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State responsible for costs in relocating Medicaid patients

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Indiana Family and Social Services must reimburse an Arcadia, Ind., long-term care facility for the costs the facility paid in caring for Medicaid patients after FSSA ended its provider agreement based on the conditions at the facility, the Indiana Court of Appeals ruled Monday.

In Randall Woodruff, trustee, U.S. Bankruptcy Court, on behalf of Legacy Healthcare Inc. v. Indiana Family & Social Services Administration, Office of Medicaid Policy and Planning, No. 29A02-1002-PL-220, Legacy Healthcare Inc. operated New Horizon Development Center, an intermediate care facility for the mentally disabled from November 1993 to November 2000. It was certified and licensed, and was able to receive funds from FSSA to operate its facility until September 1999 when the FSSA terminated its provider contract after discovering poor conditions and care at the facility. New Horizon didn’t appeal, and continued to operate the facility for another year without a Medicaid provider agreement and to bill FSSA for its services. Eventually the facility went into bankruptcy and receivership, and all the patients were transferred by December 2001.

At issue is who is responsible for the costs New Horizon paid after its agreement was ended and before it went into receivership. The trial court ruled New Horizon was responsible for the nearly $4 million in costs.

But it was the FSSA’s responsibility as the state Medicaid agency to transfer the residents and ensure their safety once the agreement was terminated, and so that agency should bear the costs, the Court of Appeals concluded. The judges cited the State Operations Manual prepared by the Centers for Medicare and Medicaid Services to support their ruling.

Once the provider agreement was involuntarily terminated, the FSSA neither accepted primary responsibility for relocating the residents nor paid for their care, wrote Judge Nancy Vaidik. The judges rejected the agency’s argument that it couldn’t legally reimburse New Horizon for the care of the Medicaid recipients because the facility was decertified.

“Although there is evidence that FSSA took some initial steps to transfer the Medicaid patients from New Horizon once New Horizon’s provider agreement was terminated, the bottom line is that FSSA left them at New Horizon and let New Horizon pay for them until New Horizon ran out of money, thereby necessitating the appointment of a receiver,” she wrote.

The judge noted it may sound attractive for New Horizon to pay the nearly $4 million because the facility allowed the care of the patients to deteriorate to the point that its contract was terminated, but FSSA’s responsibility to transfer the patients is triggered when the provider agreement is either voluntarily or involuntarily terminated.

The appellate court ordered summary judgment be entered in favor of New Horizon on its quantum meruit claim in the amount of $3.96 million. The judges also reversed the trial court in allowing FSSA to set off the nearly $1 million it owed to New Horizon for breach of contract against the costs FSSA incurred in operating the receivership.

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  1. Im very happy for you, getting ready to go down that dirt road myself, and im praying for the same outcome, because it IS sometimes in the childs best interest to have visitation with grandparents. Thanks for sharing, needed to hear some positive posts for once.

  2. Been there 4 months with 1 paycheck what can i do

  3. our hoa has not communicated any thing that takes place in their "executive meetings" not executive session. They make decisions in these meetings, do not have an agenda, do not notify association memebers and do not keep general meetings minutes. They do not communicate info of any kind to the member, except annual meeting, nobody attends or votes because they think the board is self serving. They keep a deposit fee from club house rental for inspection after someone uses it, there is no inspection I know becausee I rented it, they did not disclose to members that board memebers would be keeping this money, I know it is only 10 dollars but still it is not their money, they hire from within the board for paid positions, no advertising and no request for bids from anyone else, I atteended last annual meeting, went into executive session to elect officers in that session the president brought up the motion to give the secretary a raise of course they all agreed they hired her in, then the minutes stated that a diffeerent board member motioned to give this raise. This board is very clickish and has done things anyway they pleased for over 5 years, what recourse to members have to make changes in the boards conduct

  4. Where may I find an attorney working Pro Bono? Many issues with divorce, my Disability, distribution of IRA's, property, money's and pressured into agreement by my attorney. Leaving me far less than 5% of all after 15 years of marriage. No money to appeal, disabled living on disability income. Attorney's decision brought forward to judge, no evidence ever to finalize divorce. Just 2 weeks ago. Please help.

  5. For the record no one could answer the equal protection / substantive due process challenge I issued in the first post below. The lawless and accountable only to power bureaucrats never did either. All who interface with the Indiana law examiners or JLAP be warned.

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