124 A.3d 1137
Md. Ct. Spec. App.2015Background
- The Maryland Department of Health and Mental Hygiene (Department) issued a December 20, 2012 RFP to consolidate Rare and Expensive Case Management (REM) services to a single provider for July 1, 2013–June 30, 2016; MMARS had been a long‑time REM case manager serving ~1,000 participants.
- The RFP explained appeal procedures (COMAR 10.01.03) and stated appeals would not stay the contract start date; prior REM procurement practices differed because 2009 regulations set reimbursement rates and limited procurement‑contract status.
- The Department awarded the contract to The Coordinating Center (TCC); MMARS objected, received a debriefing, and pursued administrative challenges at OAH and the State Board of Contract Appeals while also filing in circuit court.
- OAH conducted hearings and issued a proposed decision recommending dismissal of MMARS’s appeal; MMARS filed and later dismissed exceptions to the Secretary. The Board dismissed MMARS’s bid protest for lack of jurisdiction; MMARS sought judicial review and later dismissed that petition too.
- MMARS filed a declaratory judgment action in circuit court alleging the RFP/award functioned as an unpromulgated regulation (invoking SG § 10‑125), created an unconstitutional monopoly, and sought injunctive relief; the circuit court dismissed for failure to exhaust administrative remedies.
- The Court of Special Appeals affirmed, holding the RFP and contract award were not "regulations" under the APA and thus MMARS was required to exhaust administrative remedies before seeking declaratory relief under SG § 10‑125.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether MMARS could challenge the RFP/award in circuit court under SG § 10‑125 as a challenge to a regulation | RFP and single‑provider award were effectively a regulation changing the REM program and thus amenable to declaratory judgment without exhausting administrative remedies | The RFP/award are not regulations under the APA; MMARS must exhaust administrative remedies provided (OAH/Board) before court | Held: RFP/award are not regulations; SG § 10‑125 does not apply; MMARS must exhaust administrative remedies. |
| Whether the RFP constituted a regulation because it altered prior procurement practice (multiple providers → single provider) | The change in provider selection procedure created a new, generally applicable policy requiring rulemaking | The change was a case‑specific methodology decision within statutory authority and not a generally applicable regulation | Held: procedural/ methodological change is not a regulation subject to APA rulemaking. |
| Whether MMARS had reasonably relied on past multi‑provider awards so the RFP applied retroactively to its detriment | MMARS argued prior awards created reliance and the RFP unfairly retroactively altered expectations | Dept. argued the RFP plainly stated intent to make one award; any reliance was unreasonable | Held: any claimed reliance was unreasonable given the RFP language; no retroactive application of a new regulation. |
| Whether dismissal for failure to exhaust was procedurally proper given concurrent administrative actions | MMARS asserted exhaustion exception via SG § 10‑125 and challenged dismissal | Dept. noted MMARS initiated but abandoned administrative remedies and that OAH/Board processes were ongoing when circuit petition filed | Held: dismissal was proper; circuit court judgment affirmed. |
Key Cases Cited
- Balfour Beatty Const. v. Md. Dep’t of Gen. Servs., 220 Md. App. 334 (2014) (single RFP provision that is a pilot or case‑specific does not automatically constitute a regulation)
- Md. Ass’n of Health Maint. Orgs. v. Health Servs. Cost Review Comm’n, 356 Md. 581 (1999) (agency methodological or internal changes are not necessarily regulations under the APA)
- Consumer Prot. Div., Office of Attorney Gen. v. Consumer Publ’g Co., 304 Md. 731 (1985) (agencies may address matters case‑by‑case without promulgating rules)
- Balt. Gas & Electric v. Pub. Servs. Comm’n, 305 Md. 145 (1986) (an agency action is a regulation only when it creates materially new standards generally applicable and retroactive in effect)
- CBS Inc. v. Comptroller of the Treasury, 319 Md. 687 (1990) (substantially new generally applicable policies require rulemaking)
- Reichs Ford Rd. Joint Venture v. State Rds. Comm’n of the State Highway Admin., 388 Md. 500 (2005) (standard of review for motion to dismiss is de novo)
- Forster v. State Office of Pub. Defender, 426 Md. 565 (2012) (appellate courts may affirm trial court on alternative grounds properly before the record)