Commonwealth v. EPI Healthcare, LLC

362 S.W.3d 337, 2011 Ky. App. LEXIS 262, 2011 WL 2162992
CourtCourt of Appeals of Kentucky
DecidedJune 3, 2011
DocketNo. 2010-CA-001333-MR
StatusPublished
Cited by1 cases

This text of 362 S.W.3d 337 (Commonwealth v. EPI Healthcare, LLC) is published on Counsel Stack Legal Research, covering Court of Appeals of Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Commonwealth v. EPI Healthcare, LLC, 362 S.W.3d 337, 2011 Ky. App. LEXIS 262, 2011 WL 2162992 (Ky. Ct. App. 2011).

Opinion

OPINION

VANMETER, Judge.

The Commonwealth of Kentucky, Cabinet for Health and Family Services Department for Medicaid Services (“Cabi[338]*338net”), appeals from an order of the Franklin Circuit Court which granted summary judgment in favor of EPI Healthcare, LLC. (“EPI”). For the following reasons, we affirm.

EPI operates nursing homes throughout Kentucky and receives reimbursement from the Cabinet through the Medicaid program. From 1988-1995, the Cabinet used a prospective payment system to reimburse Medicaid participant providers, whereby it would periodically advance funds to providers to cover their estimated costs based on the previous year’s cost reports. The Cabinet could recoup over-payments of Medicaid benefits from the providers per 907 KAR11:110.2

For each cost reporting period, the Cabinet had the right to conduct audits. Un-disputedly, EPI filed its costs reports in a timely fashion at the close of each of its facilities’ fiscal years. Upon auditing EPI’s cost reporting periods from 1988-1996, the Cabinet discovered $6,866,881 in overpayments and informed EPI of the Cabinet’s intent to recoup that amount.

EPI pursued an administrative appeal under KRS3 Chapter 13B, disputing the amount of overpayments and argued that because the amount was calculated by regulation, recoupment was barred by the 5-year statute of limitations for actions based “upon a liability created by statute, when no other time is fixed by the statute creating the liability.” KRS 413.120(2). The administrative hearing officer confirmed the amount of overpayments and determined that the Cabinet’s recoupment rights were exclusively found in the provider agreement between EPI and the Cabinet, which stated that EPI was required to refund any overpayment resulting from inappropriate or inaccurate claims as calculated by federal and state law, including Medicaid regulations. The hearing officer applied the 15-year statute of limitations for actions based on contract per KRS 413.090(2), and found in favor of the Cabinet. EPI appealed to the Anderson Circuit Court, which granted EPI’s motion for partial summary judgment on the basis that recoupment was barred by the 5-year statute of limitations per KRS 413.120.

The Cabinet then appealed to a panel of this court, which held that recoupment for the period from 1988-1995 was barred by the 21-month statute of limitations per 907 KAR 1:110, Section 3.4 As to the recoupment claim for 1996, because the regulation had been amended that year by removing the 21-month limitation, this court applied the 5-year statute of limitations in KRS 413.120(2) and allowed recoupment for the 1996 cost year.

On discretionary review, the Kentucky Supreme Court affirmed this court.5 At the conclusion of its opinion, it stated,

Although the result may seem extreme, we simply cannot ignore the plain meaning of the language in the regulation. We note that our ruling relates only to the Cabinet’s remedy of recoupment, and we express no opinion on the Cabinet’s ability to collect the monies through some other legal avenue.

[339]*339The Cabinet then filed the present action, which deals with the same overpay-ments that were the subject of the prior litigation. The Cabinet seeks reimbursement for the overpayments based not only on alleged violations of state and federal law (as in the previous suit), but also on contractual and quasi-contractual theories, such as unjust enrichment. The Franklin Circuit Court granted summary judgment in favor of EPI, finding that the doctrine of res judicata barred the Cabinet’s claims. This appeal followed.

On appeal, the Cabinet argues that the trial court erred by finding the present action to be barred by res judicata since the prior litigation only addressed the issue of the Cabinet’s ability to recover the overpayment through the administrative recoupment process and further, that the Kentucky Supreme Court expressly reserved ruling on “the Cabinet’s ability to collect the monies through some other legal avenue.” In other words, the Cabinet maintains that this “express reservation” by the Supreme Court fits squarely within a recognized qualification to the res judica-ta doctrine so as to allow this action to proceed. We disagree.

Summary judgment shall be granted only if “the pleadings, depositions, answers to interrogatories, stipulations, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” CR6 56.03. The trial court must view the record “in a light most favorable to the party opposing the motion for summary judgment and all doubts are to be resolved in his favor.” Steelvest, Inc. v. Scansteel Serv. Ctr., Inc., 807 S.W.2d 476, 480 (Ky.1991) (citations omitted). Further, “a party opposing a properly supported summary judgment motion cannot defeat it without presenting at least some affirmative evidence showing that there is a genuine issue of material fact for trial.” Id. at 482 (citations omitted).

On appeal from a granting of summary judgment, our standard of review is “whether the trial court correctly found that there were no genuine issues as to any material fact and that the moving party was entitled to judgment as a matter of law.” Lewis v. B & R Corp., 56 S.W.3d 432, 436 (Ky.App.2001) (citations omitted). Because no factual issues are involved and only legal issues are before the trial court on a motion for summary judgment, we do not defer to the trial court and our review is de novo. Hallahan v. Courier-Journal, 138 S.W.3d 699, 705 (Ky.App.2004).

Kentucky courts recognize the doctrine of res judicata and the rule against splitting causes of action, “both of which are intended to prevent multiplicity of suits.” Moorhead v. Dodd, 265 S.W.3d 201, 203 (Ky.2008). In Moorhead, the Court stated,

Res judicata consists of two concepts, claim preclusion and issue preclusion (also called collateral estoppel). Claim preclusion bars subsequent litigation between the same parties or their privies, on a previously adjudicated cause of action. Issue preclusion, on the other hand, precludes the relitigation of an issue that was actually litigated and decided in a prior proceeding. Finally, the rule against splitting causes of action precludes successive actions arising from one transaction.

Id. (internal citations omitted).

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362 S.W.3d 337, 2011 Ky. App. LEXIS 262, 2011 WL 2162992, Counsel Stack Legal Research, https://law.counselstack.com/opinion/commonwealth-v-epi-healthcare-llc-kyctapp-2011.