State ex rel. Peregrine Health Services of Columbus, L.L.C. v. Sears, Dir., Ohio Dept. of Medicaid
No. 18AP-16
IN THE COURT OF APPEALS OF OHIO TENTH APPELLATE DISTRICT
June 23, 2020
2020-Ohio-3426
KLATT, J.
(REGULAR CALENDAR); (C.P.C. No. 17CV-1284)
Rendered on June 23, 2020
On brief: Carlile Patchen & Murphy LLP, Maria Mariano Guthrie, and Jeffrey J. Patter, for appellants/cross-appellees. Argued: Maria Mariano Guthrie.
On brief: Dave Yost, Attorney General, Rebecca L. Thomas, and Justin T. Radic, for appellee/cross-appellant. Argued: Rebecca L. Thomas.
APPEAL from the Franklin County Court of Common Pleas
KLATT, J.
{¶ 1} Appellants/cross-appellees, Peregrine Health Services of Columbus, LLC dba Summit‘s Trace Healthcare Center and Peregrine Health Services of Cincinnati, LLC dba Oak Pavilion Nursing Center (hereinafter collectively referred to as “Peregrine“), appeal from a December 11, 2017 judgment of the Franklin County Court of Common Pleas denying their petition for a writ of mandamus ordering appellee/cross-appellant, Barbara
{¶ 2} ODM filed a conditional cross-appeal from a November 1, 2017 decision of the Franklin County Court of Common Pleas denying ODM‘s March 7, 2017 motion to dismiss Peregrine‘s complaint for failure to state a claim upon which relief may be granted pursuant tо
I. FACTS AND PROCEDURAL BACKGROUND
A. Overview
{¶ 3} This mandamus action arose out of Peregrine‘s claim that ODM had denied them critical access incentive payments for which they were eligible under
{¶ 4} ODM is responsible for determining and issuing critical access incentive payments to qualified nursing facilities according to
{¶ 5} ODM‘s decision regarding whether a nursing facility qualifies for a critical access incentive payment is subject to reconsideration when sought by the facility “on the basis of a possible error in the calculation of the rate.”
B. Facts
{¶ 6} The facts of the underlying matter are undisputed. Peregrine Health Services of Columbus, LLC operates Summit‘s Trace Healthcare Center, while Peregrine Health Services of Cincinnati, LLC operates Oak Pavilion Nursing Center. (Feb. 3, 2017 Petition at ¶ 1-2.) ODM denied critical access incentive payments to Peregrine and Peregrine requested reconsideration. ODM denied such reconsideration. Subsequently, on February 3, 2017, Peregrine filed a verified petition for a writ of mandamus seeking a writ to compel ODM to distribute critical access incentive payments to them under
{¶ 7} Thе parties agree that the sole issue is the meaning of the term “occupancy rate” as used in
{¶ 8} “Occupancy rate” is a percentage of occupied days divided by available days. (Petition at ¶ 28.) However, Peregrine argues that the calculation of an “occupancy rate” for purposes of
{¶ 9} It is not uncommon for nursing facilities to have a different number of licenses for beds than the number of actual Medicaid-certified beds. For example, Summit‘s Traсe had licenses for 201 beds but only had 177 to 180 beds that existed in the facility and could be occupied by a patient. (Heaphy Feb. 1, 2017 Aff. at ¶ 12, 20.) Oak Pavilion had licenses for 150 beds but only 130 beds existed and were available to be occupied by patients. Id. at ¶ 32.
{¶ 10} On March 7, 2017, ODM filed a motion to dismiss the complaint for failure to state a claim upon which relief may be granted pursuant to
{¶ 11} On April 4, 2017, Peregrine filed a memorandum in opposition to ODM‘s motion to dismiss, attaching an affidavit and supporting documents. On April 17, 2017, ODM filed a reply in support of its motion to dismiss. On May 3, 2017, Peregrine requested leave to file a sur-reply, which was opposed by ODM by memorandum filed the same day.
{¶ 12} By journal entry dated November 1, 2017, the trial court denied ODM‘s motion to dismiss, denied Peregrine‘s motion for leave to file sur-reply, and set the matter for supplemental briefing and hearing.
{¶ 13} On November 22, 2017, the trial court conducted a bench trial and, in addition to live testimony, it admitted documentary evidence including the verified petition for a writ of mandamus and the affidavits that had previously been filed. The trial court qualified as experts all three witnesses that testified during the trial.
{¶ 14} On Decembеr 11, 2017, the trial court issued its decision denying the requested writ. The trial court noted that the term “occupancy rate” is not defined in
A nursing facility occupancy rate could be calculated using all of its licensed beds, or using only Medicaid certified beds. There are pro‘s [sic] and con‘s [sic] to each approach. If a
facility is remodeling – in order to better serve residents – and takes licensed beds temporarily out of service the occupancy rate will go down if licensed beds are the basis for the computation, perhaps eliminating the critical access incentive payment for a year or more. But, the record suggests a facility that does not meet the 85% occupancy rate may simply be “sitting-on” excess licensed beds, or may even have quality of care issues that keep its population relatively low. Figuring out what approach is best for the public in conducting critical access incentive payment calculations is, therefore, a matter of judgment. The General Assembly did not settle that issue with this statutory language. The Department charged with implementation of the language is left to apply the statutory concept in a sensible manner.
(Decision at 6.)
{¶ 15} The trial court found that it was appropriate to defer to ODM‘s interpretation of “occupancy rate” for purposes of determining whether a nursing facility qualified for a critical access incentive payment. The trial court found the evidence showed ODM “was acting in a reasonable and good faith manner in implementing the modest legislative guidance on computing an ‘occupancy rate’ pursuant to
{¶ 16} On January 5, 2018, Peregrine timely appealed from the December 11, 2017 judgment. On January 12, 2018, ODM conditionally cross-appealed from the trial court‘s entry journalized on November 1, 2017 that denied ODM‘s motion to dismiss the mandamus action.
II. ASSIGNMENTS OF ERROR
{¶ 17} Peregrine presents three assignments of error for review:
[1.] The trial court erred in dismissing [Peregrine‘s] Writ of Mandamus when the trial court gave improper deference to the Ohio Department of Medicaid‘s interpretation of
R.C. 5165.23 .[2.] The trial court erred when it found that the Ohio Department of Medicaid‘s interpretation of
R.C. 5165.23 was reasonable.[3.] The trial court abused its discretion when it failed to find that the Ohio Department of Medicaid‘s denial of the critical access incentive payments was unreasonable, arbitrary and/or unconscionable.
III. CONDITIONAL CROSS-APPEAL
{¶ 18} ODM filed a conditional cross-appeal, requesting that the trial court‘s decision denying ODM‘s
The lower court incorrectly denied the Department‘s motion to dismiss based on failure to state a claim upon which relief could be granted. (See Comm. Pl. 11/1/2017 Journal Entry at 3.)
IV. LAW AND DISCUSSION – APPEAL
A. Mandamus
{¶ 19} To be entitled to relief in mandamus, a relator must demonstrate that (1) relator has a clear legal right to the relief prayed for, (2) respondent is under a clear legal duty to perform the act prayed for, and (3) relator has no plain and adequate remedy in the ordinary course of law. State ex rel. Berger v. McMonagle, 6 Ohio St.3d 28, 29 (1983); PBP, Inc. v. Ohio Dept. of Job & Family Servs., 10th Dist. No. 13AP-36, 2013-Ohio-4344. “Mandamus is an extraordinary remedy which is to be exercised with caution and issued only when the right is clear.” Id. at ¶ 13, citing State ex rel. Rittner v. Bumb, 6th Dist. No. F-07-017, 2007-Ohio-5319, ¶ 6. Therefore, in order for this court to issue a writ of mandamus in this matter, Peregrine must establish a clear legal right to critical access incentive payments for state fiscal year 2017, a clear legal duty on the part of ODM to issue such payments to them, and the lack of an adequate remedy in the оrdinary course of law.
{¶ 20} There is no dispute that ODM had a clear legal duty to determine and pay critical access incentive payments to qualified nursing facilities for state fiscal year 2017. Nor is there any dispute that, because
B. Standard of Review
{¶ 21} The parties disagree on the standard of review that applies in determining whether the trial court erred in entering judgment in favor of ODM. ODM cites this court‘s holding in State ex rel. BDFM Co. v. Ohio Dept. of Transp., 10th Dist. No. 11AP-1094, 2013-Ohio-107, which supports the proposition that a trial court‘s decision in a mandamus action is generally reviewed for abuse of discretion. ODM also asserts that this court should defer to ODM‘s reasonable construction of its statutes and rules, regardless of the standard of review applied.
{¶ 22} Peregrine challenges ODM‘s argument that our standard of review is an abuse of discretion review and instead argues that a de novo review should be employed. Peregrine acknowledges that, generally, the standard of review is an abuse of discretion. ODM has conceded, however, that “[t]he question presented here is purely legal; thеre are no disputed material facts.” See ODM Combined Brief at 1. Peregrine relies on this court‘s holding in State ex rel. V&A Risk Servs. v. State Bur. of Workers’ Comp., 10th Dist. No. 11AP-742, 2012-Ohio-3583, ¶ 19 (where a “stipulated record presents a question of law, appellate courts review a writ of mandamus issued by a trial court de novo“), to support their position that de novo is the appropriate standard of review here.
{¶ 23} Having independently reviewed the record and the law regarding the standard of review in a case such as this, we find de novo review appropriate. The parties and trial court agree there are no material disputed facts, and the only issue for review is whether ODM‘s interpretation of
C. Assignments of Error
{¶ 24} Because they are interrelated, we address Peregrine‘s assignments of error together. Peregrine asserts the trial court erred by affording improper deference to ODM‘s interpretation of
{¶ 25} As recognized, there are no disputed facts. Both Peregrine and ODM agree Peregrine satisfied three of the four criteria of
{¶ 26} The parties agree that, in 2012,1 the Ohio General Assembly enacted critical access incentive payments that could be awarded to nursing facilities located in highly distressed urban and rural communities to encourage the nursing facilities to remain in those communities, thereby keeping “vital and needed senior health services in place” in those communities. (Petition at ¶ 11-12; ODM Mar. 7, 2017 Mot. to Dismiss at 2.) The parties likewise agree the critical access incentive payments “were put in place to address the potential for a lack of access to healthcare by both rural and inner-city residents, a high proportion of whom are poor and chronically ill and—thus—more likely to be Medicaid recipients,” and the critical access incentive payments make it economically feasible for the nursing facilities to remain in their communities, where they also help by providing significant local employment. (Mar. 7, 2017 ODM Mot. to Dismiss at 2, citing Petition at ¶ 11-12.)
{¶ 27}
(1) The per medicaid day payment rate for ancillary and support costs determined for the nursing facility under section 5165.16 of the Revised Code;
(2) The per medicaid day payment rate for capital costs determined for the nursing facility under section 5165.17 of the Revised Code;
(3) The per medicaid day payment rate for direct care costs determined for the nursing facility under section 5165.19 of the Revised Code;
(4) The per medicaid day payment rate for direct care costs determined for the nursing facility under section 5165.19 of the Revised Code;
(5) If the nursing facility qualifies as a critical access nursing facility, the nursing facility‘s critical access incentive payment paid under section 5165.23 of the Revised Code.
{¶ 28} In order for a nursing facility to qualify for the critical access incentive payment provided for in
(A) Each state fiscal year, the department of medicaid shall detеrmine the critical access incentive payment for each nursing facility that qualifies as a critical access nursing facility. To qualify as a critical access nursing facility for a state fiscal year, a nursing facility must meet all of the following requirements:
(1) The nursing facility must be located in an area that, on December 31, 2011, was designated an empowerment zone under the “Internal Revenue Code of 1986,” section 1391,
26 U.S.C. 1391 .(2) The nursing facility must have an occupancy rate of at least eighty-five per cent as of the last day of the calendar year immediately preceding the state fiscal year.
(3) The nursing facility must have a medicaid utilization rate of at least sixty-five per cent as of the last day of the calendar year immediately preceding the state fiscal year.
(4) The nursing facility must have been awarded at least five points for meeting accountability measures under section 5165.25 of the Revised Code for the fiscal year and at least one of the five points must have been awarded for meeting the accountability measures identified in divisions (C)(9), (10), (11), (12), and (14) of section 5165.25 of the Revised Code.
{¶ 29} “The primary goal of statutory construction is to ascertain and give effect to the legislature‘s intent in enacting the statute. The court must first look to the plain language оf the statute itself to determine the legislative intent.” (Citations omitted.) State v. Bundy, 4th Dist. No. 11CA818, 2012-Ohio-3934, ¶ 46. We must consider the statutory language in context, construing words and phrases according to the rules of grammar and common usage. Bartchy v. State Bd. of Edn., 120 Ohio St.3d 205, 2008-Ohio-4826, ¶ 16, citing State ex rel. Stoll v. Logan Cty. Bd. of Elections, 117 Ohio St.3d 76, 2008-Ohio-333, ¶ 34.
{¶ 30} A court may only interpret a statute when ” ‘the words of a statute are ambiguous, uncertain in meaning, or conflicting.’ ” In re Brooks, 136 Ohio App.3d 824, 829 (10th Dist.2000), quoting State ex rel. Burrows v. Indus. Comm., 78 Ohio St.3d 78, 81 (1997). Ambiguity exists when the language of a statute is susceptible to more than one interpretation. Silver Lining Group, 2017-Ohio-7834, at ¶ 35, citing Columbus v. Mitchell, 10th Dist. No. 16AP-322, 2016-Ohio-7873, ¶ 6.
{¶ 31} ODM asserts that
{¶ 32} ” ‘If a statute provides an administrative agency authority to perform a specified act but does not provide the details by which the act should be performed, the agency is to perform the act in a reasonable manner based upon a reasonable construction of the statutory scheme.’ ” Silver Lining Group at ¶ 49, quoting Cosby v. Franklin Cty. Dept. of Job & Family Servs., 10th Dist. No. 07AP-41, 2007-Ohio-6641, ¶ 38. If the agency
{¶ 33} “[A] ‘legislative gap’ is not ‘equivalent to a lack of authority for the agency to act.’ ” Silver Lining Group at ¶ 50, quoting Northwestern Ohio Bldg. & Constr. Trades Council v. Conrad, 92 Ohio St.3d 282, 289 (2001). Moreover, ” ‘the power of an administrative agency to administer a * * * program necessarily requires the formulation of policy and the making of rules to fill any gap left, implicitly or explicitly,’ by the legislature.” (Emphasis omitted.) Northwestern Ohio Bldg. & Constr. Trades Council at 289, quoting Morton v. Ruiz, 415 U.S. 199, 231 (1974).
{¶ 34}
{¶ 35} ODM argues that using licensed beds prevents facilities from manipulating the numbers in order to meet the occupancy requirement. By using certified beds, it could provide an incentive to facilities to choose to remove Medicaid-certified beds out of service, thereby decreasing the number of beds used in the denominator of the occupancy-rate fraction in order to artificially inflate the occupancy rate above 85 percent. It could encourage facilities in empowerment zones to lower the number of available beds and thereby result in a decrease, rather than an increase, in the local access to nursing facilities in those empowerment zones. (Appellee Combined Brief at 4-5; Tr. 88-95.)
{¶ 36} Peregrine argues that using licensed beds to determine occupancy rate is contrary to ODM‘s prior administrative practices. Under
{¶ 37} Further, ODM argues occupancy rate is now interpreted consistently throughout
(D)(2) For the purpose of determining a nursing facility‘s occupancy rate under division (D)(1)(a) of this section, the department shall include any beds that the nursing facility removes from its medicaid-certified capacity unless the nursing facility also removes the beds from its licensed bed capacity.2
{¶ 38} One of ODM‘s experts, Roger Allan Dickerson, Deputy Director of the Rate Setting and Cost-Setting Section of ODM, testified that if the General Assembly intended ODM to use certified beds to calculate the occupancy rate for the critical access incentive payments, the General Assembly would have used such language in
{¶ 39} Further, ODM argues that applying the same definition to
{¶ 40} Peregrine argues that
{¶ 41} Generally, where there is ambiguity, ” ‘[a] reviewing court, in interpreting a statute, “must give due deference to an administrative interpretation formulated by an agency which has accumulated substantial expertise, and to which the legislature has delegated the responsibility of implementing the legislative command.” ’ ” Northside Amateur Boxing School Bingo Club v. Hamilton Cty. Gen. Health Dist., 184 Ohio App.3d 596, 2009-Ohio-5122, ¶ 17 (10th Dist.), quoting In re 138 Mazal Health Care, Ltd., 117 Ohio App.3d 679, 685 (10th Dist.1997), quoting State ex rel. McLean v. Indus. Comm., 25 Ohio St.3d 90 (1986). Furthermore, “in order to sustain an agency‘s application of a statutory term, a reviewing court ’ “need not find that its construction is the only reasonable one.” ’ ” Id., quoting 138 Mazal Health Care at 685, quoting Udall v. Tallman, 380 U.S. 1, 16 (1965), superseded by statute on other grounds, quoting Unemp. Comp. Comm. of Territory of Alaska v. Aragon, 329 U.S. 143 (1946). In the administrative law context, unless an administrative agency‘s interpretation of a statute that it has a duty to enforce is unreasonable, it will not be reversed. Warren v. Morrison, 10th Dist. No. 16AP-372, 2017-Ohio-660, ¶ 10, citing State ex rel. Clark v. Great Lakes Constr. Co., 99 Ohio St.3d 320, 2003-Ohio-3802, ¶ 10, citing Northwestern Ohio Bldg. & Constr. Trades Council, 92 Ohio
{¶ 42} Based on the foregoing reasons, we find that ODM‘s interpretation of occupancy rate under
V. LAW AND DISCUSSION – ODM‘S CONDITIONAL CROSS-APPEAL
{¶ 43} ODM arguеs that the trial court improperly denied its
VI. CONCLUSION
{¶ 44} Based on the foregoing, we overrule Peregrine‘s three assignments of error and affirm the judgment of the Franklin County Court of Common Pleas denying the requested writ of mandamus. Additionally, we decline to address ODM‘s conditional assignment of error on cross-appeal as it is moot.
Judgment affirmed.
LUPER SCHUSTER, J., concurs.
BRUNNER, J., dissents.
State ex rel. Peregrine Health Services of Columbus, L.L.C. v. Sears, Dir., Ohio Dept. of Medicaid
No. 18AP-16
IN THE COURT OF APPEALS OF OHIO TENTH APPELLATE DISTRICT
June 23, 2020
2020-Ohio-3426
{¶ 45} I respectfully dissent from the decision of the majority. The matter before us presents an appeal and a cross-appeal on a question of law in an action for a writ of mandamus. Appellants/cross-appellees, Peregrine Health Services of Columbus, LLC dba Summit‘s Trace Healthcare Center and Peregrine Health Services of Cincinnati, LLC dba Oak Pavilion Nursing Center (hereinafter collectively referred to as “Peregrine” and “they” or “them“), appeal from a December 11, 2017 judgment of the Franklin County Court of Common Pleas denying their petition for a writ of mandamus ordering appellee/cross-appellant, Barbara Sears, Director of the Ohio Department of Medicaid (hereinafter referred to as “ODM“) to distribute critical access incentive payments to them for state fiscal year 2017. The trial court entered judgment following a bench trial, having found Peregrine not entitled to the special writ because they had not proved that ODM‘s interpretation of
{¶ 46} The majority in this case denies for mootness ODM‘s conditional cross-appeal from a November 1, 2017 decision of the Franklin County Court of Common Pleas denying ODM‘s March 7, 2017 motion to dismiss Peregrine‘s complaint for failure to state a claim on which relief may be granted pursuant to
I. FACTS AND PROCEDURAL BACKGROUND
A. Overview
{¶ 47} While some of the facts stated in this dissenting opinion may be duplicative of those stated by the majority, I restate them for the purposes of cogency of presentation of how I view the law as applying here and based on my analysis of the record.
{¶ 48} This mandamus action arose out of Peregrine‘s claim that ODM had denied them critical access incentive payments for which they were eligible under
{¶ 49} A review of the critical access incentive payment that is the crux of the underlying matter is helpful at this juncture. Critical access incentive payments are reserved for nursing facilities that satisfy the criteria of
{¶ 50} ODM determines how much a Medicaid-funded nursing facility receives then based on a “total per medicaid day payment rate.”
{¶ 51} ODM‘s decision about whether a nursing facility qualifies for a critical access incentive payment is subject to reconsideration when sought by the facility “on the basis of possible errоr of the calculation rate.”
B. Facts
{¶ 52} Peregrine Health Services of Columbus, LCC operates Summit‘s Trace Healthcare Center, while Peregrine Health Services of Cincinnati, LLC operates Oak Pavilion Nursing Center. (Feb. 3, 2017 Petition at ¶ 1-2.) ODM is responsible for determining and issuing critical access incentive payments to qualified nursing facilities according to
{¶ 53} The facts of the underlying matter are undisputed. The parties agree that the sole issue is the meaning of the term “occupancy rate” as used in
{¶ 54} Peregrine claims that ODM “wrongfully and arbitrarily” denied them the critical access incentive payments based on ODM‘s incorrect interpretation of the term “occupancy rate.” (Petition at ¶ 32, 34.) Peregrine attached in support of their petition the affidavit of Jeffrey Heaphy, a Nursing Home Administrator (“NHA“) Partner at Plant & Moran, PLLC, who specializes in Medicaid and Medicare and the health care industry and who prepared certain Medicaid Cost Reports for Peregrine.
{¶ 55} On March 7, 2017, ODM filed a motion to dismiss the complaint for failure to state a claim on which relief may be granted pursuant to
{¶ 56} On April 4, 2017, Peregrine filed a memorandum in opposition to ODM‘s motion to dismiss with an attached new affidavit of the same Jeffrey Heaphy, along with supporting documents. On April 17, 2017, ODM filed a reply in support of its motion to dismiss. On May 3, 2017, Peregrine requested leave to file a sur-reply, which was opposed by ODM by memorandum filed the same day.
{¶ 57} By journal entry dated November 1, 2017, the trial court denied ODM‘s motion to dismiss, denied Peregrine‘s motion for leаve to file sur-reply, and set the matter for supplemental briefing and hearing.
{¶ 58} On November 22, 2017, the trial court conducted a bench trial at which it admitted the following documentary evidence: the verified petition for a writ of mandamus; the affidavits of Jeffrey Heaphy that had been filed on February 3 and April 4, 2017; the affidavits of Peregrine‘s counsel authenticating certain exhibits; the affidavit of Terry Moore, section chief for ODM‘s long-term care, rate-setting, and managed care rate-setting section; biographical information on witnesses Heaphy, Moore, and Roger Allan Dickerson, ODM‘s deputy director of ODM‘s rate-setting and cost-setting section; and certain other exhibits offered by the parties. The trial court also admitted and considered the testimony of Heaphy, Moore, and Dickerson. The transcript of the hearing and the admitted exhibits are part of the record of this appeal.
{¶ 59} On December 11, 2017, the trial court issued its decision denying the requested writ. The trial court found that all three witnesses who testified at the hearing were qualified as expert witnesses. Heaphy qualified “as an expert on the nursing home industry, and specifically, on third-party payer reimbursement arrangements.” (Dec. 11, 2017 Decision at 3.) Moore qualified as an expert on Medicaid-related matters such as rate setting, managed care rate setting, developing regulations for the Ohio Administrative Code, and working “to ‘translate’ Medicaid statutes into explanations the [ODM‘s] IT personnel can understand in writing programs for accounting and other record keeping.” Id. at 4. The trial court stated in its decision that Moore “offered very credible testimony,” and that she “demonstrated a solid understanding of the subtle issues involved in calculations such as those challenged in this case.” Id. Dickerson qualified as an expert based on his 15 years of Medicaid experience. The trial court stated in its decision that Dickerson “essentially confirmed Ms. Moore‘s explanation of how the relevant statute is
{¶ 60} The trial court noted that the term “occupancy rate” is not defined in
A nursing facility occupancy rate could be calculated using all of its licensed beds, or using only Medicaid certified beds. There are pro‘s [sic] and con‘s [sic] to еach approach. * * * Figuring out what approach is best for the public in conducting critical access incentive payment calculations is, therefore, a matter of judgment. The General Assembly did not settle that issue with this statutory language. The Department charged with implementation of the language is left to apply the statutory concept in a sensible manner.
(Decision at 6.)
{¶ 61} The trial court found that it was appropriate to defer to ODM‘s interpretation of “occupancy rate” for purposes of determining whether a nursing facility qualified for a critical access incentive payment. The trial court found the evidence showed ODM “was acting in a reasonable and good faith manner in implementing the modest legislative guidance on computing an ‘occupancy rate’ pursuant to
{¶ 62} The trial court was not persuaded by Peregrine‘s argument that ODM had changed its interpretation, previously using another formula, and that this was material to its determination of this matter.
Principles of waiver or estoppel do not apply against the state or its agencies. Silver Lining [Group EIC Morrow Co. v. Ohio Dept. of Edn. Autism Scholarship Program, 10th Dist. No. 16AP-398, 2017-Ohio-7834], ¶ 54. Thus, the fact the [ODM]
changed its interpretation of another formula – which the court accepts was done in good faith based upon the review that their original formula was mistaken – does nothing to demonstrate that the consistent interpretation applied to R.C. 5165.23 is unlawful.
(Decision at 7.)
{¶ 63} The trial court then concluded that Peregrine had not demonstrated entitlement to a writ of mandamus:
“It is a fundamental tenet of administrative law that an agency‘s interpretation of a statute that it has a duty to enforce will not be overturned unless the interpretation is unreasonable.” State ex rel. Clark v. Great Lakes Constr. Co., 99 Ohio St.3d 320, 2003-Ohio-3802, ¶ 10 and cases cited. To prove an abuse of discretion, the agency interpretation must be “unreasonable, arbitrary, or unconscionable.” That plainly is not true here. [Peregrine] have not demonstrated they are entitled to a Writ.
(Decision at 8.)
{¶ 64} On January 5, 2018, Peregrine timely appealed from the December 11, 2017 judgment. On January 12, 2018, ODM conditionally cross-appealed from the trial court‘s entry journalized on November 1, 2017 that denied ODM‘s motion to dismiss the mandamus action.
II. LAW AND DISCUSSION – APPEAL
{¶ 65} In addition to the parties’ disagreement on the standard of review this Court should apply in determining whether the trial court erred in entering judgment in favor of ODM,3 ODM argues that our standard of review is abuse of discretiоn. It also asserts that this Court should defer to ODM‘s reasonable construction of its statutes and rules, regardless of the standard of review applied in this matter:
Whatever standard of review is being applied, “[a]n agency‘s interpretation of a statute that governs its actions should be given deference so long as the interpretation is not irrational, unreasonable or inconsistent with the statutory purpose.” See, e.g., Morning View Care Center-Fulton v. Ohio Dept. of
(ODM Combined Brief at 12.)
{¶ 66} Peregrine argues for de novo review but acknowledges that, generally, the standard of review is abuse of discretion. ODM has conceded, however, and we agree that “[t]he question presented here is purely legal; there are no disputed material facts.” See ODM Combined Brief at 1. Peregrine relies on this Court‘s holding in State ex rel. V&V Risk Servs. v. State Bur. of Workers’ Comp., 10th Dist. No. 11AP-742, 2012-Ohio-3583 (where a “stipulated record presents a question of law, appellate courts review a writ of mandamus issued by a trial court de novo“), to support their position that de novo is the appropriate standard of review here. Peregrine also relies on Cincinnati Entertainment Assocs., Ltd. v. Bd. of Commrs., 141 Ohio App.3d 803 (1st Dist.2001) for de novo review. In Cincinnati Entertainment Assocs., Ltd., the First District Court of Appeals applied de novo review to a trial court‘s grant of writ of mandamus. “While the court recognized that in certain cases the abuse of discretion standard was used for appellate review of writ of mandamus, such review is ‘limited to their particular circumstances.’ [Cincinnati Entertainment Assocs., Ltd.] at 810. However, when faced with a stipulated record and contract interpretation, such [statutory] construction is a matter of law, which is reviewed de novo.” (Emphasis sic.) (Peregrine Brief at 20.)
{¶ 67} Additionally, Peregrine cites State v. McKelvey, 151 Ohio App.3d 673 (7th Dist.2003) in support of de novo review. In McKelvey, the Seventh District Court of Appeals applied the de novo standard in a mandamus review where the parties had stipulated to the underlying facts, and the issue on appeal was the trial court‘s interpretation of a statute. Id. at 675. The McKelvey court held that, “[a]s the construction of a statute is a question of law, not fact, a trial court‘s interpretation of a statute is not entitled to deference on appeal. Thus, we review the trial court‘s decision to grant the writ of mandamus de novo.” (Internal citations omitted.) Id. Finally, Peregrine cites State ex rel. Manley v. Walsh, 142 Ohio St.3d 384, 2014-Ohio-4563, in which the Supreme Court of Ohio reviewed a denial of a writ of mandamus on a de novo standard notwithstanding the general rule that the standard of review in a mandamus case is abuse of discretion.
{¶ 68} Having similarly conducted an independent review of the record and the law regarding the standard of review in a case such as this, I agree with the majority that de
{¶ 69} I would address Peregrine‘s assignments of error together, as they are so closely related that discussing them individually would result in unnecessary repetition and redundancy.
{¶ 70} Peregrine asserts the trial court abused its discretion4 by affording improper deference to ODM‘s interpretation of
{¶ 71} The statute at issue,
{¶ 72} Both Peregrine and ODM agree that Peregrine satisfied two of the three criteria of
{¶ 73} The term “occupancy rate” is not defined in
{¶ 74} Resolving this disputed issue requires this Court to interpret the relevant statutory provisions, which is a question of law. This Court must determine whether ODM‘s denial of the critical access incentive payments to Peregrine, based on its interpretation of the term “occupancy rate” as used in
{¶ 75} I restate paragraphs 26 through 28 of the majority decision for the purpose of creating clarity in understanding why I diverge from the majority in its application of the law to the claims of the parties.
{¶ 77}
- The per medicaid day payment rate for ancillary and support costs determined for the nursing facility under
section 5165.16 of the Revised Code ; - The per medicaid day payment rate for capital costs determined for the nursing facility under
section 5165.17 of the Revised Code ; - The per medicaid day payment rate for direct care costs determined for the nursing facility under
section 5165.19 of the Revised Code ; - The per medicaid day payment rate for direct care costs determined for the nursing facility under
section 5165.19 of the Revised Code ; - If the nursing facility qualifies as a critical access nursing facility, the nursing facility‘s critical access incentive payment paid under
section 5165.23 of the Revised Code .
(A) Each state fiscal year, the department of medicaid shall determine the critical access incentive payment for each nursing facility that quаlifies as a critical access nursing facility. To qualify as a critical access nursing facility for a state fiscal year, a nursing facility must meet all of the following requirements:
(1) The nursing facility must be located in an area that, on December 31, 2011, was designated an empowerment zone under the “Internal Revenue Code of 1986,” section 1391, 26 U.S.C. 1391.
(2) The nursing facility must have an occupancy rate of at least eighty-five per cent as of the last day of the calendar year immediately preceding the state fiscal year.
(3) The nursing facility must have a medicaid utilization rate of at least sixty-five per cent as of the last day of the calendar year immediately preceding the state fiscal year.
(4) The nursing facility must have been awarded at least five points for meeting accountability measures under section 5165.25 of the Revised Code for the fiscal year and at least one of the five points must have been awarded for meeting the accountability measures identified in divisions (C)(9), (10), (11), (12), and (14) of section 5165.25 of the Revised Code.
(Emphasis added.) H.B. No. 483 as enacted by the 130th General Assembly, effective Sept. 15, 2014.
{¶ 79} ODM is to determine the critical access incentive payment for each nursing facility that qualifies for the payment in accordance with
{¶ 80} The trial court‘s decision discusses the relevant statutes and rules but appears to wholly concede authority in this matter to ODM. The trial court states in its decision:
The complexity of the Medicaid reimbursement system found in
R.C. Chapter 5165 is difficult to overstate. The record reflects that nearly a thousand nursing home facilities operate across Ohio. They operate in empowerment zones, and in other vastly different settings urban, suburban, and rural. [ODM] must endeavor to stretch available funding while seeking to encourage quality care in all those varied settings. Writing and administering rules and formulas to capture the necessary date, track patient utilization, encourage new efforts like “critical access,” and pay for it all in a timely fashion (while not falling victim to fraud) cannot easily be accomplished. For that reason, [ODM] is afforded substantial deference in how it fulfills its duties so long as it appears to be acting reasonably and in good faith.The evidence shows [ODM] was acting in a reasonable and good faith manner in implementing the modest legislative guidance on computing an “occupancy rate” pursuant to
R.C. 5165.23(A)(2) . Administrative agencies have the authority to make rules to fill gaps left, implicitly or explicitly, by legislature. Silver Lining, ¶ 50 and cases cited. “[W]hen a statute does not prescribe a particular formula or methodology, the appropriate administrative agency has broad discretion in deciding how to implement its duties. [citation omitted].” In re Champaign Wind, L.L.C., 146 Ohio St.3d 489, 2016-Ohio-1513, ¶ 36. [ODM] must be allowed to do so here.Principles of waiver or estoppel do not apply against the state or its agencies. Silver Lining, supra ¶ 54. Thus, the fact the [ODM] changed its interpretation of another formula – which the court accepts was done in good faith based upon the view that their original formula was mistaken – does nothing to demonstrate that the consistent interpretation applied to
R.C. 5165.23 is unlawful.“It is a fundamental tenet of administrative law that an agency‘s interpretation of a statute that it has a duty to enforce will not be overturned unless the interpretation is unreasonable. State ex rel. Clark v. Great Lakes Constr. Co., 99 Ohio St.3d 320, 2003-Ohio-3802, ¶ 10 and cases cited. To prove an abuse of discretion, the agency interpretation must be “unreasonable, arbitrary, or unconsciоnable.” That plainly is not true here. [Peregrine] have not demonstrated they are entitled to a Writ.
(Decision at 7-8.)
{¶ 81} Although it is appropriate in some instances for a trial court to afford deference to an agency‘s interpretation of the statutes and rules applicable to its function, such deference is not unfettered—an agency‘s interpretation and application of its rules cannot be arbitrary, capricious, or otherwise contrary to law; nor can the interpretation and application constitute an abuse of discretion. Ohio Academy of Nursing Homes, Inc. v. Barry, 56 Ohio St.3d 120, 129 (1990). See also Guethlein v. Ohio State Liquor Control Comm., 10th Dist. No. 05AP-888, 2006-Ohio-1525, ¶ 24; HCMC, Inc. v. Ohio Dept. of Job & Family Servs., 179 Ohio App.3d 707, 2008-Ohio-6223, ¶ 25 (10th Dist.); Athens Cty. Bd. of Commrs. v. Schregardus, 83 Ohio App.3d 868 (10th Dist.1992). “A proposed interpretation that is inconsistent with or frustrates the legislative intent is not a reasonable one and does not create an ambiguity.” State v. Erskine, 4th Dist. No. 14CA17, 2015-Ohio-710, ¶ 26.
{¶ 82} Based on a de novo review of the record, I would find ODM‘s latest interpretation of
{¶ 83} I disagree that
{¶ 84} I compare the facts of the case before us with those this Court considered in Eaglewood Care Ctr. v. State Certificate of Need Review Bd., 10th Dist. No. 91AP-357, 1992 Ohio App. LEXIS 1265, 1992 WL 55435 (Mar. 17, 1992). In Eaglewood, a nursing home sought review of the State Certificate of Need Review Board‘s (“CONRB“) determination denying the nursing home‘s application for a certificate of need to construct an addition to an existing nursing home facility. The CONRB based its denial on a combination formula, which included “rest home beds, beds not in service, and beds not capable or permitted by licensure or certification status to serve the residents.” Id. at *11. The Eaglewood Court rejected CONRB‘s approach, stating:
Although not expressly stated by the hearing examiner, it appears that the findings were predicated upon an assumption that there are excess beds unless every bed in the county is occupied. Under such an assumption, there will always be an excess of beds in every county, since as a practical matter, it is completely unrealistic to have 100 percent occupancy at any time in all the nursing homes. This is why the only evidence as to full occupancy indicates that full occupancy commences at 95 percent. To this extent, the hearing examiner‘s findings adopted by CONRB are not supported by reliable, probative and substantial evidence and are contrary to law.
The findings are predicated upon erroneous assumptions. First, restricted beds, such as those at the Masonic Home, should not be included. Inclusion of such beds in this case greatly distorts the occupancy rate in Clark County, both because of the substantial in-migration, and because of the
great number of unoccupied beds. Secondly, there was an assumption by the hearing examiner that all authorized beds necessarily are included. The law does not contemplate that some facilities can place numerous beds in a “bed bank” to be used at some undetermined future time if needed. Rather, even though “authorized” by its CON, beds which are not in existence and will not be in existence within the reasonable, foreseeable future, should not be counted in determining whether to grant a CON application. The purpose of the CON determination is to serve the public in order to provide necessary facilities for the persons who need the service of the facility seeking the CON, not to benefit operators of other facilities who have no desire or intention of providing such service within the foreseeable future. The fact that the facility in question has a 99.11 percent occupancy rate as found by the hearing examiner, indicates that there is some need with respect to that facility. Whether 30 additional beds are needed is not a question that we can properly determine, such issue being for the CONRB. However, such determination must be predicated upon evidence directly pertinent to the need, and cannot be predicated solely upon the application of the sо-called bed-need formula, as we indicated above.
Id. at *18 - 20. The Eaglewood court recognized that the policy in place “is to meet the needs of patients, not mathematical formulas.” Id. at *24. This Court subsequently recognized that, just because beds are authorized (that is, licensed beds), it does not mean that they should be counted in determining whether to grant a certificate of need (“CON“) application. Summit Villa Care Ctr., Inc., v. Ohio Dept. of Health, 81 Ohio App.3d 761, 767 (10th Dist.1992).
{¶ 85} I find the case before us similar to those CON cases, albeit the formulas may be different. The public policies for each exist to best serve Ohio‘s aging population, providing Ohioans equal access to quality care. Here, ODM‘s calculation is based on the presumption that occupancy for purposes of
{¶ 87} Similarly, if the legislature had intended
{¶ 88} Based on the foregoing reasons, I find that ODM‘s interpretation of occupancy rate under
{¶ 89} Since the majority decided Peregrine‘s appeal differently, it mooted ODM‘s cross-appeal. On substantive grounds, I would deny it. We review de novo a trial court‘s disposition of a Civ.R. 12(B)(6) motion to dismiss for failure to state a claim on which relief can be granted. Perrysburg Twp. v. Rossford, 103 Ohio St.3d 79, 2004-Ohio-4362, ¶ 5; Adams v. Margarum, 10th Dist. No. 16AP-515, 2017-Ohio-2741; Rooney v. Ohio State Hwy. Patrol, 10th Dist. No. 16AP-204, 2017-Ohio-1123; Stewart v. Fifth Third Bank of Columbus, Inc., 10th Dist. No. 00AP-258, 2001 Ohio App. LEXIS 197, 2001 WL 58727 (Jan. 25, 2001). “A motion to dismiss for failure to state a claim upon which relief can be granted is procedural and tests the sufficiency of the complaint.” State ex rel. Hanson v. Guernsey Cty. Bd. of Commrs., 65 Ohio St.3d 545, 548 (1992); Powell v. Vorys, Sater, Seymour and Pease, 131 Ohio App.3d 681, 684 (10th Dist.1998). In considering a Civ.R. 12(B)(6) motion to dismiss, a trial court may not rely on allegations or evidence outside the complaint. State ex rel. Fuqua v. Alexander, 79 Ohio St.3d 206, 207 (1997). Rather, the trial court must limit its consideration to the four corners of the complaint and may dismiss the case only if it appears beyond a doubt that the plaintiff can prove no set of fаcts entitling the plaintiff to recover. O‘Brien v. Univ. Community Tenants Union, Inc., 42 Ohio St.2d 242 (1975), syllabus; Ritchie v. Ohio Adult Parole Auth., 10th Dist. No. 05AP-1019, 2006-Ohio-1210, ¶ 16, citing Singleton v. Adjutant Gen. of Ohio, 10th Dist. No. 02AP-971, 2003-Ohio-1838, ¶ 18. In such cases, a trial court must presume that all factual allegations in the complaint are true and draw all reasonable inferences in favor of the nonmoving party. Mitchell v. Lawson Milk Co., 40 Ohio St.3d 190, 192 (1998). This Court need not, however, accept as true any unsupported or conclusory legal propositions advanced in the complaint. Margarum at ¶ 12, citing Rooney at ¶ 14.
{¶ 90} ODM argues that the trial court improperly denied its Civ.R. 12(B)(6) motion to dismiss Peregrine‘s petition for a writ of mandamus for failure to state a claim on which relief could be granted. ODM posits that Peregrine is barred from stating a valid claim for writs of mandamus compelling ODM to pay Peregrine critical access incentive payments because Peregrine did not meet the statutory criteria for such payments, based on ODM‘s interpretation of the term “occupancy rate” as it is used in
{¶ 92} Having independently reviewed the record, I would find the trial court‘s interpretation of the law and its application to ODM‘s Civ.R. 12(B)(6) motion to be sound. Accordingly, I would find that the common pleas court did not err in denying ODM‘s Civ.R. 12(B)(6) motion to dismiss, and ODM‘s assignment of error on cross-appeal should be overruled.
IV. CONCLUSION
{¶ 93} Based on the foregoing, I would sustain Peregrine‘s assignments of error on appeal, reversing the judgment of the Franklin County Court of Common Pleas denying the requested writ of mandamus and thereby grant the writ of mandamus ordering ODM to distribute critical access incentive payments to Peregrine for state fiscal year 2017, consistent with this dissent.
{¶ 94} Additionally, I would overrule ODM‘s assignment of error on cross-appeal, thereby affirming the decision of the Franklin County Court of Common Pleas denying ODM‘s March 7, 2017 motion to dismiss Peregrine‘s complaint for failure to state a claim on which relief may be granted pursuant to Civ.R. 12(B)(6) and deny ODM‘s cross-appeal.