PA
. D O M adopt ed the hea r i ng of f i cer ’ s det erm i nat i ons as the f i nal agenc y deci s i on. ¶11. O n J anuary 2, 2 00 8, M et ho dis tfi l ed a co m plai nt i n the C hance ry C our tof H i nds C o u n ty. M etho d istall eg ed th at th e ce il ing “su b stan ti all y an d d rasti ca ll y low ers M etho d ist ’s
r ei m bur s ementf

oradmi ni s tr at i ve and ope r at i ng cos t s ( f r om $319. 24 perda y t o $74. 22) and itdirectl y co n tr ad ict s th e p lai n l an g u ag e o f bo th th e statute an d the [S tat e] Plan w h ich re q u ir e thatM et ho dis tbe tr eat ed as a s epar at e ca t egory of nur s i ng hom es f

orpurpos es of
r ei m bur s ement . ” M ethodi s tal s o ar gued thati tw as deni ed due pr oces s beca use i thad not recei ved no t i ce of the p roposed rul e chan ge u nti l aft er the rul e’s ado pti on . M et ho dis t
r eques t ed var i ous f

or m s of r el i ef , i ncl udi ng a perm anenti nj unct i on to pr eventD O M f r om i mpos i ng a p a ymen tc e i l i ng tha td oe s n ottr e a tM e tho di s ta s a s e pa r a t e c a t e go ry of nur s i ng f aci l i ty unt i l the openi ng of a s econd PN FSD f

aci l i ty.

### 8

¶1 2
. T h e c h a n c e ry c o u rt a ffi rm ed D O M ’s de cisi o n . T h e ch an ce ry co u rt’s d e c isio n is perhaps the bes tart i cul at i on of the r eas oni ng empl oyed by D O M ; i ts t at ed: T he pr i m ary cl ai m as s ert ed by M ethodi s ti s thatSPA 2006- 006 vi ol at es s t atut ory l aw becaus e i tpl ace d M ethodi s ti n the s ame cat egory as anothertype of nu r s i ng ho me. I ti s true tha tthe r e i mbur s ement c e i l i ng i mpos e d i n SPA 2 0 0 6 -00 6 is th e sa m e a s tha t i m p o sed in “th e sm all n u rsi n g fac ili ty c lass.” It i s f urthe rtrue tha tthe r e l e va nts t a tut e d i r e c t s tha tPNFSD s e r vi c e s “ s ha l l be r ei m bur s ed as a s epar at e ca t egory of nur s i ng f

aci l i t i es . ” H ow ever , i ti s nottrue thatSPA 2006- 006 i s a vi ol at i on of thi s s t atut ory mandat e. W hi l e SPA 2006- 006 i m pos es a ce i l i ng on admi ni s tr at i ve and ope r at i ng cos t s l i ke othercl as s es of nur s i ng f

aci l i t i es , M ethodi s ti s nots ubj ectt o di rectcare and ca r e- r el at ed cos t s cei l i ngs l i ke othercl as s es of nur s i ng f

aci l i t i es . Fur ther , M ethodi s t , unl i ke ot her nu rs i ng f

aci l i t i es , i s al l ow ed t o r ecoup i t s cos t s r el at ed t o the s peci al faci l i t i es and e qu i pm ent r equ i red t o tr eatthe acu t e need s of i t s pati en t s. T her ef or e, i ti s obvi ous thatthe r at e cal cul at i on f orM ethodi s tdi f

f er s f r om the r at e ca l cul at i ons f

orany othernur s ery [ s i c] f aci l i t i es . M ethodi s tal l eges thatno f ace tof i t s r ei m bur s ementm ay be on the s ame b asi s as any othercat egory of nur s i ng f aci l i ty. H ow ever , the pl ai n l angu age of the s t atut e s i m pl y does not s uppor tthi s as s ert i on . . . . C l ear l y, t he st at ute si m pl y does notr equi r e that e v e ry c o m p o n e n t o f re im b u rse m e n t b e d e ter m in e d a s a c o m p lete ly se p a ra te ent i ty f r om al l ot hernur s i ng f aci l i t i es . I ns t ead, the l anguage pr ovi des that r ei m bur s ements hal l be had a s a sepa r at e cat egory of nur s i ng fa ci l i t i es . C l ear l y, M edi cai d does r ei m bur s e M ethodi s tas a s epar at e ca t egory of nur s i ng f

aci l i ty. I n s hor t , SPA 2006- 006 pr ovi des a ce i l i ng onl y f ora dm i ni s tr at i ve and oper at i ng c o s t s ; M e th o d i s ti s s t i l l tr e a t e d a s a s e p a r a t e c l a s s o f f a c i l i ty a s r e q u i r e d b y l a w. T he cha ncel l oral s o f

ound that , al though D O M had vi ol at ed i t s r egul at ory not i ce pr ovi s i on, beca us e D O M ’ s not i ce of the pr opos ed rul e cha nge had com pl i ed w i th the mi ni m al due pr oc e s s r e qu i r e ment s pre s cr i bed b y the A PA , the c ha nc e ry c ou r tc ou l d n oti nv a l i da t e SPA 2006- 006. ¶13. M ethodi s t appea l s , ar gui ng that SPA 2006- 006 vi ol at es M i s s i s s i ppi C ode Sect i on 43- 1 3 -1 1 7 (4 4 ). M e th o d ist als o arg u e s th a t S P A 2 0 0 6 -0 0 6 is i n v a lid b e c a u se D O M a d o p ted it i n vi ol at i on of

i t s ow n r egul at ory not i ce pr ovi s i on, a nd w i thoutpr ovi di ng M ethodi s tw i th not i ce and an opportuni ty t o be hea r d.

### 9 S TANDA RD O F REVI EW ¶14. W e w i l l r ever s e the deci s i on of an admi ni s tr at i ve agenc y onl y i f the deci s i on ( 1) w as uns uppor t ed by s ubs t ant i al evi dence ; ( 2) w as arbi trary and capr i ci ous ; ( 3) w as beyond the p o w er o f th e a d m inistrati v e a g en cy t o m ak e; or (4) violated th e co m p lai n ing pa rty ’s st atuto ry o r c o n s titu tio n a l r ig h t. Hin d s Co u n t y Sc h . Dis t

. Bd . o f Trs . v. R. B. e

x r e l . D. L. B. , 10 So. 3d 3 8 7 , 3 9 4 -95 (M iss. 2 0 0 8 ). A n ag en cy m ay n o t ado p t ru les an d reg u lat ion s w h ich a re c o n tr ary to sta tu to ry p ro v is io n s o r w h ic h e x c e e d o r c o n fl ic t w ith th e a u th o ri ty g ra n te d b y s ta tu te . Miss. P ub. Ser v. Com m ’n v. Mis s . Pow er& L i ght Co. , 5 9 3 S o . 2 d 9 9 7 , 1 0 0 0 , 1 0 0 4 (M iss. 1 9 9 1 ). “[A ] n ag en cy ' s ru le-m ak ing p o w er d o es n o t exten d to the ad o p ti o n o f reg u lat ion s w h ich a re i ncons i s t entw i th actual s t atut es . ” T ill m o n v. Miss . S ta te D e

p ’t o f He a lth , 749 So. 2d 1017, 1023 ( M i s s . 1999) ( ci t i ng S ta te ex re l. P itt m a n v. Miss . P u b lic S e rv . Co m m 'n , 538 So. 2d 3 6 7 , 3 7 3 (M iss. 1 9 8 9 )). ¶15
. A n agen cy’s i nterpret at i on of a rul e or st atute go verni ng the agen cy ’s o p erat i on i s a
m att erof l aw thati s r evi ew ed de novo, butw i th gr eatdef er ence t o the age ncy’ s i nt erpr et at i on. Si er r a Club v. Mis s . E nvtl . Q ualit y Perm it B d. , 943 So. 2d 673, 678 ( M i s s . 2006) ( quot i ng McD erm en t v. Miss. R ea l E state Co m m ’n , 7 4 8 S o . 2 d 1 1 4 , 1 1 8 (M iss. 1 9 9 9 )). T h is “ d u ty of def er ence der i ves f

r om our r eal i zat i on t hatt he everyday exper i ence of the admi ni s tr at i ve a g e n c y g iv e s it fa m ili a rity w ith th e p a rticu lar iti e s a n d n u a n c e s o f th e p ro b lem s c o m m itt e d to i t s car e w hi ch no cour tcan hope t o re pl i cat e. ” G il l v. Mis s . D ep’t

of W ildli f e Conse r vati on , 574 So. 2d 586, 593 ( M i s s . 1990)
. H ow ever , i f a n a gency’ s i nt erpr et at i on i s contr ary t o t he
u n a m b ig u o u s te rm s o r b e s t re a d in g o f a sta tu te , n o d e fe re n c e is d u e . Sie r r a Club , 943 S o. 2d at679
. A n agen cy’s i nterpret at i on w i l l not be up held i f “i ti s so pl ai nly errone o u s o r so

### 10

i ncons i s t entw i th ei therthe under l yi ng r egul at i on ors t atut e as t o be arbi tr ary, capr i ci ous , an abus e of di s cr et i on orotherw i s e noti n acc or dance w i th l aw . ” B u e lo w v. G lide w e ll , 757 So. 2 d 2 1 6 , 2 1 9 (M iss. 1 9 9 5 ). A N A L Y S IS I . W HETH ER BY ADO PTI NG SPA 2 0 0 6 - 0 0 6 , DO M FAI LED TO RE I M B UR S E M E T HOD I S T AS A S E P AR AT E C AT E GOR Y O F N U R S IN G F A C IL IT Y , IN V IO L A T IO N O F S E C T IO N 4 3 -13 -11 7 (44 ). ¶16. M ethodi s t ar gues that SPA 2006- 006 vi ol at es the pl ai n l anguage of M i s s i s s i ppi C ode Sect i on 43- 13- 117( 44) thatr equi r es D O M t o re i m bur s e M ethodi s tas a s epar at e ca t egory of
nur s i ng f aci l i t i es . M ethodi s tcl ai m s the cl earl egi s l at i ve i nt entw as thatD O M w oul d s ubj ect M et ho dis tt o a rei m bu rs em ent s chem e t ai l ored t o it s part i cularr ole as a P N F S D . M et ho dis t argues, “[ b] ecause the cei l i ng forsm al l nu rs i ng faci li ti es i s an ave rage of theiractual cost s,
w hi ch ar e i ncurr ed i n the admi ni s tr at i on and o perat i on of f aci l i t i es w hos e pat i ent s ar e not
near l y s o i l l ors o c hal l engi ng a s thos e atM ethodi s t ’ s f aci l i ty f orthe s ever el y di s abl ed, s uch
a c eil ing c a n o n ly red u ce M etho d ist ’s reim b u rsem en t, an d is de ri v ed from the c o sts of a d if fe re n t c a te g o ry o f n u rs in g h o m e th a t is n o t s u b je c t to M e th o d is t’ s p a rt ic u la r n e e d s .” T heref ore, M et ho dis targues, S P A 20 06 -006 effect i vely m akes M et ho dis trei m bu rs able as a s m al l nur s i ng f

aci l i ty, nota PN FSD
. M ethodi s tt akes i s s ue w i th D O M ’ s det erm i nat i on t hat the s t atut ory r equi r ementi s s at i s f i ed as l ong as M ethodi s t ’ s r ei m bur s ementm ethod does not
m i rr orpr eci s el y t hatof

anothertype of

f aci l i ty. ¶17. D O M ar gues t hat , becaus e cei l i ngs fordi r ect - car e and car e- r el at ed cos t s appl y t o ot her f aci l i t i es butnott o M ethodi s t , M ethodi s ti s s t i l l bei ng r ei m bu rs ed as a s epar at e ca t egory of
n u rsin g fa c ili ty , alth o u g h itn o w sh a re s th e c e ili n g fo r a d m in istra tiv e a n d o p e ra tin g c o sts w ith

### 11

the s m al l nurs i ng fa ci l i ty cat egory. D O M ar gues t hatt he pl ai n l anguage of M i s s i s s i ppi C ode Sect i on 43 -13-117( 44) does notr equi r e thatevery as pectof a PN FSD ’ s r ei m bur s ementbe
s epar at e f

r om thatof

anothercat egory of

f aci l i ty. D O M a l s o a r gues thati tw as r eas onabl e f or D O M t o as s i gn the s m al l nur s i ng f aci l i ty cei l i ng f

oradmi ni s t rat i ve and ope r at i ng cos t s t o a P N F S D . D O M c o n ten d s th a t, w h ile it is re a so n a b le to e x p e c t M e th o d ist to h a v e h ig h e r c o sts f ordi r ect - car e and c ar e- re l at ed s ervi ces due t o i t s acut e- car e pat i ent s , i ti s unr eas onabl e f or M ethodi s tt o have hi ghercost s foradm i ni s tr at i on and oper at i on than t hos e of a s i m i l ar l y- s i zed
or di nary nur s i ng f

aci l i ty. ¶18
. W e turn to S ec ti o n 4 3 -13 -11 7 (44 ). T h is C o u rtw il l no t eng ag e in statu tory i nterpret at i on i f a s t atute i s pl ai n an d u nam biguou s. In r e G u a rdia n sh ip o f D u c k e tt , 991 So. 2d 1165, 1181 ( M i s s . 2008) ( ci t i ng D u P re e v. Ca rr o ll , 9 6 7 S o . 2 d 2 7 , 3 0 (M iss. 2 0 0 7 )). H ow ever , s t atut ory i nt erpr et at i on i s appr opr i at e i f a s t atut e i s ambi guous ori s s i l enton a s p e c if ic is s u e . I

d. I n ei thercas e, the ul t i m at e goal of thi s C our ti s t o di s cern the l egi s l at i ve in te n t. Allr e d v. Y

arbo r ough , 8 43 S o. 2 d 727 ( M i s s . 2003) ( quot i ng Cit y of N atchezv. Sulli van , 612 So. 2d 1087, 1089 ( M i s s . 1992) )
. T he bes te vi dence of l egi s l at i ve i nt enti s the t extof the s t atut e; the C our tm ay al s o l ook t o t he st atut e’ s hi s t or i cal backgr ound, purpos e, and
o b je c tiv e s . In re D u c k e tt , 9 9 1 S o . 2 d at 11 8 1 -82
. If a statute is am b igu o u s, itis th e C o u rt ’s duty t o “ car ef

ul l y r evi ew s t atut ory l anguage a nd a ppl y i t s m os tr eas onabl e i nt erpr et at i on and
m eani ng t o the f

act s of a part i cul arcas e. ” Caldw el l v. N . Mis s . Med. Ctr. , 95 6 S o. 2d 888, 891 ( M i s s . 2007) ( quot i ng P ope v. B r ock , 9 1 2 S o . 2 d 9 3 5 , 9 3 7 (M iss. 2 0 0 5 )). ¶1 9
. S e c tio n 4 3 -1 3 -1 1 7 (44 ) pro v ides th at “ n u rsin g fa c ili ty se rv ice s fo r th e se v e re ly di s abl ed” a r e t o be provi ded i n “a l ong- t erm car e nur s i ng f aci l i ty dedi cat ed t o the ca r e and

### 12

tre a tm e n t o f p e rso n s w ith s e v e re d isa b ili ties .” T h is f a c ili ty “ sh a ll b e re im b u rse d a s a se p a ra te cat egory of

nur s i ng f

aci l i t i es . ” M i s s . C ode A nn. § 43-13- 117( 44) (Rev. 2004). W e f i nd that Sect i on 43- 13- 117( 44) i s s ubj ectt o i nt erpr et at i on, beca us e i ti s s i l enton the s peci f i c i s s ue of
w h e th er o r no t placing an o ther fac il ity ’s ce il ing o n o n e c o m p o n en t of a P N F S D ’s
r ei m bur s ementm eans t hatt he PN FSD i s bei ng re i m bur s ed as “a s epar at e ca t egory of nur s i ng f aci l i t i es . ” See In re D u c k e tt , 991 So. 2d at1181. ¶20. T hi s C our t def

er s t o an admi ni s tr at i ve agenc y’ s i nt erpr et at i on of a governi ng s t atut e. Sie r r a Club , 943 So. 2d at678. D O M has det erm i ned thatSPA 2006- 006 does notconf l i ct
w ith S e cti o n 4 3 -13 -11 7 (44 ) be ca u se itm ak es o n ly o n e c o m p o n en t of M etho d ist ’s
r e i mb u r s e me n tth e s a me a s th a to f a n o th e rc a t e g o ry o f

n u r s i n g f

a c i l i ty . Ho we v e r , DOM admi t s t hatt he l egi s l at i ve i nt entof Sect i on 43-13- 117( 44) w as t o re cogni ze the spe ci al needs of a PN FSD by pr ov i di ng f orthe r e i mbur s e mentof a PN FSD a s “ a s e pa r a t e c a t e go r y of
nur s i ng f aci l i t i es . ” D O M a r gues thatthi s l egi s l at i ve i nt entw as s at i s f i ed by D O M ’ s use of
ano ther cat ego ry’ s cei l i ng t o rei m bu rs e M et ho dis t ’s adm i nis trat i ve an d o perat i ng cost s. ¶21
. A l tho ug h w e give defer ence t o D O M ’s i nterpret at i on , i t w i l l no t be up held i f “i t i s so pl ai nl y err oneous ors o i ncons i s t entw i th ei therthe under l yi ng r egul at i on ors t atut e as t o be
a rb itr a ry , c a p ri c io u s , a n a b u s e o f d is c re tio n o r o th e rw is e n o t in a c c o rd a n c e w ith la w .” B uelow , 757 So. 2d at219. W hen r eas onabl e, thi s C our ti s obl i ged t o r eac h a n i nt erpr et at i on th a t g iv e s e ff

e c t t o a ll o f th e s ta tu to ry la n g u a g e . G ilm e r v . S ta te , 95 5 S o. 2d 82 9, 83 5 (M i ss. 2 0 0 7 ). M iss iss ip p i C o d e S e c tio n 4 3 -1 3 -1 1 7 (4 4 ) w a s e n a c ted to p ro v id e fo r th e M e d ica id reim b u rsem en t of serv ices p rov ided to se v ere ly d isab led p atie n ts a t l o n g -t erm n u rsi n g ca re fa c ili ties d e d ica ted to th e c a re a n d tre a tm e n t o f th o se p a tien ts, k n o w n a s P N F S D s. T h e S tate

### 13

Pl an l i s t s s ever al s peci f i c ca t egor i es of

f aci l i t i es and pr om ulga t es r ei m bur s ement
m ethodol ogi es appl i cabl e t o the ca t egor i es . T he Legi s l atur e saw f i tt o pr ovi de f

ort he
r ei m burs em ent of a P N FSD “as a s epar at e ca t egory of nur s i ng f

aci l i t i es . ” W e f

i nd thatt he p ro v isio n th a t a P N F S D sh a ll b e re im b u rse d as “a se p a ra te c a teg o ry o f n u rsin g fac ili ties ” is b est v iew ed as a leg isl ati v e d eterm ination that a P N F S D is no t com p ara b le t o an o ther c ateg o ry of nur s i ng f aci l i ty f orr ei m bur s ementpu rpo s e s . O the rw i s e , the Leg i s l a tur e c ou l d ha ve omi t t ed thi s provi s i on, and D O M w oul d have been abl e t o pl ace P N FSD s i nt o anotherr ei m bur s ement cat egory. ¶22. T hi s C our tfi nds t hatD O M ’ s i nt erpr et at i on of Sect i on 43-13- 117 (44) i s i ncons i s t ent
w i th thats t atut e’ s r equi r ementthatD O M r ei m bur s e M ethodi s tas a s eparat e cat egory of
nur s i ng f aci l i ty. D O M c ont ends that , s o l ong as M ethodi s ti s r ei m bur s ed i n a mannerunl i ke th a t o f a n y o th e r n u rsin g f a c ility , D O M m a y u til ize c e ili n g s a p p lica b le to o th e r fa c ili ty
c a teg o rie s w ith o u t ru n n in g a fo u l o f th e sta tu te. S im u ltan e o u sly , D O M a d m its th a t itw o u ld be unr eas onabl e f

orD O M t o appl y the s m al l nur s i ng f aci l i ty cei l i ngs f

ordi r ect - car e and c ar er el at ed cos t s t o M ethodi s tdue t o M ethodi s t ’ s s peci al r ol e i n car i ng f ort he s ever el y di s abl ed. Y e t, un d e r D O M ’s in terp re tatio n o f th e sta tu te, n o th in g p re v e n ts D O M fro m p lac in g th e sm a ll
nur s i ng f aci l i ty cei l i ngs upon M ethodi s t ’ s di r ect - car e and car e- r el at ed cos t s , beca us e as l ong as ther api es cos t s w er e nots ubj ectt o a ce i l i ng, M ethodi s t ’ s r ei m bu rs em ents t i l l w oul d be unl i ke thatof

any otherf

aci l i ty. T her ef

or e, carr i ed t o i t s l ogi cal end, D O M ’ s i nt erpr et at i on yi el ds abs ur d r es ul t s by r ender i ng the “sepa r at e ca t egory of nur s i ng f

aci l i t i es ” l anguage
v i r tu a l l y m e a n i n g l e s s . T h i s i n t e rp r e t a t i o n c o n tr a v e n e s th e e v i d e n tl e g i s l a t i v e i n t e n tth a tDOM eval uat e the ne eds of

a PN FSD s epar at el y f

orr ei m bur s ementpurpos es . W e r ecogni ze that

### Thedi ss ent a cc use s thi s Court

of f ai ling t o a ff

ord prope r def

er enc e to M edicaid. 5 

### Regarding theint er

pre tati on of statutes, it

is theLegi sl at

ure , not Medi ca id, that i s e nti tl ed to o ur u ltimate defer en ce . While th is Co urt is w ell-aware o f the p rob lems currently exp eriencedbythe Medicaidsystem, it is the role of the Legislature, not this Co urt, to shield thepublicfrom Me dic ai d over -bi ll ing. It would beim

prope r f or this Court

to unde rt akethat subs tanti alta sk at t

he e xpens e of

es ta bli shed p rincip les of a genc y law and s tatut ory int er pre tati on. Wenot e that Medi ca id rem ains f re e t o curtailMethodis t’ s a dminis trativeand operating c ost s rei mbur se ment by pl ac ing a ce il ing upon Me thodi st ’s adm ini strative and operating c ost s that

is not tie d to anothe r c at egor y’s ce il ing. 14 there ce rt ainly is no sta tu to ry restri cti o n p rev en ti n g D O M from cu rt ail ing M etho d ist ’s
r e i mbur s e ment , w he the rthr ou gh c e i l i ng s orothe rw i s e . H oweve r , un de rSe c t i on 43
- 13- 117( 44) , any ce i l i ng orot herl i m i t at i on m us tbe one c al cul at ed f ora PN FSD , notf

oranother type of nur s i ng f

aci l i ty. 5 ¶2 3
. W e a lso ad d ress M etho d ist ’s arg u m en t that D O M ’s ap p li ca ti o n o f a ce il ing to c o sts previ ou sl y n o t s ubj ectt o a ceil i ng w as arbitrary an d cap ri ci ou s becau se “an ag ency m ust ei t her c onf

or m t o i t s pr i ornor m s and dec i s i ons orexpl ai n the r eas on f ori t s departur e f

r om s uch pr ece dent
. ” Miss. V a ll ey G a s C o . v. Fed

. E n erg y R eg. Co m m ’n , 6 5 9 F .2 d 4 8 8 , 5 0 6 (5 th C i r . 1981)
. M ethodi s tcont ends thati f D O M be l i eved M ethodi s t ’ s cos t s t o be unr eas onabl e, then the appr opr i at e r emedy underthe St at e Pl an w oul d have been a f i el d audi tfol l ow ed by
a n a d ju s tm e n t to a llo w a b le c o s ts . See S tat e P l an, A t t achm ent 4. 19 D , 1-7(A ). M et ho dis t p o ints ou t th at D O M alr ea d y ha d pe rform ed a field a u d it , w h ich c o n clud ed that M etho d ist ’s
cos t s w er e r eas onabl e. T her ef or e, M ethodi s tar gues thatD O M ’ s m ot i vat i on i n pr om ul gat i ng SPA 2006- 006 w as t o r ew r i t e i t s regul at i ons t o obt ai n the r es ul ti tw as unabl e t o obt ai n by f ol l ow i ng i t s ext antrul es . D O M r ecogni zes that“an a gency mustei therconf or m t o i t s pr i or
n o rm s a n d d e c isio n s o r e x p lain th e re a so n fo r its d e p a rtu re fr o m s u c h p re c e d e n t,” b u t ita ss e rts

### Becau se the h earing officer’s o pin iondiscu ssed th e p ri o r pro ceedin g, th is 6 

### inf orm ation c le arly wa s a

part of there cord be for e the a genc y.

15 thatthe r eas on f

ori t s a dopt i on of

SPA 2006- 006 w as thatM ethodi s t ’ s r eport ed admi ni s t r at i ve c o s ts w e re “ g ro s s ly o u t o f l in e w ith re a s o n a b le c o s ts .” ¶24. W e agr ee that“an a gency mustei therconf orm to i t s pri ornor m s and dec i s i ons or expl ai n the r eas on f

ori t s departur e f

r om s uch pr ece dent
. ” Mis s . V al ley G as Co. , 659 F. 2d at 5 0 6
. D O M arg u es th at itp rom u lgated S P A 2 0 0 6 -00 6 b ec au se itd eterm ined tha t M etho d ist ’s adm i nis trat i ve an d o perat i ng cost s w ere un reas on ably hi gh
. H ow ever, this conclusi on i s cast into d o u b t by the fa ct th at M etho d ist ’s rep o rt ed co sts w ere fou n d t o be reaso n ab le by D O M ’s
ow n i nt ernal audi t . I tappea r s thatthe amendm entw as adopt ed f orthe purpos e of

l i m i t i ng 6 the r ei m bur s ementf

oradmi ni s tr at i ve and ope r at i ng cos t s thatD O M al r eady had dee m ed
r eas onabl e. ¶25. I n B ev erly E n terp rises v. Missi ssipp i D ivision o

f Me dica id , 80 8 S o. 2d 939, 943 ( M i s s . 2002) , thi s C our texami ned the def i ni t i ons of

“arbi tr ary” and “c apr i ci ous , ” and s t at ed: I n McG ow an v. Mis s . State O il & G as B d. , 6 0 4 S o . 2 d 3 1 2 , 3 2 2 (M iss. 1 9 9 2 ), this C ou rtdefi ned arbi trary an d cap ri ci ou s as f oll ow s: "A rbitrary " m ea n s fi x ed o r d o n e ca p ri ciou sly o r at plea su re. A n ac t i s arb itrary w hen i ti s done w i thoutadequat el y det erm i ni ng pri nci pal ; notdone acc or di ng to rea so n o r j u d g m en t, b u t dep en d ing u p o n the w il l alon e,— ab so lute in p o w er, tyr anni cal , despot i c, non-r at i onal , — i m pl yi ng ei thera l ack of under s t andi ng of or a di sr egard for the fund am ental natur e of things. "C a p ric io u s" m e a n s fr e a k ish , fick le, o r a rb itrar y . A n a c t i s c a p ric io u s w h e n it i s done w i thou treason, i n a w hi m s i cal m anner , i m pl yi ng ei thera l ack of under s t andi ng of

ora di s r egar d f

orthe s urr oundi ng f

act s and s ett l ed contr ol l i ng pri ncipl es.

### 16

W e f i nd thatD O M ’ s pr om ul gat i on of a r egul at i on thatl i m i t ed M ethodi s t ’ s r ei m bur s ementf or cos t s w hi ch D O M al r eady had dee m ed t o be re as onabl e and r ei m bur s abl e w as , def i ni t i vel y, an arbi tr ary and capr i ci ous act i on by the age ncy. ¶26. I n concl us i on, w e hol d thatSPA 2006- 006 conf l i ct s w i th the s t atut ory r equi r ement that a PN FSD be r ei m bur s ed as a sepa r at e cat egory of nur s i ng f aci l i ty; ther ef

or e, the amendm ent is vo id an d o f no effec t. A cc o rdin g ly, w e re v erse the d ec isi o n s o f D O M an d of th e c h an ce ry c o u rt an d w e rem a n d this ca se to th e c h a n c e ry c o u rt fo r fu rth e r p ro c e e d in g s c o n sis ten t w ith thi s opi ni on. I I . W HETH ER S P A 2 0 0 6 - 0 0 6 I S I NVA LI D BECAUSE DOM VI OLATED TH E A PA O R I TS O W N R EG U LA TIO N S. ¶27. M ethodi s ta r gues thatSPA 2006- 006 i s i nval i d becau se D O M ’s fai l ure t o pr ovi de
no t i ce and an o pp ortun i ty to be he ard, or t o foll o w it s o w n regulat ory no t i ce prov i si on s, vi ol at ed M et hodi s t ’ s r i ghtt o due pr oces s . T he C our thas al r eady de t erm i ned i n I s s ue I t hat S P A 2 0 0 6 -0 0 6 is in v a lid . T h e re fo re , this iss u e is m o o t an d w e d o n o t ad d re ss it. CO NC L US I ON ¶28. B eca us e SPA 2006- 006 conf l i ct s w i th the st at utor y requi rem ent t hat a PN FSD be rei m bu rs ed as a separat e cat ego ry of nursi ng f aci l i ty, i ti s vo i d and of no ef fect
. W e revers e the d ec isi o n s o f the c h an ce ry co u rta n d o f D O M a n d rem an d this c ase to the ch an ce ry c o u rt f orf ur therpr ocee di ngs cons i s t entw i th thi s opi ni on. ¶29. RE VE RS ED AND RE M ANDE D. W AL LE R, C. J . , CA RL S ON, P . J . , KI TC HENS AND P I ER CE , J J . , CONCUR. D I C K I N S O N , J ., C O N C U R S I N P A R T A N D I N R E S U L T . R A N D O L P H , J ., D I SSE N T S W I T H SE P A R A T E W R I T T E N O P I N I O N JO IN E D B Y L A M A R , J. GR AV E S , P . J . , NO T P AR T I CI P AT I NG .

### 17

RA ND OL P H, J US T I CE , DI S S E NT I NG : ¶ 3 0
. I d iss e n t fro m th e m a jo rity ’s d e ter m in a tio n th a t th e M iss iss ip p i D iv isio n o f M e d ica id
err ed i n i nt erpr et i ng M i s s i s s i ppi C ode Sect i on 43- 13- 117( 44) ( b) ( R ev. 2004)
. G i vi ng the agenc y’ s i nt erpr et at i on the “gr eatdef er ence ” as i s pr operunderours t andar d of r evi ew , I f

i nd th a t th e ru le is c o n s is te n t w ith th e sta tu to ry la n g u a g e a t is s u e . See S ier ra Clu b v. Miss . E n v tl. Q ualit y Perm it B d. , 9 4 3 S o . 2 d 6 7 3 , 6 7 8 (M is s . 2 0 0 6 ). ¶31. T he maj or i ty’ s det erm i nat i on thatM edi cai d’ s rul emaki ng w as arbi tr ary and capr i ci ous ( as oppos ed t o r ef

l ect i ng s ound j udgm entand comm on s ens e) a l l ow s M ethodi s tH os pi t al and R ehabi l i t at i on C ent erunbr i dl ed author i ty t o s hi f tcos t s and s etadmi ni s tr at i ve s al ar i es and exp enses atit s w h im , and si m ply hand the am pli fi ed b i l l t o o ur st at e’s t axp aying ci t i zens’
r epr es ent at i ves and demand s at i s f act i on of i t s B r obdi ngnag i an app et i t e. I s M edi cai d t o be
cas t i gat ed f

ori t s deci s i on and det erm i nat i on thatthe nur s i ng f aci l i ty’ s admi ni s tr at i ve and operat i ng cos t s w er e unr eas onabl e, gi ven thatM ethodi s t ’ s over al l r ei m bur s ementr at e w as near l y s eve n t i m es gr eat erthan thatof a s t andar d s ki l l ed- nur s i ng f aci l i ty ( “SN F”) , and gi ven thatM ethodi s tw as bi l l i ng tw i ce the aver age da i l y r at e of an SN F f

oradmi ni s tr at i ve and oper at i ng c os t s ? Such a deci s i on doe s notf aci al l y appea rt o be “tyr anni cal [ or ] des pot i c, ” or “f r eaki s h, f i ckl e, or. . . done w i thoutr eas on, i n a w hi m s i cal manner. . . . ” McG ow an v. Miss. State Oil

& Gas B d. , 6 0 4 S o . 2 d 3 1 2 , 3 2 2 (M iss . 1 9 9 2 ). T h e m a jo rity o p in io n fa ils to acknow l edge thatM edi cai d pr oper l y di d notcont es tthe expe ct ed enha nced c os t s f orthe
n e c e ss a ry sk ill s a n d e q u ip m e n t to se rv e a n d c a re fo r th e n e e d s o f M e th o d ist’s s e v e re ly

### 18

i m pai r ed r es i dent s . R ei m burs ement s f ordi r ectcar e, ther api es , and ca r e- r el at ed expe ns es rem ai n o n a b asi s of cost , plus the ap pli cable trend fact ors. ¶ 3 2
. R e g a rd in g iss u e tw o , M e th o d ist a ss e rts th a t M e d ica id v io late d th e n o tice re q u ire m e n ts of the A dm i ni s tr at i ve Pr ocedur e A ct( “A PA ”) by f ai l i ng t o s end M etho dis ta copy of t he p ro p o s e d ru le c h a n g e . See M i s s C ode A nn. § 25-43- 3. 103 ( R ev. 2004)
. H ow ever , t hat pr ovi s i on i s i nappli cable here; M ethodi s thad neve rr eques t ed t o be on the mai l i ng l i s t , as re q u ir e d b y t h e s ta tu te . See M i s s . C ode A nn. § 25- 43- 3. 103( 2) ( R ev. 2004)
. A s s um i ng arguen do that i tapp l i es, t he A P A do es not al l ow forv oidi ng a rul e un der these ci rcum st ances. See M i s s . C ode A nn. § 25- 43- 3. 111( 1) (Rev. 2004) ( “I nadvert entfa i l ur e t o m ai l a not i ce of pr opos ed rul e adopt i on t o any per s on as r equi r ed by Sect i on 25- 43-3. 10 3(2) doe s not inv ali d ate a rule” ). O f gre ater im p o rt , M etho d istw as a c c o rd e d d u e-p roc ess righ ts f o r a h e a rin g . R a th e r th a n a p p e a r a n d c o n tes t th is r u le, M e th o d ist c h o se , a s w a s its rig h t, t o su b m it
a w r i t t en compl ai ntt o a M edi cai d hear i ng of f i cer , w hos e dec i s i on then r equi r ed ac cept ance orr ej ect i on b y t he E xecut i ve D i r ect or ; and f i nal l y, by a cha ncel l or . I f i nd thi s i s s ue t o be
w ith o u t m e rit. ¶33. M ethodi strai ses a t hir d i ssue i n i t s bri ef – thatM edi cai d had vi ol at ed the not i ce pr ovi s i ons of

i t s ow n r egul at i ons – butM ethodi s tfa i l ed t o l i s tthi s i s s ue i n i t s “St at ementof Is s u e s .” T h u s , w e n e e d n o t c o n s id e r t h is is s u e . See M . R . A
. P. 28( a) ( 3)
. O nce a gai n, as s um i ng ar guendo, the i s s ue w as prop er l y pr es erved, i ti s w i thoutm er i t . M edi cai d’ s not i ce re q u ir e m e n ts h a v e n o p ro v is io n to in v a lid a te a ru le o n th is b a s is
. ¶ 3 4
. T h e c h a n c e llo r fu lly c o n sid e re d th e iss u e s a n d fo u n d th a t “ M e th o d ist h a [d ] n o t m e t it s bur den of

pr oof thatthe f

i nal deci s i on w as uns uppor t ed by s ubs t ant i al evi dence , arbi tr ary or

### 19

capr i ci ous , i n exce s s of the s t atut ory authori t y or j ur i s di ct i on of M edi cai d, ora vi ol at i on of
a n y v e ste d c o n s titu tio n a l rig h ts o f a n y p a rty in v o lv e d .” T h e c h a n c e llo r c o n c lu d e d th a t h is
c o u rt w o u ld “ n o t su b stitu te its o w n ju d g m e n t” fo r th a t o f M e d ica id , the a g e n c y c h a rg e d w ith i m pl ement i ng the s t at ute. T hi s C our ts houl d exer ci s e the s ame r es tr ai nt , w hi ch w e have im p o s e d o n o u rs e lv e s p re v io u s ly
. See E lec . D a ta S y s. Co rp . v. Miss . D iv. o f Me dica id , 853 So. 2d 1192, 1204 ( M i s s . 2003) ( ci t i ng State B d. of Ps ychologi cal

E xam ’ rs v. Coxe , 355 So. 2 d 6 6 9 , 6 7 1 (M is s . 1 9 7 8 ))
. ¶3 5 . T h e ch an ce ll o r f o u n d th at SP A 20 0 6 -00 6 w a s n o t in c o n sis ten t w ith th e sta tu tory
m a n d a te o f M iss iss ip p i C o d e S e c tio n 4 3 -1 3 -1 1 7 (4 4 )(b ) (R e v . 2 0 0 4 ). T h e c h a n c e llo r a stu tely recogn i zed thatM et ho dis tw as not subjectt o any cei l i ng s fordir ect -car e or care- rel at ed co st s, and t ha tthe n e w c e i l i ng s a pp l i e d on l y t o a dmi ni s tr a t i ve a ndo pe r a t i ng c os t s . H e n ot e d t hat the pl ai n l anguage of

the s t atut e does notpr eventM edi cai d f r om r ef err i ng t o the cr i t er i a f

or othercat egor i es of

nur s i ng f

aci l i t i es t o est abl i s h a pr operr ei m bur s ementf or m ul a f or M ethodi s t . T he chanc el l orconcl uded t hatM ethodi s tw as “st i l l tr eat ed as a s epar at e cl as s of f aci l i ty as r equi r ed by l aw . ” ¶36. O urpre cede ntre qui r es us to g i ve “gre atdef er ence ” t o st atut ory i nt erpr et at i ons done b y a d m in is tr a tiv e a g e n c ie s c o n c e rn in g th e irg o v e rn in g s ta tu te s . Sie r r a Club , 9 43 So
. 2 d a t 678. “[ N ] o courtcan hope t o r epl i cat e” a n agenc y’ s “f ami l i ar i ty w i th the part i cul ar i t i es and
nu ances of

the pr obl ems comm i t t ed t o i t s car e . . . . ” G il l v. Miss. D ep’t

of W ildli fe Conse r vati on , 5 7 4 S o . 2 d 5 8 6 , 5 9 3 (M iss . 1 9 9 0 ). F u rth e r, “th is C o u rt h a s n o rig h t, prer og at i ve, or duty t o ben d a st atute t o m ake itsay w hat i tdo es not s ay. . . . [ C ] ou rt s, j ud ges,

### For the ye ar from July 2004 t

hrough June, 2005, the tre nd fa ct ors ca ll ed f or the 7 

### f ol l ow i ngi nc r e a s e s over act ua lc os t s : Dir e c t

Car e , 10
. 57 5% ; Th e r a py , 11
. 12 5% ; Administrativ e andOp erating , 21 .77 5%
. 20 a n d ju s tic e s s it to a p p ly t h e l a w a s it is , n o t m a k e th e la w a s th e y th in k it s h o u ld b e .” Fra n k lin Co llec tio n S e rv ., In c . v. K y le , 9 5 5 S o . 2 d 2 8 4 , 2 8 8 -89 (M iss. 2 0 0 7 ). ¶ 3 7 . T h e s ta tu to ry la n g u a g e a t is s u e is s ile n t o n t h e s p e c if ic is s u e h e re . See M i s s . C ode A n n . § 43- 13- 117( 44) ( b) (Rev. 2004) ( “a s epar at e ca t egory of nur s i ng f

aci l i t i es ”)
. T he chan cel l or f

ou nd that “the p l ai n langua g e to th e st atute [ did] no tsupp ort[ M et ho dis t ’s ]
as s ert i on. ” I agr ee w i th thi s f i ndi ng. U nderthe rul e, M ethodi s ti s notsubj ectt o any cei l i ngs fordir ect -car e or care- rel at ed co st s. T hu s, forthese cost s – tho se that ar e i ncreased bec ause of the tr eatm entof

seve r el y- di s abl ed pat i ent s – M ethodi s tw i l l cont i nue t o be r ei m bur s ed on a “c os t - pl us ” bas i s . T hati s , M ethodi s tw i l l geteverythi ng i tcl ai m s and more , as the t ot al cl ai m ed cos t s ar e m ul t i pl i ed by a “t r end f act or . ” U ndert he rul e, M ethodi s tw oul d be subj ect

7
o n ly to a c e ili n g fo r a d m in istra tiv e a n d o p e ra tin g c o sts , w ith n o c e ili n g o n c o sts re late d to d ir ec t care for p ati en ts. M ed icaid p o ints o u t th at w h en M etho d istw as ap p o inted a s a p rov ider, ef f ect i ve F ebruary 27, 2004, M edi cai d s etthe i nt er i m r at e bas ed on es t i m at ed f undi ng by M etho d ist , at a d ail y rate o f $4 8 7 . 7 4 for a ll cos t s . T en mont hs l at er , M ethodi s ts ubm i t t ed its i ni t i al cos tr eportpr oj ect i ng $1, 106. 68, of w hi c h $ 45 4. 42 w a s f

ora dmi ni s tr a t i ve a nd oper at i ng cos t s . M edi cai d acc ept ed the hi gh car e cos t s r el at ed t o the s peci al
- need pa t i ent s , butatt he
s ame t i m e det erm i ned thatM ethodi s t ’ s admi ni s tr at i ve and ope r at i ng cost s s houl d be compar abl e t o t hos e of

a s i m i l ar l y- s i zed nur s i ng hom e.

### Ref er enc e t o othe r c at egorie s t o computeMethodis t’ s rei mbur se me nt i s not 8 

### unpreced ented . Fo r on e aspect o f its reimbursement fo rmula, return o n equity , Meth od ist has b een p aid at th e same rate as o th er nursin g facilities sin ce Meth od ist first op enedits PN FS D. 21 ¶38. M ethodi s t ar gues that the “s epar at e cat egory” l anguage r equi r es that i t not be s ubj ect t o any ce i l i ng, f

orany of i t s cos t s , and thatcompar i s on t o anothertype of f aci l i ty cannotbe any partof

i t s re i m bur s ementform ul a. A s the s t atut e i s s i l ent , I cannoti n good cons ci ence 8
a c c e p t M e th o d ist’s in terp re tatio n . O n e h a s to a m e n d th e sta tu to ry lan g u a g e to g e t to th is des i r ed r es ul t . I decl i ne. M et hodi s tacc us es M edi cai d, unconvi nci ngl y, of s eeki ng t o add sta tu to ry lan g u a g e . M e th o d ist a rg u e s th a t an a d m in istra tiv e -a n d -o p e ra tin g e x c e p tio n sh o u ld be tr eat ed as a s epar at e ca t egory. T he s t atut e has no s uch exce pt i on. M edi cai d has acc or ded a f ai ri nt erpr et at i on of the st atut e, and w e, l i ke t he chanc el l or , ow e M edi cai d’ s i nt erpr et at i on

“ g re a t d e fe re n c e .” ¶3 9. M et hodi s tar gue s a l s o tha tthe s t a tut e r e qu i r e s M e di c a i d t o t a i l ora r ei m bur s ement
s che me t o M e tho di s t ’ s pa r t i c ul a rr ol e a s a pr i va t e nu r s i ng f a c i l i ty f orthe s e ve r e l y d i s a bl ed ( “PN FSD ”)
. T he rul e pr eci s el y a ccompl i s hes the s t atut ory r equi r ement , al bei ti n a di f f er ent
w ay than d i d the pri or r ei m bu rs em ent rule, w hich gr anted M et ho dis tcart e blanche. M et ho dis t
w as r ei m bur s ed f

oral l o f i t s expe ns es on a “c os t - pl us ” bas i s , t aki ng i nt o cons i der at i on t he high cost s of the faci l i ty’s s pecial funct ions of car i ng forpersons w i th severe dis abil i t i es. U nderthe new rul e, M ethodi s tcont i nues t o r ece i ve “c os t - pl us ” r ei m bur s ement f orthe hi gh di r ect - car e and care- rel at ed cos t s , s ubj ectonl y t o a ce i l i ng f oradmi ni s tr at i ve and ope r at i ng cost s.

### 22

¶ 4 0
. T h e m a

jo rity p a rro ts M e th o d ist’s a rg u m e n t th a t M e d ica id ’s in terp re tatio n , if tak e n to i t s l og i cal con cl usi on , w ou l d y i el d ab surd r esul t s i n fut uro . T h e c laim is th a t if w e d e fe r to thi s i nt erpr et at i on, nothing w ou l d st op M edicai d fr om placi ng cei l i ng s on d i rect -car e and car ere late d c o sts . S h o u ld th is im a g in a ry c o n c e rn d e v e lo p , w e w ill d e a l w ith it w h e n it i s p ro p e rly b e fo re th e C o u rt . W e a re p re c lu d e d fr o m ru lin g o n c o n tr o v e rs ie s n o t p re s e n te d
. See G a rtr e ll
v. G a rtr e ll , 936 So. 2d 915, 917 ( M i s s . 2006) ( ci t i ng McD an iel v. Hu rt , 92 M i s s . 197, 41 So. 3 8 1 (1 9 0 6 ))
. ¶ 4 1
. T h e c iti z e n s o f th is s ta te w h o p ick u p th e tab fo r g o v e rn m e n t s e rv ice s a re e n tit led to have the expe ns es moni t or ed by the governm entthey puti nt o pow er , a nd notby the w hi m of a vendorof

s ervi ces . A dm i ni s tr at i ve and oper at i ng cos t s i ncl ude s uch i t ems as the s al ar i es a n d frin g e b e n e fits o f th e ad m in istra to r an d as sis tan t ad m in istra to r, as w e ll as o th e r la b o r c o sts
su c h a s: d ieta ry , h o u se k e e p in g , lau n d ry , m a in ten a n c e , m e d ica l rec o rd s, an d o th e r p e rso n n e l. O ther cost s i n thi s cat eg o ry in clud e n o n ca p it al am o rt izati o n an d d ep rec iat ion fee s for v eh i cl es. D oes M ethodi s tpay i t s hous ekee per s , mai nt e na nc e s t a f f , and l aundry w or ker s m or e than other h ea lth -ca re p rov iders? Is i ts secre tari al st aff co m p en sated diff ere n tl y , or i ts foo d co sts high er, o r d o th e y p a y a h ig h e r r a te fo r th e iru tilit ie s a n d v e h ic le s ? M e d ic a id c e rt a in ly h a s a ri g h t, a duty, t o anal yze thes e cos t s . W hen i tdoes , w e s houl d noti nt er f er e. ¶4 2. Shoul d a governm entagenc y b e p r oh i bi t e d f r om “ t i ght eni ng i t s bel t , ” as m any M iss is s ip p ia n s a re h a v in g to d o d u rin g th is tim e o f h ig h u n e m p lo y m e n t an d e c o n o m ic
u n c e rta in ty ? C o st c o n tr o l is im p o rta n t to a ll M iss iss ip p ian s, a n d is e ss e n tially im p o rta n t to th e o th e r b e n e fi c ia ri e s o f M e d ic a id , o u r p o o r a n d d is a d v a n ta g e d
.

### 23

¶43
. S tat ist ics p rov ided b y M ed i cai d d em on strat e t he d i ff erences bet w een M et ho dist ’s
r ei m bur s ementand thos e of f aci l i t i es i n othercat egor i es : “Fors ki l l ed nur s i ng f aci l i ty car e, the ave r age pe rdi em re i m bur s ementr at e paid b y M edi cai d i s $169. 03.
. . . A t$511. 01, M ethodi s t ’ s t ot al rat e as cal cul at ed by M edi cai d i s cl ear l y di s t i ngui s habl e f r om the r at es of othernur s i ng f

aci l i t i es . ” ¶ 4 4
. O u r sta tu te a u th o riz e s M e d ica id to m a k e p a y m e n ts, in c lu d in g th o se fo r th e se v e re ly dis abled, as f

oll ow s: M edi cai d as aut hor i zed by t hi s ar t i cl e sha l l i ncl ude paym entof partor al l of the c o s ts , a t th e d is c re tio n o f t h e d iv is io n , w ith a p p ro v a l o f t h e G o v e rn o r, o f . . . c a re a n d se rv ice s re n d e re d to e lig ib le a p p lica n ts w h o h a v e b e e n d e ter m in e d to be el i gi bl e f

orthat care and se r vi ces , w i thi n the l i m i t s of s t at e appr opr i at i ons and feder al m at ching fund s. M i s s . Code A nn . § 4 3- 13
- 17 7 ( Rev. 20 04 )
. H e r e , M e di c a i d a do pt e d a rul e c on c e r ni ng admi ni s tr at i ve and ope r at i ng cos t s . T he rul e change does notre s ul ti n a cei l i ng on cos t s f or the pat i ent s ’ car e, butaf f ect s onl y t he admi ni s tr at i ve and oper at i ng expens es of the f aci l i ty. T he exp enses s ubj ectt o a cei l i ng ar e cost s that any n ursi ng ho m e exp end s ( accou nti ng fees , bank s ervi ce c har ges , di et ary s uppl i es , ut i l i t i es ) , as w el l as ot her s thatar e l es s es s ent i al ( educa t i onal s emi nar s , tr avel , a nd home- of f i ce expens es ) , a nd thos e i n betw een (a d m in istra tiv e sa lar ies a n d frin g e b e n e fits). C o st c u tti n g , n o t in v io latio n o f a sta tu te , is l audabl e, and s houl d notbe mi cr om anage d by thi s C our t . “[ T ] he eve ryday expe r i ence of [ M edi cai d] gi ves i tf

ami l i ar i ty w i th t he part i cul ar i t i es and nuanc es of the pr obl ems comm i t t ed t o i t s car e [ thatw e ca nnot ] hope t o r epl i cat e. ” G ill , 574 So. 2d at593.

### 24

¶4 5 . T h ere fore , co n side ri n g th e g rea t d efe ren ce w e sh o u ld rig h tly g iv e to a n a g e n c y ’s i nt erpr et at i on of

i t s governi ng s t atut es , I w oul d af f i r m the hol di ngs of

the admi ni s tr at i ve h e a ri n g o ff

ic e r, M e d ic a id , a n d th e c h a n c e llo r. LA M AR, J . , J OI NS THI S OP I NI ON.