Kentucky Spirit Health Plan, Inc. v. Commonwealth, Finance & Administration Cabinet

462 S.W.3d 723, 2015 WL 2266946
CourtCourt of Appeals of Kentucky
DecidedMay 15, 2015
DocketNos. 2013-CA-001003-MR, 2013-CA-001081-MR
StatusPublished
Cited by3 cases

This text of 462 S.W.3d 723 (Kentucky Spirit Health Plan, Inc. v. Commonwealth, Finance & Administration Cabinet) 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
Kentucky Spirit Health Plan, Inc. v. Commonwealth, Finance & Administration Cabinet, 462 S.W.3d 723, 2015 WL 2266946 (Ky. Ct. App. 2015).

Opinion

OPINION

MAZE, JUDGE:

Kentucky Spirit Health Plan, Inc., (hereinafter “Kentucky Spirit”) appeals from a decision of the Franklin Circuit Court granting summary judgment in favor of [726]*726the numerous appellees in this case (collectively “the Commonwealth”). Specifically, Kentucky Spirit argues that the circuit court erroneously interpreted the terms of its Medicaid Managed Care Contract (hereinafter “the Contract”) with the Commonwealth, pursuant to which Kentucky Spirit provided various Medicaid-eligible services. The Commonwealth appeals the circuit court’s use of a non-deferential standard of review in addressing the decision of the Finance and Administration Cabinet’s (FAC) Secretary.

We conclude that the Contract required Kentucky Spirit to cover the contested services, though we do so for reasons other than those in the circuit court’s order. Hence, we affirm summary judgment for the Commonwealth. We further affirm the circuit court’s chosen standard of review.

Background

The underlying facts of this case are neither disputed nor complex. Beginning in November 2011, Kentucky Spirit, a Missouri-based corporation and Managed Care Organization (MCO), facilitated Kentucky’s Medicaid program pursuant to the Contract1 as well as various state and federal Medicaid statutes and regulations.2 One of the many services Kentucky Spirit was charged with providing was “preventative health services.” Prior to 2011, approved medical professionals in the 104 subject Kentucky counties performed these and other services and billed the Department of Medicaid Services (DMS) directly as part of a “fee-for-service” system. Under this system, DMS also reimbursed local health departments for eligible services performed by healthcare professionals employed with local health departments, including school-based clinics staffed by registered nurses.

Under the new “managed care” scheme adopted in 2011, Kentucky Spirit became one of three providers of Medicaid with which the Commonwealth contracted to provide services to eligible Kentuckians. For these services, and in the place of the past fee-for-service arrangement, the Commonwealth paid Kentucky Spirit a monthly fee based upon the number of enrolled members. In 2012, after reviewing claims it had received from the Commonwealth, Kentucky Spirit determined that claims for services performed by health department registered nurses and licensed practical -nurses at school clinics were “outside the scope of the Contract and therefore not eligible for payment....” Kentucky Spirit contended that the costs of these services were the responsibility of the Education Cabinet.

Pursuant to the Contract, Kentucky Spirit filed a reimbursement dispute with the Cabinet for Health and Family Services (CHFS) and later appealed to the FAC. The CHFS Secretary determined that the Contract required Kentucky Spirit to pay the disputed claims. However, she agreed with Kentucky Spirit that services provided by licensed practical nurses were not compensable under the Contract. The FAC Secretary affirmed CHFS’s decision.

[727]*727On January 25, 2013, Kentucky Spirit filed suit in Franklin Circuit Court seeking declaratory and injunctive relief against the decision of the FAC Secretary pursuant to KRS3 45A.245. Kentucky Spirit sought and received expedited handling of its action. The circuit court held oral arguments on the merits of the case; and after both parties filed motions' for summary judgment and fully briefed the issue, the circuit court entered an Opinion and Order.

In its decision, the circuit court agreed with the Commonwealth that Kentucky Spirit was obligated under the Contract to provide the same level of coverage previously provided under the fee-for-service arrangement. The court further held that Kentucky Spirit could not disregard what the court deemed was a “longstanding interpretation of Medicaid eligibility” for school-based medical services performed by local public health departments. Employing the doctrines of contemporaneous construction and comity, as well as the legislative intent behind Kentucky’s Medicaid-related statutes, the circuit court granted the Commonwealth’s motion for summary judgment and denied Kentucky Spirit’s motion for the same. Kentucky Spirit now appeals from the circuit court’s decision; and the Commonwealth cross-appeals on the sole basis of the circuit court’s chosen standard of review.

Standard of Review

While it is rare for this Court to address and dispose of a. contested issue while merely stating the appropriate standard of review, the unique facts and arguments in this case prove it to be possible. On cross-appeal, the Commonwealth argues that the circuit court erred in failing to show appropriate deference to the FAC Secretary’s ruling. More specifically, it contends that the circuit court was required, but failed, to conduct judicial review of the decision of the FAC Secretary “under the auspices of KRS 13B.150 and the standards of common administrative law.” Furthermore, the Commonwealth urges that we must do the same. We have observed this argument, or some variation of it, in several recent cases involving the Commonwealth; and we once again disagree.

We decline to apply KRS 13B. Above all, we cite to the fact that the parties agreed in Section 40.9 of the Contact that disputes between them would be resolved pursuant to KRS 45A, not KRS 13B. The Commonwealth is bound by this provision and may not now choose another remedy.

In further support of a proposed deferential standard of review, the Commonwealth cites to KRS 45A.280, part of Kentucky’s Model Procurement Code, which states,

[t]he decision of any official, board, agent, or other person appointed by the Commonwealth concerning any controversy arising under, or in connection with, the solicitation or award of a contract, shall be entitled to a presumption of correctness and shall not be disturbed unless the decision was procured by fraud or the findings of fact by such official, board, agent or other person do not support the decision.

Kentucky Spirit’s action sought declaratory and injunctive relief concerning the terms of its contract with the Commonwealth. In effect, Kentucky Spirit sought enforcement of the Contract. Hence, we conclude that the more specific and more applicable provision of the Model Procurement Code is KRS 45A.245(1). It states, in pertinent part,

[728]*728Any person, firm or corporation, having a lawfully authorized written contract with the Commonwealth at the time of or after June 21, 1974, may bring an action against the Commonwealth on the contract, including but not limited to actions either for breach of contracts or for enforcement of contracts or for both.

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Bluebook (online)
462 S.W.3d 723, 2015 WL 2266946, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kentucky-spirit-health-plan-inc-v-commonwealth-finance-administration-kyctapp-2015.