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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. Oh, the name calling was not name calling, it was merely social commentary making this point, which is on the minds of many, as an aside to the article's focus: https://answers.yahoo.com/question/index?qid=20100111082327AAmlmMa Or, if you prefer a local angle, I give you exhibit A in that analysis of viva la difference: http://fox59.com/2015/03/16/moed-appears-on-house-floor-says-hes-not-resigning/

  2. Too many attorneys take their position as a license to intimidate and threaten non attorneys in person and by mail. Did find it ironic that a reader moved to comment twice on this article could not complete a paragraph without resorting to insulting name calling (rethuglican) as a substitute for reasoned discussion. Some people will never get the point this action should have made.

  3. People have heard of Magna Carta, and not the Provisions of Oxford & Westminster. Not that anybody really cares. Today, it might be considered ethnic or racial bias to talk about the "Anglo Saxon common law." I don't even see the word English in the blurb above. Anyhow speaking of Edward I-- he was famously intolerant of diversity himself viz the Edict of Expulsion 1290. So all he did too like making parliament a permanent institution-- that all must be discredited. 100 years from now such commemorations will be in the dustbin of history.

  4. Oops, I meant discipline, not disciple. Interesting that those words share such a close relationship. We attorneys are to be disciples of the law, being disciplined to serve the law and its source, the constitutions. Do that, and the goals of Magna Carta are advanced. Do that not and Magna Carta is usurped. Do that not and you should be disciplined. Do that and you should be counted a good disciple. My experiences, once again, do not reveal a process that is adhering to the due process ideals of Magna Carta. Just the opposite, in fact. Braveheart's dying rebel (for a great cause) yell comes to mind.

  5. It is not a sign of the times that many Ind licensed attorneys (I am not) would fear writing what I wrote below, even if they had experiences to back it up. Let's take a minute to thank God for the brave Baron's who risked death by torture to tell the government that it was in the wrong. Today is a career ruination that whistleblowers risk. That is often brought on by denial of licenses or disciple for those who dare speak truth to power. Magna Carta says truth rules power, power too often claims that truth matters not, only Power. Fight such power for the good of our constitutional republics. If we lose them we have only bureaucratic tyranny to pass onto our children. Government attorneys, of all lawyers, should best realize this and work to see our patrimony preserved. I am now a government attorney (once again) in Kansas, and respecting the rule of law is my passion, first and foremost.

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