case, and there is a genuine issue when there is sufficient evidence for a fact
4 finder to choose between competing versions of the fact." Mcilroy v. Gibson's
Apple Orchard, 2012 ME 59, err 7, 43 A.3d 948 (quoting N. E. Ins. Co. v. Young, 2011
ME 89, err 17, 26 A.3d 794).
In the present case, there are no genuine issues of material fact. Instead,
the parties' competing motions address the legal question of whether DHHS's
exclusion of Plaintiff from the MaineCare program constitutes the revocation of a
"license" within the meaning of 5 M.R.S. § 8002(7) and 4 M.R.S. § 152(9).
b. Authority
The Maine Administrative Procedures Act("APA") defines "[l]icensing"
as "the administrative process resulting in the grant, denial, renewal, revocation,
suspension or modification of a license." 5 M.R.S. § 8002(6). A "license" in turn,
"includes the whole or any part of any agency permit, certificate, approval,
registration, charter or similar form of permission required by law which
represents an exercise of the state's regulatory or police powers." 5 M.R.S. §
8002(7). 4 M.R.S. § 152(9) confers upon the Maine State District Court "exclusive
jurisdiction upon complaint of an agency ... to revoke or suspend licenses issued
by the agency." See also 5 M.R.S. § 10051(2) ("the District Court has exclusive
jurisdiction upon complaint of any agency ... to revoke or suspend licenses issued
by the agency ... ").
c. Motion to Dismiss
DHHS argues in its motion to dismiss that Dr. Doane's Complaint fails as
a matter of law because DHHS's action does not constitute the revocation of a
license. DHHS contends that participation in MaineCare is purely voluntary, not
required by law, and, when DHHS ends a provider's participation, it is not
exercising police or regulatory power, which is an element of a "license"
5 pursuant to 5 M.R.S. § 8002. Instead, it is simply enforcing the terms of a
contractual agreement. DHHS argues that Webber Hospital entered into the
Provider Agreement and enrolled Dr. Doane as a rendering provider. Therefore,
Dr. Doane is contractually bound to the terms of the Provider Agreement.
Dr. Doane contests DHHS's assertion that this is merely a contract dispute
on two grounds. First, Dr. Doane points out that the letter of termination, which
was sent to Webber Hospital rather than to Dr. Doane personally,2 did not
mention any contract, but rather cited to 10-144 C.M.R. Ch. 101, sub-ch. I. Citing
to the regulation rather than to contract language suggests that DHHS was
seeking to enforce the regulation rather than a contract when noticing Dr. Doane
of his termination from the MaineCare. Second, the Provider Agreement that
DHHS points to is between Webber Hospital and DHHS. Dr. Doane is not party
to the contract. Dr. Doane did not enter into an agreement with DHHS that could
be enforced.
Finally, DHHS argues that because Dr. Doane is in the midst of the
administrative process, waiting for the issuance of a determination by DHHS,
there is no final agency action for review by the Court, as is required by M.R.
Civ. P. BOC. DHHS concedes that this question is "not relevant to disposition of
this Motion to Dismiss," yet argues that the right to judicial review does not
attach until after a petitioner has exhausted the administrative process. (Def.
Mot. Dismiss p. 8.)
The Court finds that, viewing the facts in the light most favorable to Dr.
Doane, Dr. Doane has stated a claim for which relief may be granted. According
2 As noted in footnote 1, Dr. Doane no longer worked at Webber Hospital at the time the letter was issued.
6 to Black's Law Dictionary, a contract is "An agreement between two or more
parties creating obligations that are enforceable or otherwise recognizable at
law" Contract, Black's Law Dictionary (9·" ed. 2009). Additionally, "the formation
of a contract requires a bargain in which there is a manifestation of mutual assent
to the exchange and a consideration." Restat 2d of Contracts,§ 17 (2"' 1981).
According to the facts as presented, Dr. Doane did not enter into any agreement
with DHHS. There was no mutual assent of the parties and there were no agreed
upon obligations. Because Dr. Doane did not enter into an agreement with
DHHS, Dr. Doane's termination from the MaineCare program could not have
been the exercise of contractual power afforded to DHHS by a breach of contract
by Dr. Doane. Dr. Doane's claim that DHHS revoked an approval or "license" as
defined by the APA, in violation of 4 M.R.S. § 152(9), is a viable claim when
viewing the facts as stated in Dr. Doane's complaint as true.
"The doctrine of exhaustion of administrative remedies requires a party
who seeks an administrative remedy or who challenges an administrative action
to pursue that remedy or challenge to a conclusion before the administrative
agency prior to initiating action in the courts." Town of Levant v. Seymour, 2004
ME 115, '1I 13, 855 A.2d 1159 (citations omitted). The doctrine of exhaustion, is not
always required where the issue before the court is the interpretation of statute.
See Annable v. Board of Environmental Protection, 507 A.2d 592, 595 (1986). "Where
the interpretation of a statute is at issue, we have in the past recognized that a
plaintiff may maintain a declaratory judgment action even though an alternative
remedy may be available to him." Id., citing Berry v. Daigle, 322 A.2d 320, 325
(Me. 1974); King Resources Co. v. Environmental Improvement Comm., 270 A.2d 863,
867-68 (Me. 1970). Because the exhaustion doctrine does not necessarily bar Dr.
7 Doane from seeking declaratory relief, and because the declaratory relief sought
is the interpretation of statute, Dr. Doane has stated a claim for which relief may
be granted.3 The Court denies DHHS's Motion to Dismiss.
d. Summary Judgment
Dr. Doane seeks declaration by the Court that the ability to participate in
the MaineCare program constitutes a license pursuant to the APA. According to
the APA, a license "includes the whole or any part of any agency permit,
certificate, approval, registration, charter or similar form of permission required
by law which represents an exercise of the state's regulatory or police powers."
5 M.R.S. § 8002(7) (emphasis added). Dr. Doane argues that DHHS's
determination to allow a doctor to participate in the MaineCare program as a
rendering provider is an "approval" according to the APA and that the
reasoning used to exclude Dr. Doane from the program is an "exercise of the
state's regulatory or police powers". Because the "license" to participate in the
MaineCare program is not governed by exceptions noted in 4 M.R.S. § 152(9) or 5
M.R.S. § 10051, it may only be taken away from a physician by the District Court.
DHHS argues that, not only is the ability to participate in MaineCare a
matter of contract rather than license, it is not a license because no physician is
required to participate in MaineCare and Dr. Doane is free to use his medical
3 The Court has determined that justice requires the parallel proceedings of the administrative appeal and the action for declaratory judgment in this case where it was not required in the Corrado case for two reasons. First, because unlike in Corrado, in which the plaintiff individually entered into a provider agreement with DHHS, in this case Dr. Doane has not contracted with DHHS. Secondly, it has now become clear to the Court that this is a recurring question of law in need of determ.ination. Therefore, the Court determines that parallel proceedings are appropriate.
8 license as bestowed on him by the Board to practice medicine outside of the
MaineCare program.
Dr. Doane further replies that DHHS's assertion that Dr. Doane's freedom
to engage in the practice of medicine outside of the MaineCare program proves
that the ability to participate in MaineCare is not a license is not persuasive for
three reasons. First, by excluding Dr. Doane from MaineCare, DHHS is trying to
perform a function that falls squarely within the historical scope of the State's
police power, i.e. providing for the public health and safety. Second, even if Dr.
Doane were free to engage in the practice of medicine, that would not change the
character of DHHS' s conduct. This is because the government may, and often
does, regulate conduct without prohibiting it entirely. Third, the notion that Dr.
Doane remains free to engage in the practice of medicine is a fiction because, as a
practical matter, the MaineCare program is a dominant force in Maine's
healthcare market and it is inconceivable that any hospital could operate in
Maine unless it did business with Maine Care.
In the current case, DHHS has interpreted section 8002 of the
Administrative Procedures Act to be inapplicable to Dr. Doane's ability to
participate in the MaineCare program. Despite a process by which DHHS
reviews a doctor's record, unilaterally decides whether or not he may continue to
participate in the program based upon regulation, and reviews and solely
decides upon letters for reinstatement after a doctor has been terminated from
the program, DHHS contends that a doctor's ability to practice is a contract right,
not "the whole or any part of any agency permit, certificate, approval,
registration, charter or similar form of permission required by law which
9 represents an exercise of the state's regulatory or police powers." 5 M .R.S. §
8002(7).
Here, the Court finds that DHHS's termination of Dr. Doane's ability to
participate in the MaineCare program constitutes a revocation of a license within
the meaning of 5 M.R.S. § 8002(7) and 4 M.R.S. § 152(9) because the ability to be
reimbursed for care of participant patients constitutes a form of permission,
similar to a license, that is required by law and represents an exercise of the
state's regulatory or police powers. This is because the Maine APA broadly
defines the term "license" in a manner that is similar to the "extremely broad"
definition of "license" in 5 U.S.C. § 551(8). See Air North America, 937 F.2d 1427,
1437 (9th Cir. 1991). This broad definition indicates that the Legislature intended
to cast a wide-net concerning what constitutes a license. This broad definition is
contrary to DHHS's attempt to narrow the definition of "license" to exclude
contracts from the definition, without regard to their context.
The plain language of 5 M.R.S. § 8002(7) identifies any type of "approval
... required by law which represents an exercise of the state's regulatory or police
powers" as a license. 5 M.R.S. § 8002(7). This language is similar to the Federal
Administrative Procedure Act defining "license" as including "the whole or a
part of an agency permit, certificate, approval, registration, charter, membership,
statutory exemption or other form of permission." 5 U.S.C. § 551(8). Not many
courts have addressed whether the authority to participate in, and be reimbursed
by, a government-funded medical assistance program constitutes a license.
However, this question has arisen in the bankruptcy context, wherein the
Bankruptcy Code prohibits governmental entities from revoking or suspending
any "license, permit, charter, franchise, or similar grant" of authority to a debtor
10 solely because he is insolvent. 11 U.S.C. § 525(a)). Within this context, several
courts have found that section 525 is applicable to Medicare agreements. See In
re Psychotherapy and Counseling Center, Inc., 195 B.R. 522, 529-530 (Bankr. D.D.C.
1996); In re St. Mary's Hospital, 89 B.R. 503, 504 (Bankr. E.D. Pa. 1988); Health Care
Fin. Admin. v. Sun Healthcare Group, Inc. (In re Sun Healthcare Group, Inc.), 2002
U.S. Dist. LEXIS 17868 *1 (D. Del. Sept. 4, 2002)) .)
Furthermore, the limited case law addressing analogous situations
indicates that the Provider Agreement fits within the broad definition of
"license." Pertinently, In re Sun Healthcare Group, Inc. found that Medicare
agreements constituted "licenses" under 11 U.S.C. § 525. 2002 U.S. Dist. LEXIS
17868 *14. In that case, Sun Health and certain of its subsidiaries filed a petition
for Chapter 11 bankruptcy. Id. at *1. Prior to the bankruptcy petition, one of Sun
Health's subsidiaries was suspended from participation in the Medicare and
Medicaid programs for failure to comply with regulations. Id. at *2. The
subsidiary was told it could be reinstated if it cured the violations, but before it
could cure its Medicaid obligations, Sun Health filed for bankruptcy and
triggered the automatic stay provisions. Id. Subsequently, Sun Health moved
for an order compelling the Health Care Financing Administration ("HCFA") to
recertify the subsidiary for participation in the Medicare program or to authorize
Sun Health to pay prepetition debts owed to HCFA in connection with the
subsidiary. Id. at *2-3. A primary issue in resolving Sun Health's motion was
whether the Medicaid Provider Agreement constituted a "license" or "other
similar grant" pursuant to 11 U.S.C. § 525(a). See id. at *12-17. Section 525(a)
provides, in pertinent part, that a governmental unit may not "deny, revoke,
suspend, or refuse to renew a license, permit, charter, franchise, or other similar
11 grant to ... a person that is or has been a debtor under this title [11 U.S.C.S. §§ 101
et seq.][.]" 11 U.S.C. § 525(a). This language, while not identical, is similar to the
Maine AP A's definition of "license."
In its analysis, In re Sun Healthcare Group, Inc. explained that "[t]here is
very little case law addressing exactly what constitutes a license" under 11 U.S.C.
§ 525. 2002 U.S. Dist. LEXIS 17868 *12. It noted, however, that the government
had not cited, and the court did not find, "any case wherein a court has explicitly
stated that Medicare and Medicaid agreements are prima facie exempt from the
requirements of section 525." Id. at 14. On the other hand, "several courts have
found that section 525 is applicable to Medicare agreements, and have applied its
provisions accordingly." Id. (citing See In re Psychotherapy and Counseling Center,
Inc., 195 B.R. 522, 529-530 (Bankr. D.D.C. 1996) (applying section 525 in Medicare
and Medicaid contexts); In re St. Mary's Hospital, 89 B.R. 503, 504 (Bankr. E.D. Pa.
1988) (applying section 525 to Medicare agreement)). In re Sun Healthcare Group,
Inc. then explained that "the Medicare provider agreements at issue authorized
the providers to pursue an endeavor, namely caring for elderly patients" and
that while it is "possible for a provider to care for Medicare patients in the
absence of a provider agreement, without the agreement, they would receive no
compensation for the services." Id. at 16. "Consequently, without a provider
agreement, providers would be forced to provide Medicare services free of
charge." Id. As a result, the court found that "although the Medicare provider
agreement may not be a license in the strictest sense of the word, it is clearly
similar to a license for section 525 purposes." Id.
Similar to Sun Health in In re Sun HealthCare Group, Inc., the Plaintiff in
this case cannot participate in the MaineCare program absent consideration and
12 approval by DHHS. Accordingly, DHHS's determination to allow a rendering
provider to participate in MaineCare constitutes a form of permission, required
by law.
Finally, it is clear that DHHS's decision to permit a rendering provider to
enter into a provider agreement represents an exercise of the state's regulatory or
police powers. This is because the State's traditional police power includes "the
authority to provide for the public health, safety, and morals .... " Barnes v. Glen
Theatre, 501 U.S. 560, 562 (1991); see also In re Spring Valley Dev., 300 A.2d 736, 748
(Me. 1973) (finding it indisputable that limitations on the use of property for the
purpose of protecting the quality of air, soil and water from unreasonable
destruction "for the protection of the public health and welfare is within the
police power"); State v. Corriveau, 131 Me. 79, 84-85, 159 A. 327 (1932). In this
case, it is undisputed that DHHS terminated his participation in the MaineCare
program due to public health concerns, i.e. the death of a patient by overdose
and subsequent reprimand by the Board. Furthermore, the State explains its
policy as necessary to ensuring the quality of the medical services provided,
further noting that "all states' Medicaid agencies are required by federal rule to
'have administrative procedures in place that enable it to exclude an individual
or entity for any reason for which the Secretary [of Health and Human Services]
could exclude such individual or entity ... "' (Mot. Dismiss p. 7, fn 6.) What
DHHS describes herein is police power rather than the enforcement of
contractual rights. Accordingly, the Court grants the Plaintiff's motion for
summary judgment because DHHS's actions constitute a revocation of a license
that can only be done by the Maine District Court pursuant to 5 M.R.S. § 8002(7)
and 4 M.R.S. § 152(9).
13 III. Conclusion
The Court denies DHHS' Motion to Dismiss.
The Court grants Plaintiff's Motion for Summary Judgment.
The Clerk is directed to incorporate this Order into the docket by reference
in accordance with M.R. Civ. P. 79(a).
DATE: Michaela Murphy )7 Justice, Superior Court