Vicksburg Healthcare, L.L.C., d/b/a River Region Health System VS State of Louisana Through the Department of Health & Hospitals and Alan Levine In His Official Capacity As Secretary of the Louisiana Department of Health & Hospitals (2011CA0488 Consolidated With)
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STATE OF LOUISIANA COURT OF APPEAL FIRST CIRCUIT 2011 CA 0488 CKSBURG HEALTHCARE LLC DBA RIVER REGION HEALTH c SYSTEM VERSUS STATE OF LOUISIANA THROUGH THE DEPARTMENT OF HEALTH AND HOSPITALS AND ALAN LEVINE IN HIS CAPACITY AS SECRETARY OF THE LOUISIANA DEPARTMENT OF HEALTH AND HOSPITALS DATE OF JUDGMENT WC 2 1 2 n l l ON APPEAL FROM THE NINETEENTH JUDICIAL DISTRICT COURT NUMBER 571263 DIV 24 PARISH OF EAST BATON ROUGE STATE OF LOUISIANA HONORABLE R MICHAEL CALDWELL JUDGE Charles E Despat Stephen R Russo Counsel for Defendants1 st Appellants State ofLouisiana Department of Michael J Coleman Baton Rouge Louisiana Health and Hospitals and Alan Levine Secretary Claude F Reynaud Jr Gregory D Frost Emily Black Grey Traci S Thompson Baton Rouge Louisiana Counsel for Plaintiff2d Appellant Vicksburg Healthcare River Region Health System BEFORE WHIPPLE KUHN AND GUIDRY JJ Disposition AMENDED AND AS AMENDED AFFIRMED r 1f4111 c 9 LLC colica41 b da r Defendants the State of Louisiana through the Department of Health and Hospitals and its secretary Alan Levine collectively DHH or the department appeal the trial court judgment overruling an exception raising the objection of s prescription and awarding plaintiff Vicksburg Healthcare LLC da River Region b Healthcare System River Region reimbursement for inpatient healthcare services it administered to Louisiana resident Medicaid patients River Region and DHH each also appeal the amount of reimbursement awarded by the trial court For the following reasons we amend and as amended affirm FACTUAL AND PROCEDURAL BACKGROUND We have previously rendered an opinion in this matter affirming on grounds of a violation of the Commerce Clause of the U Constitution the trial court S s grant of summary judgment and its declaration that a reimbursement methodology promulgated by DHH which appears in various publications of the Louisiana Register was unconstitutional in its application to River Region See Vicksburg Healthcare LLC v State ex rel Dept of Health and Hospitals 20101248 La App lst Cir 3 63 So3d 205 11 25 River Region is a hospital located in Vicksburg Mississippi approximately eight miles from the Louisiana state line and is organized under the laws of the State of Mississippi Between March 2000 and December 2008 River Region was enrolled in the Louisiana Medicaid program and administered non emergent healthcare services to Louisiana Medicaid patients Id at 209 Medicaid is a joint federal state program which furnishes medical assistance on behalf of families with dependent children and other qualifying individuals see 42 USCA 1396 in which Louisiana participates Vicksburg Healthcare LLC v State ex rel Dept of Health and Hospitals 20101248 La App 1st Cir 3 63 So 205 207 11 25 3d 2 After its successful challenge of the constitutionality ofthe rules promulgated by DHH which categorized River Region as an out border hospital and state of reimbursed River Region at a lower per diem rate for inpatient hospital healthcare services it administered to Louisiana Medicaid patients than the amount DHH reimbursed similar Louisiana hospitals River Region filed a motion for summary judgment seeking an award of reimbursement for the difference between what DHH had paid and the amount it averred it was entitled to be paid under a constitutional reimbursement methodology In response DHH filed a peremptory exception raising the objection ofprescription After a hearing the trial court overruled the exception of prescription and granted River Region summary judgment awarding reimbursement in the amount of 52 636 525 3 A judgment in conformity with the trial court ruling was s subsequently signed Both parties have appealed In its appeal DHH urges that the trial court erred in overruling the exception of prescription And both DHH and River Region contend the trial court erred in the amount of reimbursement it awarded EXCEPTION OF PRESCRIPTION In reviewing a peremptory exception raising the objection of prescription 2 River Region also appealed the trial court denial of a motion to enforce the judgment The s motion filed along with the motion for summary judgment sought to execute the trial court s declaration that the reimbursement methodology was unconstitutional In our appellate review of sdevolutive appeal ofthat declaration we made clear that the reimbursement methodology DHH had only been proven to be an unconstitutional commerce clause violation as DHH had applied it to River Region for inpatient healthcare services the Mississippi hospital had administered to Louisiana resident Medicaid patients See Vicksburg Healthcare LLC 63 So at 213 3d Because River Region no longer administers non emergent healthcare services to Louisiana Medicaid patients execution of the declaratory judgment can serve no useful purpose or give any practical relief Therefore the motion to enforce is moot See Joseph v Ratclzff 20101342 La App 1st Cir 363 So 220 225 Accordingly we find no error in the trial court 11 25 3d s denial of the motion to enforce judgment 3 appellate courts strictly construe the statutes against prescription and in favor of the claim that is said to be extinguished Onstott v Certified Capital Corp 2005 2548 La App 1st Cir 11 950 So 744 747 When evidence is received on the 06 3 2d trial of the peremptory exception the factual conclusions of the trial court are reviewed by the appellate court under the traditional rules governing appellate review of facts s As such a trial court factual determinations regarding prescription should not be reversed in the absence of manifest error Onstott 950 2d So at 746 Stobart v State through Dept of Transp and Deu 617 So 880 2d 882 La 1993 However when a question of law is presented the appellate court s review consists of determining whether the trial court was legally correct or incorrect in its decision See Onstott 950 So at 746 2d The issue before this court in reviewing the trial court ruling on the s peremptory exception of prescription is the proper classification of the nature of River Region claim The essential facts necessary for resolution of this issue are s not in dispute On October 1 2008 River Region filed a petition seeking a declaration that the reimbursement methodology DHH was applying to pay it for its administration of inpatient hospital healthcare services to Louisiana Medicaid patients was unconstitutional The trial court granted that relief and this court affirmed that declaration albeit on different grounds in which we clearly emphasized the limitation of the declaration of unconstitutionality only as to DHH s application of the methodology to River Region claim for reimbursement for s inpatient hospital healthcare services See Vicksburg Healthcare LLC 63 So at 3d 213 4 But in its petition River Region also sought damages consisting of a monetary award of a constitutionally permissible amount of reimbursement The parties agree that River Region is entitled to an award of the difference between the amount River Region was actually paid and the amount which it should have been paid if DHH had used a constitutionally and legally valid reimbursement rate This amount of reimbursement is therefore the only damages that River Region claims entitlement to in its motion for summary judgment Thus because the underlying facts are not in dispute we are presented with a question of law for which our resolution is simply a determination of whether the trial court was legally correct or incorrect in overruling the exception of prescription insofar as River sclaim for an amount of reimbursement See Onstott 950 So at 746 Region 2d We note and the parties do not dispute that the Medicaid Act does not provide a time period by which a qualified healthcare provider such as River Region may seek recovery for deficient reimbursement payments from the state See 42 U 1396 When a federal statute fails to provide a maximum time A C S period during which such an action can be brought courts typically borrow the most analogous state statute See DelCostello v Int Brotherhood of Teamsters 462 l S U 151 1 103 S 2281 2287 76 L 476 485 1983 Thus we turn to 58 Ct 2d Ed Louisiana liberative prescriptive statutes All personal actions including actions to enforce contractual obligations are generally subject to a liberative prescription of ten years unless otherwise provided by legislation La C art 3499 Delictual actions are subject to a liberative prescription of one year running from the day injury or damage is sustained La C art 3492 The allegations and prayer of the petition determine the true nature 5 of the action and the applicable prescriptive period A set of circumstances can give rise to more than one cause of action and each of those causes has its own prescriptive period Onstott 950 So at 747 2d DHH urges that River Region claim is an action alleging a violation of a s federal constitutional right which is delictual in nature and as such has to be filed within one year of the date on which the constitutional violation occurred Thus DHH contends that River Region claim is prescribed for all payments DHH s tendered to River Region under the unconstitutional reimbursement methodology prior to October 1 2007 which is one year before the hospital filed its petition seeking declaratory relief and reimbursement provider agreement by which DHH River Region maintains that the approved the hospital enrollment s in sMedicaid program is a contract with DHH and as such the failure of Louisiana DHH to reimburse it a constitutionally proper amount allows it to raise its claim within a tenyear prescriptive period The nature of the duty breached determines whether the action is in tort or in contract The classic distinction between damages ex contractu and damages ex delicto is that the former flow from the breach of a special obligation contractually assumed by the obligor whereas the latter flow from the violation of a general duty owed to all persons Gallant Investments Ltd v Illinois Cent R Co 2008 1404 La App 1st Cir 2113109 7 So 12 17 3d When a person negligently performs a contractual obligation he has committed an active breach of contract 3 Under DHH theory it implicitly concedes that payments it made subsequent to one year s before River Region filed the petition seeking a declaration of the unconstitutionality of the reimbursement methodology constituted continuous conduct that caused continuous damages so as to fall within the continuous tort doctrine See In re Medical Review Panel for Claim of Moses 20002643 La 5 788 So 1173 1183 86 01 25 2d 6 which may also support an action in tort First Louisiana Bank v Morris Dickson Co LLC 44 La App 2d Cir 43d 1047 1050 187 6So 09 8 In this case the unconstitutional reimbursement methodology utilized by DHH to pay River Region constitutes a negligent performance of a contractual obligation Thus DHH has committed an active breach of contract That River Region may have also had an action sounding in tort which would be subject to the oneyear prescriptive period of La C art 3492 and that has already accrued does not destroy its right to pursue its action in contract See First Louisiana Bank v Morris Dickson Co LLC 6 So at 1050 3d It is undisputed that DHH has tendered a sum of money to River Region for the hospital performance of its obligation to administer inpatient healthcare to s Louisiana Medicaid patients since March 2000 Thus by their actions the parties have formed a contract See La C art 1927 And DHH payment from March s 2000 through December 2008 of an amount less than it owed River Region under a constitutionally and legally valid reimbursement methodology is but a partial performance of a special obligation DHH contractually assumed when it approved the provider agreement that permitted River Region administration of inpatient s healthcare to Louisiana Medicaid patients As such River Region is permitted to 4 La C art 1927 states A contract is formed by the consent ofthe parties established through offer and acceptance Unless the law prescribes a certain formality for the intended contract offer and acceptance may be made orally in writing or by action or inaction that under the circumstances is clearly indicative of consent Unless otherwise specified in the offer there need not be conformity between the manner in which the offer is made and the manner in which the acceptance is made 7 claim the amount it is owed under a constitutionally and legally valid reimbursement methodology See La C art 1861 Additionally La R 46 S 437 Cwhich appears in the Louisiana Medical 11 Assistance Programs Integrity Law and was enacted to combat and prevent fraud and abuse committed by healthcare providers participating in Medicaid states Each provider agreement shall be a voluntary contract between the department and the health care provider in which the health care provider agrees to comply with federal and state laws and rules pertaining to the medical assistance programs i under the Medicaid e Act when furnishing goods services or supplies to a recipient and the department agrees to pay a sum determined by fee schedule payment methodology or other method for the goods services or supplies provided to the recipient Emphasis added This statutory authority clearly recognizes the contractual relationship between the healthcare provider and DHH The statute acknowledges the obligation of a healthcare provider like River Region to comply with federal and state laws and rules when furnishing goods services or supplies to a Louisiana Medicaid recipients as well as the reciprocal obligation of DHH to pay a sum determined by fee schedule payment methodology or other method for the goods services or supplies thus provided And we have no problem concluding the statute implicitly requires that the sum DHH agreed to pay to River Region must be determined by a constitutionally and legally valid fee schedule payment methodology or other 5 La C art 1861 provides An obligee may refuse to accept a partial performance Nevertheless if the amount of an obligation to pay money is disputed in Part and the obligor is willing to pay the undisputed part the obligee may not refuse to accept that part If the obligee is willing to accept the undisputed part the obligor must pay it In either case the obligee preserves his right to claim the disputed part 6 See generally La R 46 437 S 437 14 1 8 method for the goods services or supplies provided by the healthcare provider to Louisiana Medicaid recipients Because the reimbursement methodology that DHH utilized to perform its contractual obligation to River Region was unconstitutional and illegal it is evident that DHH breached the special obligation it contractually assumed under the statutorily recognized voluntary contract between DHH and River Region Accordingly we conclude that River Region is entitled to pursue its claim for that portion of the sum that DHH was specially obligated to pay by a constitutional and legal reimbursement methodology in contract As such La C art 3499 is the most analogous applicable state statute Thus the trial court correctly overruled s DHH exception of prescription since the claim was filed within the applicable 1 0 year prescriptive period QUANTUM OF REIMBURSEMENT River Region filed a motion for summary judgment urging entitlement to a specific amount of reimbursement Summary judgments are reviewed on appeal de Although at the hearing of this matter DHH contended that if River Region claim for s reimbursement were determined to sound in contract the most analogous time limitation statute applicable is the threeyear period set forth in La C art 3494 we find no merit in this assertion Mindful that a traditional written contract expressing the terms of an open account relationship does not exist between these parties but rather that River Region was annually enrolled in Louisiana Medicaid Program we find River Region claim for reimbursement is s not properly categorized as an open account or compensation for services rendered While River Region is claiming that its reimbursement is compensation for services rendered and DHH suggests the contract resembled that of an open account the actual recipients of the services rendered by River Region were Louisiana Medicaid patients not DHH See DoubleEight Oil and Gas L v Caruthurs Producing Co Inc 41 La App 2d Cir 11 942 C 451 06 20 2d So 1279 1286 as between the parties the claim for payment is not for purchases or services rendered by the claimant to the debtor as the open account statute contemplates see also House of Raeford Farms of Louisiana L v OseiTutu 41 La App 2d Cir 11 942 C 586 06 1 2d So 601 60304 the mere creation of a debt owed does not give rise to an action on an open account where the debt arises from a service rendered for the debtor and not by him In light of the hybrid nature of the relationship between River Region and DHH which is derived from both the conduct of the parties and a statutorily recognized voluntary contract we conclude that under the facts of this case La C art 3499 is the more appropriately analogous applicable state prescriptive statute 9 novo with the appellate court using the same criteria that govern the trial court s determination of whether is summary judgment Healthcare LLC 63 So at 207 3d appropriate Vicksburg The motion should be granted only if the pleadings depositions answers to interrogatories and admissions on file together with any affidavits show that there is no genuine issue of material fact and that mover is entitled to judgment as a matter of law La C art 966 P B On appeal both DHH and River Region challenge the trial court grant of s summaryjudgment awarding reimbursement in the amount of 3 DHH 52 636 525 urges that amount is more than River Region is entitled to recover under a constitutionally and legally valid reimbursement methodology And River Region maintains that the amount is less than what it is entitled to receive from DHB In support of its motion for summary judgment River Region established that it was enrolled in the Louisiana Medicaid program from March 2000 until December 2008 During that time River Region provided a total of 13 days of 284 inpatient hospital healthcare services to Louisiana Medicaid patients Under the tiered system DHH classification of Peer Group 5 refers to a category of s hospitals which have more than 138 beds and are neither rural hospitals nor teaching hospitals River Region is an outofstate hospital where Louisiana Medicaid patients customarily obtain medical services It has more than 138 beds and is neither a rural hospital nor a teaching hospital In order to determine the amount DHH owes River Region i the difference e between what DHH paid and what River Region is owed under a constitutionally and legally 40 1300 144 valid reimbursement methodology According to La R 40 S 1300 144 0 1 both parties cite La S R A The department shall adopt rules and regulations in accordance with the Administrative Procedure Act that provide the following a 3 With respect to reimbursement for services furnished in another state the department shall insure that reimbursement for such services shall be the lesser of the payment for such services by the state wherein such hospital is located or the department payment s made to like instate providers The department shall provide coverage for such services to the same extent that it would pay for services furnished within the boundaries of this state only if any of the following conditions is met Medical i services are needed because of a medical emergency ii Medical services are needed and the recipient health s would be endangered if he were required to travel to his state or residence iii The state determines on the basis of medical advice that the needed medical services are necessary supplementary resources and more readily available in the other state iv It is general practice for recipients in a particular locality to use medical resources in another state b medical In the event federal requirements for the state plan for assistance permit the department to impose further restrictions on payment for and coverage of medical services to Louisiana Medicaid patients rendered by outofstate providers the department shall promulgate regulations restricting payment for and coverage of such services to the fullest extent permitted by law Such restrictions shall include lowering the rate of reimbursement provided for services rendered to outofstate hospitals to the payment for such services by the state wherein such hospital is located the s department payment made to like instate providers or the average rate paid to Louisiana rural hospitals located in the state whichever is the least As we noted in our earlier opinion in an attempt to conform to the directive stated in La R 40 DHH adopted a rule which created a S 1300 b 3 A 144 classification of outof state border hospitals a classification that DHH applied to River Region Vicksburg Healthcare LLC 63 So at 208 3d 11 6 n We found that the DHH rule as applied to River Region was unconstitutional and not in conformity with La R 40 Vicksburg Healthcare LLG 63 S 1300 b 3 A 144 3d So at 213 Thus its application to the facts of this case is inappropriate And an application of La R 40 is likewise inappropriate in this S 1300 a 3 A 144 case as River Region has not cited nor has this court found a rule or regulation adopted by DHH in accordance with the Administrative Procedure Act as mandated under the legislative authority provided in that subsection Therefore because DHH has not adopted any rule or regulation under the enabling legislation of La R 40 or b we look to the Medicaid Act for guidance S 1300 a 3 A 144 Under federal law a state plan for medical assistance must provide for inclusion to the extent required by regulations ofprovisions conforming to such regulations with respect to the furnishing of medical assistance under the plan to individuals who are residents of the State but USCA 1396a 16 a are absent there from See 42 According to 42 C 431 providing for R b F 52 4 payments for services furnished out of state A State plan must provide that the State will pay for services furnished in another State to the same extent that it would pay for services furnished within its boundaries if the services are furnished to a recipient who is a resident of the State and condition is met the following t i is general practice for recipients in a particular locality to use medical resources in another State Thus under the plain language of this federal regulation which is applicable in this case under 42 USCA 1396a Louisiana state plan requires DHH to 16 as pay for the inpatient healthcare services River Region administered to Louisiana resident Medicaid patients to the same extent that DHH pays for those services furnished within the boundaries of Louisiana where as here it is the general 12 practice for Louisiana resident Medicaid recipients to use the medical resources of River Region which is located in Mississippi Based on the showing made by River Region on its motion for summary judgment utilizing the same reimbursement Peer Group 5 rate that similar Louisiana hospitals were paid between March 2000 and December 2008 as required under an application of 42 C 431 the difference between Rb F 52 4 the amount that River Region was paid and the amount it was entitled to under a constitutionally and legally valid reimbursement methodology is 5 65 420 490 Thus the trial court judgment awarding reimbursement in the amount of s 52is 636 525 3 amended to award River Region reimbursement in the amount of 65 420 490 5 DECREE For these reasons the trial court judgment is amended to award plaintiff s Vicksburg Healthcare LLC da River Region Healthcare System reimbursement b 8 Although in its appeal DHH challenges the reimbursement rate to which River Region is entitled it has offered no specific assertions against River Region calculations of 13 days s 284 for its administration of inpatient hospital healthcare services at the Peer Group 5 rate under a constitutionally and legally valid reimbursement methodology 9 Citing dicta in Vicksburg Healthcare LLC 63 So at 214 n DHH asserts that the 3d 13 approval of an amendment to Louisiana sstate plan by the Centers for Medicare and Medicaid Services demonstrates that 42 C 431 does not require DHH to reimburse River Rb F 52 Region at the same rate as a comparable instate hospital In reliance of this assertion DHH points to a document entitled State Plan under Title XIX of the Social Security Act Medical Assistance Program designated Attachment 4 which was provided by DHH to River 19A Region in response to interrogatories and requests for production of evidence and submitted by River Region in support of its entitlement to the earlier rendered summary judgment declaring the DHH rule unconstitutional The document which was not admitted at the hearing on the motion for summary judgment presently under review is neither self explanatory nor self proving and has not been sufficiently authenticated to be reliable As in our earlier opinion in which we found it was insufficient to support River Region entitlement to declaratory relief s under the Medicaid Act we likewise find in this appeal that it is insufficient evidence to rebut the showing made by River Region that it is entitled to summary judgment under the plain language of 42 C 431 on the issue of damages Accordingly DHH assertion is without Rb F 52 4 s merit 13 in the amount of 5 As amended the judgment is in all other respects 65 420 490 affirmed Appeal costs in the amount of 7 are assessed against 20 858 defendants the State of Louisiana through the Department of Health and Hospitals and its secretary Alan Levine AMENDED AND AS AMENDED AFFIRMED 14
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