In this suit for declaratory relief, Haverhill Manor, Inc. (Haverhill Manor), challenges the refusal of the Commissioner of Public Welfare (commissioner) to remit to Haverhill Manor certain sums owed Haverhill Manor for the provision of health services. Haverhill Manor asserts that the administrative procedures employed by the commissioner in reaching his determination abridged its rights under the due process clause of the Fourteenth Amendment to the United States Constitution and under the State Administrative Procedure Act (APA), G. L. c. 30A, and that the commissioner had no legal right to treat Haverhill Manor and three affiliated nursing home corporations as a single corporate entity in order to collect past overpayments to the affiliated homes from money owed to Haverhill Manor. The case comes before us on the reservation and report, without decision, of a single justice of this court.
Briefly, the facts appearing in the parties’ statement of agreed facts, which amounts to a case stated, are these. Haverhill Manor, a Massachusetts corporation licensed to do business as a nursing home, furnishes a variety of health care services to eligible persons under programs administered by the Department of Public Welfare (department) and, as a consequence, is deemed a “provider of health services” under G. L. c. 7, §§ 30K-
Haverhill Manor and three other individually incorporated nursing homes (affiliated homes) which also supply health services under the above statutes are wholly-owned subsidiaries of Century Convalescent Centers, Inc. (Century), a Massachusetts corporation. Century, in turn, is a wholly-owned subsidiary of Carex International, Inc. (Carex), a Delaware corporation with its principal place of business in Los Angeles, California. Carex, for a management fee, performs accounting, managerial and administrative services for Haverhill Manor and the affiliated homes. All such services are performed, and original financial records are kept, in California. The funds of each of the corporations (with the exception of petty cash accounts maintained separately in Massachusetts) are commingled by Carex with its own funds and the funds of its other subsidiaries. The Massachusetts corporations and Carex file consolidated tax returns for Massachusetts and Federal tax purposes. However, Haverhill Manor and the affiliated homes have individual identification numbers with the United States Internal Revenue Service and individual vendor numbers with the department.
The rates of payment for the health services provided by Haverhill Manor and the affiliated homes pursuant to the above mentioned programs are prescribed by the Rate
Initially, the commission issues interim and final rates without affording the provider notice or opportunity to be heard. A provider who is “aggrieved” by any interim or final rate may appeal and will receive a full hearing before a hearing officer or a member of the commission in accordance with G. L. c. 30A. 7 G. L. c. 7, § 300. A provider who is aggrieved by a decision of the commission after such hearing may petition for review in the Superior Court for Suffolk County. See G. L. c. 7, § 300.
In the instant proceeding, Haverhill Manor contests the commissioner’s right to utilize his offset procedure. Haverhill Manor presents four specific objections: It alleges that (1) the decision to offset overpayments against current amounts due to Haverhill Manor constitutes a regulation, as that term is defined in the APA, G. L. c. 30A, § 1 (5), and was improperly promulgated and implemented without a hearing; (2) the commission’s failure to provide a post-audit evidentiary hearing concerning the final rate for 1971 12 before the commissioner commenced the offset procedure denied Haverhill Manor due process of law under the Fourteenth Amendment; (3) the commissioner’s deduction of alleged over-payments to the affiliated nursing homes from amounts owed to Haverhill Manor for services rendered in 1973 violated Haverhill Manor’s rights under the due process clause of the Fourteenth Amendment because no prior hearing had been convened to give Haverhill Manor an opportunity to defend the separateness of the corporate entities involved; and (4) the commissioner, generally, had no legal right to treat the affiliated homes and Haverhill Manor as a single entity for the purpose of collection of past overpayments.
2. Despite the absence of express statutory authorization, we believe that the commissioner may legally offset current obligations against past overpayments. Under G. L. c. 18, § 5E, any vendor who receives payment under any assistance program administered by the department must return overpayments or erroneous payments to the State Treasurer on demand. The offset procedure expeditiously recaptures funds owed to the Commonwealth without necessity for demand or court proceedings. “ [Multiplicity of suits and circuity of action are avoided.”
Wisconsin Cent. R.R.
v.
United States,
Further, the financial relationship between the department and Haverhill Manor appears analogous to a relationship between other parties doing business which would create a “mutual and open account current” or a simple “running (open) account.” In either case and, by extension, in this case, one party owes the other party only the balance in the account at the particular time, and charges by each may satisfy charges by the other. The balance owed by either is computed by setting off charges against favorable items. See
Penniman
v.
Rotch,
3. As noted above, the commissioner has reduced payments to Haverhill Manor for health services supplied in 1973 by the amount of alleged overpayments to Haverhill Manor in 1971 and preceding years. Haverhill Manor contends that this offset procedure deprives it of due process of law guaranteed under the Fourteenth Amendment because the offsets preceded any hearing on the question whether overpayments had, in fact, occurred. Again, we disagree.
We do not question that Haverhill Manor has shown a property interest which is cognizable under the due process clause. Property interests “are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state laws — rules or understandings that secure certain benefits and that support claims of entitlement to those benefits.”
Regents of State Colleges
v.
Roth,
To say that Haverhill Manor has a property right protected by the due process clause does not in any way determine what process constitutes “due process” in the circumstances. Due process is a protean concept which imports different procedures in different situations or circumstances. “The very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation . . . [Consideration of what procedures due process may require under any given set of circumstances must begin with a determination of the precise nature of the government function involved as well as of the private interest that has been affected by governmental action.”
Cafeteria & Restaurant Wkrs. Union Local 473, AFL-CIO
v.
McElroy,
Given the aforementioned legal background, we do not believe the offset procedure adopted by the commissioner with respect to the pre-1973 overpayments to Haverhill Manor violated Haverhill Manor’s right to due process of law. Summary action serves the same substantial governmental purpose served in the cited tax cases — preservation of the integrity of the public purse. Payments to Haverhill Manor, if they were made in spite of the preliminary findings of the field audit, would deplete the public treasury to the extent of the payments in the face of a real possibility that no money was owed to Haverhill Manor. We will not, in this case, require the com
We cannot say that Haverhill Manor’s interest in pre-hearing receipt of the funds is sufficient to overcome the commissioner’s interest in pursuing this expeditious procedure. Haverhill Manor has presented no evidence of potential harm
13
beyond the bare, allegedly temporary deprivation of the use of property. In a reply brief, Haverhill Manor has asserted that reductions of current payments will engender reductions of patient services and, perhaps, closing of the nursing home. Without supporting evidence of impending insolvency, this assertion is little more than a veiled threat that patients will suffer if the Commonwealth does not capitulate.
14
From the record we cannot say that, if Haverhill Manor’s claim
Haverhill Manor argues that
Goldberg
v. Kelly,
Haverhill Manor’s need is in no way comparable to the “brutal need” (see
Russi
v.
Weinberger,
4. Finally, Haverhill Manor argues, without further citation of authority, that the decision to offset alleged overpayments to the affiliated nursing homes against payments owed Haverhill Manor for health services rendered in 1973 denied Haverhill Manor due process of law under the Fourteenth Amendment. Haverhill Manor contends that it was entitled to a hearing before the
Haverhill Manor’s argument here suffers from the same infirmities as the previously discussed due process argument. Haverhill Manor raises a simple claim of property deprivation which cannot stand before the Commonwealth’s clear interest in recovering overpayments expeditiously. As we have noted above, in such circumstances, the Commonwealth may postpone the hearing on the merits and need not afford Haverhill Manor a pre-offset hearing. Haverhill Manor has access to forums in which it will receive a constitutionally adequate hearing after, or concurrently with, implementation of the commissioner’s decision to offset alleged overpayments to the affiliated nursing homes against payments owed to Haverhill Manor.
It is true that Haverhill Manor cannot challenge the commissioner’s decision through the procedures provided in G. L. c. 7, § 300,
18
or the APA. The statutory procedure for immediate administrative appeal and subsequent judicial review pursuant to G. L. c. 7, § 300, is available
only
for challenges to actions of the commission. The APA provisions applicable to “adjudicatory proceedings” (G. L. c. 30A, §§ 10, 14) are similarly in-apposite, since in the instant circumstances a hearing is not “required by constitutional right
19
or by any provision of the General Laws” (G. L. c. 30A, § 1 [1]). See
School
Nevertheless, Haverhill Manor does have a statutorily granted right to an adequate hearing regarding the merits of the commissioner’s offset determination. Haverhill Manor could have brought a bill for injunctive and declaratory relief pursuant to G. L. c. 231A. “It is settled that a suit for declaratory relief will lie to challenge the legality of an administrative action even though such action is neither an ‘adjudication’ nor the promulgation of a ‘rule,’ provided that the other requirements of maintaining such a suit can be met.”
Westland Housing Corp.
v.
Commissioner of Ins.
6. Haverhill Manor is not now entitled to the precise relief sought in its petition. However, as in every case where the proceeding is properly brought under G. L. c. 231 A, it is entitled to a decree declaring the rights of the litigants.
Vasilakis
v.
Haverhill,
The case is remanded to the county court. The single justice is to enter an interlocutory decree declaring that the challenged offset procedures initiated by the commissioner were not violative of the due process clause of the Fourteenth Amendment or the State Administrative Procedure Act, G. L. c. 30A. The single justice shall retain jurisdiction of the case. Haverhill Manor is given leave within thirty days of rescript to take the necessary procedural steps to join the affiliated homes as parties. If, within that time, Haverhill Manor joins the affiliated homes as parties in the suit for declaratory relief, the single justice may (a) conduct proceedings regarding the legality of the commissioner’s treatment of the affiliated homes and Haverhill Manor as a single corporation and thereafter enter such judgment as is appropriate, or (b) in his discretion, transfer the case to the Superior Court for such proceedings. If Haverhill Manor does not join the affiliated homes within the allotted time or does not seek declaratory relief on this issue, the single justice shall enter a judgment not inconsistent with this opinion.
So ordered.
Notes
The parties refer to these sections. The sections were repealed by St. 1973, c. 1229, effective July 1, 1974, which substituted G. L. c. 6A, §§ 31-36. As G. L. c. 7, §§ 30K-30P, were in effect during the years at issue in this suit, we employ the repealed statutory provisions in the text.
General Laws c. 118D was in effect during the years at issue in this suit but has been repealed by St. 1973, c. 1210, § 24, effective January 1, 1974.
The amended statute provides for determination of preliminary final rates as well. G. L. c. 6A, § 32.
See G. L. c. 6A, § 32.
Pursuant to G. L. c. 18, § 3, the department is under “the direction, supervision and control” of the commissioner.
Under the new statute, G. L. c. 6A, § 36, hearings on appeal are conducted by the division of hearing officers alone.
None of the homes filed appeals from the 1970 interim rates.
Though the affiliated homes appealed the 1970 final rate determination, Haverhill Manor did not.
Payments were, of course, predicated on the relevant interim rates.
At the time the instant proceeding was. commenced, a sum in excess of $2,800 was owed to Haverhill Manor by the Commonwealth and the department for 1973. A preliminary order of the single justice stated that the parties appeared to agree that “the combined or net adjustment for all prior fiscal periods is a credit in favor of” Haverhill Manor and instructed the commissioner to authorize payment of this sum owed for 1973. Subsequently, the commission issued final rates for 1971. The commissioner then calculated that Haverhill Manor had received almost $30,000 in excess of the amounts to which it was entitled.
The statement of the issue in Haverhill Manor’s brief arguably imports a somewhat broader conception of the issue than that presented in this opinion. In its brief, Haverhill Manor predicates its procedural due process claim on the fact that the “respondents” did not afford Haverhill Manor the requested hearing before “determining . . . monies owed by petitioner to respondents.” In the light of the bill for declaratory relief and the substance of Haverhill Manor’s arguments, we construe this statement as a request for a post-audit pre-action evidentiary hearing to consider evidence concerning final rates. Haverhill Manor has not challenged the commissioner’s determinations of amounts actually paid in the past and, we believe, does not claim a right to an evidentiary hearing on the subject of these determinations.
Haverhill Manor has not shown that the commissioner will deny Haverhill Manor interest on withheld funds if Haverhill Manor and the affiliated homes are ultimately successful in their appeals of the final rate determinations.
A similar claim was advanced in a recent Federal case, in which pre-hearing suspension of Medicare payments to a provider of health services because of alleged past overpayments was challenged. The court responded; “. . . [T]he plaintiffs in this case continue to be credited for services rendered and such credit will remain irrespective of the outcome of this dispute. The only question is whether amounts credited to plaintiffs will ultimately be offset against amounts allegedly owing by them. If not, payments owing to plaintiffs will be made. Thus, there is no reason to believe that discontinuance of Medicare services by these plaintiffs is inevitable. This, coupled with the availability of Medicare services from other sources, renders the possible adverse effect on recipients insufficient and
See n, 13, supra.
These rights to review are continued in G. L. c. 6A, § 36.
Cf.
Lexington Nursing Home, Inc.
v.
Rate Setting Commn.
Since the repeal of G. L. c. 7, § 300, these procedures have been set forth in G. L. c. 6A, § 36.
Because we find the declaratory judgment procedure constitutionally adequate, we perceive no constitutional right to an adjudicatory proceeding under the APA. Cases such as
Milligan
v.
Board of Registration in Pharmacy,
Haverhill Manor may also be able to challenge the commissioner’s determination in a contract action.
Of course, a finding that the affiliated homes and Haverhill Manor may be treated as one corporation would not bind the affiliated homes if they were not joined as parties. See
Leventhal
v.
Krinsky,
Such an action might yield an inconsistent judgment on the merits.