Petitioner Hoag Memorial Hospital Presbyterian (Hoag) is an acute care hospital whose patients include beneficiaries of California's Medi-Cal program. The California Department of Health Care Services (the Department) prepared a Medi-Cal audit reviewing Hoag's cost report for fiscal year 2009, including $ 2,413,623 in audit reimbursement reductions mandated by Assembly Bill (AB) 5 and AB 1183. Hoag filed an administrative appeal that was a blanket challenge to the legality of those assembly bills, and hence the legality of the reimbursement reductions based upon them. Over one and one-half years later, Hoag submitted a second administrative appeal regarding an alleged $ 620,903 calculation error that it requested be "incorporated" into the open administrative appeal. Hoag alleged that if its global challenge failed, the $ 2,413,623 reduction should not include $ 620,903 stemming from an erroneous calculation of Medi-Cal days subject to the reductions required by the assembly bills. The Department's Office of Administrative Hearings and Appeals (OAHA) dismissed the administrative appeal of the alleged calculation error as untimely and Hoag filed a petition for writ of administrative mandate, which was denied. As Hoag's legal challenge to the Medi-Cal audit reduction is a separate issue from its challenge to the alleged calculation error and was therefore untimely, we affirm the dismissal of Hoag's administrative appeal.
BACKGROUND
Hoag is a medical surgical acute care hospital in Newport Beach, California. Along with other services, Hoag provides inpatient hospital services to Medi-Cal beneficiaries.
" 'The Medi-Cal program [citation] represents California's implementation of the federal Medicaid program [citation], through which the federal government provides financial assistance to states so that they may furnish medical care to qualified indigent persons. [Citation.] The Department is the single state agency designated to administer the Medi-Cal program. [Citation].' " ( Santa Ana Hospital Medical Center v. Belshe (1997)
The Medi-Cal reimbursement available to hospitals during the relevant period of time was reduced by the passage of AB 5 and AB 1183. ( Santa Rosa Memorial Hospital, Inc. v. Kent (2018)
The Department's Audit of Hoag's 2009 Cost Report
On April 17, 2012, the Department issued its final audit report of Hoag's cost report for its fiscal year ending September 30, 2009 (FYE 2009). The Department found that AB 5 and AB 1183 required reductions totaling $ 2,413,623 to Hoag's FYE 2009 reimbursement. After factoring in these reductions, interim payments to Hoag, and several other audit adjustments, the Department determined that Hoag had been overpaid $ 149,494 for Medi-Cal services provided during FYE 2009. The final audit report notified Hoag that a party could appeal the audit decision in writing, and that "[t]he written notice of disagreement must be received by the
May 2012 Administrative Appeal Challenging the Legality of the AB 5 and AB 1183 Reimbursement Reductions
On May 19, 2012, Hoag began the administrative appeals process by filing a timely Statement of Disputed Issues (SODI) contesting the legality of the AB 5 and AB 1183 reimbursement reductions contained in the April 17, 2012 final audit report. Hoag's "Provider's Position" set forth in the SODI was, in full, as follows: "Effective July 1, 2008 the [Department] implemented AB 5; imposing a ten percent reduction in Medi-Cal rates for non-contract hospitals pursuant to the California
On May 29, 2012, the OAHA notified Hoag and the Department that the SODI had "been received and accepted as a valid appeal," and that the case would be "held in abeyance" pending the outcome of litigation pertaining to AB 5 and AB 1183.
On December 12, 2013, over 18 months after the May 2012 SODI was submitted, Hoag submitted a second SODI requesting that a "disputed issue be incorporated into the open appeal." The new issue was whether the Department erroneously included "nursery days" (days of covered inpatient nursery care) in a calculation of the number of Medi-Cal days subject to the reimbursement reductions required under AB 1183. Hoag stated that it "disputes and appeals the Medi-Cal payment reduction calculation of $ 2,413,623 implemented by AB 5 and AB 1183 as it incorrectly includes Nursery Days in the determination not in accordance with the applicable instruction and regulation." Specifically, Hoag alleged the Department "incorrectly includes 448 Nursery Days" in its calculation of the $ 2,413,623 reimbursement, and it identified the amount in dispute based on this new issue as $ 620,903. Neither Hoag's initial SODI nor the parallel legal challenges to the assembly bills addressed the cost calculation of eligible Medi-Cal days under AB 1183 at issue in Hoag's second SODI.
Two weeks later, on December 27, the OAHA sent a notice informing Hoag and the Department that the December 12 letter "has been accepted as an appeal of the identified issues" and setting a formal hearing date. On January 13, 2014, counsel for the Department sent an email to the assigned Administrative Law Judge (ALJ) asking for clarification of the "open appeal" reference: "[t]here appears a significant gap in time between [the May 19, 2012 SODI and the December 12, 2013 letter] where it seems something may be missing ...." Two days later, the ALJ responded by email, explaining "[a]s I look at the file, it appears that issue 1 and issue 2 are the same issue. First an informal hearing was requested, and then a formal one." However, less than an hour later, the ALJ sent a follow up email, stating that "[a]ctually, it appears [Hoag] has requested
Dismissal of Hoag's Administrative Appeals
In January 2014, the OAHA issued an order to show cause requiring Hoag to demonstrate why its administrative appeals should not be dismissed on the grounds that: (1) the issue raised in the [May 2012] SODI as to the validity, legality or constitutionality of AB 5 and AB 1183 is beyond the jurisdiction of this Tribunal," and (2) Hoag's appeal of the issue in the December 2013
In May 2014, the administrative appeals were dismissed on the grounds stated in the order to show cause. In rejecting Hoag's contention that the appeal of the alleged calculation error was timely as "just an elaboration of the same adjustment raised in the original SODI," the ALJ cited to section 51022(d) (providing each issue raised in a SODI must be set forth separately) and found the issues were "clearly different issues with different financial affects [sic], even if they [were] related to the same adjustment. Accordingly, the issue of the calculation of the nursery days [was] a separate issue and was not raised in a timely manner." The ALJ rejected Hoag's contention that it should have been granted 30 days after the notice of deficiency to file an amended SODI since the 30-day provision does not apply to an untimely SODI but rather to an insufficient, but timely, SODI. (§ 51022, subd. (d).) The ALJ further explained that, under section 51022, subdivision (c), all late requests shall be denied unless the provider establishes good cause for the late filing within 15 days of being notified of the untimeliness, and that Hoag "was given well in excess of that amount of time to show good cause of late filing because [Hoag] was notified of the untimeliness of its request to include the nursery days issue on January 28, 2014, and given until April 14, 2014 [the due date of Hoag's reply brief on the order to show cause], to establish good cause for the lateness of the request."
Writ of Administrative Mandate
Hoag filed a petition for a writ of administrative mandate seeking to reverse the ALJ's dismissal. ( Welf. & Inst. Code, § 14171, subd. (j) ["[t]he final decision of the director shall be reviewable in accordance with Section 1094.5 of the Code of Civil Procedure...."].)The trial court denied Hoag's petition on December 13, 2017 in regards to Hoag's appeal of the calculation issue, and affirmed "[t]he dismissal of the [SODI] dated December 12, 2103, seeking to reduce the [$ 2,413,623] of the Department's Report on the Cost Report Review for Hoag for [FYE 2009] by $ 620,903 because of a claimed error in nursery days ...." The trial court remanded the petition to the OAHA in regards to the issue of the legality of AB 5 and AB 1183, but ordered that it be held in abatement pending a final resolution of
Hoag timely appealed the portion of the judgment affirming the dismissal of the administrative appeal contained in the December 2013 SODI.
DISCUSSION
I. Standard of Review
The appellate scope of review from a judgment on a petition for writ of mandate is the same as that of the trial court. ( Department of Corrections & Rehabilitation v. State Personnel Board (2015)
" 'When reviewing the denial of a petition for writ of administrative mandate under Code of Civil Procedure section 1094.5, we ask whether the public agency committed a prejudicial abuse of discretion.' " ( Hi-Desert Medical Center v. Douglas (2015)
As this matter before us presents purely legal issues, we review de novo the dismissal of Hoag's administrative appeal regarding the alleged calculation error.
II. The Dismissal of Hoag's Administrative Appeal of the Calculation Error Was Not an Abuse of Discretion
The parties do not dispute the dates and central issue - Hoag filed its first administrative appeal challenging the legality of the AB 5 and AB 1183 reductions in May 2012 and then, in December 2013, sought to add its administrative appeal of an alleged calculation error in the
We find no abuse of discretion in the dismissal of Hoag's administrative appeal of the alleged calculation error issue. Hoag did not request a hearing on the issue within 60 days of receipt of the Department's audit report as the appeal of the alleged calculation error does not relate back to the date of the initial administrative appeal concerning the legality of reductions taken pursuant to AB 5 and AB 1183. (See § 51022.) The OAHA notice stating "acceptance" of Hoag's calculation error administrative appeal does not affect the timeliness determination.
Section 14171, subdivision (a), of the Welfare and Institutions Code provides that the director of the Department "shall establish administrative appeal processes to review grievances or complaints arising from the findings of an audit" and the Department did so. ( § 51016, et seq. ) Under the administrative appeals process, a provider "may request a hearing for any disputed audit or examination finding" according to the process set forth in section 51022. (§ 51022, subd. (a).) To request a hearing, "[a] written request shall be filed with the Department within 60 calendar days of the receipt of the written notice of the audit or examination findings." (§ 51022, subd. (a)(1).) The written request is known as the "Statement of Disputed Issues" (SODI) and may be amended at any time during the 60-day period following receipt of the written notice of the audit. (§ 51022, subds. (a)(2), (d).)
Hoag's May 2012 SODI challenged the lawfulness of the $ 2,413,623 Medi-Cal reimbursement reduction made pursuant to AB 5 and AB 1183. In this SODI, Hoag specifically "disputes and appeals the Medi-Cal payment reduction of ($ 2,413,623) implemented by AB 5 and AB 1183" and stated that it "believes that these Medi-Cal rate reductions are illegal because they violate federal and state laws and regulations and provisions of the state and federal constitutions."
Although the date on which Hoag received the April 17, 2012 audit report is not clear from the record, Hoag necessarily received it by May 19, 2012, the date it submitted its first SODI. Under the 60-day time limit, Hoag had, at most, until July 18, 2012 to dispute the results of the audit by filing a SODI specifically listing "each issue as are in dispute" and "setting forth [its] contentions as to those issues and the estimated amount each issue involves."
Hoag argues that because it filed an administrative appeal challenging the legality of the Department's finding that AB 5 and AB 1183 required a $ 2,413,623 adjustment, it should be permitted to belatedly appeal a separate issue contesting a specific $ 620,903 adjustment calculation that constituted a portion of the total $ 2,413,623 adjustment. It asserts that, "[u]nder Section 51022, a Provider does not appeal 'issues,' it appeals 'any disputed audit or examination finding' " and contends that the calculation challenge was "only elaborating on" the earlier challenge to the lawfulness of the AB 5 and AB 1183 reductions. In so doing, Hoag ignores the clear statutory requirements that administrative appeals of Medi-Cal audits must be specific as to each contested issue and ignores the reality that the "math issue" was a completely new and distinct challenge.
Welfare and Institutions Code section 14171, subdivision (e)(1), provides that the administrative appeal of a Medi-Cal audit
The cases cited by Hoag are inapposite to the case before us and do not suggest that a provider, after timely appealing an audit finding, may add a separate and distinct issue to its appeal without complying with the 60-day timeliness requirement. (See Kaiser Foundation Hospitals v. Belshe (1997)
On the contrary, courts have recognized that section 51022 mandates a provider to timely identify issues in order to commence the administrative appeal process. (See County of San Joaquin v. Belshe (1995)
In sum, we find that Hoag was required to set forth each issue it was appealing, including its contentions as to each issue and the estimated amount of each issue, within the 60-day time frame set forth in section 51022. We reject Hoag's contention that its administrative appeal of the legality of the "finding" of the $ 2,413,623 reduction mandated by AB 5 and AB 1183 included the separate challenge to the alleged $ 620,903 adjustment calculation error as the contentions underlying the two challenges are completely distinct, as are the amounts at issue. (See § 51022, subd. (d) [a SODI "shall be specific as to each issue as are in dispute, setting forth the provider's contentions as to those issues and the estimated amount each issue involves"].) Therefore, we find the ALJ properly exercised discretion in dismissing the administrative appeal of the alleged calculation error as untimely.
B. The OAHA Notices Accepting Hoag's Administrative Appeals do not Determine the Timeliness Issue
The OAHA notified Hoag that the May 19, 2012 SODI "has been received
Hoag has not provided to us, and did not provide to the trial court, any legal authority in support of its position that an OAHA notice accepting an administrative appeal constitutes a determination of timeliness or precludes the presiding ALJ from making a timeliness determination. Hoag simply refers to Welfare and Institutions Code section 14171(g), which states that "a provider who prevails in an appeal of a disallowed payment shall be entitled to interest at the rate [calculated] .... commencing on the date the appeal is formally accepted by the department or the date payment is received by the department, whichever is later." (Italics added). This provision addresses interest calculations, not timeliness. Therefore, we reject Hoag's contention that the notices constitute a final determination of the timeliness of its appeal of the alleged calculation error issue.
III. Hoag Has Waived Any Good Cause Argument for its Delay
Under section 51022, subdivision (c), all late SODIs "shall be denied and the audit ... findings deemed final unless the provider establishes in writing good cause for late filing within 15 calendar days of being notified of the untimeliness of its request."
Hoag was given approximately two and one-half months, far more than 15 days, to respond to the order to show cause regarding dismissal for lack of timely filing. In contrast to the good cause arguments that Hoag now attempts to assert, including that it would be unreasonable to expect it to immediately "audit the audit" upon its receipt, Hoag responded to the order to show cause by asserting to the ALJ it was just "an independent and simple calculation error in the same audit finding." Hoag did not raise any justification for the late filing and instead took the position that it was timely because: (1) it was not subject to the 60-day requirement of section 51022, subdivision (a), as it related to the same "finding" that was at issue in its challenge to the lawfulness of the AB 5 and AB 1183 reductions; (2) the Department "explicitly accepted" its second SODI by issuing the December 19, 2013 notice; and (3) it should have been granted an additional 30 days under section 51022, subdivision (d)(1), to file an amended SODI. These are substantive issues that we have addressed, and rejected, above.
Therefore, Hoag has waived its good cause for delay argument for failure to make that argument in the administrative proceedings below. (See
DISPOSITION
The judgment is affirmed. The Department is entitled to recover its costs on appeal.
WE CONCUR:
Siggins, P.J.
Wiseman, J.
Notes
All further undesignated section references are to title 22 of the California Code of Regulations.
Retired Associate Judge of the Court of Appeal, Fifth Appellate District, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.