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FSSA able to terminate 9-year Medicaid provider contract without cause

April 7, 2014

An Indiana Court of Appeals panel unanimously rejected a company’s argument that its state contract was wrongfully terminated. The company argued it has a property interest in continuing to be a Medicaid services provider.
 
Umbrella Family Waiver Services LLC signed a contract with the Indiana Family and Social Services Administration in 2003 to provide home- and community-based services under the Medicaid program. The agreement included provisions that allowed the state to end the contract for no reason with 60 days notice.

However, when FSSA notified Umbrella the contract was being terminated, the service provider fought back by requesting an administrative review. Umbrella was unable to convince the administrative law judge to rule in favor of its motion for summary judgment and the company was unsuccessful in its request for a review of the summary judgment decision.

Turning to the courts, Umbrella filed a Verified Petition for Judicial Review. After the Marion Superior Court denied the petition and affirmed FSSA’s termination of the contract, Umbrella filed an appeal with the Court of Appeals.

The denial of the verified petition was affirmed in Umbrella Family Waiver Services, LLC, v. Indiana Family and Social Services Administration, 49A02-1306-PL-525.
  
The COA did not find merit with Umbrella’s arguments that it has a property interest in continuing to serve as a Medicaid provider. FSSA has discretion in drafting contracts, the Court of Appeals pointed out, so Umbrella did not have a legitimate expectation that the state would provide a reason for the termination. Also, the appellate court found that Umbrella was not entitled to additional processes beyond the 60-day notice requirement.
 

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