Woodruff v. Indiana Family & Social Services Administration
2012 Ind. LEXIS 41
| Ind. | 2012Background
- Decertified Medicaid provider New Horizon operated without funding for 131 patients during a nine-month gap before a state receiver was appointed.
- New Horizon sought payment for care post-decertification via quantum meruit and breach-of-contract theories; the trial court denied quantum meruit and allowed partial breach recovery with a set-off.
- Indiana statutes create a tight framework for Medicaid funding; certification and decertification terminate eligibility for federal and state funds.
- State processes (ISDH survey, FSSA provider agreements) govern whether a facility may continue receiving Medicaid funds after decertification; the state has no obligation to fund decertified providers.
- The Court of Appeals reversed on exhaustion and quantum meruit; the Supreme Court granted transfer to resolve exhaustion, quantum meruit viability, and set-off issues; the Supreme Court affirms in part and reverses on exhaustion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did New Horizon exhaust all administrative remedies? | New Horizon exhausted remedies; multiple levels of review satisfied AOPA procedures. | Exhaustion applied only to decertification appeals; other refusals/timely appeals were not exhausted. | New Horizon had no further administrative remedies to exhaust. |
| Does quantum meruit lie where a valid Medicaid provider agreement existed and was terminated? | There was unjust enrichment if FSSA benefited without payment post-decertification. | Post-decertification, no expectation of payment and public policy discourages recovery; unclean hands concerns. | Quantum meruit claim fails as a matter of law. |
| Is the State entitled to a set-off for receivership costs against New Horizon's breach recovery? | Receivership costs should be borne by the State only if law allows; offset would be improper if not authorized. | 2002 amendment clarifies costs due from facility; set-off supported by statute. | State is entitled to a set-off against New Horizon. |
Key Cases Cited
- Bayh v. Sonnenburg, 573 N.E.2d 398 (Ind. 1991) (quasi-contract elements and unjust enrichment doctrine)
- Kelly v. Levandoski, 825 N.E.2d 850 (Ind.Ct.App. 2005) (test for quantum meruit recovery in contract context)
- Austin Lakes Joint Venture v. Avon Utils., Inc., 648 N.E.2d 641 (Ind. 1995) (exhaustion and administrative review principles)
- Legacy Healthcare, Inc. v. Barnes & Thornburg, 837 N.E.2d 619 (Ind.Ct.App. 2005) (insufficient care and related equitable considerations in public funding context)
- Legacy Healthcare, Inc. v. Feldman, 11 Fed.Appx. 589 (7th Cir. 2001) (federal appellate discussion of related Medicaid funding issues)
- Murray v. City of Lawrenceburg, 925 N.E.2d 728 (Ind. 2010) (standards for de novo appellate review of judgments on pleadings)