Court Opinion

ID: 4455086
Source: CourtListenerOpinion
Date Created: 2019-11-12 21:10:23.504911+00
Date Added: 2024-06-11T14:45:09.285655
License: Public Domain

[Cite as State v. Amherst Alliance, L.L.C., 2019-Ohio-4640.]

                              IN THE COURT OF APPEALS OF OHIO

                                   TENTH APPELLATE DISTRICT

State of Ohio,                                          :

                 Plaintiff-Appellant,                   :           No. 18AP-982
                                                                 (C.P.C. No. 16CV-1043)
v.                                                      :
                                                               (REGULAR CALENDAR)
Amherst Alliance, LLC, et al.,                          :

                 Defendants-Appellees.                  :

State of Ohio,                                          :

                 Plaintiff-Appellant,                   :           No. 18AP-983
                                                                 (C.P.C. No. 16CV-5141)
v.                                                      :
                                                               (REGULAR CALENDAR)
United Church Homes, Inc.,                              :

                 Defendant-Appellee.                    :

State of Ohio,                                          :

                 Plaintiff-Appellant,                   :           No. 18AP-984
                                                                 (C.P.C. No. 16CV-7057)
v.                                                      :
                                                               (REGULAR CALENDAR)
Orion Royal Oaks, LLC, et al.,                          :

                 Defendants-Appellees.                  :

                                            D E C I S I O N

                                   Rendered on November 12, 2019

                 On brief: Dave Yost, Attorney General, William C. Greene,
                 and Anthony J. Molnar, for appellant. Argued: William C.
                 Greene.
Nos. 18AP-982, 18AP-983, and 18AP-984                                                     2

              On brief: Rolf Goffman Martin Lang LLP, Christopher G.
              Kuhn, Jaqueline Anderson, and Joseph F. Petros, III, for
              appellees. Argued: Christopher G. Kuhn.

              APPEALS from the Franklin County Court of Common Pleas

LUPER SCHUSTER, J.
       {¶ 1} Plaintiff-appellant, State of Ohio, appeals from three decisions and entries of
the Franklin County Court of Common Pleas granting the motions for summary judgment
of defendants-appellees, Amherst Alliance, LLC, Progressive Green Meadows, LLC,
Progressive Morning Care, LLC, Progressive Rolling Hills, LLC, Progressive Parma Care
Center, LLC, Progressive Park, LLC, Progressive Pines, LLC, United Church Homes, Inc.,
Orion Royal Oaks, LLC, Orion Willow Park, LLC, Orion Mansfield, LLC, Orion Austinburg,
LLC, Orion Blossom, LLC, Orion Toledo, LLC, Orion Lexington, LLC, Essex Healthcare
Corporation, and Camelot Arms Care Center, Inc. For the following reasons, we affirm.
I. Facts and Procedural History
       {¶ 2} In 2016, the state filed three separate complaints in the trial court alleging
appellees, all operators of skilled nursing facilities ("SNFs") receiving Medicaid
reimbursement, had violated R.C. 5164.35 ("the Provider Offenses Statute") by willfully or
through the use of deception obtaining Medicaid funds which appellees were not entitled
to receive. Specifically, the state alleged in its three complaints that between 2008 and
2010 appellees used deception to obtain Medicaid Provider Agreements for nonexistent
independent laboratories and/or willfully billed and accepted Medicaid reimbursement for
blood glucose tests conducted on SNF residents for which Medicaid does not provide
reimbursement.
       {¶ 3} On March 3, 2017, the trial court granted the parties' joint motion to
consolidate the cases. Subsequently, on August 11, 2017, appellees filed a joint motion for
summary judgment, arguing the state could not meet its burden to show that appellees
either willfully or through deception sought to receive or obtain Medicaid reimbursement
to which they were not entitled. Through their Civ.R. 56 evidentiary materials, appellees
sought to establish that although laboratory procedures, including blood glucose tests, are
not included in the Medicaid per diem payment to SNFs, these laboratory services are
Nos. 18AP-982, 18AP-983, and 18AP-984                                                      3

reimbursable by Medicaid under independent laboratory agreements, and the appellees
qualified as independent laboratories under the relevant Medicaid statutory and
administrative code provisions. Further, appellees argued that during the relevant time
frame, the Ohio Administrative Code allowed for reimbursement for blood glucose tests,
and as such, the state could not seek to retroactively apply a new policy determining SNFs
could not also operate as independent laboratories in order to establish a violation of the
Provider Offenses Statute.
       {¶ 4} The state responded to appellees' motion for summary judgment with a
September 29, 2017 memorandum in opposition. In its memorandum in opposition, the
state asserted that appellees knew they were not entitled to reimbursement for blood
glucose tests so they sought to use deceit to establish themselves, on paper only, as
independent laboratories eligible for Medicaid reimbursement. The state argued its Civ.R.
56 evidence demonstrated that appellees misled the Ohio Department of Medicaid to
obtain approval of their applications to become independent laboratory providers, allowing
appellees to then bill Medicaid simultaneously for their services as SNFs and as
independent laboratories, collecting millions of dollars from the Department of Medicaid
in the process. Once the Department of Medicaid realized appellees were submitting
payment claims as two simultaneously existing providers, the Department of Medicaid then
issued a policy on November 22, 2010 declaring that SNFs could not seek separate
reimbursement for blood glucose tests and other "routine procedures." (No. 18AP-984, Ex.
No. 35, attached as Appx. A to Appellees' Aug. 14, 2017 Notice.) Appellees filed a combined
reply brief in support of their motion for summary judgment on November 1, 2017.
       {¶ 5} In three separate decisions and entries filed in each of the three cases on
November 30, 2018, the trial court granted appellees' combined motion for summary
judgment. Specifically, the trial court determined the state did not provide any Civ.R. 56
evidence creating a genuine issue of material fact as to whether appellees could be licensed
as independent laboratories at the time the Department of Medicaid granted their licensure
and made payments to appellees for the blood glucose tests. The trial court further
concluded that because the Civ.R. 56 evidence demonstrated that appellees sought
guidance from the Department of Medicaid in applying for and ultimately receiving
licensure as independent laboratories, the state failed to establish there remained a genuine
Nos. 18AP-982, 18AP-983, and 18AP-984                                                     4

issue of material fact as to appellees' using deception. The state timely appeals all three
decisions. This court sua sponte consolidated the cases for purposes of appeal.
II. Assignment of Error
       {¶ 6} The state assigns the following error for our review:
                The trial court erred in granting summary judgment to
                defendant-appellees.

III. Standard of Review and Applicable Law
       {¶ 7} An appellate court reviews summary judgment under a de novo standard.
Coventry Twp. v. Ecker, 101 Ohio App.3d 38, 41 (9th Dist.1995); Koos v. Cent. Ohio
Cellular, Inc., 94 Ohio App.3d 579, 588 (8th Dist.1994). Summary judgment is appropriate
only when the moving party demonstrates (1) no genuine issue of material fact exists,
(2) the moving party is entitled to judgment as a matter of law, and (3) reasonable minds
could come to but one conclusion and that conclusion is adverse to the party against whom
the motion for summary judgment is made, that party being entitled to have the evidence
most strongly construed in its favor. Civ.R. 56(C); State ex rel. Grady v. State Emp.
Relations Bd., 78 Ohio St.3d 181, 183 (1997).
       {¶ 8} Pursuant to Civ.R. 56(C), the moving party bears the initial burden of
informing the trial court of the basis for the motion and identifying those portions of the
record demonstrating the absence of a material fact. Dresher v. Burt, 75 Ohio St.3d 280,
293 (1996). However, the moving party cannot discharge its initial burden under this rule
with a conclusory assertion that the nonmoving party has no evidence to prove its case; the
moving party must specifically point to evidence of the type listed in Civ.R. 56(C)
affirmatively demonstrating that the nonmoving party has no evidence to support the
nonmoving party's claims. Id.; Vahila v. Hall, 77 Ohio St.3d 421, 429 (1997). Once the
moving party discharges its initial burden, summary judgment is appropriate if the
nonmoving party does not respond, by affidavit or as otherwise provided in Civ.R. 56, with
specific facts showing that a genuine issue exists for trial. Dresher at 293; Vahila at 430;
Civ.R. 56(E).
IV. Analysis
       {¶ 9} In its sole assignment of error, the state argues the trial court erred in
granting appellees' motion for summary judgment. More specifically, the state argues it
Nos. 18AP-982, 18AP-983, and 18AP-984                                                      5

provided sufficient evidence in opposition to appellees' motion for summary judgment to
create a genuine issue of material fact as to whether appellees violated the Provider
Offenses Statute.
       {¶ 10} The state asserted in its complaints that appellees violated various provisions
of the Provider Offenses Statute, namely R.C. 5164.35(B)(1)(a), (b), and (c). In pertinent
part, the Provider Offenses Statute states:
              (1) No medicaid provider shall do any of the following:

              (a) By deception, obtain or attempt to obtain payments under
              the medicaid program to which the provider is not entitled
              pursuant to the provider's provider agreement, or the rules of
              the federal government or the medicaid director relating to the
              program;

              (b) Willfully receive payments to which the provider is not
              entitled;

              (c) Willfully receive payments in a greater amount than that to
              which the provider is entitled;

              ***

              (2) A medicaid provider engages in "deception" for the purpose
              of this section when the provider, acting with actual knowledge
              of the representation or information involved, acting in
              deliberate ignorance of the truth or falsity of the representation
              or information involved, or acting in reckless disregard of the
              truth or falsity of the representation or information involved,
              deceives another or causes another to be deceived by any false
              or misleading representation, by withholding information, by
              preventing another from acquiring information, or by any
              other conduct, act, or omission that creates, confirms, or
              perpetuates a false impression in another, including a false
              impression as to law, value, state of mind, or other objective or
              subjective fact. No proof of specific intent to defraud is
              required to show, for purposes of this section, that a medicaid
              provider has engaged in deception.

R.C. 5164.35(B)(1) through (2).
       {¶ 11} The state argued in its response to appellees' motion for summary judgment
and on appeal that there remains a genuine issue of material fact as to whether appellees
Nos. 18AP-982, 18AP-983, and 18AP-984                                                      6

acted willfully and/or by deception. However, as appellees note, under the plain language
of the Provider Offenses Statute, the threshold issue to finding a violation of R.C.
5164.35(B)(1)(a), (b), or (c) is a finding that appellees were not entitled to the payments.
Stated another way, if the state is unable to demonstrate that appellees were not entitled to
the Medicaid payments they received or attempted to receive, the state's claims for
violations of the Provider Offenses Statute must fail and summary judgment was
appropriate.
       {¶ 12} The issue of whether appellees were entitled to the Medicaid payments they
received or attempted to receive for the blood glucose tests from the period of 2008 to 2010
depends on the interplay of appellees' status as both SNFs and independent laboratories.
Pursuant to the version of the statute in effect during this time period, SNFs enrolled in
Medicaid are paid a per diem rate that covers both "direct care costs" and "ancillary and
support costs" of the SNF residents. Former R.C. 5111.222(A) (effective June 30, 2006).
The Ohio Administrative Code then provides that "[a]ll laboratory and x-ray procedures
covered under the Medicaid program are reimbursed directly to the laboratory or x-ray
provider." Former Ohio Adm.Code 5101:3-3-19(B) (effective Feb. 2, 2006; currently
codified at Ohio Adm.Code 5160-3-19(D)). A separate section of the Ohio Administrative
Code covers those costs not reimbursable to SNFs and provides that "[t]he costs of ancillary
services rendered to [SNF] residents by providers who bill medicaid directly," including but
not limited to "physicians, legend drugs, radiology, laboratory, oxygen, and resident-
specific medical equipment." Former Ohio Adm.Code 5101:3-3-42.4(E) (effective Feb. 9,
2006; currently codified at Ohio Adm.Code 5160-3-42.4).
       {¶ 13} Appellees agree with the state that, pursuant to their status as SNFs, the
statutory and regulatory framework outlined above prohibited them from collecting
Medicaid reimbursement, separate from their per diem reimbursement, for blood glucose
tests performed on their residents. However, an "independent laboratory" is a distinct
provider contemplated in the Medicaid statutes and regulations. Here, appellees sought
and were granted approval to operate as independent laboratories by the Department of
Medicaid. Under former Ohio Adm.Code 5101:3-11-01(A):
               "Independent laboratory" means a facility for the biological,
               microbiological,  immunological,    immunohematological,
Nos. 18AP-982, 18AP-983, and 18AP-984                                                      7

              serological, chemical, hematological, cytological, pathological
              or other examination of materials of the human body for the
              purpose of providing information for the diagnosis, prevention,
              or treatment of any disease or impairment, or for the
              assessment of an individual's health. An "independent
              laboratory" is a facility that is independent of the attending or
              consulting physician's office, a clinic, an ambulatory surgery
              center, or a hospital. A laboratory under the ownership and
              direction of a physician or physician group, such as a
              pathologist(s), is considered an independent laboratory if the
              physician holds himself or herself and the facilities of his or her
              office out to other physicians as being available for the
              performance of laboratory procedures.             Facilities only
              collecting or preparing specimens or only serving as a mailing
              service and not performing testing are not considered
              laboratories.

(Emphasis added.) Former Ohio Adm.Code 5101:3-11-01(A) (effective May 25, 2006;
currently codified at Ohio Adm.Code 5160-11-01).
       {¶ 14} As the emphasized language above notes, the regulatory definition of
"independent laboratory" in effect during the relevant time frame specifically listed four
entities from which an "independent laboratory" must be independent: (1) the offices of the
attending or consulting physicians, (2) clinics, (3) ambulatory surgery centers, and
(4) hospitals. Former Ohio Adm.Code 5101:3-11-01(A). Notably absent from this list of four
entities are SNFs. Though the state argues that SNFs should be impliedly included in the
list of four entities, arguing there must be some de minimis requirement that an
independent laboratory has some physical independence from the SNF facility, the state
points to no authority, statutory or otherwise, to support this argument. Additionally, the
state points to no legal authority to support its position that, during the time in question,
an SNF could not also be licensed as an independent laboratory. Notably, the Department
of Medicaid knew of and approved the applications of the SNFs to become additionally
licensed as independent laboratories, undercutting the state's argument that the statutory
and regulatory framework impliedly prohibited such dual licensure.
       {¶ 15} The state also argues that appellees should have known they were unable to
seek Medicaid reimbursement for the blood glucose tests because under former Ohio
Adm.Code 5101:3-11-03(K)(1)(b), "[r]outine laboratory and screening procedures" are
Nos. 18AP-982, 18AP-983, and 18AP-984                                                      8

"non-covered laboratory services." Again, however, while the state asserts blood glucose
tests inherently must be considered routine laboratory procedures, it points to no legal
authority to support such an argument. We are also mindful that once appellees received
notification from the state, in November 2010, that a new policy determination prohibited
SNFs from seeking Medicaid reimbursement for blood glucose tests because those tests
qualified as routine laboratory tests, appellees stopped seeking reimbursement for the
blood glucose tests. While the state seeks to have the November 2010 policy decision apply
retroactively this is not supported by law.
       {¶ 16} The Civ.R. 56 materials submitted to the trial court demonstrate that there
was nothing prohibiting appellees' conduct of collecting reimbursement for the blood
glucose tests prior to the November 2010 policy decision. Thus, we agree with the trial
court that state did not meet its burden under Civ.R. 56 to demonstrate there remained a
genuine issue of material fact as to whether appellees were not entitled to the Medicaid
reimbursement they sought, as licensed independent laboratories, for the blood glucose
tests. Accordingly, we conclude the trial court did not err in granting appellees' motion for
summary judgment. We overrule the state's sole assignment of error.
V. Disposition
       {¶ 17} Based on the foregoing reasons, the trial court did not err in granting
appellees' motion for summary judgment. Having overruled the state's sole assignment of
error, we affirm the judgments of the Franklin County Court of Common Pleas.

                                                                      Judgments affirmed.

                          KLATT, P.J., and NELSON, J., concur.

NELSON, J., concurring.
       {¶ 18} I concur fully in the panel decision, and write separately only to observe that
students of the ways of governmental bureaucracies may find that the full record in this
case rewards their examination. The state's posture here is characterized by its argument
that: "While Appellees state that Appellant [the State of Ohio] can cite no legal authority
supporting the proposition that one entity cannot simultaneously be two provider types,
they have cited no authority establishing that one entity can. Whose interpretation of the
Nos. 18AP-982, 18AP-983, and 18AP-984                                                       9

rules should be afforded deference?" Appellant's May 17, 2019 Reply Brief at 5 (emphasis
in original). The notion that the state can regulate telepathically through unexpressed
administrative intention (whether or not in direct conflict with staff guidance actually
expressed, as appellees have submitted here) has little support in law under our system of
checks and balances. I grant that it may not be too far removed, however, from the
apparently less exotic notion that regulatory power appropriately expands to the extent that
the regulators can craft especially opaque rules and then claim interpretive "deference."