397 Mass. 56 | Mass. | 1986
This case represents phase two of an action which was commenced on March 12, 1981, and which resulted in our decision on August 23, 1983, in Addison Gilbert Hosp. v. Rate Setting Comm’n, 390 Mass. 17 (1983) (Addison Gilbert I). In the present case, we affirm the trial judge’s entry of summary judgment for the plaintiffs which awarded the plaintiffs prejudgment interest on the principal sums due to them after the judgment which followed Addison Gilbert I. The defendants appealed, and we transferred the case to this court on our own motion. We affirm.
It is important to note what Addison Gilbert I decided. In that case, the plaintiffs challenged the validity of a regulation promulgated by the commission. The regulation (114.1 Code Mass. Regs. § 3.06 [1981]) fixed a flat reimbursement rate for health care providers, such as the plaintiffs, to Medicaid patients. The rate was applicable to those days which are called “administratively necessary days.” Addison Gilbert I described “administratively necessary days” in the following language: “The regulation sets the rate at which hospitals are to be reimbursed for their patients who are on ‘administratively necessary day’ status. These patients are originally admitted to hospitals to receive care for their acute conditions, which could only be provided in the hospital setting. When their conditions change so that the medical services they require can be administered in a lower level facility, such as a nursing home, the patients are usually released from the hospital. However, frequently no nursing home beds are available for these patients, and the hospital is forced to keep them. The days during which the hospital continues to provide care for these patients are known as ‘administratively necessary days.’”
The Federal legislation which created the Medicaid program requires a State to adopt a plan, which complies with Federal law and which must be approved by the Secretary of Health and Human Services. 42 U.S.C. § 1396a(b) (1982). In particular, the Federal law required States to establish rates for “inpatient hospital services” and these rates require approval of the Secretary of Health and Human Services. Addison Gilbert I, supra at 19.
The narrow question decided in Addison Gilbert I was “whether the care provided by hospitals to patients on administratively necessary day status is considered to be ‘inpatient hospital services’ under 42 U.S.C. § 1396a(a) (13)(D) (1976).” Id. at 20. We answered that question in the affirmative. It followed that Federal approval was required and that failure to obtain the approval rendered the $70 flat rate invalid. Id. at 20-21.
Following our rescript in Addison Gilbert I, a judgment was entered for the plaintiffs on November 1, 1983, for the difference between the rate at which the plaintiffs were previously reimbursed for “administratively necessary days” and the correct rate, but this judgment left open the issue presented on this appeal, i.e., whether the plaintiffs are entitled to prejudgment interest from November 1, 1981, to January 10, 1984 (a time period stipulated by the parties as applicable, if any prejudgment interest is due).
The defendants argue that they did not cause a breach of contract, that they acted in good faith and that they honestly misinterpreted Federal law as to the requirement of approval of the rate. They argue that under the test of Perkins School for the Blind v. Rate Setting Comm’n, 383 Mass. 825, 831 (1981), they should be exonerated from the payment of interest because they have “done all that the law required ... in the particular case.” We disagree.
Language from Massachusetts Gen. Hosp. appearing in Perkins immediately before this quoted language provides that “interest may be allowed against the Commonwealth for any ‘detention of money, beyond the reasonable time which the statutes requiring payment to [plaintiffs] fairly should be interpreted as contemplating. ’ ” Perkins, supra at 831, quoting Massachusetts Gen. Hosp., supra at 209.
Despite the defendants’ arguments to the contrary, the present case is distinguishable from one in which a provider successfully appeals the amount of the rate under the procedure established in G. L. c. 6A, § 32. In this instance, the language of
In a word, the defendants’ conduct constituted a breach of contract for which they must be responsible for the payment of interest.
Judgment affirmed.
The definition used in Massachusetts is “a day of acute inpatient hospitalization on which a lower than acute level of care is determined to be appropriate by the PSRO [Professional Standards Review Organization] but on which an appropriate placement is not available.” 106 Code Mass. Regs. § 452.007 (B)(1)(1978).
General Laws c. 231, § 6C (1984 ed.), is as follows: “In all actions based on contractual obligations, upon a verdict, finding or order for judgment for pecuniary damages, interest shall be added by the clerk of the court to the amount of damages, at the contract rate, if established, or at the rate of twelve per cent per annum, from the date of the breach or demand. If the date of the breach or demand is not established, interest shall be added by the clerk of court, at such contractual rate, or at the rate of twelve per cent per annum from the date of the commencement of the action.”