Opinion ID: 4537297
Heading Depth: 2
Heading Rank: 2

Heading: Were the DOM’s actions arbitrary and

Text: capricious? ¶32. Methodist argues that the DOM acted arbitrarily and capriciously by singling out Methodist for a reduction of its adjustment rate, by failing to apply a rule of general applicability to Methodist in a consistent manner and by failing to articulate a reason for 15 deviating from its prior norms and decisions. ¶33. “An administrative agency’s decision is ‘arbitrary’ when it is not done according to reason or judgment, but depending on the will alone.” Pub. Emps.’ Ret. Sys. v. Marquez, 774 So. 2d 421, 429 (Miss. 2000) (citing Burks v. Amite Cty. Sch. Dist., 708 So. 2d 1366, 1370 (Miss. 1998); McGowan v. Miss. State Oil & Gas Bd., 604 So. 2d 312, 322 (Miss. 1992)). This Court has also stated that an act of an administrative agency “is ‘capricious’ if it is done without reason, in a whimsical manner, implying either a lack of understanding of or a disregard for the surround fact and settled controlling principles.” Id. at 429–30 (citing Burks, 708 So. 2d at 1370; McGowan, 604 So. 2d at 322). ¶34. “[A]n agency must either conform to its prior norms and decision or explain the reason for its departure from such precedent.” Miss. Methodist Hosp. and Rehab. Ctr., Inc. v. Miss. Div. of Medicaid, 21 So. 3d 600, 609 (Miss. 2009) (internal quotation marks omitted) (quoting Miss. Valley Gas Co. v. Fed. Energy Reg. Comm’n, 659 F.2d 488, 506 (5th Cir. 1981)), abrogated on other grounds by King, 245 So. 3d 404. ¶35. Methodist argues that the DOM’s explanation for such a departure from its previous norms or decisions must be more than a mere placeholder and that “an agency changing its course must supply a reasoned analysis indicating that prior policies and standards are being deliberately changed, not casually ignored . . . .” Greater Boston Television Corp. v. FCC, 444 F.2d 841, 852 (D.C. Cir. 1971). Here, the DOM complied with both. ¶36. The DOM acted in accordance with its previous norms and decisions by basing Methodist’s NBV-adjustment rate on what it would cost to construct an NFSD today. The 16 DOM’s only departure from its previous practices relevant here was the change in Methodist’s NBV-adjustment percentage amount. The DOM’s final decision adopting the AHO’s opinion provided a well-reasoned analysis for why it was necessary to depart from the 328.178 percent add-on adjustment and move to a 175 percent add-on for Methodist. The DOM explained that if it were to conform with the 328.178 percent add-on after the standard NBV was drastically increased, then the DOM would be overpaying Methodist for what it would cost to construct the facility by nearly $100,000 per bed. The AHO’s opinion also notes that because Methodist is the only NFSD in the state, the effort to establish a NBV is complicated by the fact that there are few such comparable facilities in the country. ¶37. Methodist also asserts that the DOM’s actions were arbitrary and capricious because it failed to apply a rule of general applicability. Methodist argues that the rule of general applicability here is that the fair-rental value be based on the cost to construct a new facility in the present day. Again, Methodist’s argument is without merit because its adjusted fairrental value was, in fact, based on what it would reasonably cost to construct a new NFSD in the present day, as explained in the DOM’s final decision. ¶38. After reviewing the record, we find that the DOM’s final decision to change Methodist’s adjustment rate to a 175 percent add-on was supported by substantial evidence and was not arbitrary or capricious