Christ the King Manor v. Commonwealth, Department of Public Welfare

911 A.2d 624, 2006 Pa. Commw. LEXIS 623
CourtCommonwealth Court of Pennsylvania
DecidedNovember 22, 2006
StatusPublished
Cited by40 cases

This text of 911 A.2d 624 (Christ the King Manor v. Commonwealth, Department of Public Welfare) is published on Counsel Stack Legal Research, covering Commonwealth Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Christ the King Manor v. Commonwealth, Department of Public Welfare, 911 A.2d 624, 2006 Pa. Commw. LEXIS 623 (Pa. Ct. App. 2006).

Opinions

OPINION BY

Judge SIMPSON.

In an effort to increase funding, Petitioners 1 filed an amended petition for review. It challenges the validity of amendments to regulations for nursing facility payment rates under Pennsylvania’s medical assistance program. Specifically, Petitioners seek a declaration that the amended regulations2 are unenforceable because they were authorized by the Act of July 7, [629]*6292005, P.L. 177 (hereinafter “Act 42”), which is allegedly unconstitutional on several grounds. Before the Court are the Department of Public Welfare’s (DPW) preliminary objections.

I. Background

A. Legislation and Amended Regulations

The Legislature enacted two pieces of legislation in 2005 affecting payment rates for medical assistance (MA) nursing facility services during State Fiscal Year (FY) 2005-06. See 35 Pa.B. at 6233 (2005) (DPW explanation for amending nursing facility payment rates). First, in the 2005 General Appropriations Act (2005 GAA),3 the Legislature did not appropriate sufficient funds for DPW to cover the anticipated rate of inflation under the formula in its pre-amendment rate-setting regulations. Id.

Second, and as a result of the appropriations decision, Act 42 permitted DPW to amend its rate-setting methodology for nursing facilities participating in the MA program to better control inflation increases. See 35 Pa.B. at 6232-34. Further, Act 42 authorized DPW to expeditiously adopt the amendments to its rate-setting regulations in final form by using final-omitted (notice-omitted) rulemaking. See id. at 6232; 36 Pa.B. at 3207 (2006).4

Pursuant to Act 42, DPW amended the regulations at 55 Pa.Code § 1187.96(e)(i-ii) by adding a cost adjustment factor of .95122 for the 2005-06 rate year. Application of the cost adjustment regulations resulted in a statewide cap on nursing facility MA payment rate increases of 2.8% over the prior fiscal year rate.5 35 Pa.B. at 6233. DPW intended the new regulations to benefit consumers by moderating increases in nursing facility rates for FY 2005-06 “while still providing payment rate increases sufficient to assure that consumers will continue to have access to medically necessary nursing facility services.” Id. at 6234.

B. Amended Petition for Review

Petitioners’ amended petition for review seeks to increase funding by invalidating the cost adjustment regulations. To do so, Petitioners raise two fundamental constitutional challenges to the authorizing statute, Act 42. First, they challenge the procedure by which Act 42 was enacted. Second, they challenge Act 42 as an improper delegation of legislative authority to an administrative agency. Petitioners also assert Act 42 unlawfully exempts DPW [630]*630from normal regulatory oversight in promulgating the challenged regulations, but, as discussed later, this assertion is dependent upon success of the constitutional challenges.

Therefore, Petitioners request a declaration that the cost adjustment regulations are invalid, and they seek a permanent injunction requiring DPW to set rates for FY 2005-06 using the pre-amendment regulations. For the following reasons, we sustain DPW’s preliminary objections and dismiss Petitioners’ amended petition.6

1.

Since July 1996, DPW compensated both public and private nursing facilities through its MA program under what is known as the case-mix payment system. See 55 Pa.Code §§ 1187.1-1187.91-97. Am. Pet. at ¶ 5. Under the case-mix system, DPW inputs audited costs incurred by facilities, information on the acuity level of residents, and other factors, to arrive at individualized facility per diem rates. Id. at ¶ 6. The per diem rates are updated annually on a fiscal year basis, effective July 1 of one year through June 30 of the next year, with quarterly adjustment for patient acuity only. Id. at ¶ 7.

DPW designed the case-mix payment system with the intention of providing reasonable and adequate payments to economically and efficiently operated nursing facilities and of ensuring access to nursing facility services for its MA recipients.7 See 25 Pa. B. at 4478 (1995). Am. Pet. at ¶ 8.

2.

In March 2005, sponsors introduced House Bill (HB) 1168, which was referred to the House of Representatives’ Health and Human Services Committee. Am. Pet. at ¶¶ 9-10. HB 1168 was initially 23 lines long. Id. at ¶ 11. It proposed to amend Section 1074 of the Public Welfare Code8 to add nursing facilities to the list of facilities DPW was authorized to inspect on an annual basis. Id. at ¶ 12. When reported out of committee in May 2005, HB 1168 was 38 lines long; the proposed amendment to Section 1074 was deleted, and a similar inspection provision was placed in a new provision, Section 1402(e) of the Welfare Code, 62 P.S. § 1402(e). Id. at ¶¶ 15-16. On June 14, the House passed HB 1168 by vote of 193-1. Id. at ¶ 18.

HB 1168 proceeded to the Senate’s Public Health and Welfare Committee. Id. at ¶ 20. On June 30, it was reported out of committee; it was 22 lines long. Id. at ¶¶ 21-22. The stated purpose of the bill remained unchanged from the prior House version. Id. at ¶ 24. On July 5, the Senate unanimously passed HB 1168. Id. at ¶ 25.

On July 6, the following actions occurred: the House unanimously non-con[631]*631curred in the Senate amendments; the Senate insisted on its amendments; the House insisted on its non-concurrence to the Senate amendments; the House and Senate appointed representatives to a Conference Committee; the Conference Committee met at 3:55 p.m. and thereafter issued a Report; and, both houses adopted the Report and signed HB 1168. Id. at ¶ 26. DPW actively participated in these events. Id. at ¶ 27.

3.

As passed, Act 42 contained approximately 1,000 lines over 34 pages of text. Id. at ¶28. It included the inspection provision, which occupied 12 lines of text. Id. at ¶ 29. More significantly, Act 42 added or amended 24 other provisions of the Welfare Code. Id. at If 31. Its stated purpose was changed to reflect these various additions and amendments. Id. at ¶ 30.

4.

Act 42 added or amended three specific provisions addressing nursing facility compensation. First, new Section 454 of the Welfare Code, 62 P.S. § 454, allowed DPW to promulgate regulations to establish provider payment rates and exempted DPW from the normal ratemaldng process. As amended, that provision, states in pertinent part (with footnotes and emphasis added):

(a) Notwithstanding any other provision of law to the contrary, the department shall promulgate regulations as provided in subsection (b) to establish provider payment rates ....
(b) For purposes of implementing this section, and notwithstanding any other provision of law, including section 814,-A of this act, the secretary shall promulgate regulations pursuant to section 204(l)(iv) of the [Commonwealth Documents Law (CDL) ],[9]

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Bluebook (online)
911 A.2d 624, 2006 Pa. Commw. LEXIS 623, Counsel Stack Legal Research, https://law.counselstack.com/opinion/christ-the-king-manor-v-commonwealth-department-of-public-welfare-pacommwct-2006.