The Cedars v. Maine DHHS

• Court: Superior Court of Maine
• Decided: July 11, 2016
• Docket: CUMap-15-21
• Status: Unpublished

Opinion

MLlzj~-fl- L4D -~ ) I STATE OF MAINE SUPERJOR COURT CUMBERLAND, SS. CIVIL ACTION DOCKET NO. CUMSC-AP-15-21

CEDARS NURSING CARE CENTER ) d/b/a THE CEDARS, ) ) Petitioner, ) ) V. ) ORDER ON RULE 80C APPEAL ) MAINE DEPARTMENT OF HEAL TH ) AND HUMAN SERVICES, ) ) STATE OF MAINE Respondent, ) Cumberland ss Clerk's Office ) and ) JUL\ 1 2016 ) THE AROOSTOOK MEDICAL CENTER/ ) AROOSTOOK HEAL TH CENTER, ) RECEi\/EO ) Intervenor. )

Before the court is Cedars Nursing Care Center d/b/a The Cedars' ("Cedars") petition for

review of final agency action by the Maine Department of Health and Human Services ("DHHS"

or the "Department") pursuant to the Maine Administrative Procedures Act (the "APA"), 5

M.R.S. § 11001 et seq., and Maine Rule of Civil Procedure 80C. Based on the following,

DHHS's decision denying Cedars' request for informal review is reversed and remanded for

further consideration.

I. Background

DHHS is a state agency responsible for implementing Maine's Medicaid program, known

as MaineCare. 10-144 C.M.R. ch. 101 §§ 1.01-1.02, 10 (2014). Pursuant to its duty, DHHS

reimburses nursing facilities for services provided to MaineCare members based on a rate

established by DHHS. 10-144 C.M.R. ch. 101 § 37 (2014). DHHS classifies nursing facility providers into one of three Peer Groups for purposes of MaineCare reimbursement. 10-144

C.M.R. ch. 101 § 86 (2014); (R. Vol. 1, 204-207.) Cedars operates a nursing facility in Portland,

Maine. (R. Vol. 1, 155.) Cedars is classified as a Peer Group II facility. (Id. at 207.) Aroostook

Health Center ("AHC") operates a nursing facility in Mars Hill, Maine. (Id. at 8.) Before 2015,

AHC was also classified as a Peer Group II facility. (Id. at 207.)

In April 2013, AHC requested a change in its status from a free standing nursing facility

(Peer Group II) to a hospital-based nursing facility (Peer Group III). (Id. at 1, 144); 10-144

C.M.R. ch. 101 § 86. On January 8, 2015, DHHS issued a Final Informal Review Decision

informing AHC that it would be reclassified as a hospital-affiliated nursing facility (Peer Group

III) and reimbursed at a higher rate (the "AHC Decision"). (R. Vol. 1, 137-39, 144.) Cedars did

not receive notice of the AHC Decision. (Id. at 139.) Sometime thereafter, Cedars made a

Freedom of Access request to DHHS regarding the AHC Decision. (Id. at 143.) DHHS

provided Cedars with a copy of the AHC Decision on May 8, 2015. (Id.)

On June 12, 2015, Cedars submitted written request for informal review and/or

administrative hearing to DHHS regarding the AHC Decision. (Id. at 143-44.) In its June 12,

2015 request, Cedars asserted that AHC did not meet the definition of a "hospital-affiliated

nursing facility" to be included in Peer Group III and should remain classified as a free standing

nursing facility as part of Peer Group II. (Id. at 144.) Cedars asserted that it intended to put

forth evidence showing how AHC's classification as a Peer Group III facility violated DHHS's

rules and would "directly and adversely" impact Cedars' MaineCare reimbursement. (Id.)

On June 24, 2015, DHHS issued a letter to Cedars denying its request for informal

review. (Id. at 159-60.) In its letter, DHHS concluded the following: (1) Cedars' request for

informal review was untimely under both § 140 .1 and § 1.21-1 of the Maine Care Benefits

2 Manual; (2) Cedars was not entitled to an informal review under § 140.1 of the MaineCare

Benefits Manual because Cedars was not the nursing facility to which the AHC Decision was

issued; and (3) Cedars was not a entitled to an informal review under§ 1.21-1 of the MaineCare

Benefits Manual because it was not aggrieved by the ABC Decision. (Id.)

Cedars filed a Rule 80C petition appealing the AHC Decision on June 16, 2015.

Following DHHS's denial of its request for informal review, Cedars moved to amend its petition

on July 14, 2015, to address both the ABC Decision and the June 24, 2015 denial. DHBS moved

to dismiss Cedars' petition an July 17, 2015. The court granted Cedars' motion to amend its

petition and denied DHHS motion to dismiss on August 24, 2015. On September 3, 2015, AHC

moved to intervene in this action, which the court granted.

The administrative record was filed with the court on September 25, 2015. DHBS further

supplemented the record on October 13, 2015. Cedars filed a motion to take additional evidence

on October 5, 2015, which DBBS and ABC both opposed. The court denied Cedars motion to

take additional evidence on February 29, 2016. In its order, the court ruled that the only issue

properly before the court was whether DHHS erred in denying Cedars' June 12, 2015 request for

informal review. The court stated that the AHC Decision was not a final agency action

appealable by Cedars under the AP A, because further agency review was available to Cedars.

See 5 M.R.S. §§ 8002(4), 11001(1). Indeed, Cedars' June 12, 2015 request sought further

agency review of the AHC Decision.

Cedars field its Rule 80C brief on April 6, 2016. AHC and DHBS filed their responses

on May 6, 2016. Cedars filed a reply on May 20, 2016.

3 II. Standard of Review

\,Vhen acting in an appellate capacity pursuant to Rule 80C and the AP A, the court

reviews the agency ' s decision for abuse of discretion, error of law, or findings not supported by

the evidence. Guar. Tr. Life Ins. Co. v. Superintendent ofIns., 2013 ME 102,, 16, 82 A.3d 121.

The standard for review of final agency action is provided by § 11007 of the AP A. M.R. Civ. P.

80C(c). The court may reverse or modify any agency determination if the agency's findings,

inferences, conclusions, or decisions: (1) violate constitutional or statutory provisions, (2) exceed

the agency's statutory authority, (3) are made upon unlawful procedure, (4) are affected by bias

or error of law, (5) are unsupported by substantial evidence in the record, or (6) are arbitrary,

capricious, or an abuse of discretion. 5 M.R.S. § 11007(4)(C). The court may also remand the

case for further proceedings, findings of fact or conclusions of law, or direct the agency to hold

such proceedings or take such action as the court deems necessary. Id. § 11007(4)(B).

An agency's interpretations of its own rules are given "considerable deference." Friends

of the Boundary Mts. v. Land Use Regulation Comm 'n, 2012 ME 53, , 6, 40 A.3d 947. The

court will not set aside an agency's interpretation of its own rules "unless the rule plainly

compels a contrary result, or the rule interpretation is contrary to the governing statute." Id.

An agency's findings of fact must be supported by substantial evidence in the record and

cannot be based on unsupported speculation. Hannum v. Ed. ofEnvtl. Prat., 2003 ME 123, , 15

n.6, 832 A.2d 765. To be supported by substantial evidence, the agency's findings of fact must

be supported by "such relevant evidence as a reasonable mind might accept as adequate to

support the resultant conclusion." Sinclair Builders, Inc. v. Unemployment Ins. Comm 'n, 2013

ME 76, , 9, 73 A.3d 1061 (internal quotation marks omitted). The court will not substitute its

own judgment for that of the agency merely because the record could support more than one

4 conclusion. Abrahamson v. Sec'y of State, 584 A.2d 668, 670 (Me. 1991 ). Similarly, an

agency's decision is arbitrary and capricicus if it is "unreasonable, has no rational factual basis

justifying the conclusion or lacks substantial support in the evidence." Cent. Me. Power Co. v.

Waterville Urban Renewal Auth., 281 A.2d 233,242 (Me. 1971).

III. Analysis

Cedars asserts that DHHS erred in denying its June 12, 2015 request for informal review

pursuant to § 1.21-1 of the Maine Care Benefits Manual. 1 (Pet. Br. 1.) Section 1.21-1 of the

MaineCare Benefits Manual provides, in relevant part:

Any provider who is aggrieved by a Departmental action made pursuant to this Manual ... has sixty ( 60) calendar days from the date of receipt of that decision, to request an informal review. The request for an informal review must be in writing, to the Director of MaineCare Services or other specified Departmental official. This review will be conducted by the Director of MaineCare Services, or other designated Department representative who was not involved in the decision under review. The informal review will consist solely of a review of documents in the Department's possession including submitted materials/documentation and, if deemed necessary by the Department, it may include a personal meeting with the provider to obtain clarification of the materials. Issues that are not raised by the provider, individual, or entity through the written request for an informal review or the submission of additional materials for consideration prior to the informal review are waived in subsequent appeal proceedings. The request for informal review may not be amended to add further issues.

10-144 C.M.K ch. 101 § 1.21-1 (2014).

Cedars argues that DHHS erred in fmding ( 1) that its June 12, 2015 request was untimely

and (2) that Cedars was not an aggrieved party under § 1.21-1. (Pet. Br. 5.) Cedars also argues

that DHHS erred in adopting the definition of "aggrieved" used by the courts for the purposes of

the APA as its definition of"aggrieved" for purposes of§ 1-21.1. (Id. at 8-9.)

1 Cedars does not contest DHHS' s determination that Cedars was not entitled to an informal review pursuant to§ 140.1 of the MaineCare Benefits Manual. (Pet. Br. 5 n.4.) Cedars only contests DHHS's decisions regarding § 1.21-1 . (Id.)

5 A. Timeliness of Cedars' June 12, 2015 Reguestfo:r Informal Review

In its June 24, 2015 letter, DHHS asserts that Cedars' June 12, 2015 request was filed

after the sixty-day deadline for seeking informal review of the AHC Decision issued on January

8, 2015. (R. Vol. 1, 159.) Cedars argues that it did not receive the AHC Decision until its

Freedom of Access request was fulfilled on May 8, 2015. (Pet. Br. 6); see (R. Vol. 1, 143.)

Cedars argues that its June 12, 2015 letter requesting informal review of the AHC Decision was

timely under § 1.21-1 because the request was sent to DHHS within sixty days "from the date of

receipt of that decision." (Pet. Br. 6.) In its brief, DHHS concedes that Cedars' June,12, 2015

request for informal review was timely under § 1.21-1. (Resp. Br. 6.) Thus, DHHS concedes

2 that its June 24, 2015 determination that Cedars request was untimely was an error oflaw.

B. DHHS's Adoption of the APA Definition of"Aggrieved"

DHHS concedes in its response brief that nursing facilities have the right under § 1.21-1

to challenge decisions issued to other nursing facilities if they are aggrieved by the decision. (Id.

at 7.) In its June 24, 2015 letter, DHHS stated that Cedars had no legal standing to seek informal

review under § 1.21-1 because it was not aggrieved by the AHC Decision. (R. Vol. 1, 160.)

DHHS's June 24, 2015 letter further states:

The MaineCare Benefits Manual does not define "aggrieved." However, [the APA] uses the same standard of "aggrieved" to grant legal standing to "any person aggrieved by final agency action shall be entitled to judicial review ... " Title 5, § 11001(1). Although the APA does not define "aggrieved", the Maine Supreme Court has had the opportunity to define "aggrieved" for purposes of the APA.

The Maine Supreme Court has ruled that to be "aggrieved" in order to challenge final agency action, a litigant must demonstrate a particularized injury as a result of the action. Great Hill Fill & Gravel, Inc. v. Board of Environmental

2 Intervenor AHC still argues that it was within DHHS 's discretion to measure the sixty-day period from the date AHC received its decision on January 8, 2015, and that Cedars' request for informal review, though within sixty-days from when it obtained a copy of the decision, was still untimely. (Intervenor Br. 4.) Because DHHS concedes its determination was in error, the court does not address ABC's argument.

6 Protection, 641 A.2d 184 (Me. 1994). The agency decision must "adversely and directly" affect the litigant's "property, pecuniary or personal rights. " ld. Further, a litigant "who suffers only an abstract irrjmy does not thereby gain standing to sue." Nichols v. City ofRockland, 324 A.2d 295 , 297 (Me. 1974).

(Id.) Cedars argues that the term "aggrieved" should be given a more expansive definition for

purposes of§ 1.21-1 of the MaineCare Benefits Manual than for the APA. (Pet. Br. 9.)

As previously discussed, an agency's interpretation of its own rules is given

"considerable deference" and "will not be set aside unless the rule plainly compels a contrary

result, or the rule interpretation is contrary to the governing statute." Friends of the Boundary

Mts., 2012 ME 53, 16, 40 A.3d 947. Section 1.21-1 of the MaineCare Benefits Manual does not

define the term "aggrieved" and nothing in the rule plainly compels DHHS to adopt another

definition. See l 0-144 C .M.R. ch. 101 § 1.21-1. Furthermore, Cedars has not cited, and the

court is not aware of, any provision in the governing statute that would compel DHHS to adopt a

different definition. Therefore, the court defers to DHHS interpretation of its rules and its

adoption of the AP A definition of "aggrieved" for purposes of § 1.21-1.

C. Df-IH S' s Determination Cedars was not an "Aggrieved" Provider

To be an "aggrieved" party for purposes the APA, and therefore under § 1.21-1, a

provider must show a "particularized injury," meaning DHHS's decision must "adversely and

directly affect" the provider's "property, pecuniary or personal rights." (R. Vol. 1, 160) (internal

quotation marks omitted); see also Lindemann v. Comm 'n on Governmental Ethics & Election

Practices, 2008 ME 187, ,i 14,961 A.2d 538 (defining "aggrieved" for purposes of the APA).

Cedars argues that its June 12, 2015 request for informal review sufficiently set forth a

particularized injury in order to obtain an informal review. (Pet. Br. 9-11.) Cedars' June 12,

2015 request for informal review stated:

7 Although The Cedars was not a pruiicipant in the proceedings initiated by The Aroostook Merucal Center/Aroostook Health Center, The Cedars is an aggrieved person. Reclassifying ABC from a free standing facility to a hospital-affiliated nursing facility, and thus reimbursing ABC as part of Peer Group III, will directly and adversely impact MaineCare reimbursement to The Cedars.

For purposes of an informal review, we intend to rely on the MaineCare definition of hospital-affiliated nursing facility, the changes to the MaineCare Manual over time, legislative history, and related documents. We also intend to rely on our understanding of MaineCare reimbursement, and discussion with Division of Audit Staff, to show how changing AHC's designation from a free standing nmsing facility to a hospital-affiliated nursing facility will violate the letter and spirit of the Principles of Reimbtu-sement for Nursing Facilities (especially Chapter JU, Section 67, Principle 13), and directly and adversely impact reirnbw·sement for the State of Maine and The Cedars itself.

(R. Vol. 1, 144.)

In its June 24, 2015 letter denying informal review, DHHS stated:

Finally, based on information and belief, it is my W1dersta11ding that MaineCare _reimbursement to Cedars has not been reduced - or changed at all - as a result of the AHC Decision.

(Id at 159.) DHHS's June 24, 2015 letter concluded:

Cedars has not demonstrated any injury. Cedars' MaineCare reimbursement has not been impacted at all from the Department's AHC decision. Accord:ingly, Cedars is not "aggrieved" by the ABC Decision, and therefore, Cedars has no legal standing to appeal that decision.

(Id. at 160.)

DHHS's determination that Cedars was not aggrieved was the result of an error o f law,

arbitrary and capricious, and unsupported by record evidence. First, DHHS's determination that

Cedars did not affirmatively demonstrate an injury in its request for informal review constitutes

an error of law. Cedars' June 12, 2015 request set forth a prima facie case for how it will s uffer

a particularized injury and was aggrieved by the AHC Decision. (R. Vol. 1, 144.) Cedars made

an offer of proof as to how it would demonstrate its injury for the informal review. (Id.) D HHS

concluded that Cedars had not put forth evidence demonstrating an injury. (Id at 160.)

8 Although the court generally must defer to an agency's interpretation of its own rules, the court

will set aside an agency's interpretation if "the rule plainly compels a contrary result." Friends

ofthe Boundary Mts., 2012 ME 53, ~ 6, 40 A.3d 947. Nothing in the plain language of§ 1-21.1

required Cedars to submit evidence proving it is an aggrieved party as part of its request for

informal review. Section 1.21-1 simply states:

The request for an informal review must be in writing, to the Director of MaineCare Services or other specified Departmental official.

10-144 C.M.R. ch. 101 § 1.21-1. The plain language of § 1-21.1 contemplates that the provider

may submit evidence after the request for informal review is granted. Section 1.21-1 states:

This review will be conducted by the Director of MaineCare Services, or other designated Department representative who was not involved in the decision under review. The informal review will consist solely of a review of documents in the Department's possession including submitted materials/documentation and, if deemed necessary by the Department, it may include a personal meeting with the provider to obtain clarification of the materials. Issues that are not raised by the provider, individual, or entity through the written request for an informal review or the submission of additional materials for consideration prior to the informal review are waived in subsequent appeal proceedings.

Id. (emphasis supplied). In contrast, other provisions of the Maine Care Benefits Manual

expressly require that a party to include all of its evidence in its request for informal review. For

instance, § 140. l of the MaineCare Benefits Manual explicitly stated:

Within thirty (30) days of receipt of an audit or other appealable determination, the facility must request, in writing, an informal review before the Director of the Office of Audit or his/her designee. The facility must forward, with the request, any and all specific information it has relative to the issues in dispute, ...

10-144 C.M.R. ch. 101 § 140.1.2(1) (2014). Thus, unlike other provisions of MaineCare

Benefits Manual,§ 1.21-1 did not expressly require Cedars to submit all of its evidence as part of

its request for informal review. Therefore, because § 1.21-1 did not expressly require Cedars to

submit its evidence as part of its request, and because § 1.21-1 contemplates that a provider may

9 submit evidence before the informal review occurs, DHHS's determination that Cedar did not

demonstrate an injury in its written request constitutes an error of law.

Second, DHHS's reliance on "information and belief' in making its findings does not

meet the substantial evidence standard and is arbitrary and capricious. In its June 24, 2015 letter,

DHHS explicitly stated that it based its determination that Cedars' MaineCare reimbursements

had not been reduced or changed as a result of the AHC Decision on "information and belief."

(R. Vol. 1, 159.) As previously discussed, an agency's findings of fact must be supported by

substantial evidence in the record and cannot be based on unsupported speculation. Hannum,

2003 ME 123, , 15 n.6, 832 A.2d 765. Substantial evidence is "such relevant evidence as a

reasonable mind might accept as adequate to support the resultant conclusion." Sinclair

Builders, Inc., 2013 ME 76, , 9, 73 A.3d 1061 (internal quotation marks omitted). DHHS's

"information and belief' is not substantial evidence and is effectively akin to speculation.

Additionally, an agency's determination is arbitrary and capricious if it is unreasonable, has no

rational factual basis justifying the conclusion, or lacks substantial support in the evidence.

Cent. Me. Power Co., 281 A.2d at 242. DHHS's determination based on "information and

belief' is both unreasonable and lacks a rational factual basis. Therefore, DHHS's finding of

fact based on "information and belief' is unsupported by substantial evidence and arbitrary and

capnc10us.

Third, DHHS's ultimate determination that Cedars' MaineCare reimbursements were not

impacted by the AHC Decision is not supported by substantial evidence in the record. Again,

substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to

support the resultant conclusion." Sinclair Builders, Inc., 2013 ME 76, , 9, 73 A.3d 1061

(internal quotation marks omitted). The only evidence in the record regarding Cedars'

10 MaineCare reimbursements are two MaineCare Rate Letters issued to Cedars. (R. Vol. 1, 155­

58.) The first MaineCare Rate letter, dated July 21, 2014, states Cedars' reimbursement rates

from July 1, 2014 through June 30, 2015. (Id. at 155-56.) In other words, the first MaineCare

Rate letter sets forth Cedar's MaineCare reimbursement rates prior to the January 8, 2015 ARC

Decision. The second MaineCare Rate letter sets forth Cedars' reimbursement rates from July 1,

2015 through June 30, 2016, after the ABC Decision. (Id. at 157-58.) However, the second

MaineCare Rate letter is dated July 16, 2015. (Id at 157.) Thus, the second MaineCare Rate

letter was not part of the record before that date, and DHHS could not have considered it in

making its d~termination in the June 24, 2015 letter. There is no other evidence in the record

regarding Cedars' MaineCare reimbursement rates. Therefore, DHHS's determination that

Cedars' MaineCare reimbursement rates were not impacted by the ABC Decision, and therefore

Cedars' was not an aggrieved party, was not supported by substantial evidence in the record.

Because DHHS' s determination that Cedars' was not an aggrieved party was the result of

an error of law, arbitrary and capricious, and not supported by substantial evidence in the record,

DHHS ' s June 24, 2015 denial of Cedars' request for informal review pursuant to § 1.21-1 must

be rever~;ed and remanded to DHHS for reconsideration. The court expresses no opinion on

whether or not Cedars is, in fact, an aggrieved party under § 1.21-1.

IV. Conclusion

Based on the foregoing, the Maine Department of Health and Human Services' decision

denying Cedars Nursing Care Center d/b/a The Cedars' request for informal review is reversed

and remanded to the Department of Health and Human Services for further. consideration.

11 The Clerk is directed to enter this Order on the civil docket by reference pursuant to

Maine Rule of Civil Procedure 79(a).

Date 7/11 f 1e La

12 I ~tJ1) STATE OF MAINE SUPERIOR COURT CUMBERLAND, ss CIVIL ACTION Docket No. AP-15-21

CEDARS NURSING CARE CENTER d/b/a THE CEDARS, STATE OF MAINE Cumberland ss Clerk's Office Petitioner V. FEB 2 9 2016 MAINE DEPARTMENT oF ~~~clVED 1 ORDER AND HUMAN SERVICES,

Respondent and

THE AROOSTOOK MEDICAL CENTER/ AROOSTOOK HEAL TH CENTER,

Intervenor

Before the court is petitioner's motion to take additional evidence and supplement the

record and its motion to stay the notice and briefing schedule. For the following reasons, the

court denies the motion to take additional evidence and grants the motion to stay.

I. FACTS

Respondent is the state agency responsible for implementing Maine's Medicaid program,

known as MaineCare. Pursuant to this duty, respondent classifies nursing facilities into one of

three Peer Groups for purposes of reimbursement. Petitioner operates a nursing facility m

Portland, and intervenor Aroostook Health Center (AHC) operates a nursing facility m

Aroostook County. Both facilities participate in MaineCare.

Respondent has classified petitioner's facility as Peer Group II. On January 8, 2015,

respondent issued a decision changing AHC's classification from Peer Group II to Peer Group

III. Petitioner received a copy of respondent's decision on May 8, 2015 in response to a Freedom

of Access Act request. By letter dated June 12, 2015, counsel for petitioner requested from respondent review of its January 8 decision. Respondent denied petitioner's request on June 24,

2015 on the grounds that the request was untimely and petitioner lacked standing.

Petitioner filed a Rule SOC petition on June 16, 2015 and an amended petition on July 14,

2015. Petitioner seeks (I) a declaratory judgment that respondent erred in changing AHC's

classification to Peer Group III and (2) a permanent injunction preventing respondent from

changing AHC's classification to Peer Group III and directing respondent to continue

reimbursing AHC as a member of Peer Group II. Petitioner contends that respondent's January 8

decision will reduce the median costs used for calculating reimbursement of Peer Group II

nursing facilities and will likely decrease the overall amount of MaineCare reimbursement

available for nucsing facilities that are not in Peer Group Ill.

On August 24, 2015, the court denied respondent's motion to dismiss and ordered

respondent to file the administrative record within 30 days. Respondent filed the record on

September 25, 2015. The court issued a briefing schedule on September 28, 2015. Petitioner filed

its motion to take additional evidence and supplement the record and its motion to stay the

briefing schedule on October 5, 2015. Respondent filed a motion in opposition on October 23,

2015, and AHC filed a motion in opposition on October 26, 2015.

II. D1SCUSSION

A. Motion to Take Additional Evidence

"Except in limited circumstances, judicial review of an agency decision 'shall be

confined to the record upon which the agency decision was based."' },,!arlin v. Unemployment

Ins. Comm'n, 1998 ME 271, ~ 8 n.6, 723 A.2d 412 (quoting 5 M.R.S. § 11006(1)) (citation to

footnote only). A party may, however, request that the reviewing court take additional evidence

or order the taking of additional evidence as provided by 5 M.R.S. § 11006(1). M.R. Civ. P.

2 SOC(e). Under section 11006(1), the court may order the taking of additional evidence before the

agency if it finds that the additional evidence is necessary to deciding the petition for review, or

it may allow leave to present additional evidence if the evidence is material to the issues

presented and could not have been presented or was erroneously disallowed in the proceedings

before the agency. 5 M.R.S. § I 1006(1)(B) (2015). "The Administrative Procedure Act leaves it

to the discretion of the trial court to detennine whether additional evidence is necessary to

complete the record." ,\,furphy v. Bd. ofRnvtl. Prof., 615 A.2d 255, 260 (Me. 1992).

Petitioner argues that the record contains mostly respondent's "rules, licenses, and other

generic material" and is missing " testimony, analysis, or other evaluation" of the impact of

respondent's decision on other nursing facilities, including petitioner. (Pl.'s Mot. Addt' l Evid. 2­

3.) Specifically, petitioner wishes to supplement the record with the following additional

evidence: ( t) transcripts of testimony explaining the MaineCare reimbursement and rate setting

process to he provided by, at a minimum, petitioner's CFO, the director of respondent's Division

of Audit, and a financial analyst in respondent's Rate Setting Unit; (2) respondent' s. internal

emails and memoranda relating to its January 8 decision and any impact on nursing facilities

other than AHC; and (3) any documentation showing the assignment of nursing facilities to each

of the Peer Groups and any changes of those assigmnents. (Id. at 4-5.)

Petitioner's proffered evidence is not necessary or material because the only issue

property before the cou1t is whether respondent erred in denying petitioner's June 12 request for

administrative review. The Administrative Procedure Act (APA) entitles any person who is

aggrieved by fmal agency action to judicial review in Superior Court. 5 M.R.S. § 1100 I (I)

(2015 ). "Final agency action" means a "decision by an agency which affects the legal rights,

duties or privileges of specific persons, which is dispositive of all issues, legal and factual, and

3 for which no further recourse, appeal or review is provided within the agency." 5 M.R.S . §

8002(4) (2015). Respondent's January 8 decision cannot be final agency action because further

review of that decision was available within the agency. See l 0-144 C.M.R. ch. 101 , § 140.1.2(1 )

(2014) (providing administrative review of agency decisions); 10-144 C.M.R. ch. 101, § 1.21-1

(2014) (same). Indeed, petitioner's June 12 letter requested administrative review of the January

8 decision. Respondent's denial of that request on June 24 left petitioner with no further review

within the agency, and it is from that decision that petitioner appeals to this court. See l 0-144

C.M.R. ch. 101, § 140.1.2(4) (2014) (authorizing judicial review of administrative review); 10­

144 C.M.R. ch. 101, § 1.21-l(A) (2014) (same).

In its June 24 decision, respondent denied petitioner's request for review on the following

grounds: (1) the request was untimely under both section 140.1.2(1) and section 1.21-1 because

it was filed beyond the respective 30 and 60 day appeal periods; (2) petitioner lacked standing

under section 140 .1 because it was not the facility to which the January 8 decision issued; and (3)

petitioner lacked standing under section 1.21-1 because it was not aggrieved by the decision. The

court's review is confined to these issues. See 5 M.R.S. § 11001(1) (allowing judicial review of

final agency action); M.R. Civ. P. 80C(a) (same). Petitioner' s proffered evidence, which

challenges the merits of respondent's January 8 decision, is not necessary or material to

determining whether petitioner's June 12 request was timely or whether petitioner had standing

to make that request. The court therefore denies the motion to take additional evidence.

B. Motion to Stay

The briefing schedule has been stayed pending this order. See M.R. Civ. P. 80C(e)

("Upon the filing of a motion for the taking of additional evidence, the time limits contained in

this rule shall cease to run pending the issuance of an appropriate order of court specifying the

4 )

future course of proceedings with that motion.") . The court orders the following revised briefing

schedule pursuant to M.R. Civ. P. 80C(g):

1. Petitioner's brief is due within 40 days of the date of this order.

2. Respondent's brief and AHC ' s brief are due within 30 days after the service of

petitioner's brief.

3. Petitioner's reply brief, if any, is due within 14 days after last service of the brief

of any other party.

III. CONCLUSION

The court hereby ORDERS that petitioner's motion to take additional evidence and

supplement the record is DENIED and its motion to stay the briefing schedule is GRANTED.

Pursuant to M.R. Civ. P. 79(a), the clerk is directed to incorporate this Order by reference

in the docket.

Dated: U,-.. Z4 J tJ I(, 0

5 STATE OF MAINE SUPERJOR COURT CUMBERLAND, SS. CIVIL ACTION DOCKET NO. AP-15-21

CEDARS NURSING CASE CENTER d/b/a/ THE CEDARS,

Petitioner,

V. ORDER STATE OF MAINE DEPARTMENT OF HEALTH Cumber/and MAINE . ss, Clerk's Office AND HUMAN SERVICES, AUG 2 4 2015 Respondent. RECEIVED I. Background

Petitioner the Cedars appeals from two related decisions. The first is a January 8,

2015 decision by the Department of Health and Human Services (DHHS) that re­

classified the Aroostook Health Center (AHC) from Peer Group II to Peer Group III ("the

AHC decision"). The Cedars contends the AHC decision will affect its MaineCare

reimbursement rates. The second decision is one dated June 24, 2015, in which DHHS

denied the Cedars's request for an informal review or administrative hearing of the AHC

decision.

DHHS moves for an extension of time to file the administrative record and also

moves to dismiss the complaint under Rule 12(b)(6).

II. Discussion

A. The Administrative Record

Under Rule 80C(f), "The agency shall file the complete record of the proceedings

under review as provided by 5 M.R.S. § 11005." Under 5 M.R.S. § 11005, "The agency shall file in the reviewing court within 30 days after the petition for review is filed." If the

the petitioner believes the record is incomplete or over-inclusive, Rule 80C(f) sets forth a

procedure whereby the agency and petitioner work to modify the record. If unable to

agree, the petitioner can file a motion with the court to modify the contents of the record.

DHHS requested an extension to file the administrative record on the grounds that

if the motion to dismiss is granted, the record need not be filed. If however the motion is

denied, the court's decision will help DHHS determine the scope of materials to include.

DHHS takes the position that the decision to reclassify AHC from Peer Group II to Peer

Group III is not appealable by the Cedars and have moved to extend the deadline until

after a ruling on the motion to dismiss in order to avoid filing materials related to that

proceeding.

B. Motion to Dismiss: Standing

'When considering a motion to dismiss, the court considers the allegations

contained in the complaint as true and admitted by the defendant. Annable v. Bd ofEnvtl.

Prat., 507 A.2d 592,593 (Me. 1986). On a 12(b)(6) motion, the court determines whether

the complaint states a claim "upon which relief can be granted." M.R. Civ. P. 12(b)(6).

DHHS chiefly argues that the Cedars is not "aggrieved" and cannot appeal the

AHC decision. 1 See 5 M.R.S. § 11001 ("[A]ny person who is aggrieved by final agency

action shall be entitled to judicial review thereof in the Superior Court.") "A person is

aggrieved within the meaning of the APA if that person has suffered particularized

injury-that is, if the agency action operated prejudicially and directly upon the party's

1 DHHS also argues there has been no "final agency action" because the Cedars is not an aggrieved party. Because the argument hinges on the Cedars's status as an aggrieved party, the court considers the final agency action as part of the standing analysis.

2 property, pecuniary or personal rights." Nelson v. Bayroot, LLC, 2008 ME 91, , 10, 953

A.2d 378.

The amended complaint2 alleges that the Cedars is aggrieved in two respects.

First, the change in designation from Peer Group II to Peer Group III "will reduce median

costs used for calculating reimbursement of Peer Group II facilities, which will in turn

reduce MaineCare reimbursement to the Cedars." Second, "using the 'higher hospital

affiliated rate' to reimburse AHC will also likely mean a decrease in overall MaineCare

reimbursement available to reimburse nursing facilities not in Peer Group III, such as the

Cedars." (Pet. Compl. ,, 23-24.)

DHHS argues the Cedars is not "aggrieved" because as a factual matter, the

Cedars's MaineCare reimbursement remains unaffected by the AHC decision. In other

words, because any potential consequences flowing from the AHC decision have not yet

materialized, any injury or aggrieved status the Cedars could claim remains too

speculative to support standing.

Taking the facts alleged in the complaint as true and admitted by the Defendant,

the Cedars will suffer a decrease in MaineCare reimbursement that will be proximately

caused by the AHC decision. If true, this is a sufficiently particularized injury to support

standing at the motion to dismiss stage, especially where the agency has failed to timely

file the administratiye record. Without the record, the court has a limited context to

evaluate the rights affected by the AHC decision. Nelson, 2008 ME 91, ~ 10, 953 A.2d

378 ("We examine the issue of standing in context to determine whether the asserted

effect on the party's rights genuinely flows from the challenged agency action.") The

2 DHHS does not oppose the motion to amend. The court grants the motion to amend and considers the amended complaint for the purposes of this order.

3 complaint states a sufficiently particularized injury to support standing. The motion is

therefore denied.

UL Conclusion

As set forth above, the scope of the record is to be determined by reference to

scope of proceedings challenged at the agency level in the 80C petition. The agency is

responsible for filing the record, but lacks the prerogative to strategically withhold the

record in an effort to preemptively limit the issues fairly raised by the appeal. M.R. Civ.

P. 80C(f). Rule 80C(f) requires DHHS file a "complete record," including materials

related to the AHC classification decision that the Cedars appeals.

The clerk shall enter the following:

The Respondent's motion to dismiss is DENIED. The Respondent is hereby ordered to file the administrative record within 30 days.

SO ORDERED.

DATED: August£, 2015

4 JUSTICE COLE Date Filed: 06/16/2015 CUMBERLAND Docket No. AP15-0021 COUNTY " Action: BOC APPEAL

• CEDARS NURSING CARE CENTER MAINE DEPARTMENT OF HEALTH AND D/B/A THE CEDARS HUMAN SERVICES vs.

Plaintiff's Attorney Defendant's Attorney

MICHAEL A. DUDDY, ESQ JANE B. GREGORY, MG KELLY, REMMEL, & ZIMMERMAN OFFICE OF THE ATTORNEY GENERAL 52 EXCHANGE STREET, P.O. BOX 597 6 STATE HOUSE STATION PORTLAND, ME. 04112 AUGUSTA, ME. 04333

--­ CJ