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Hospital Center at Orange v. Guhl

June 1, 2000

HOSPITAL CENTER AT ORANGE, ST. FRANCIS MEDICAL CENTER, ST. MARY HOSPITAL (PASSAIC), DEBORAH HEART AND LUNG CENTER, CATHEDRAL HEALTH CARE SYSTEM, INC., ST. FRANCIS HOSPITAL (JERSEY CITY), MOUNTAINSIDE HOSPITAL, PALISADES GENERAL HOSPITAL, RANCOCAS HOSPITAL, ST. MARY HOSPITAL (HOBOKEN), AND HACKETTSTOWN COMMUNITY HOSPITAL, PLAINTIFFS-APPELLANTS,
v.
MICHELE K. GUHL, COMMISSIONER OF THE DEPARTMENT OF HUMAN SERVICES, AND MARGARET MURRAY, DIRECTOR OF THE DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES, DEFENDANTS-RESPONDENTS.



Before Judges Skillman, D'Annunzio and Newman.

The opinion of the court was delivered by: Skillman, P.J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued January 11, 2000

On appeal from Division of Medical Assistance and Health Services, Department of Human Services.

This case deals with the obligation of the Division of Medical Assistance and Health Services (Division) to provide prompt review of hospitals' appeals from administrative determinations of Medicaid reimbursement rates.

On February 17, 1999, appellants, which are twelve non-profit acute care hospitals that participate in the Medicaid program, initiated this action in lieu of prerogative writs in the Law Division. The named defendants were Margaret Murray, the Director of the Division, and Michele K. Guhl, the Commissioner of the Department of Human Services. Appellants alleged that they had filed administrative appeals with the Division challenging the Medicaid reimbursement rates established in January 1996, October 1996, January 1997 and January 1998, but that the Division had "continually and consistently failed to make any determination or issue any decision with respect to any of the . . . rate appeals." Appellants sought an order directing the Division to decide all their pending rate appeals within thirty days. Appellants also sought an order directing the Division to decide any future rate appeals within 120 days. In addition, appellants sought an order requiring "defendants to pay . . . all costs and fees, including attorneys fees, incurred in prosecuting this action."

Appellants' claims were based on principles of state administrative law as well as Title XIX of the Federal Social Security Act, commonly known as the Medicaid Act, 42 U.S.C.A. §§ 1396-1396v, and the regulations adopted thereunder. In addition, appellants contended that the Division's failure to promptly decide their Medicaid rate appeals violates the Due Process Clause of the Fourteenth Amendment. Appellants asserted that their federal claims were maintainable under 42 U.S.C.A. § 1983.

Respondents filed a motion to dismiss appellant's complaint or, in the alternative, to transfer the case to this court. On May 13, 1999, the Law Division transferred the case, concluding that this court has exclusive jurisdiction because appellants seek review of the inaction of a state administrative agency.

On June 29, 1999, appellants filed a motion for the summary entry of an order compelling the Division to immediately decide their pending Medicaid rate appeals.

On July 9, 1999, while appellants' motion was pending, the Division issued final decisions in all of appellants' pending Medicaid rate appeals except for four filed by Deborah Heart and Lung Center. *fn1 Twenty-nine of these decisions consisted of identical form letters that denied the hospitals' Medicaid rate appeals on the ground that the "hospital did not sustain a marginal loss in providing inpatient services to Medicaid beneficiaries at the rates under appeal." The other two were form letters that dismissed the hospitals' rate appeals on the ground that they had been filed beyond the twenty-day period allowed under N.J.A.C. 10:52-9.1(b)(1).

Following these decisions, respondents filed a motion to dismiss this appeal on the ground that appellants' claim that the Division had failed to decide their rate appeals within a reasonable period of time was moot because the Division had issued decisions. Appellants opposed the motion on the ground that their claims were not limited to a demand for issuance of decisions in the pending rate appeals. We denied respondents' motion.

Appellants now ask this court to grant declaratory and injunctive relief that would require the Division to decide future Medicaid rate appeals in a timely manner. Specifically, appellants seek an order that would require the Division "to issue written determinations of hospitals' rate appeals within 120 days." Appellants also seek a determination that the decisions issued by the Division on July 9, 1999 were "incomplete" and an order directing the Division to issue "complete" decisions in their rate appeals. In addition, appellants seek an award of attorney's fees under 42 U.S.C.A. § 1988.

We conclude that the Division has an obligation to decide Medicaid rate appeals within a reasonable period of time, and that the Division failed to satisfy that obligation in processing the appeals that precipitated this action. However, neither federal nor state law obligates the Division to decide Medicaid rate appeals within 120 days or any other fixed time period, and we do not believe it would be appropriate for this court to impose such an obligation. Therefore, we deny appellants' request for injunctive relief compelling the Division to decide future Medicaid rate appeals within a specified time period. We also reject appellants' demand for a declaration that the decisions in the rate appeals issued on July 9, 1999, are "incomplete." We reject appellants' claim for attorney's fees under 42 U.S.C.A. § 1988.

I.

Preliminarily, we note that the Law Division properly transferred the case to this court.

Rules 2:2-3(a)(2) and 2:2-4 "contemplate[] that 'every proceeding to review the action or inaction of a state administrative agency [shall] be by appeal to the Appellate Division.'" Pascucci v. Vagott, 71 N.J. 40, 52 (1976) (quoting Central R.R. v. Neeld, 26 N.J. 172, 185, cert. denied, 357 U.S. 928, 78 S. Ct. 1373, 2 L. Ed. 2d 1371 (1958)). "The term 'action,' found in [Rules 2:2-3(a) and 2:2-4], includes inaction." Mathews v. Finley, 46 N.J. Super. 175, 177 (App. Div.), certif. denied, 25 N.J. 283 (1957). Therefore, the Appellate Division has exclusive jurisdiction to consider a claim of state administrative agency inaction. Pascucci v. Vagott, supra, 71 N.J. at 52; Johnson v. New Jersey State Parole Bd., 131 N.J. Super. 513, 517-21 (App. Div. 1974), certif. denied, 67 N.J. 94 (1975); see also Toll Bros., Inc. v. State of New Jersey, Dept. of Envtl. Protection, 242 N.J. Super. 519, 525-26 n.3 (App. Div. 1990); Equitable Life Mortgage & Realty Investors v. New Jersey Div. of Taxation, 151 N.J. Super. 232, 237-38 (App. Div.), certif. denied, 75 N.J. 535 (1977); but cf. Township of Montclair v. Hughey, 222 N.J. Super. 441, 446-48 (App. Div.), modified on other grounds, 108 N.J. 587 (1987). *fn2 If our determination of such a claim requires the development of a factual record, "we can remand to the agency for a statement of reasons, for further action by the agency, or can permit the Law Division to create a record and make fact-finding." Trantino v. New Jersey State Parole Bd., 296 N.J. Super. 437, 460 (App. Div. 1997), modified on other grounds, 154 N.J. 19 (1998).

Accordingly, under our appellate rules, the appropriate procedural route for a party claiming to be adversely affected by the inaction of a state administrative agency is to file a notice of appeal and motion for summary disposition accompanied by a supporting brief, certification and other relevant factual materials. The agency's response to such a motion affords this court an opportunity to determine whether there is any dispute concerning the factual allegations upon which an inaction claim is grounded. If there is no dispute, this court can proceed to a prompt disposition of the claim. If there is a dispute, the matter can be remanded to the agency, an Administrative Law Judge or the Law Division to develop a record and make appropriate factual findings.

In this case, appellants' motion for the summary entry of an order compelling the Division to immediately decide their pending Medicaid rate appeals was mooted when the Division decided those appeals while the motion was still pending. Insofar as the certifications submitted in connection with that motion relate to appellants' other claims, the parties consented to supplementation of the record to include their respective certifications. Moreover, we are satisfied from our review of the certifications that there is no dispute concerning any factual allegations material to a disposition of appellants' remaining claims. Therefore, this appeal is ripe for a final decision without the need for a remand.

II.

Respondents renew their argument that this appeal should be dismissed as moot because the Division has now rendered decisions in the rate appeals that appellants sought to compel the Division to decide. Appellants respond that we have already rejected this argument by denying respondents' motion to dismiss the appeal.

Because our order denying respondents' motion to dismiss was interlocutory, it is subject to reconsideration. See State v. Reldan, 100 N.J. 187, 205 (1985); Johnson v. Cyklop Strapping Corp., 220 N.J. Super. 250, 257-64 (App. Div. 1987), certif. denied, 110 N.J. 196 (1988). However, we remain satisfied that this appeal is not moot.

Although the Division's failure to issue timely decisions in appellants' then pending Medicaid rate appeals precipitated this action, appellants sought not only an order compelling the Division to decide the pending appeals within thirty days, but also a directive that the Division decide any future Medicaid rate appeal within 120 days. In addition, after the Division decided the pending rate appeals, appellants asserted a claim that those decisions were "incomplete" and sought an order directing the Division to issue "complete" decisions. Appellants also seek an award of attorney's fees. These claims were not mooted by the issuance of decisions in the rate ...


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