Court Opinion

ID: 9627073
Source: CourtListenerOpinion
Date Created: 2023-08-22 08:32:50.949088+00
Date Added: 2024-06-11T15:27:12.284559
License: Public Domain

Utter, J.
(dissenting) — I dissent. The findings of fact made by the trial court establish that the hospitals did not agree to DSHS' reimbursement formula. In order to create a contract without the benefit of favorable factual findings, the majority makes an offer from an enrollment form, consideration from legally obligated treatment of hospital patients, and a meeting of the minds from express disagreement. It then fails to acknowledge its own statement that this "offer" did not specify reimbursement rates. By so doing it enables the majority to create a "contract" which includes a term neither party contemplated at the time.
If DSHS feels that policy considerations require an expansion of its authority, it may ask the Legislature to *593approve apportioning reimbursement to profit rather than costs. We, however, lack the power to amend the statute and should not attempt to do so here.
The majority's use of unilateral contract theory to limit the ability of hospitals to challenge the administration of a benefits program is unprecedented and unsound. Unilateral contracts have hitherto forced promisors to pay those who perform an offer's terms. See generally Petit, Modern Unilateral Contracts, 63 B.U.L. Rev. 551, 552 (1983). The majority's ruling requires nothing from DSHS, the promi-sor under the majority's theory, but uses a supposed promise of DSHS to inhibit the hospitals' ability to challenge the administration of a program reimbursing it for its treatment of the poor. The holding creates precedent which can effectively insulate administrative agencies administering benefits programs in disregard of statutory limitations from recipients' challenges.
The majority's unilateral contract includes no language referring to variable rate reduction. The majority incorrectly states that the "Core Provider Agreement" (Agreement) includes payment rates. Majority, at 587. But "[t]he Agreement does not specify the reimbursement rates”. (Italics mine.) Majority, at 576. Nor does it mention variable rate reduction, the methodology at issue here.
Trial court findings not challenged on appeal compel the conclusion that this document did not "offer" variable rate reduction. The majority says its decision to consider a novel theory raised for the first time on the motion for reconsideration justifies ignoring the trial court's findings of fact. Majority, at 581 n.14. The majority cites no case law to support this remarkable decision. Because the findings of fact show conclusively that the Agreement did not include variable rate reduction, they are highly relevant to the question of whether a contract was formed as to variable rate reduction. After all, DSHS argued that this Agreement was the offer forming the basis of the unilateral contract. *594Uncontested findings of fact are verities on appeal. Metropolitan Park Dist. v. Griffith, 106 Wn.2d 425, 433, 723 P.2d 1093 (1986).
When WAC 388-87-070 first required use of the Agreement, the MI and GAU programs did not exist in their present form. Finding of fact 9. The Agreement is not renewed on a yearly basis, let alone every time DSHS changes its reimbursement regulation. Finding of fact 13. DSHS developed this document because Medicaid required it, not to specify rates for the MI-GAU program. Clerk's Papers, at 396-97, 404.30
Neither DSHS nor the hospitals thought the Agreement offered variable rate reductions when it was signed. Clerk's Papers, at 312. Indeed, DSHS' cover letter to the Agreement explicitly stated that the Agreement "does not include requirements beyond those by which providers are already bound." Clerk's Papers, at 234. In 1981, when this Agreement was circulated, providers were not bound to accept variable rate reduction. DSHS did not use variable rate reduction until 1983. Majority, at 576-77.
The trial court's conclusion that this Agreement was actually a "method of enrollment for program participation, and really nothing more", is absolutely correct. Report of Proceedings, at 39 (June 8, 1989). The majority magically creates an offer of variable rate reduction from an enrollment form signed before variable rate reduction was introduced and before the MI-GAU program existed in its current form.
Performance of the terms of an offer can establish a unilateral contract, but it cannot change the offer's terms. The majority recognizes that this signed enrollment form did not create a bilateral contract. Majority, at 581. The majority's conclusion that no bilateral contract existed cannot be based on lack of consent to its terms. It was signed. The Agreement does not create a bilateral contract because its *595terms did not indicate assent to variable rate reduction. Even if the majority is correct that the hospitals indicated consent to the Agreement by performance, as well as by signing it, this double consent does not alter the Agreement's content.
Any contract, even a unilateral one, requires a meeting of the minds as to essential terms. See Estate of Bogley v. United States, 514 F.2d 1027, 1038 (Ct. Cl. 1975) (unilateral promise accepted by performance creates a unilateral contract because there was a meeting of the minds as to essential terms); Coleman v. Holecek, 542 F.2d 532, 535 (10th Cir. 1976) (unread signed form does not form basis of unilateral contract because there was no meeting of the minds); Watson v. Idaho Falls Consol. Hosps., Inc., 111 Idaho 44, 720 P.2d 632 (1986) (employment manual can create a unilateral contract when employee's work indicates intention to accept promises in the employment manual). In a unilateral contract, the promise is unilateral, but the intention to contract remains bilateral. See Farley v. Clark Equip. Co., 484 S.W.2d 142, 147-48 (Tex. Civ. App. 1972) (performance does not create a unilateral contract because there was no mutual intention to contract). One party simply indicates the intention to contract by performance rather than by making a promise. See Restatement (Second) of Contracts § 18 (1979) (assent manifested by conduct or words); see generally Petit, Modern Unilateral Contracts, 63 B.U.L. Rev. 551, 552 (1983).
The intent to contract is a factual question. Weimer-skirch v. Leander, 52 Wn. App. 807, 813, 764 P.2d 663 (1988). The party arguing for a contract's existence must establish the intent to contract. Johnson v. Nasi, 50 Wn.2d 87, 91, 309 P.2d 380 (1957). Because Washington uses an objective theory of contract, DSHS in this case must show that the reasonable meaning of DSHS' and the hospitals' words and actions indicates an intention to contract for variable rate reduction. See Everett v. Estate of Sumstad, 95 Wn.2d 853, 855, 631 P.2d 366 (1981).
*596The majority makes a meeting of the minds out of express disagreement. The objective evidence shows that the hospitals did not intend to agree to the nonexistent variable rate reduction term. The "offer" does not mention the term. The only record evidence about the hospitals' intention with regard to variable rate reduction is that they did not intend to agree to it. They informed the Department of their objections in the fall of 1985 and filed this lawsuit in 1986.
The reasonable meaning of DSHS' actions is that it never intended to seek an agreement about variable rate reduction. Rather, DSHS thought that it had the statutory authority to impose this reimbursement method upon hospitals and did so by regulation. See majority, at 577-79. DSHS did not rely upon its contractual authority under RCW 74.09.120 in promulgating these regulations. It relied upon its power to compel compliance with general rules under RCW 74.08.090. Nor did DSHS ever attempt to modify the Agreement to include variable rate reduction.
DSHS' actions since the Agreement shows even more forcefully that it did not intend to bind itself by this "offer". DSHS changed its method of reimbursement repeatedly in the years since the Agreement was signed. It did not violate a contract thereby, because the Agreement involved no promise which would bind DSHS to pay according to any particular formula. An offer not manifesting an intention to be bound is not an offer and cannot form the basis of a contract. See Panto v. Moore Business Forms, Inc., 130 N.H. 730, 735, 547 A.2d 260 (1988) (classic unilateral contract includes offeror's promise to be bound); Chasan v. Village Dist. of Eastman, 128 N.H. 807, 815, 523 A.2d 16 (1986) (writing not using the word "offer" or otherwise manifesting intention to be bound cannot be the basis of a unilateral contract); Chauvin v. Bohn, 411 So. 2d 442, 445 (La. 1982) (offer must declare party's intention to be bound); Augustus v. John Williams & Assocs., Inc., 92 N.M. 437, 440, 589 P.2d 1028, 1031 (1979) (accepted offer omitting an essential term shows no intent to be bound and *597forms no contract); see also Owens-Coming Fiberglas Corp. v. Fox Smith Sheet Metal Co., 56 Wn.2d 167, 172, 351 P.2d 516 (1960) (letters not manifesting an intention to be bound form no contract). This court cannot say that a contract exists here unless it is prepared to enforce the contract against DSHS when it changes its methodology to the detriment of these hospitals.
This "contract" not only lacks any objective indication that either party intended to make an agreement about the matter at issue here, it lacks consideration as well. The majority argues that the treatment of indigent patients constitutes consideration for DSHS' "promise" to pay according to variable rate reduction. See majority, at 586. The majority recognizes that performance of a preexisting legal obligation is not valid consideration, but argues incorrectly that the hospitals have no statutory obligation to treat "MI-GAU patients." Majority, at 585-86.
The terms of the federal Emergency Medical Treatment and Active Labor Act doom the majority's attempt to exempt these unfortunate "MI-GAU patients" from its protections. The act requires emergency medical treatment of "any individual (whether or not eligible for benefits under [medicare])". 42 U.S.C. § 1395dd(a), (b)(1). The hospital that fails to obey this law can incur civil penalties of $50,000 per violation, even if the individual is an "MI-GAU patient". 42 U.S.C. § 1395dd(d)(2)(A).
Neither the majority nor DSHS cite a single page in the record supporting the notion that the hospitals exceeded the requirements of the federal law in order to take advantage of variable rate reduction. Absent some support in the record, the State cannot meet its burden of proving consideration, an essential element to any contract.
Moreover, DSHS did not bargain for this "consideration". See Huberdeau v. Desmarais, 79 Wn.2d 432, 440, 486 P.2d 1074 (1971) ("consideration will . . . render a promise enforceable if it was 'something bargained for"). DSHS did not offer variable rate reduction as an inducement to treatment of the indigent; indeed, it is a disincentive. Nor does *598the record show bargaining for treatment of the indigent. DSHS did not bargain for this treatment because it is legally required. The majority's attempt to eviscerate the law requiring treatment is dangerous to the seriously injured poor.
Conclusion
The trial court correctly concluded that the hospitals did not agree to variable rate reduction. Because DSHS cannot require variable rate reduction absent a contract, the regulations establishing variable rate reduction are invalid. I would affirm the trial court's decision striking the regulation.
Brachtenbach, J., concurs with Utter, J.
Reconsideration denied September 5, 1990.

The court made no specific factual finding on this point, but the record amply supports it.