Court Opinion

ID: 6452522
Source: CourtListenerOpinion
Date Created: 2022-06-25 12:35:32.461634+00
Date Added: 2024-06-11T15:53:04.150137
License: Public Domain

Cordy, J.
(concurring, with whom Marshall, C.J., joins). I agree with the court’s conclusion that the plaintiffs cannot proceed on a breach of contract theory, and that they have forfeited any right to reimbursement at the inpatient rate on any denied claim not administratively appealed to the division’s board of hearings as required by 130 Code Mass. Regs. § 450.211 (1997). I write separately to express my view that the plaintiffs could properly have sought reimbursement at the outpatient rate for all claims denied solely on the ground that the treatment, while medically appropriate, could have been provided in a more conservative or less costly (i.e., outpatient) setting, even though they did not administratively appeal from those denials.
*428It is uncontested that prior to our decision in Massachusetts Eye & Ear Infirmary v. Commissioner of the Div. of Med. Assistance, 428 Mass. 805 (1999) (Mass. Eye & Ear), the division’s regulations did not permit any reimbursement for claims submitted as inpatient claims, even when the medical treatment provided was appropriate in every respect, if the division concluded that the treatment could have been provided in an outpatient setting. Although the division’s regulations permitted the appeal of the denial of a “medically appropriate” inpatient claim, the only issue the hearing board could decide was whether the setting of the treatment (inpatient) was warranted. The board was specifically without jurisdiction to decide challenges to the regulatory scheme, including challenges to the propriety of excluding all reimbursement for medically necessary treatment rendered in the wrong setting, nor did it have the authority to grant outpatient reimbursement for inpatient care.
In these circumstances, any attempt by the plaintiffs to obtain anything other than reimbursement at the inpatient rate through the administrative appeals process would have been completely futile. Futility is a well-recognized exception to the requirement that plaintiffs exhaust their administrative remedies before seeking relief from the court. See Space Bldg. Corp. v. Commissioner of Revenue, 413 Mass. 445, 448 (1992); DiStefano v. Commissioner of Revenue, 394 Mass. 315, 319 (1985). Its application is particularly apt where the customary rationales for the doctrine of exhaustion, avoidance of unnecessary judicial intervention and the unhampered exercise of agency expertise on a well-developed factual record of its own making do not apply. American Fed’n of Gov’t Employees v. Acree, 475 F.2d 1289, 1292 (D.C. Cir. 1973). In the present circumstances, judicial intervention was inevitable because the board was not empowered to provide the relief (reimbursement at the outpatient rate), and additional agency expertise was irrelevant with respect to claims that it had already reviewed and concluded were for appropriate medical treatment rendered in the wrong setting.
Claims that would have been futile to pursue through the administrative appeals process would not, in my view, be barred *429by G. L. c. 118E, § 38. Section 38 empowers the division to establish procedures for the appeal from denials of provider claims, and to set deadlines for the filing of such appeals. It also provides that “[t]he provider’s right to payment under this chapter shall be extinguished if the provider fails to file an appeal within the time prescribed by the division.” I would interpret § 38 as extinguishing only claims to payment that could have been obtained through the appeals process that the division, by regulation, provided, and not claims for payment which could not have been obtained by the very terms of the division’s regulations.
Claims for payment at the outpatient rate for the services at issue here only became viable when this court decided in Mass. Eye & Ear that the division’s medical necessity regulations violated Federal Medicaid requirements, and that the division could not refuse (under those regulations) to pay anything for services that were medically appropriate but performed in the wrong setting. While the division is free, as we noted in Mass. Eye & Ear, supra at 817, to promulgate new regulations that deny all reimbursement to providers who provide treatment in the wrong setting, those rules must be clear and provide substantive criteria which can be understood and applied by providers charged with making good faith judgments about treatment requirements. Such regulations did not exist at the time these claims were denied.
Consequently, I would have allowed the case to proceed, as limited to claims for payment at the outpatient rate, had plaintiffs sought this relief. They did not.