Poplar Springs Nursing Ctr. v. Miss. Div. of Medicaid & Drew Snyder

337 So.3d 271

POPLAR SPRINGS NURSING CENTER, Appellant

v.MISSISSIPPI DIVISION OF MEDICAID and Drew Snyder, in his Official Capacity as Executive Director of the Mississippi Division of Medicaid, Appellees

NO. 2020-SA-01333-COA

Court of Appeals of Mississippi.

April 19, 2022

ATTORNEYS FOR APPELLANT: JULIE BOWMAN MITCHELL, PHILIP JOSEPH CHAPMAN, Ridgeland

ATTORNEYS FOR APPELLEES: JANET McMURTRAY, MAUREEN BURKE SPEYERER, SAMUEL GOFF

BEFORE BARNES, C.J., McCARTY AND SMITH, JJ.

McCARTY, J., FOR THE COURT:

¶1. Unsatisfied with a series of cost adjustments by the Division of Medicaid, a nursing home sought review in chancery court. The court ruled it did not have subject matter jurisdiction because the nursing home had not exhausted its administrative remedies. Finding that the nursing home did not timely seek review of the cost adjustments, we affirm the dismissal for lack of subject matter jurisdiction.

FACTS AND PROCEDURAL HISTORY

¶2. Poplar Springs Nursing Center is the current operator of a nursing facility located in Meridian, Mississippi. The nursing home began operating in this capacity after a change of ownership in 2005.

¶3. The Division of Medicaid requires that all nursing facilities file annual cost reports that represent all expenses by each facility. The Division of Medicaid uses this cost report to establish a per diem rate that is paid to each facility for Medicaid-eligible residents cared for in the facility.

¶4. Poplar Springs was a new provider in 2005, so it had no previous history of cost reports. As a result, the state plan in effect in 2005 stated that Poplar Springs was granted the maximum-allowed per diem rate until the change-of-ownership cost report was submitted and rates were calculated. This per diem rate sets the rate retroactively after the actual cost is determined. The first change-of-ownership cost report covered August through October of 2005.

¶5. In December 2006, the Division of Medicaid conducted a "desk review"¹ of the change-of-ownership cost report. Poplar Springs did not object to the findings of the desk review. Three years later, the agency retained an independent auditor to conduct an audit of the change-of-ownership cost report. This audit resulted in new proposed cost adjustments. Poplar Springs retained a certified public accountant to respond to the proposed adjustments. The independent auditor sent a letter to Poplar Springs' accountant in 2009, stating that Poplar Springs "will receive a copy of the final report from the MDOM with instructions on how to proceed should you wish to pursue these issues further."

The 2009 Findings

¶6. The Division issued its first decision in June 2009. A letter detailing the findings was sent to Poplar Springs, via its CPA, by certified mail. The letter informed the nursing facility of its right to request an appeal within thirty days of receiving notice of the adjustments and informed Poplar Springs that the audit would be final in thirty days absent an appeal. The nursing home did not seek an administrative appeal of this June 2009 letter.

The 2011 Findings

¶7. The Division issued its second series of findings in March 2011, and contained certain rate adjustments for Poplar Springs relating to an amended audit. The 2011 letter again explained how the nursing facility would have thirty days to request an appeal of the adjustments. Critically, the 2011 letter also explained how the adjustments made in 2009 were now final:

In accordance with Medicaid policy, you have thirty (30) days from your receipt of this letter to appeal these changes. In regards to the other adjustments that were not revised, your thirty (30) day period to appeal has expired. If we have not received a response from you within (30) days of receipt, the Division of Medicaid will deem the audit findings final and proceed to adjust the facility's reimbursement rates as appropriate. Any request for a hearing must be made in accordance with Medicaid Policy Section 7.06[.]

(Emphasis added).

¶8. Poplar Springs took no action after receiving this letter and did not seek administrative review of the findings. As a result, the cost adjustments became final and were then used to calculate the new per diem rate for the nursing facility.

The 2013 Findings

¶9. The Division issued its third decision in March 2013. The 2013 decision involved only rate calculations based on the previously uncontested rate adjustments based on the 2009 and 2011 decisions. The 2013 rate calculations letter revealed the Division had overpaid the nursing center in the amount of $996,000. The nearly one-million-dollar amount was subject to recoupment by the Division of Medicaid.

¶10. Only then did Poplar Springs jump into action. In April 2013, the nursing home timely filed an appeal and requested a hearing regarding the rate adjustments from the March 2013 Medicaid decision. However, Poplar Springs used this opportunity to attempt to include a review of the 2009 and 2011 rate adjustments and their underlying cost adjustments.

¶11. The Division of Medicaid denied Polar Springs' requests on administrative appeal of the rate adjustments from June 2009 to March 2011, finding them time-barred. However, it did allow the nursing home to pursue an administrative appeal of the March 2013 rate calculations.

¶12. The nursing center alleged there was no final determination made by the Division regarding the rate adjustments in 2009 and 2011 until the 2013 letter, which Poplar Springs argued finalized the cost adjustments. The agency declined to review the 2009 and 2011 adjustments. Unsatisfied with going forward with only an administrative hearing relating to the 2013 rate calculations, Polar Springs requested that the Division stay the administrative hearing while it sought review from the chancery court as to whether it could contest the 2009 and 2011 adjustments. The agency consented to this process and agreed to a stay.

¶13. Once in chancery court, the Division of Medicaid sought to dismiss for lack of subject matter jurisdiction. The Division of Medicaid argued that the nursing center failed to exhaust its available administrative remedies by failing to timely appeal the 2009 and 2011 cost adjustments, so the chancery court lacked subject matter jurisdiction.

¶14. The chancery court conducted a hearing. To some extent, Poplar Springs protested that it had not received the 2009 letter, although this argument was not supported by the testimony of a witness or an affidavit. Regardless, when questioned by the chancery court, the nursing home did admit to receiving the 2011 letter, which clearly notified it of the 2009 changes:

[THE COURT]: But you-all, I mean you got the second one, so you knew about the [2009] decision.

[COUNSEL]: We did, but that - - well, at that point, we would have learned about it, yes , but we didn't know what those adjustments were other than the amended adjustments in that new audit report. There was never - - they were never provided an opportunity to appeal even though they got it, Your Honor. That letter stated the old adjustments of these three new ones are unappealable at this time.

(Emphasis added). Poplar Springs further conceded it took no action in 2011.

¶15. The chancery court granted the Division's motion to dismiss, holding that Poplar Springs had failed to seek an administrative review in either 2009 or 2011. This failure to exhaust administrative remedies required the chancery court to dismiss the case for lack of subject matter jurisdiction.

STANDARD OF REVIEW

¶16. "In reviewing appeals taken from chancery court rulings, we apply a limited standard of review in that the factual findings of the chancery court, if supported by substantial evidence, will not be disturbed unless the chancery court abused its discretion, applied an erroneous legal standard, or its findings are manifestly wrong or clearly erroneous." Rucker v. Miss. Dep't of Revenue , 281 So. 3d 253, 254 (¶6) (Miss. Ct. App. 2019). "However, questions of law receive a de novo review." Id .

DISCUSSION

¶17. Poplar Springs claims two errors on appeal. The first focuses on whether the Division of Medicaid deprived it of due process by the denial of the request for an administrative hearing on the 2009 and 2011 cost adjustments. Second, the nursing home claims the denial of its request to appeal the 2009 and 2011 letters was "contrary to the law, arbitrary, capricious, and against the substantial weight of the evidence."

¶18. The chancery court did not reach the merits of those alleged errors, as it ruled that it did not have subject matter jurisdiction. "As a threshold inquiry, subject matter jurisdiction must be determined before the court has authority to decide whether plaintiff has stated a claim upon which relief may be granted." Luckett v. Miss. Wood Inc. , 481 So. 2d 288, 290 (Miss. 1985). "When a plaintiff's allegations of jurisdiction are questioned, the plaintiff bears the burden to prove jurisdiction by a preponderance of the evidence." Schmidt v. Cath. Diocese of Biloxi , 18 So. 3d 814, 822 (¶14) (Miss. 2009).

¶19. The Division of Medicaid has established administrative remedies that must be followed by providers who participate in the Medicaid program. Section 7.06 of the Provider Policy Manual providing for administrative hearings states in pertinent part:

[A]dministrative hearings shall be available to providers of services participating in Mississippi Medicaid. These hearings are for providers who are dissatisfied with final administrative decisions of DOM relating to disallowances ... or matters relating to payment rates or reimbursement if not previously considered by DOM under Public Notice or Public Hearing Procedures.

Additionally, section 7.06 of the Provider Policy Manual provides that "[w]ithin thirty (30) calendar days after a final administrative decision has been made, the provider may request a formal hearing." The Policy Manual further states that "[u]nless DOM receives a timely and proper request for a hearing...