Department of Health & Mental Hygiene v. Chimes, Inc.

A.2d HEALTH AND MENTAL DEPARTMENT OF HYGIENE v.

CHIMES, INC. Term, Sept. No. 1995. Maryland. Appeals Court Aug. (J. Baida, Curran, Jr., Atty. Joseph

Andrew H. Asst. Gen. Gen., Keech, Gen., brief), Atty. Atty. Thomas W. Asst. on Baltimore, for Petitioner. (Deborah Ober, Kaler,

Laurence B. Russell M. Thompson, Shiver, brief), Baltimore, Respondent. Grimes & MURPHY, C.J., ELDRIDGE, Argued before RODOWSKY, CHASANOW, KARWACKI, BELL and RAKER, JJ.

MURPHY, Judge. Chief Developmental The issue this case is whether the Disabil- in Department ities Administration of Health and Mental Hygiene Maryland violated the Administrative Procedure Act by instituting following a cost containment measure without “notice and comment” or emergency rulemaking procedures.

I 1952, on Organiza Commission Administrative State, McKeldin, tion of the recom appointed by Governor adoption mended of the 1946 Model Administrative State (MSAPA) agen Procedure Act “to the end that administrative subjected unduly cies be to essential controls but not hampered in the of their performance functions.” Seventh Report Organization of the Commission on Administrative (1952). That statute was designed State 70 ensure sense, justice “certain basic of common and fair principles ness,” notice to interested including parties, applied are Id., procedures, unduly administrative “without restricting 8; in the agencies performance their various tasks.” Id. at (1995 § Maryland Repl.Vol., Supp.) see also Code 1995 10-201 (declaration of the State Government Article Com policy); Act, mission to Revise the Administrative Procedure Initial (1992). 2 4 APA 2 Report Subtitles

339 (APA), adopted Act Administrative Procedure MSAPA, there- and based on the of the Acts of 1957 Ch. 94 adminis- fore, interest efficient to balance the State’s sought in fairness. Bon- individuals’ interest against tration Cf. (1986 Rule & Making Administrative 1.2.2 State field, Private Woodland MSAPA); 1981 (discussing the Supp.1993) (1987) (in State, v. A.2d Study Group 109 N.J. exception statements determining intra-agency whether upon APA the court focuses Jersey applies, from the New is procedure interest streamlined agency’s “whether that are affect- of the interests outweighed by importance Cobb, Ho v. see also Emma Ah ed.”); 62 Haw. 617 P.2d (1980) APA (discussing excep- the federal contracts tion). agencies proposed regu- APA to submit requires State legality, as to Attorney approval General

lations e) "Regula- 101(g)(formerly paragraph of the APAdefines 1. Section 10— as follows: tion” repeal or of a “Regulation” means a statement or an amendment that: statement (i) application; general has effect; (ii) has future (iii) adopted by a unit to: administers; carry out a law that the unit 1. detail or unit; govern organization of 2. unit; govern procedure 3. unit; govern practice before the form, (iv) including: is in guideline; 1. a rule; 2. a standard; 3. a interpretation; a statement of or policy. 5. a statement of (2) “Regulation” does not include: (i) a statement that: unit; only management 1. concerns internal of the and rights public directly affect of the or the 2. does not public; procedures to the available (ii) response petition adoption regulation of a of the unit to a for subtitle; § of this or under 10-123 order, (iii) regulation, declaratory ruling of the unit as to a or statute, under Subtitle 3 of this title. 10-111.1, §§ or “Regulation”, as used in 10-110 and means all any portion regulation. of a 107(b) Article, and also to the § of the State Government 10— Executive, Administrative, Legisla Joint Committee Committee) (AELR review preliminary Review tive 110(b). must agency § The publication. days prior 10— Maryland Register in the regulation proposed publish 10-111(a)(1). § For days later. regulation may adopt comment public must days, agency accept 30 out of the 10-111(a)(3). AELR Com § The regulation. proposed on the more to allow adoption regulation of the may delay mittee 10-111(a)(2)(i). AELR § The Committee review. time for with the conformity is regulation whether the considers intent of legislative authority agency of the statutory § 10- promulgated. is regulation under which the the statute 111.1(b). adoption of oppose If AELR Committee votes modify regula withdraw or agency may regulation, § 10- approval. tion, to the Governor or submit 111.1(c)(2). agency then order the The Governor 10-111.1(c)(3). § withdraw, regulation. modify, adopt or in the printed must be adoption Notice of the commonly is process § 10-114. This Maryland Register. rulemaking. and comment” known as “notice of Adoption” regu for “Emergency APA also provides 10-111(b)(1) § necessary, If deems it lations. by submitting adoption allows immediate AELR statement Com impact and a fiscal AELR or the chair A Committee majority mittee. 111(b)(2)(i). § A regulation. may approve co-chair 10— member of request held at the hearing must be public 111(b)(2)(ii). courts § The circuit AELR Committee. 10— adopted violation any regulation declare invalid must 10-125(d). these procedures.

II (DDA) in the Administration Developmental Disabilities with Hygiene charged Mental of Health and Department with persons services plan provide a State developing “consultation, cooperation, through disabilities developmental Maryland Code contract, of facilities. operation” or direct (1994 § of the Health-Gen. 7-303—305 Repl.Vol., Supp.) residential community-based DDA may provide Article. homes or alternative group public private such as programs Chimes, of 93 private § Inc. is one units. 7-601. The living services. provide DDA contracts to such with which entities “Prospective by regulation DDA established (PPS) private provid- for reimbursement Payment System” (COMAR) Regulations Administrative ers. Code of the “Pro- incorporates by reference 10.22.17. The Community Services Payment System spective Disabled Clients Pro- Mentally Developmentally Retarded and Edition)” (Manual). (First COMAR Manual cedures “a system that the PPS is explains 10.22.17.02.A.The Manual at 800-3. client.” Manual price per day per based on a fixed provide quality incentive to give providers It is intended to develop pro- innovative efficiently flexibility care and DDA. accountability providers as to grams, give well Id. PPS, a must under provider operate

To be included years, giving opportunity contract for two grant accepted is into provider’s provider review the costs. When PPS, bidding competitive it is from the State’s exempted (1995 Repl.Vol., Supp.) Code requirements. Maryland 11-101(n)(2)(iii) Proc. Article. of the State Fin. & PPS, are based on two payments Under the “cost centers.” COMAR 10.22.17.10.A. categories of costs or Sub-System, or “the costs The first is the Client Assessment clients,” 10.22.17.01.- routine services to COMAR providing B.(25), set of cost and is not at issue in this case. The second administra- Provider which includes Component centers tion, transportation and costs. CO- general, capital, special, 10.22.17.01.B.(51). DDA rates bases reimbursement MAR COMAR upon reports providers. submitted reimbursable, 10.22.17.06. DDA eliminates costs that are COMAR advertising lobbying expenses, such as 10.22.17.13, rate for inflation adjusts the reimbursement rates. Manual at 800-9. and attendance 7-234(a) Pro- Finance & 7-205 and State Sections money spending from prohibit agencies Article State curement DDA regulation, budget appropriations. in excess of budget subject that the PPS “is accordingly, establishes COMAR by Legislature.” appropriations approved further provides: 10.22.17.02.E. measures may take cost containment Department sys- payment on the expenditures prospective

control total include, may measures but These cost containment tem. are not limited to:

(1) less payments any surplus prospective Sharing cost; actual prospec- percentage limits on the Establishing rate for cost center. payment

tive addition, provides In the Manual 10.22.17.08.A. COMAR budgetary measures for control cost containment “[o]ther at 800-8. The necessary.” Manual also be Agreement” the “Provider were into incorporated Manual IA in which Chimes paragraph DDA and Chimes between regulations, and with the statutes agreed comply applicable guidelines by Depart- issued as well as “transmittals ment.” DDA has instituted stay budget appropriations,

To within In years. measures over the cost containment numerous (FY) 1990, ceiling DDA set a for certain cost year fiscal average cost for deviation above centers at one standard inflation rate from 6% to DDA cut the annual all providers. 1992, in FY 1993. In FY again in FY to 0% 2.5% Subsys- in the Assessment hourly DDA froze the rates Client using calculated ceiling In FY rate was tem. cut standard deviations above and was to .75 weighted average per in FY DDA cut client per Beginning the mean. $37 21 consecutive months. from each rate for provider’s month these cost containment measures Providers were notified of not follow Although DDA. did memoranda from rulemaking proce- emergency APA “notice and comment” or containments, chal- instituting provider dures in these cost no actions to this lenged any prior these case. 1993, DDA met with members of the August reimbursement Community

Association Services discuss DDA subsequently providers rates for FY 1994. notified memoranda several individually-addressed taking that it was limitation on steps to control costs. At issue here is DDA’s administration, general, in the and trans- growth capital, portation providers cost centers 7% for whose costs were below the mean and 4% for whose costs were above providers In FY applied “growth cap,” the mean. DDA In FY calculating averages separately. for each cost center again imposed “growth cap,” using aggre- gate of four cost centers to determine whether were action, above or below the mean. As a result of this Chimes’ reimbursement rate cut.2 was initially appealed imposition “growth cap”

Chimes of the to Board, Appeal the which is to hold evidentia- empowered PPS or oral on ry hearings the calculation of the reimbursement rate, amount, the final disputes reimbursement and other 700-3, between and DDA. Manual at 7. The PPS Appeal delegated authority Board its to the Office of Adminis- (OAH). Hearings parties trative filed for cross motions (ALJ), summary decision. The Administrative Law Judge OAH, held, ruled in of DDA. “may favor the ALJ rule on regulation whether a statute or was appropriately applied by the agency, but has no authorization to determine the validity itself,” was, thus, of jurisdiction in without this case.

Chimes then filed a in Complaint Declaratory Judgment the Circuit Court for Baltimore that County claiming DDA’s of the adoption “growth cap” violated the rulemaking 4%/7% procedures required under the parties APA. Both filed for summary judgment. motions a Following hearing, Beginning voluntarily procedures in FY DDA followed APA in Action, imposing "growth cap.” Emergency See Notice of 22 Md. (1995). Reg. 1654 held, 25, 1995, “growth January that circuit court within the a under the APA and was not was

cap” 10-101(g)(2)(i) management” exception “internal that rejected also DDA’s contention APA. court (COMAR 10.22.17.08.A) DDA grants existing regulation without authority to cost containment measures implement rulemaking It declared the following procedures. APA relief in and later cap” granted supplemental invalid “growth $941,788 and a amount for amount of for FY 1994 similar DDA year. to at the end of the fiscal FY be determined Special Appeals. arguments to Before the Court appealed court, in of Certiorari. granted that we Writ

Ill must have the argues “[j]ust that as an rulemaking or proceed by to decide whether to discretion possess flexibility it must also case-by-case adjudication, to situa- respond myriad applying existing regulatory its routinely pursuit that it confronts tions it Specifically, question presented says mission.” undergo rigorous time-consuming “the whether must time it rulemaking process each seeks requirements existing regulations that authorize the State take implement budgetary measures within its stay appro- cost containment through administering government program pri- priation right says It further vate contractors.” State’s contractors be reimbursed their limit the amount that judgment a quasi-legislative overhead costs does not constitute rule, to to no more than rise a new but rather amounts giving authority that underlies the specific the core application its regard, explains that action entire PPS. In this merely applied no in law but a change existing effected that notified all the PPS participants that to the same containment right impose has the cost State implemented According in this case. to measure that was DDA, time it must requiring amend its each contingencies account for constitutes unnec- unpredictable expense burden on the State at the essary costly Thus, DDA main- government. and effective efficient proper mea- cost containment impose it was authorized tains that rulemaking procedures. APA following without sures Pub., 731, 304 Md. Protection v. Consumer In Consumer (1985), proceeded Maryland Attorney General 501 A.2d 48 pills which sold diet adjudication against company a by mail, advertising that its was false through alleging Protection Consumer misleading violation 737, claimed that since company Id. at 501 A.2d 48. The Act. wide, industry were used advertising practices the same companies, Attorney Gener- apply many rule would by the by rulemaking required al should have proceeded 753, the Attorney APA. Id. 501 A.2d 48. We held at by rulemaking not because required proceed General was or even formulate rules of change existing “did not law he Id. at 501 A.2d 48. widespread application.” rulemaking procedures formal again require We declined Comm’n, 305 Md. in Baltimore Gas & Elec. v. Public Serv. (1986). Commission, 145, 501 A.2d 1307 The Public Service utility is entitled to a fuel rate determining when whether authorized statute to consider whether the adjustment, level.” Id. at utility’s plants operate at “reasonable E’s re- partially A.2d 1307. The denied BG & Commission to recover the costs of quests adjustments for fuel rate outages forced at BG purchasing supplemental power during outages E’s The Commission determined that the plants. & and, thus, the partially “managerial imprudence” were due to at a “reasonable level.” Id. at 153- plants operating were held that the Commission was not 501 A.2d 1307. We rulemaking because the Commission required proceed by or new standards ... applied “materially had not modified company to the detriment of a that had relied retroactively Id. at upon past pronouncements.” the Commission’s A.2d 1307. agency proceed by mandated that an only time we have 687, 692-93, 319 Md.

rulemaking Comptroller, was CBS v. (1990). case, Comptroller 575 A.2d 324 In that used a new 346 advertising share of calculating Maryland’s

method of CBS’s at 575 A.2d 324. We held: receipts. Id. audit to announce a Comptroller’s

The effect of the was respect new with to substantially generally applicable policy of national advertising of the network income apportionment pur- corporations. change, practical That broadcasting to a in a rule. poses, change generally applicable amounted Protection, action in it was an agency Unlike the Consumer law” and “formulate rules “change existing [in] effective did action in application.” Unlike widespread Elec, ... & “a case in which material- Baltimore Gas was retroactively ly applied or new were modified standards company upon [agen- the detriment of a that had relied cy’s] past pronouncements.”

Id. at A.2d 324. 575

IV case, not new rules of this did formulate law, existing apply new widespread application, change entity detriment of that had retroactively standards past “growth upon agency’s pronouncements. relied only provid at here to a limited number of cap” applied issue agency pursu ers in their as contractors with a state capacity subject termination parties ant contracts between the Furthermore, cap” only “growth applied either side. a particular particular year, response and in a program, Thus, not particular budget “growth cap” crisis. was application. rule of widespread not, said, cap” change as we “growth existing did expendi

law. Both statute and DDA’s regulation limited tures to and Manual budget appropriations regulation specifically for cost containment. The provided contemplated “establishing percent the need for on the limits rate for cost center.” age prospective payment “growth cap” merely COMAR 10.22.17.08.A. The effectuated the law. policies, change Radiological these but did Cf. v. State Jersey Dept. N.J.Super. Soc. New A.2d promulgated not be statement need (policy of the certifi a re-affirmation simply where it “was existing in enunciated requirements already need cate of signifi and ... not constitute a and does material Bendix clear, position.”); past agency from a change cant H., 25 Cal.3d S. & Occup. Forest Etc. v. Div. of (state (1979) agency 882, 887, 600 P.2d Cal.Rptr. an required employer in when it engage rulemaking did a merely regu implemented for but gloves employees, provide required for protection may be provided “[h]and lation ”). employees.... did not new standards “growth cap” apply

Finally, prior of an that relied on retroactively entity to the detriment apply did not “growth cap” agency pronouncements. in the current to control costs retroactively, but was instituted notified the and the Manual year. fiscal budget appropri that reimbursement was limited providers containment DDA had instituted numerous cost ations and addition, DDA notified the previously. measures in FY 1994 additional measures implement that it needed to options various opportunity afforded them the to discuss controlling costs. honored, de- substantially interest in fairness was Chimes’ hand, DDA the lack of APA On the other spite procedures. policy in a containment as strong adopting had a interest cost “growth FY 1996 of the quickly possible. adoption DDA’s emergency adoption procedures cap” regulation through as a burden on lag huge months to Such a time complete. took administering complex program such as for the Judge Eldridge As said Prospective Payment System. in is needed the admin- Judy Schaefer, “flexibility v. Court efficiently to run budget order the State istration (1993) 239, 261, 627 A.2d 1039 to avoid deficits.” 331 Md. budget to reduce authorizing statute Governor (upholding 25%). appropriations by up hold, therefore, the standards enunciated following

We Protection, Elec., CBS, & and Consumer Baltimore Gas contemplated in the sense “regulation” not a cap” was “growth according promulgated need not have been APA and by the v. Lions Manor also Dep’t See rulemaking procedures. APA Home, 425, 430, A.2d 1351 281 Md. Nursing as a con- was valid schedule payment home vendor (nursing APA). status under of its regardless tract amendment BY AP REVERSED; BE PAID TO COSTS JUDGMENT PELLEE.

BELL, J., dissents.

BELL, dissenting. Judge, Developmental holds that case, majority

In this (“DDA”) Department Administration Disabilities not violate Hygiene did and Mental Health (1984, 1995 Act, Maryland Code Procedure Administrative Gov §§ 10-101—139 of the State Cum.Supp.) Repl.Vol., a it, regulation,1 Article, promulgating without first when ernment applicable measure a cost containment tituted ins 10-101(g) (1984, Cum.Supp.) Repl.Vol., 1995 Maryland Code 1. provides: Article State Government of the Regulation.- (g) repeal of a (1) or an amendment or “Regulation” means a statement that: statement application; general has effect; (ii) future has (iii) adopted by a unit to: administers; carry a law that the unit detail or out 1. unit; govern organization of the 2. unit; procedure or govern the of 3. unit; and govern practice before the 4. form, (iv) including: any is in guideline; 1. a rule; a2. standard; 3. a interpretation; or 4. a statement of policy. 5. a statement (2) "Regulation” does not include: (i) that: a statement unit; management only internal 1. concerns proce- rights public or the directly the does not affect public; available to the dures (“PPS”).2 it con- Prospective Payment System Specifically, cludes: case, of wide-

In this DDA did not formulate new rules law, new stan- change existing apply or spread application, that had entity to the detriment of an retroactively dards pronouncements. upon agency’s past relied only at issue here to a limited number “growth cap” applied a in their as contractors with State capacity subject to agency pursuant parties to contracts between the Furthermore, “growth cap” termination either side. year, in a in a applied only particular program, particular Thus, in response particular budget to a crisis. “growth cap” widespread application. was not a rule of so, doing purpose it stresses several factors: APA3; pertaining the existence of and a manual PPS4; (1985, prohibition, contained Code (ii) adoption regulation, response petition of the unit a of a subtitle; 10-123 of this or under! order, (iii) declaratory ruling regulation, of the unit as to a statute, under 3 of this title. Subtitle 10-111.1, (3) "Regulation”, 10-110 and means all or as used !! portion regulation. of a Developmental promulgated 2. Disabilities Administration has since measure, regulations incorporating imposition percentage of a provid- limit overhead costs allowed all PPS increase certain ers, Action, Reg. "growth cap.” Emergency i.e. a See Notice of 22 Md. that, action, (1995). prior taking this it had not concedes rulemaking procedures prescribed by followed the formal the APA. APA, Focusing purpose majority on the for the enactment of the 3. Organization notes that the of the State Commission Administrative princi- commented that it was intended to "ensure that ‘certain basic sense, fairness,' ples justice including of common notice to interest- parties, applied proceedings unduly ed are in administrative ‘without ” restricting agencies performance in the of their various tasks.' 336, 338, (1996) (quoting 343 Md. 681 A.2d 485 the Commission’s it, therefore, (1952)). Report majority Seventh 8 As the sees what has to be achieved in this case is the balance that was intended when the adopted: operation APA was the State’s interest in efficient and the party's interested interest in fairness. regulations establishing 4. The the PPS are at Code of codified (COMAR) Regulations regulations, Administrative 10.22.17. Those 7-234(a)6 of §§ 7-2055 Cum.Supp.) Repl.Vol., Article, agen- against State Procurement Finance &

the State fact that budget appropriations; their exceeding cies instituted had challenge, or DDA, protest without past, its conclu- support measures.7 cost containment other law, existing change rather than cap” “growth that sion asserts majority existing policy, effectuates simply COMAR regulations, promulgated properly one of on the 10.22.17.08.A, “establishing percent- limits contemplates cost center.” any rate for prospective payment age System Payment for “Prospective incorporate by reference the which Developmentally Mentally Retarded and Community Services Edition),” (First provide that PPS Manual Disabled Clients Procedures " Legislature” approved by the budget appropriations subject and that to control total may measures Department take cost containment system. These cost contain- prospective payment expenditures on the include, limited to: may but are not ment measures (1) prospective payments less actual Sharing any surplus on cost; prospective pay- (2) percentage of the Establishing on the limits cost center. ment rate stating regulation, echoes that The manual COMAR 10.22.17.08.A. "[ojther budgetary control be measures for cost containment necessary.” appropriation. with current § Disbursements in accordance 5. 7-205. Treasury only accordance the State Money may be disbursed from program from time to appropriation for a as amended current with the this title. in accordance with time appropriation. Expenditures in excess 6. 7-234. government may not (a) the State officer or unit of Prohibited.—An money: spend unit; (1) or appropriation to the officer or of the total in excess in the current schedule of the amounts set forth in excess appropriation. apportionment and disbursement instituted as measures” were appears that these "cost containment It year each successive year and were continued in early as fiscal thereafter, challenged recent measure. appellee this most until the acquiesced past cost containment providers may have in these That the measures, APA, estop them waiving arguments under the does their regulation. formally adopt this To challenge of DDA to me, the failure explained provided majority has not sense. The this is common holding any authority for otherwise.

351 not view does foregoing majority that the I from the gather of contemplation within the cap” as “growth that majority saying also seems be 10-101(g). §APA The by the is covered containment measure this cost particular and, event, it any in existing promulgated properly appellee fair being of balance proper strikes it to maintain flexibility needs agency giving fact, In I find I persuaded. am not operation. efficient J.) (Kahl, County Court Baltimore reasoning of the Circuit I Accordingly, dissent. compelling. to be court, it has the circuit appellant argued before

The widespread of court, cap” that the is not “growth before this argument, I rejected that The circuit court applicability. Attorney of General relying opinions on properly, think adopt analysis: I its addressing very point. that “general application” of of analyses two the notion best 8, (July Att’y in 72 Gen. 230 Op. in are found (Jan. 1990). 1987) 23, Both Att’y 15 Op. and 75 Gen. consistently has “regulation” that the term opinions suggest been, be, broadly language as its construed “as and should Att’y 75 Gen. Op. intent direct.” apparent underlying 233). Accordingly, Att’y 72 Gen. (quoting Op. finding resolved by doubt should be would seem of “general application”.... to be one policy in Op. Att’y also forth Gen. Attorney General has set upon n. in of its contention support which DDA has relied aimed at those contractual relations with policies applica- of agency question ordinarily “general are Attorney stated: tion.” The General 230, 234 n. 4 Attorney Opinions General of “a in a group persons that when suggested we affected relationship with a State [are] contractual contract,” those agency directives authorized under and hence might “general application” directives not be of “regulation” might be outside definition however, in mind APA. That not have suggestion, did Medicaid, complex having like program directives under and, large group potentially effects on a Thus, program beneficiaries as well. the better approach is to Transmittal of “general view No. 91 as applicability” and analyze then its effects in the considering whether management internal exception applies to it. Op. 15, Att’y Gen.

75 24 n. Admittedly the PPS not as program is broad as Medicaid date, covers, only and 93 providers, to however the number of program beneficiaries to be cost impacted by the 1994 containment policy potentially Accordingly, enormous. this Court adopts Attorney rationale of the General set forth above. General Attorney though has also that opined “[e]ven class,

an action to applies persons within a small the action is of if general that class is described in application general terms and new members can be Op. to added the class.” 72 230, 234 Att’y Gen. 4 (quoting Citizens Sensible n. Resources, Zoning v. Dept. Natural 804, 90 Wis.2d 280 (1979). N.W.2d by Chimes, 707-708 As asserted policy cost containment to all DDA applies providers, in general addition, class described terms. new mem join bers can class by executing provider agreements with DDA providing period services for a to sufficient costs____ allow for calculation of historic Thus it appears indeed, is, one policy “general Application” within the 10-101(1)(e)(i), definition of regardless SG of how this Court chooses to address that issue. rejected circuit court also properly appellant’s

argument, premised the cost containment being measure merely and, of existing regulations hence, reflective simply policy expressed effectuates the It therein. relied on this v. Insurance Comm’r. Court’s Independent Bankers opinion Insurance Company, Md. 606 A.2d (1992). case, In that Chief Judge Murphy, author of case, majority opinion Court, in this speaking ob- served: delegated legislatively power

[A] to make rules and regula- nature, tions is it administrative is not and can be not laws; adopt only power it is make power as legislature carry into effect the will regulations not be enacted by Legislation statute. expressed guise of its exercise under the an administrative rule by issuing a make rules and power with, harmony or out of which is inconsistent or subverts, to, enlarges, alters, or adds extends or which limits, being the act administered. restricts impairs, Id. note, outset, absolutely the circuit court is

I at the 10.22.17.08.A, re upon appellant which the correct —COMAR thus permits it to as it did and authorizing proceed lies all, regulation at subject regulation is not a argue that I fundamentally, under Bankers. More pass muster does cap,” subject “growth circuit court that the agree also with the characterization, is a within majority’s whatever 10-101(g). set forth in the definition is the state- “growth cap” majority The states that the existing policy. policy change of a and that it did not ment new A form of reimbursement majority misspeaks. by provider payment of all incurred requires expenses by agency significant- is supplying services overseen recognizes, from one that for reimbursement ly different The moment the only expenses. some of those purposes, formula, the new adopting issues a directive distinction, and it policy it has stated new draws the only one. The altered the old certainly significantly has they two is that both are similarity policies between the methods. reimbursement subject which is the of this issuing

Prior to case, DDA to reimburse regulations required the DDA submitted, they adjusting on the provider reports based PPS rates. COMAR 10.22.17.06 for inflation and attendance See regulation, at 800-9. After the reimbursement and Manual im- “growth cap” provider reports based on the was I majority, consider the by agency. Contrary posed Moreover, I hard-pressed am quite significant. difference find its authorization the formally adopted regulations. There really is a difference between saying that certain mea- sures may have to and, be taken the future when the circumstances requiring the taking the measures have occurred, formulating precise responsive measures.

The APA prescribes the formal process, in accordance with which regulations must be promulgated and adopted. See §§ APA 10-109-117.8 It would indeed be a subversion of the purpose and if, intent of this aspect of the APA Judge Kahl out, pointed an administrative agency were enabled “side- step requirement[s] [these] merely by allowing implemen- tation of ‘regulations’ by administrative fiat.” But that precisely the effect of appellant’s theory, adopted by the majority: a statement of agency policy meeting otherwise definition “regulation” somehow is rendered not a regula- tion virtue of the agency having previously adopted a broad, open-ended rule contemplating future action by the agency. But a “regulation” is no less a “regulation” simply because a previous regulation has been drafted so as to recognize, that, if not anticipate, future, sometime in the may be necessary other, to adopt different policies than those presently reflected in the formally adopted regulations, (1982, Repl.Vol., Code Supp) § 1995 Cum. 2-104 of Article, the Health General which Secretary authorizes the of Health Hygiene promulgate Mental regulations, rules and seems also to and, so, favors, contemplate, rule-making. provides: formal It (b) regulations.- Rules and Secretary may adopt carry rules and out the provisions jurisdiction of law that are within Secretary. the of the (2) (i) Secretary adopt regulations, shall in consultation and bodies, cooperation governing govern with local siting to the of community special populations residences for by funded the De- partment, Department the Housing of Community Develop- ment, Resources, Department the of Department Human of Juvenile Justice. (ii) Any regulations adopted comply shall with the Federal Fair Housing Amendment Act of 1988. (iii) adoption Prior to the regulations proposed of under this subsection, Secretary the public shall conduct a hearing the for sole purpose allowing of governing all the county bodies of each municipality opportunity the to review pro- and comment on the posed regulations. at issue. subject “regulation” of the that are the include those despite one the and remains regulation it is a And because promulgat- it must be existing regulation, too reference the the need formality. Anticipating required ed with the would effectuate advance such a policies infor- for the provides no basis implementation for their need in this case. rule-making mal that occurred correct, rule-making formal majority If is the benefits of longer No will amendments will be undermined. significantly circumstances be changed to to take account regulations can include in the agency expected Each be to necessary. may it indicating be promulgates language general of a for the take future action necessary opinion, Under this changed to address circumstances. nature agency to issue required permit that is that would be all directives, they have devel- by informed the facts detailed changes by announced oped, significantly policies which inter- fairness intended for the original regulations. time, very be lost. At the same parties largely ested will administrative power their agencies abuse potential real concomitantly expense very and at the will increase APA to be fair. As the parties whom the was intended it: puts appellee completely short-cut undermines regulatory

Such a efficiency by allowing fairness and goal ensuring APA’s affected significantly by who be regulated populations rulemaking in the proposed agency policy participate process. short, skews the balance taking majority’s approach it precipitously.

and it does time, flexibility nor the need for warrants expense, Neither Legislature required this result. When a formally promulgated, it must be formally promulgated, to be involved, expense, or the lack of notwithstanding time Police, Montgom- flexibility that entails. Fraternal Order 155, 172-79, Mehrling, et v. 343 Md. ery Lodge al. County 356 (1996). 1052,

680 A.2d 1061-65 Expediency should not simply be allowed hold sway process over the regular rightful to which interested party entitled. event, I am not convinced requiring that

follow the proper procedure for adopting regulations is so time-consuming costly as to warrant its avoidance. The which, emergency rule-making procedures, according to the burdensome, are, majority, fact, are also too intended and of, designed accommodate, to take account the need for to act and with quickly dispatch, thus giving flexibility. least, needed very At the the agency should be to follow required procedures those whenever -it desires to change, expand or clarify regulations pursuant to which it the program under it administers are working. however, To majority, it appears that nothing short of complete authority informally to make rules will It, suffice. like the agency completely abrogate would requirement APA’s that amendments to existing adopted be with the formality same accompanied the regulation. original approach That renders nugatory por- §of 10-101(g) tion that prescribes requirement, contrary to the usual rules of statutory construction. See Prince Vieira, George’s 651, 658, 898, v. County 340 Md. 667 A.2d 901 Comm’r, (quoting 124, GEICO v. Insurance 332 Md. 713, (1993)); 630 A.2d 714 Corp., Rose v. Fox Pool 351, 359, (1994); Md. 643 A.2d Montgomery County Buckman, 516, 524-25, v. 333 Md. (1994); 636 A.2d State, 481, 491, (1993). v. Condon 332 Md. 632 A.2d

Case Details

Case Name: Department of Health & Mental Hygiene v. Chimes, Inc.

Court Name: Court of Appeals of Maryland

Date Published: Aug 27, 1996

Citation: 681 A.2d 484

Docket Number: 94, Sept. Term, 1995

Court Abbreviation: Md.