Opinion ID: 865553
Heading Depth: 2
Heading Rank: 1

Heading: whether by adopting spa 2006-006, dom failed to

Text: REIMBURSE METHODIST AS A SEPARATE CATEGORY OF NURSING FACILITY, IN VIOLATION OF SECTION 43-13-117(44). ¶16. Methodist argues that SPA 2006-006 violates the plain language of Mississippi Code Section 43-13-117(44) that requires DOM to reimburse Methodist as a separate category of nursing facilities. Methodist claims the clear legislative intent was that DOM would subject Methodist to a reimbursement scheme tailored to its particular role as a PNFSD. Methodist argues, “[b]ecause the ceiling for small nursing facilities is an average of their actual costs, which are incurred in the administration and operation of facilities whose patients are not nearly so ill or so challenging as those at Methodist’s facility for the severely disabled, such a ceiling can only reduce Methodist’s reimbursement, and is derived from the costs of a different category of nursing home that is not subject to Methodist’s particular needs.” Therefore, Methodist argues, SPA 2006-006 effectively makes Methodist reimbursable as a small nursing facility, not a PNFSD. Methodist takes issue with DOM’s determination that the statutory requirement is satisfied as long as Methodist’s reimbursement method does not mirror precisely that of another type of facility. ¶17. DOM argues that, because ceilings for direct-care and care-related costs apply to other facilities but not to Methodist, Methodist is still being reimbursed as a separate category of nursing facility, although it now shares the ceiling for administrative and operating costs with 10 the small nursing facility category. DOM argues that the plain language of Mississippi Code Section 43-13-117(44) does not require that every aspect of a PNFSD’s reimbursement be separate from that of another category of facility. DOM also argues that it was reasonable for DOM to assign the small nursing facility ceiling for administrative and operating costs to a PNFSD. DOM contends that, while it is reasonable to expect Methodist to have higher costs for direct-care and care-related services due to its acute-care patients, it is unreasonable for Methodist to have higher costs for administration and operation than those of a similarly-sized ordinary nursing facility. ¶18. We turn to Section 43-13-117(44). This Court will not engage in statutory interpretation if a statute is plain and unambiguous. In re Guardianship of Duckett, 991 So. 2d 1165, 1181 (Miss. 2008) (citing DuPree v. Carroll, 967 So. 2d 27, 30 (Miss. 2007)). However, statutory interpretation is appropriate if a statute is ambiguous or is silent on a specific issue. Id. In either case, the ultimate goal of this Court is to discern the legislative intent. Allred v. Yarborough, 843 So. 2d 727 (Miss. 2003) (quoting City of Natchez v. Sullivan, 612 So. 2d 1087, 1089 (Miss. 1992)). The best evidence of legislative intent is the text of the statute; the Court may also look to the statute’s historical background, purpose, and objectives. In re Duckett, 991 So. 2d at 1181-82. If a statute is ambiguous, it is the Court’s duty to “carefully review statutory language and apply its most reasonable interpretation and meaning to the facts of a particular case.” Caldwell v. N. Miss. Med. Ctr., 956 So. 2d 888, 891 (Miss. 2007) (quoting Pope v. Brock, 912 So. 2d 935, 937 (Miss. 2005)). ¶19. Section 43-13-117(44) provides that “nursing facility services for the severely disabled” are to be provided in “a long-term care nursing facility dedicated to the care and 11 treatment of persons with severe disabilities.” This facility “shall be reimbursed as a separate category of nursing facilities.” Miss. Code Ann. § 43-13-117(44) (Rev. 2004). We find that Section 43-13-117(44) is subject to interpretation, because it is silent on the specific issue of whether or not placing another facility’s ceiling on one component of a PNFSD’s reimbursement means that the PNFSD is being reimbursed as “a separate category of nursing facilities.” See In re Duckett, 991 So. 2d at 1181. ¶20. This Court defers to an administrative agency’s interpretation of a governing statute. Sierra Club, 943 So. 2d at 678. DOM has determined that SPA 2006-006 does not conflict with Section 43-13-117(44) because it makes only one component of Methodist’s reimbursement the same as that of another category of nursing facility. However, DOM admits that the legislative intent of Section 43-13-117(44) was to recognize the special needs of a PNFSD by providing for the reimbursement of a PNFSD as “a separate category of nursing facilities.” DOM argues that this legislative intent was satisfied by DOM’s use of another category’s ceiling to reimburse Methodist’s administrative and operating costs. ¶21. Although we give deference to DOM’s interpretation, it will not be upheld if “it is so plainly erroneous or so inconsistent with either the underlying regulation or statute as to be arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law.” Buelow, 757 So. 2d at 219. When reasonable, this Court is obliged to reach an interpretation that gives effect to all of the statutory language. Gilmer v. State, 955 So. 2d 829, 835 (Miss. 2007). Mississippi Code Section 43-13-117(44) was enacted to provide for the Medicaid reimbursement of services provided to severely disabled patients at long-term nursing care facilities dedicated to the care and treatment of those patients, known as PNFSDs. The State 12 Plan lists several specific categories of facilities and promulgates reimbursement methodologies applicable to the categories. The Legislature saw fit to provide for the reimbursement of a PNFSD “as a separate category of nursing facilities.” We find that the provision that a PNFSD shall be reimbursed as “a separate category of nursing facilities” is best viewed as a legislative determination that a PNFSD is not comparable to another category of nursing facility for reimbursement purposes. Otherwise, the Legislature could have omitted this provision, and DOM would have been able to place PNFSDs into another reimbursement category. ¶22. This Court finds that DOM’s interpretation of Section 43-13-117(44) is inconsistent with that statute’s requirement that DOM reimburse Methodist as a separate category of nursing facility. DOM contends that, so long as Methodist is reimbursed in a manner unlike that of any other nursing facility, DOM may utilize ceilings applicable to other facility categories without running afoul of the statute. Simultaneously, DOM admits that it would be unreasonable for DOM to apply the small nursing facility ceilings for direct-care and carerelated costs to Methodist due to Methodist’s special role in caring for the severely disabled. Yet, under DOM’s interpretation of the statute, nothing prevents DOM from placing the small nursing facility ceilings upon Methodist’s direct-care and care-related costs, because as long as therapies costs were not subject to a ceiling, Methodist’s reimbursement still would be unlike that of any other facility. Therefore, carried to its logical end, DOM’s interpretation yields absurd results by rendering the “separate category of nursing facilities” language virtually meaningless. This interpretation contravenes the evident legislative intent that DOM evaluate the needs of a PNFSD separately for reimbursement purposes. We recognize that 13 there certainly is no statutory restriction preventing DOM from curtailing Methodist’s reimbursement, whether through ceilings or otherwise. However, under Section 43-13117(44), any ceiling or other limitation must be one calculated for a PNFSD, not for another type of nursing facility.5 ¶23. We also address Methodist’s argument that DOM’s application of a ceiling to costs previously not subject to a ceiling was arbitrary and capricious because “an agency must either conform to its prior norms and decisions or explain the reason for its departure from such precedent.” Miss. Valley Gas Co. v. Fed. Energy Reg. Comm’n, 659 F.2d 488, 506 (5th Cir. 1981). Methodist contends that if DOM believed Methodist’s costs to be unreasonable, then the appropriate remedy under the State Plan would have been a field audit followed by an adjustment to allowable costs. See State Plan, Attachment 4.19D, 1-7(A). Methodist points out that DOM already had performed a field audit, which concluded that Methodist’s costs were reasonable. Therefore, Methodist argues that DOM’s motivation in promulgating SPA 2006-006 was to rewrite its regulations to obtain the result it was unable to obtain by following its extant rules. DOM recognizes that “an agency must either conform to its prior norms and decisions or explain the reason for its departure from such precedent,” but it asserts 5 The dissent accuses this Court of failing to afford proper deference to Medicaid. Regarding the interpretation of statutes, it is the Legislature, not Medicaid, that is entitled to our ultimate deference. While this Court is well-aware of the problems currently experienced by the Medicaid system, it is the role of the Legislature, not this Court, to shield the public from Medicaid over-billing. It would be improper for this Court to undertake that substantial task at the expense of established principles of agency law and statutory interpretation. We note that Medicaid remains free to curtail Methodist’s administrative and operating costs reimbursement by placing a ceiling upon Methodist’s administrative and operating costs that is not tied to another category’s ceiling. 14 that the reason for its adoption of SPA 2006-006 was that Methodist’s reported administrative costs were “grossly out of line with reasonable costs.” ¶24. We agree that “an agency must either conform to its prior norms and decisions or explain the reason for its departure from such precedent.” Miss. Valley Gas Co., 659 F.2d at 506. DOM argues that it promulgated SPA 2006-006 because it determined that Methodist’s administrative and operating costs were unreasonably high. However, this conclusion is cast into doubt by the fact that Methodist’s reported costs were found to be reasonable by DOM’s own internal audit.6 It appears that the amendment was adopted for the purpose of limiting the reimbursement for administrative and operating costs that DOM already had deemed reasonable. ¶25. In Beverly Enterprises v. Mississippi Division of Medicaid, 808 So. 2d 939, 943 (Miss. 2002), this Court examined the definitions of “arbitrary” and “capricious,” and stated: In McGowan v. Miss. State Oil & Gas Bd., 604 So. 2d 312, 322 (Miss. 1992), this Court defined arbitrary and capricious as follows: Arbitrary means fixed or done capriciously or at pleasure. An act is arbitrary when it is done without adequately determining principal; not done according to reason or judgment, but depending upon the will alone,—absolute in power, tyrannical, despotic, non-rational,—implying either a lack of understanding of or a disregard for the fundamental nature of things. Capricious means freakish, fickle, or arbitrary. An act is capricious when it is done without reason, in a whimsical manner, implying either a lack of understanding of or a disregard for the surrounding facts and settled controlling principles. 6 Because the hearing officer’s opinion discussed the prior proceeding, this information clearly was a part of the record before the agency. 15 We find that DOM’s promulgation of a regulation that limited Methodist’s reimbursement for costs which DOM already had deemed to be reasonable and reimbursable was, definitively, an arbitrary and capricious action by the agency. ¶26. In conclusion, we hold that SPA 2006-006 conflicts with the statutory requirement that a PNFSD be reimbursed as a separate category of nursing facility; therefore, the amendment is void and of no effect. Accordingly, we reverse the decisions of DOM and of the chancery court and we remand this case to the chancery court for further proceedings consistent with this opinion. II. WHETHER SPA 2006-006 IS INVALID BECAUSE DOM VIOLATED THE APA OR ITS OWN REGULATIONS. ¶27. Methodist argues that SPA 2006-006 is invalid because DOM’s failure to provide notice and an opportunity to be heard, or to follow its own regulatory notice provisions, violated Methodist’s right to due process. The Court has already determined in Issue I that SPA 2006-006 is invalid. Therefore, this issue is moot and we do not address it.