Court Opinion

ID: 9897442
Source: CourtListenerOpinion
Date Created: 2023-11-14 19:11:36.539556+00
Date Added: 2024-06-11T09:16:02.583320
License: Public Domain

FILED
                                                                      Mar 27 2023, 8:28 am

                                                                            CLERK
                                                                       Indiana Supreme Court
                                                                          Court of Appeals
                                                                            and Tax Court

ATTORNEYS FOR APPELLANT                                    ATTORNEYS FOR APPELLEE
Randall R. Fearnow                                         Theodore E. Rokita
Quarles & Brady LLP                                        Indiana Attorney General
Chicago, Illinois                                          Frances Barrow
                                                           Deputy Attorney General
Lucy R. Dollens                                            Indianapolis, Indiana
Roxanne M. Hilton
Sarah T. Parks
Quarles & Brady LLP
Indianapolis, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

American Senior Communities,                               March 27, 2023
Appellant-Petitioner,                                      Court of Appeals Case No.
                                                           22A-PL-2556
        v.                                                 Appeal from the Marion Superior
                                                           Court
Indiana Family & Social Services                           The Honorable Marc T.
Administration,                                            Rothenberg, Judge
Appellee-Respondent                                        Trial Court Cause No.
                                                           49D07-2109-PL-30994

                                 Opinion by Judge Crone
                            Judges Robb and Kenworthy concur.

Crone, Judge.

Court of Appeals of Indiana | Opinion 22A-PL-2556 | March 27, 2023                             Page 1 of 11
                                              Case Summary
[1]   For purposes of Medicaid reimbursement, American Senior Communities

      (ASC) submitted a Medicaid cost report that classified the Nursing Scheduler

      Coordinator position as a direct care component. The Office of Medicaid Policy

      and Planning (OMPP) reclassified the position as an administrative component.

      ASC appealed, and the administrative law judge (ALJ) concluded that OMPP

      had a reasonable basis for the reclassification. The ALJ’s order was upheld by

      the Indiana Family and Social Services Administration (FSSA), which in turn

      was affirmed by the trial court. ASC now appeals, arguing that the

      reclassification of the Nursing Scheduler Coordinator position from the direct

      care component to the administrative component was arbitrary and capricious.

      We disagree and therefore affirm.

                                  Facts and Procedural History
[2]   ASC operates seventy-eight nursing facilities, all of which employ a Nursing

      Scheduler Coordinator. ASC classified the position of Nursing Scheduler

      Coordinator as a direct care component in its 2016 and 2018 Medicaid cost

      reports relating to Medicaid rate effective dates of July 1, 2017, and July 1,

      2019, respectively. In brief, the “direct care component” refers to “direct patient

      care services and supplies.” 405 Ind. Admin. Code (IAC) 1-14.6-2(p). OMPP

      administers the Medicaid program for FSSA. OMPP contracted Myers &

      Stauffer, LP, to perform compliance reviews of facilities’ cost reports, reviewing

      allowable costs and correct classification of the reported costs. Myers & Stauffer

      reviewed ASC’s Medicaid cost reports on behalf of OMPP and determined that

      Court of Appeals of Indiana | Opinion 22A-PL-2556 | March 27, 2023        Page 2 of 11
      the Nursing Scheduler Coordinator position should be reclassified from the

      direct care component to the administrative component. The administrative

      component refers to “administrative services” and includes “[o]ffice and clerical

      staff.” 405 IAC 1-14.6-2(b). These two components receive different Medicaid

      reimbursement rates. Accordingly, Myers & Stauffer issued rate change notices

      on the abovementioned Medicaid cost reports for all of ASC’s seventy-eight

      nursing facilities. Myers & Stauffer’s reclassification resulted in a reduction in

      Medicaid reimbursements to ASC of approximately $3.3 million.

[3]   ASC requested reconsideration of the reclassification, which Myers & Stauffer

      denied. ASC then filed petitions for administrative review of the

      reclassification. After the appointed ALJ granted ASC’s request to consolidate

      the two administrative appeals, ASC and OMPP each filed summary judgment

      motions. The ALJ granted summary judgment in favor of OMPP. Appellant’s

      App. Vol. 2 at 14-17. In sum, the ALJ concluded, “There is a clearly reasonable

      basis for the [Nursing Scheduler Coordinator] position to be included within a

      cost report’s administrative component rather than direct care component” and

      “OMPP through its contractor did not act arbitrarily and capriciously by

      reclassifying this position accordingly.” Id. at 17.

[4]   ASC filed an objection to the ALJ’s decision. FSSA’s ultimate authority issued

      a final agency order, in which it adopted the ALJ’s findings of fact and

      concluded as follows:

              All members of the staff at a nursing facility influence the care
              and well-being of the patients. Maintenance workers make sure

      Court of Appeals of Indiana | Opinion 22A-PL-2556 | March 27, 2023          Page 3 of 11
              that the heat works during the winter; office staff make sure that
              the power bills are paid; and payroll staff make sure that the
              nurses are paid so that they can continue to work. Yet these staff
              persons clearly fall under the administrative designation and not
              the hands-on designation. Absent an express definition
              otherwise, logic dictates that the Nursing Schedule[r]
              Coordinator is another position whose services are vital, but
              administrative in nature.

      Id. at 19. Accordingly, FSSA’s ultimate authority upheld the ALJ’s decision.

[5]   ASC petitioned for judicial review of FSSA’s final order pursuant to the Indiana

      Administrative Orders and Procedures Act (AOPA). Following a hearing, the

      trial court issued findings of fact and conclusions of law, concluding that FSSA

      “properly adjusted the payment rate for ASC’s [Nursing Scheduler

      Coordinators] due to their lack of direct contact with patients.” Appealed Order

      at 8. ASC now appeals. Additional facts will be provided as necessary.

                                      Discussion and Decision
[6]   In an appeal involving an administrative agency’s decision, our standard of

      review is governed by the AOPA, and we are bound by the same standard of

      review as the trial court. Ind. Bd. of Pharmacy v. Elmer, 171 N.E.3d 1045, 1049

      (Ind. Ct. App. 2021), trans. denied. “We do not try the case de novo and do not

      substitute our judgment for that of the agency.” Walker v. State Bd. of Dentistry, 5

      N.E.3d 445, 448 (Ind. Ct. App. 2014), trans. denied.

              We will reverse the administrative decision only if it is: (1)
              arbitrary, capricious, an abuse of discretion, or otherwise not in
              accordance with law; (2) contrary to a constitutional right,

      Court of Appeals of Indiana | Opinion 22A-PL-2556 | March 27, 2023           Page 4 of 11
              power, privilege, or immunity; (3) in excess of statutory
              jurisdiction, authority, or limitations, or short of statutory right;
              (4) without observance of procedure required by law; or (5)
              unsupported by substantial evidence.

      Id. (citing Ind. Code § 4-21.5-5-14). “A decision is arbitrary and capricious

      when it is made without consideration of the facts and lacks any basis that may

      lead a reasonable person to make the decision made by the administrative

      agency.” Ind. Real Estate Comm’n v. Martin, 836 N.E.2d 311, 313 (Ind. Ct. App.

      2005), trans. denied (2006). “The burden of demonstrating the invalidity of the

      agency action is on the party who asserts the invalidity.” Walker, 5 N.E.3d at

      449.

[7]   ASC argues that FSSA’s interpretation of 405 IAC 1-14.6-2 is arbitrary and

      capricious. “Appellate courts review questions of regulatory interpretation in a

      similar manner as questions of statutory interpretation.” Nat. Res. Def. Council v.

      Poet Biorefining-N. Manchester, LLC, 15 N.E.3d 555, 564 (Ind. 2014). “An

      interpretation of a statute by an administrative agency charged with the duty of

      enforcing the statute is entitled to great weight, unless this interpretation would

      be inconsistent with the statute itself.” City of Gary v. Ind. Dep’t of Env’t Mgmt.,

      967 N.E.2d 1053, 1057 (Ind. Ct. App. 2012) (quoting Dev. Servs. Alts., Inc. v. Ind.

      Family & Soc. Servs. Admin., 915 N.E.2d 169, 181 (Ind. Ct. App. 2009), trans.

      denied (2010)).

              If a court determines that an agency’s interpretation is
              reasonable, it should terminate its analysis and not address the
              reasonableness of the other party’s proposed interpretation.

      Court of Appeals of Indiana | Opinion 22A-PL-2556 | March 27, 2023              Page 5 of 11
              Terminating the analysis recognizes the general policies of
              acknowledging the expertise of agencies empowered to interpret
              and enforce statutes and increasing public reliance on agency
              interpretations. However, an agency’s incorrect interpretation of
              a statute is entitled to no weight. If an agency misconstrues a
              statute, there is no reasonable basis for the agency’s ultimate
              action and the trial court is required to reverse the agency’s
              action as being arbitrary and capricious.

      Id. (emphasis omitted) (quoting Dev. Servs. Alts., 915 N.E.2d 181). “[T]the

      foremost goal of regulatory construction—like with statutory interpretation—is

      to give the words and phrases in the regulations their plain and ordinary

      meaning, within the context of the regulatory scheme in a way that reflects the

      intent of the agency that promulgated the regulations.” Poet Biorefining, 15

      N.E.3d at 564.

[8]   OMPP classified the Nursing Scheduler Coordinator as an administrative

      component, which is defined in 405 IAC 1-14.6-2(b)(3) as “the portion of the

      Medicaid rate that shall reimburse providers for allowable administrative

      services and supplies, including prorated employee benefits based on salaries

      and wages. Administrative services and supplies includes … [o]ffice and

      clerical staff.”

[9]   ASC asserts that the position of Nursing Scheduler Coordinator “fits squarely

      within the definition of the direct care component.” Appellant’s Br. at 20. 405

      IAC 1-14.6-2(p) defines the direct care component as

              the portion of the Medicaid rate that shall reimburse providers for
              allowable direct patient care services and supplies, including prorated

      Court of Appeals of Indiana | Opinion 22A-PL-2556 | March 27, 2023           Page 6 of 11
                  employee benefits based on salaries and wages. Direct care
                  services and supplies include all of the following:

                  (1) Nursing and nursing aide services.

                  (2) Nurse consulting services directly related to the provision of hands-on
                  resident care.

                  (3) Pharmacy consultants.

                  (4) Medical director services.

                  (5) Nurse aide training.

       (Emphases added.)1

[10]   ASC’s job description for the Nursing Scheduler Coordinator provides, “The

       Nursing Scheduler Coordinator is responsible for the overall assurances of

       appropriate staffing levels are met [sic] at all times with accordance to state and

       federal regulations and budgetary settings.” Appellant’s App. Vol. 2 at 222. In

       addition, the job description lists fourteen “Essential Position Functions,”

       which, not surprisingly, include such functions as creating and adjusting the

       staffing schedule for the nursing department, recommending new scheduling

       practices to improve efficiency, advising the executive director and director of

       nursing services of all staffing and scheduling needs, handling questions

       1
           We have included the most relevant of the sixteen services and supplies that are listed.

       Court of Appeals of Indiana | Opinion 22A-PL-2556 | March 27, 2023                             Page 7 of 11
       regarding scheduling needs, conducting initial interviews with nursing

       applicants, completing reference checks on potential new nursing hires, serving

       as a liaison with the payroll coordinator regarding payroll matters, and

       scheduling new nursing assistants for skills validation and training. Id. We

       observe that none of the listed functions involves “direct patient care services

       and supplies.” 405 IAC 1-14.6-2(p). ASC concedes this point but asserts that the

       Nursing Scheduler Coordinator provides “nurse consulting services directly

       related to the provision of hands-on resident care.” See 405 IAC 1-14.6-2(p)(2).

[11]   Based upon the plain and ordinary meanings of the terms administrative

       services and nurse consulting services, ASC’s assertion is unavailing. Creating a

       staffing schedule and the other functions of the Nursing Scheduler Coordinator

       are commonly understood to be administrative duties performed by office and

       clerical staff. Generally speaking, consulting services are commonly understood

       to mean the provision of expert advice. We understand nurse consulting

       services to be the provision of expert nursing advice or expert advice for

       nursing. The fact that the Nursing Scheduler Coordinator makes the schedule

       for the nursing staff does not transform the position into nurse consulting

       services. We conclude that there is a reasonable basis for OMPP’s classification

       of ASC’s Nursing Scheduler Coordinator as an administrative component

       rather than a direct care component, and therefore the reclassification was not

       arbitrary and capricious.

[12]   ASC also contends that “[t]he ALJ arbitrarily and capriciously restricted the

       definition of ‘direct care components’ based on his own, personal internet

       Court of Appeals of Indiana | Opinion 22A-PL-2556 | March 27, 2023         Page 8 of 11
       research, which does not appear in the record.” Appellant’s Br. at 26. The

       ALJ’s finding 11 reads,

               Neither party provided significant guidance or argument on what
               “nurse consulting services” are and what that term should refer
               to. Based on the ALJ’s prior understanding and experience, an
               individual (or a company in some cases) providing nurse
               consulting services (i.e. a nurse consultant) would generally be
               someone with specialized education, expertise or experience with
               whom a nurse, other caregiver, or organization would consult 1)
               in individualized circumstances, in order to better care for a
               patient when they are uncertain what to do or need confirmation
               of a course of action, 2) in broader circumstances, in order to
               make unit- or organization-wide decisions about patient care and
               functional/operational issues. A brief general internet search of
               ‘nurse consulting services’ and ‘nurse consultant’ consistently
               and repeatedly confirmed this prior understanding. Nothing
               about this case or the arguments made by either side suggests that
               a significantly different meaning is intended by 405 IAC 1-14.6-
               2(p)(2). The term does not reasonably describe someone with
               little more than a high school diploma or equivalent that hands
               out unit assignments for direct care nurses, even if they
               “consulted” with other Nursing Department personnel in order
               to do so. Based on the evidence provided including the Position
               Description, there is no meaningful resemblance between a nurse
               consultant as normally understood and ASC’s Nurse Schedule[r]
               Coordinators.

       Appellant’s App. Vol. 2 at 16 (emphasis added).

[13]   FSSA argues, and the trial court found, that the ALJ’s brief internet search

       constitutes harmless error because the “research was only incidental to the final

       decision.” Appealed Order at 7. We agree. Assuming, without deciding, that

       Court of Appeals of Indiana | Opinion 22A-PL-2556 | March 27, 2023      Page 9 of 11
       the finding related to the internet search is improper, 2 the error is not prejudicial

       because the finding is not necessary to support the ALJ’s judgment. See In re

       B.J., 879 N.E.2d 7, 19-20 (Ind. Ct. App. 2008) (stating that a finding of fact is

       not prejudicial to a party unless it directly supports a conclusion necessary to

       sustain the judgment), trans. denied. The internet search was not the sole support

       for the ALJ’s judgment. We note that the ALJ may rely on his knowledge and

       experience. Ind. Code § 4-21.5-3-27(d). In addition, the ALJ relied on ASC’s

       brief and the affidavit of ASC’s controller in finding that the “position at issue

       consists of scheduling coordinators, which work in each facility’s Nursing

       Department to make sure the facility’s residents have appropriate nurse staffing

       available to them.” Appellant’s App. Vol. 2 at 15. ASC does not dispute this

       finding.

[14]   Moreover, the ALJ concluded that “[t]he term ‘schedule coordinator’ or

       scheduler’ immediately connotes administrative functions,” and that even

       though the Nursing Scheduler Coordinator works in the nursing department

       and with the executive director and director of nursing “to provide appropriate

       hands on nurse staffing levels,” the duties of the Nursing Scheduler Coordinator

       remain administrative functions. Id. at 17. In addition, the ALJ concluded that

       the Nursing Scheduler Coordinator is “centered around staffing and scheduling

       tasks and concerns” and the services “barely” refer to “anything having to do

       2
        We observe that “a court may take judicial notice of a dictionary definition of a word, so long as the other
       conditions set out in [Indiana Evidence Rule 201] are met.” Campbell v. Shelton, 727 N.E.2d 495, 501 (Ind. Ct.
       App. 2000), trans. denied (2001).

       Court of Appeals of Indiana | Opinion 22A-PL-2556 | March 27, 2023                              Page 10 of 11
       with residents or resident care or somehow assisting nurses to perform their

       hands-on duties.” Id. These conclusions do not rest on the internet search and

       support the ALJ’s judgment. We conclude that the brief internet search, if error,

       was harmless error. Based on the foregoing, we affirm the trial court’s

       judgment.

[15]   Affirmed.

       Robb, J., and Kenworthy, J., concur.

       Court of Appeals of Indiana | Opinion 22A-PL-2556 | March 27, 2023        Page 11 of 11