Guthrie v. Dept. of Social Rehabi

No. 13317 IN THE SUPREME COURT OF THE STATE OF MONTANA

RALPH GUTHRIE GERTRUDE GUTHRIE, husband and wife, d/b/a Guthrie Centers Company, Plaintiffs and Respondents,

DEPARTMENT OF SOCIAL AND REHABILITATION SERVICES OF THE STATE OF MONTANA, Defendant and Appellant.

Appeal from: District Court of the First Judicial District, Honorable Peter G. Meloy, Judge presiding. Counsel of Record: For Appellant: Thomas H. Mahan argued, Helena, Montana For Respondents: Smith, Smith and Sewell, Helena, Montana Chadwick H. Smith argued, Helena, Montana

Submitted: January 20, 1977 Decided:

Filed :APR 2 1 195T

Clerk M r . J u s t i c e Gene B. Daly d e l i v e r e d t h e Opinion o f t h e Court.

The Department of S o c i a l and R e h a b i l i t a t i o n S e r v i c e s of t h e s t a t e of Montana (SRS) a p p e a l s from t h e o r d e r of t h e d i s t r i c t c o u r t , Lewis and C l a r k County, g r a n t i n g p l a i n t i f f s ' motion f o r summary judgment. P l a i n t i f f s sought a d e c l a r a t o r y judgment under s e c t i o n 93-8901, R.C.M. 1947, and a d e t e r m i n a t i o n of r e a s o n a b l e c o s t s and p r o f i t allowance a l l e g e d l y due them.

P l a i n t i f f s , doing b u s i n e s s a s G u t h r i e C e n t e r s Company, own and o p e r a t e t h e Libby Convalescent C e n t e r , a n u r s i n g home l o c a t e d i n Libby, Montana, l i c e n s e d by t h e s t a t e of Montana t o provide s k i l l e d n u r s i n g c a r e and r e l a t e d s e r v i c e s t o i t s r e s i d e n t s . The Center commenced o p e r a t i o n i n February 1971, and h a s been under

~ d ~ r t r a wti t h SRS s i n c e March 1 9 7 1 c t o p r o v i d e s k i l l e d and i n t e r -

mediate n u r s i n g home c a r e t o w e l f a r e r e c i p i e n t s .

The f i r s t c o n t r a c t which p l a i n t i f f s executed w i t h SRS,

dati~led Annual Agreement, provided t h a t p l a i n t i f f s would r e c e i v e

$12.00 p e r day f o r each p a t i e n t r e q u i r i n g s k i l l e d n u r s i n g c a r e and $10.00 p e r day f o r each p a t i e n t r e q u i r i n g i n t e r m e d i a t e c a r e f o r the p e r i o d March 1, 1971 through February 29, 1972. The c o n t r a c t

< s t a t e d t h e r a t e s would be r e e v a l u a t ~ d n n u a l l y , o r upon r e c e i p t a

o r bona f i d e evidence i n d i c a t i n g c o s t s had v a r i e d a minimum o f 10X o r more, w i t h i n t h e l i m i t a t i o n s and a v a i l a b i l i t y of SRS funds. This c o n t r a c t was executed i n compliance w i t h SRS'S "GUIDELINES

F U K REIMBURSEMENT F R SKILLED NURSING HOME CARE AND INTERMEDIATE O

CAKE BASED ON REASONABLE COST", e f f e c t i v e June 1, 1970, which provided t h a t new f a c i l i t i e s , commencing o p e r a t i o n where no c o s t d a t a was a v a i l a b l e , would be a f f o r d e d a n e g o t i a t e d i n t e r i m r a t e s u b j e c t t o subsequent review, based on r e a s o n a b l e c o s t s , a f t e r a minimum p e r i o d o f s i x months o p e r a t i o n and a minimum of 80% occupancy.

On August 1 5 , 1971, t h e government i n i t i a t e d Phase I of i t s bconomic S t a b i l i z a t i o n Program. SRS, p u r p o r t e d l y i n compliance w i t h t h e wage-price f r e e z e , r e f r a i n e d from i n c r e a s i n g t h e r a t e s f o r n u r s i n g home c a r e . On J u l y 1, 1972, upon removal of wage-price r e s t r i c t i o n s , SRS i n c r e a s e d t h e r a t e f o r s k i l l e d n u r s i n g c a r e t o $13.31 p e r day and i n c r e a s e d t h e r a t e f o r i n t e r m e d i a t e c a r e t o $12.30 p e r day.

Subsequent t o t h e i n c r e a s e i n r a t e s and removal of wage-price r e s t r i c t i o n s , t h e p a r t i e s e n t e r e d i n t o a second agreement f o r n u r s i n g home c a r e covering t h e p e r i o d December 22, 1972 through December 22, 1973. On May 1, 1973, SRS a g a i n i n c r e a s e d t h e r a t e s f o r n u r s i n g home c a r e t o $14.27 p e r day f o r s k i l l e d c a r e and $13.24 per day f o r i n t e r m e d i a t e c a r e . These i n c r e a s e d r a t e s were maint a i n e d f o r t h e remainder of t h e time p e r i o d contemplated i n t h e instant suit. SRS contends t h e s e r a t e s a r e t h e same r a t e s p l a i n -t i f f s charged t h e i r p r i v a t e p a t i e n t s .

O November 29, 1974, p l a i n t i f f s f i l e d a complaint i n t h e n

district c o u r t seeking (1) a d e t e r m i n a t i o n of p l a i n t i f f ' s r i g h t s pursuant t o t h e agreements between t h e p a r t i e s , s t a t u t e s and r u l e s and, ( 2 ) a d e t e r m i n a t i o n of reasonable c o s t s and p r o f i t allowance due p l a i n t i f f s f o r t h e p e r i o d March 1, 1971 through December 31, 1973. Subsequently, p l a i n t i f f s f i l e d a motion f o r summary judgment, granted by t h e d i s t r i c t c o u r t and e n t e r e d on December 31, 1 9 7 5 .

The c o n t r o l l i n g i s s u e on appeal i s whether t h e e n t r y of

suliunary judgment f o r p l a i n t i f f s was e r r o r . W find the granting e

01 summary judgment was e r r o r . The judgment i s vacated and t h e cause remanded t o t h e d i s t r i c t c o u r t f o r f u r t h e r proceedings.

Rule 5 6 ( c ) , M.R.Civ.P., s t a t e s t h a t summary judgment s h a l l be rendered only i f :

"* * * t h e pleadings, d e p o s i t i o n s , answers t o i n t e r r o g a - t o r i e s , and admissions on f i l e show t h a t t h e r e i s no genuine i s s u e a s t o any m a t e r i a l f a c t and t h a t t h e moving p a r t y i s e n t i t l e d t o a judgment a s a matter of law."

The general purpose underlying Rule 56, M.R.Civ.P., i s t o promptly dispose of a c t i o n s which have no genuine i s s u e of f a c t , thereby encouraging j u d i c i a l economy through t h e e l i m i n a t i o n of unnecessary t r i a l , delay and expense. Silloway v. Jorgenson, 146 Mont. 307, 406 P.2d 167. Nev-ertheless, summary judgment i s n o t a s u b s t i t u t e for a t r i a l . Johnson v. Johnson, Mont . Y P.2d Y 34 St.Rep. 162. See: Harland v. Anderson, Mont . > 548 P.2d 613, 33 St.Rep. 363, f o r a d i s c u s s i o n of summary judgment under Rule 5 6 ( c ) , M.R.Civ.P.

The grounds upon which t h e d i s t r i c t c o u r t granted p l a i n t i f f s ' motion f o r summary judgment were:

1. There was no genuine i s s u e a s t o any m a t e r i a l f a c t .

2. F i n a n c i a l statements and c o s t r e p o r t s were timely submitted by p l a i n t i f f s .

3. The Libby Convalescent Center reached an 80% p a t i e n t

c a p a c i t y by t h e end of t h e 1971 calendar y e a r , a f t e r more than s i x months operation.

4. P l a i n t i f f s were e n t i t l e d t o review and adjustment of t h e i n t e r i m d a i l y reimbursement r a t e s based upon p l a i n t i f f s ' reasonable c o s t s a s shown by t h e i r f i n a n c i a l statements and c o s t r e p o r t s .

5. The Federal Economic S t a b i l i z a t i o n Program d i d n o t prevent SRS from i n c r e a s i n g r a t e s a s a r e s u l t of t h e i n c r e a s e i n t h e s i z e of t h e p l a i n t i f f s ' work f o r c e and increased o u t l a y f o r s u p p l i e s and equipment a t s t a b i l i z e d wages and p r i c e s .

6. Reimbursement r a t e s f o r providing nursing home s e r v i c e s t o m$dicaid p a t i e n t s were n o t l i m i t e d t o t h e r a t e p l a i n t i f f s charged p r i v a t e p a t i e n t s a t t h e Libby Convalescent Center i n 1971, 1972 and 1973, such reasonable c o s t s being l i m i t e d by t h e amount p l a i n t i f f s charged p r i v a t e p a t i e n t s i n 1974, i . e . $16.00 per day f o r s k i l l e d nursing c a r e and $15.00 p e r day f o r i n t e r -mediate carer - .

7. That p l a i n t i f f s were e n t i t l e d t o judgment a s a m a t t e r of law.

The d i s t r i c t c o u r t then concluded, a s a matter of law:

a ) That SRS Guidelines f o r Reimbursement provided f o r r e t r o -active r a t e increases;

b) p l a i n t i f f s were e n t i t l e d t o a r a t e i n c r e a s e a f t e r s i x months o p e r a t i o n , s i n c e t h e Libby Convalescent Center was operat i n g a t 80% occupancy and had incurred increased c o s t s of o p e r a t i o n ; and

c ) reasonable reimbursement r a t e s f o r nursing home c a r e f o r welfare r e c i p i e n t s could exceed those r a t e s charged p r i v a t e p a t i e n t s i n t h e years 1971,1972 and 1973.

P l a i n t i f f s contend t h e d i s t r i c t c o u r t c o r r e c t l y granted summary judgment a s a matter of law and should be affirmed on appeal.

One of t h e principal disagreements between t h e p a r t i e s i s whether reimbursement r a t e s can be increased and given r e t r o a c t i v e effect. SRS contends t h e o r i g i n a l c o n t r a c t between t h e p a r t i e s provided a negotiated i n t e r i m r a t e which was t o be reevaluated annually o r upon r e c e i p t of bona f i d e evidence e s t a b l i s h i n g a v a r i a t i o n of c o s t s by a minimum of 10%. Lee v. L a i t i n e n , 152 Mont. 230, 448 ~ . 2 d154. SRS argues once reevaluation occurred any increase in rates would apply prospectively with the exception of the 60 day period allowed for the filing of financial statements and cost reports.

Plaintiffs, on the other hand, contend the SRS Guidelines for Reimbursement and the second contract provide for fiscal retroactive treatment of rate increases. The applicable language of the contract reads:

"* * * Reports received after 60 days will forfeiture any right for retroactive increase to the beginning of your fiscal year."

Since this language standing alone does not appear to'support the conclusion that rate- increases could be retroacti'vely applied

to prior fiscal years, a genuine issue as to a material fact remains unresolved and therefore evidence should be taken concerning the intent of the contracting parties at the time the agreement was executed and past business practices involving rate increases and their effect. Kober & Kyriss v. Billings Deac.Hosp., 148 Mont. 117, 417 P.2d 476.

Second, SRS questions the determination that the Libby Convalescent Center was operating at 80% occupancy and thus entitled to a rate increase. SRS contends the 80% ,occupancy

level pertained to each individual class of service, not the total occupancy level of the facility. Plaintiffs, in their answers to request for admissions, stated the occupancy level for skilled nursing care at the Libby Convalescent Center never reached 80% for the three years in question. Plaintiffs contend that total occupancy level controls and they are only able to satisfy the 80% ,occupancy level by combining the occupancy level

of skilled nursing with the occupany level of intermediate care. T-he Guidelines for Reimbursement provides:

"* * * New facilities commencing operations for which no cost data is available will be afforded a negotiated interim rate subject to subsequent review based on reasonable costs after a minimum period of six months operation and a minimum of 80 ~ercentoccupancy.'' (Emphasis added. )

The general language of the Guidelines for Reimbursement is open to interpretation when coupled with the consideration that rates

for nursing care are increased for specific levels of care and

not for care in toto. SRS should have been allowed the opportunity to present evidence construing the meaning of "80 percent occupancy".

Gropp v. Lotton, 160 Mont. 415, 503 P.2d 661.

A third issue resolved by the district court was the question of whether reimbursement rates for nursing home care could exceed

the rates charged private patients at the Libby Convalescent Center. A genuine and material question of fact arises as to the reason- ableness of rates for the nursing care of welfare recipients when

those rates exceed the rates charged private patients. Genuine: issues of material fact remain that have not been

resolved and plaintiffs are not entitled to summary judgment as

a matter of law, therefore this action is remanded to the district court for further proceedings consistent with this opinion.

I

Justice We Concur: