DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
SUBJECT: Pennsylvania Department of Public Welfare
Docket No. 86-186
Decision No. 822
DATE: January 12, 1987
DECISION ON REMAND
This matter is before the Board on remand from the U.S. District Court
for
the Middle District of Pennsylvania, in the case entitled Medicaid
Payments
for Emergency Room Services at the Medical College of
Pennsylvania,
Pennsylvania Department of Public Welfare v. Heckler, Civ.
No. 85-0643.
The remand interrupted the Court's review of Board
Decision No. 582, November
1, 1984. On September 18, 1986 Judge Kosik
issued a Memorandum and
Order remanding the action to give the Board the
opportunity to review an
opinion of the Secretary of the Pennsylvania
Department of Public Welfare of
March 26, 1986, "in order to determine
whether the opinion does indeed have
any effect on its decision of
November 1, 1984." Upon consideration, we
determine that the opinion of
the Secretary does not have any effect on our
decision.
Background
The Pennsylvania Department of Public Welfare (DPW)
appealed to the
Board the decision of the Health Care
Financing Administration (HCFA)
disallowing $247,159 in federal financial
participation claimed under
Title XIX (Medicaid) of the Social Security Act,
representing the
federal share of the cost of emergency room services
provided by members
of a group of physicians. The basis for the
disallowance was that DPW's
reimbursement regulations during the period in
question prohibited the
payment of a fee for emergency room services to a
group of physicians
when a fee for the same services was also being paid to
the hospital.
The disallowance stated that it had been DPW's position that
the fee for
the emergency room visit was available to either the hospital, or
to a
group of physicians that had assumed complete operation of an
emergency
room. Further, this interpretation by DPW had been upheld by
the
Pennsylvania Supreme Court in Commonwealth v. Forbes Health System,
492
Pa. 77, 422 A.2d 480 (1980).
In Decision No. 582 (Board Docket No. 83-282) we upheld HCFA's
position.
We pointed out that DPW had never varied in its position of what
the
regulations meant throughout the period when the questioned
payments
were made. (p.7) The decision in Forbes said that DPW
had been right
all along in its interpretation.
Since the physicians had not assumed complete operation of the
emergency
rooms, we held that payments to them were overpayments, and so did
not
constitute payments for medical assistance for which DPW could
receive
federal financial participation.
DPW eventually filed a complaint in the federal District Court
seeking
judicial review of the Board's decision. In the same action
the
plaintiff also joined as defendants the Medical College of
Pennsylvania;
MCP Emergency Services (MCPES), the group of physicians which
rendered
the emergency medical services which were the basis of the
disallowance;
and the individual physicians involved. As to these
additional
defendants, plaintiff sought to recover any erroneous Medicaid
payments
for which Pennsylvania may have to repay the federal government.
During the proceedings in the District Court, DPW filed a motion to
stay
the action against the additional defendants, and to remand to the
Board
for consideration of the opinion of the Secretary of DPW on the
State
regulation involved in our decision. The Court granted the
motion, and
remanded to us as indicated above. The Board, upon
receiving the
remand, set up an abbreviated briefing schedule to give
the plaintiff
and the federal defendant an opportunity for comment.
What is before the Board
The Board in giving the parties an opportunity to brief pointed out
that
the issue presented to the Board was a very narrow one:
The parties should not reargue the merits of the
underlying
controversy, but should limit themselves
to commenting on the
Secretary's opinion and the
effect, if any, it should have on the
Board's
decision.
The plaintiff did not heed this directive. On the second
(unnumbered)
page of the State's opening brief, it requested reconsideration
from the
Board pursuant to 45 CFR 16.13. The stated purpose of
requesting
reconsideration was "to give the Board the broadest possible
discretion
in deciding the case on remand." The request for
reconsideration, and
the purported reason, are both clearly outside the scope
of the remand
and the briefing directive to the parties. If any action
is necessary
on the request, it is denied. The plaintiff, assuming
apparently that
reconsideration would be granted, then proceeded to reargue
the merits
of Decision No. 582. Without any basis for doing so,
plaintiff
proceeded to discuss the question of lack of
employer-employee
relationship between MCPES and the resident physicians,
citing
Pennsylvania cases. The plaintiff went on to make a
self-serving
proposition. The State was willing to accept a
disallowance if it were
subject to reopening "if, in a proceeding involving
MCPES, an
employer-employee relationship between the physicians and MCPES
is
indeed found." (State brief, unnumbered second-last page) All
this of
course has nothing to do with the remand to the Board, to see if
the
Secretary's opinion would make any difference in our decision.
In its reply brief the State finally conceded that the issue of
reopening
the disallowance "is not before the Board now and need not
be
addressed." (Reply brief, last page) The State only mentioned
it "to
alert the Board and the Agency for the future." (Id.)
The Secretary's Opinion
We come now to what is properly before the Board, namely, a
consideration
of the opinion of the Secretary of the Pennsylvania DPW.
In this the
Secretary gave his opinion why the decision in Commonwealth
v. Forbes Health
System, supra, should not be given "retroactive"
effect. To follow the
Secretary's reasoning, it is necessary to examine
the Forbes litigation.
Forbes Health System (Forbes) was a Pennsylvania corporation
which
operated two hospitals. Geoffrey M. Hosta and Associates
(Hosta)
entered into an agreement with Forbes to provide emergency
room
physicians to its hospitals. For almost
two years Forbes billed
DPW for emergency
room services rendered to Medicaid patients in its
hospitals, and Hosta also
billed DPW for physicians' services to the
same patients in the emergency
rooms. Finally, DPW advised Forbes that
their previous authorization of
double payments for a single service was
"made in error," and terminated
payments to Hosta. Hosta appealed from
DPW to the Pennsylvania courts,
and Forbes joined in its appeal. The
Commonwealth Court first held in
their favor, but on appeal by DPW, the
Supreme Court of Pennsylvania (the
highest court in the State) reversed.
The decision in Forbes was based on the court's view that
section
9412.11 of the Pennsylvania Medical Assistance Manual spoke clearly
in
the alternative: Either hospital outpatient clinics, or
approved
physician group practices that have assumed the complete operation
of a
hospital outpatient clinic or emergency room, were entitled to
the
clinic visit fee; either, but not both. The physicians' group
had not
assumed the complete operation of the emergency rooms.
Therefore, said
the court:
[S]ubstantial evidence supports the conclusion
of DPW that
under section
9412.11 only the contracting hospitals, and not the
contracting physician groups, are eligible for reimbursement.
(422 A.2d at 483)
The Secretary of DPW does not claim that there was any difference
between
the facts in the emergency room situations in Forbes and in the
emergency
rooms manned by physicians who belonged to MCPES which should
affect our
decision. His opinion is that the decision of the
Pennsylvania Supreme
Court in Forbes "should be given prospective effect
only." (p.1)
He goes on to say that he "will not interpret DPW
regulations to find the
existence of an overpayment" unless he is
required to do so "as a condition
of receipt of federal financial
participation." It is not entirely
clear what this conditional
disclaimer means, but it does not in any event
affect the Board's
decision.
We are concerned, however, with just what the Secretary is trying to
do.
He purports to give his opinion under a Pennsylvania statute
which
authorizes him to "interpret or make specific the law administered
by
the Department." (Opinion, p.1) This opinion is that the
Forbes
decision should not be applied retroactively, even though
retroactive
application of a rule announced by judicial decision is the
usual
practice in Pennsylvania. However, says the Secretary, the
Pennsylvania
Supreme Court has recognized that a sweeping rule of
retroactive
application cannot be justified, citing August v. Stesak, 492 Pa.
550,
424 A.2d 1328(1981). (Opinion, p.2) Furthermore, says the
Secretary,
the determination of whether a judicial decision should be
given
prospective or retroactive application is a judicial one. But in
the
absence of guidance from the Supreme Court of the State, the
Department
has to make the initial determination. Balancing the
equities, the
Secretary opts for prospective application. (Opinion,
p.2) The
difficulty with all this reasoning is that we are not dealing
with
prospective or retroactive effect of a decision. A classic example
of a
retroactivity issue is in the case of August v. Stesak, supra, cited
by
the Secretary. The Pennsylvania Supreme Court had decided, in
another
case, that the provision in an insurance policy requiring
notification
of loss within a certain time period would not be used to cause
a
forfeiture by a policy- holder unless the failure to give notice
was
prejudicial to the insurance company. August v. Stesak was then
pending
on appeal, the lower court having decided against the
policyholder. The
Supreme Court said the new decisional law should be
applied
retroactively, so as to benefit cases then pending on appeal.
That is not this case. The Pennsylvania Supreme Court hardly made
new
decisional law in Forbes. All it decided was that DPW was correct
in
its interpretation of its own regulation, that you did not pay both
the
hospital and the emergency room physicians. As the Secretary
mentions
in his opinion, the State won in Forbes. The State's
interpretation of
its regulations was consistent throughout. When it
paid both the
hospital and the emergency room physicians, it was not because
the State
thought its regulations provided for it, but because the
payments
slipped through in error. As we said in Decision No. 582,
"[T]he State
admitted that where it had made payments to MCPES they were
contrary to
its own interpretation of its regulations." (p.7)
The Secretary of DPW in his opinion is not asking for Forbes to be
applied
only prospectively; he is trying to find a hardship excuse to
avoid having to
try to recoup the overpayments from the physicians.
Decision No. 582 held
that HCFA was correct in denying federal funding
in the payments made in
violation of the State's own regulations and
intrepretation. This is
so, irrespective of whether the State can or
should collect from the
physicians.
The State's position on the Secretary's opinion, as stated in
its
reply brief, is remarkable. After interrupting federal court
litigation
for a remand to the Board to consider the Secretary's opinion, the
State
wrote in its Conclusion:
This Board should conclude that the Secretary of
Public Welfare's
opinion is irrelevant because the
issue of the proper
interpretation [by the Board] of
Forbes was mere dicta and
unnecessary to the
decision of this case. . . .
(Reply brief, unnumbered last page)
The purported explanation for this extraordinary concession was
the
State's fear of a possible large second disallowance based on
the
Agency's reading of Forbes. (Reply brief, pp.1-2) The State
then
suggested that the Board "would do all concerned a great service" if
it
recognized that the Board's holding regarding the Forbes issue "was
mere
dicta and hence not precedential." (Reply brief, p.2)
The Board cannot reconcile the State's position with the function of
this
Board, both in deciding cases, and in responding to a specific
court-ordered
remand. The Board does not retroactively parse its
decisions for
unhappy litigants, to decide which phrases may or may not
be dicta, or to
reclassify holdings as dicta.
CONCLUSION
The Board was given a specific task by the federal court, to review
the
Secretary's opinion. We have reviewed it,
despite the State's
belief that it is
irrelevant. Upon review, we find, as outlined above,
that it has no
effect on our decision of November 1, 1984.
__________________________________
Judith
A. Ballard
__________________________________
Cecilia
Sparks Ford
__________________________________
Alexander
G. Teitz Presiding Board