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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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  2. A traditional parade of attorneys? Really Evansville? Y'all need to get out more. When is the traditional parade of notaries? Nurses? Sanitation workers? Pole dancers? I gotta wonder, do throngs of admiring citizens gather to laud these marching servants of the constitution? "Show us your billing records!!!" Hoping some video gets posted. Ours is not a narcissistic profession by any chance, is it? Nah .....

  3. My previous comment not an aside at court. I agree with smith. Good call. Just thought posting here a bit on the if it bleeds it leads side. Most attorneys need to think of last lines of story above.

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  5. He must be a Rethuglican, for if from the other side of the aisle such acts would be merely personal and thus not something that attaches to his professional life. AND ... gotta love this ... oh, and on top of talking dirty on the phone, he also, as an aside, guess we should mention, might be important, not sure, but .... "In addition to these allegations, Keaton was accused of failing to file an appeal after he collected advance payment from a client seeking to challenge a ruling that the client repay benefits because of unreported income." rimshot

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