# SeniorsPlus v. Maine Department of Health and Human Services

> Superior Court of Maine · January 23, 2017

URL: https://www.frixlaw.com/law-library/cases/10811488

## Case

- **Court:** Superior Court of Maine
- **Decided:** January 23, 2017
- **Precedential status:** Unpublished
- **Opinion:** Opinion
- **Judges:** MaryGay Kennedy
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

STATE OF MAINE SUPERIOR COURT
ANDROSCOGGIN, ss. CIVIL ACTION
DOCKET NO. AUBSC-AP-16-008
RE CE!VE D ?: FILED
SENIORSPLUS,
JAN 2 3 2017
Petitioner,
AND~OSCOGGI N .
V. SUPE ~ IOR ~ ER ON PETITIONER'S MOTION
) TO TAKE ADDITIONAL EVIDENCE
MAINE DEPARTMENT OF HEALTH )
AND HUMAN SERVICES, )
)
Respondent. )

Presently before the court is Petitioner SeniorsPlus' s motion requesting that this

case be remanded to the Maine Department of Health and Human Services ("DHHS")

for the taking of additional evidence before the agency. Based on the following,

Petitioner's motion is granted.

I. BACKGROUND
Petitioner SeniorsPlus, also as known Elder Independence of Maine, is a private,

non-profit corporation registered to do business in the State of Maine. (R. Tab A at 5.)

On July 1, 2008, SeniorsPlus entered into a contract with DHHS's Office of Elder

Services ("OES") for the 2009 fiscal year, contract number OES-09-351 (the "2009

contract"). (Id.) Under the 2009 contract, SeniorsPlus agreed to provide certain

services, including home care management services for DHHS clients, and payment

processing for third parties who provide direct home-based care ("HBC") services to

DHHS clients. (Id.) The 2009 Contract was amended several times to increase the total

dollar amount of the contract and to extend the contract through June 30, 2010. (Id.)

The total amount of the 2009 contract through June 30, 2010, was $17,336,325. (Id.)

Pursuant to its terms, the 2009 contract was subject to the Maine Uniform

Accounting and Auditing Practices for Community Agencies ("MAAP"), 10-144 C.M.R.

Page 1 of 18
ch. 30, et seq. (Id.) Pursuant to MAAP, DHHS conducted an audit of the 2009 contract in

2013. (Id. at 6.) On June 28, 2013, DHHS issued a report that, according to its audit,

DHHS had overpaid SeniorsPlus $1,108,787 under the 2009 contract and ordered

SeniorsPlus to reimburse DHHS in that amount. (Id.)

SeniorsPlus sent a letter of appeal to the director of the DHHS' s Division of

Audit on August 12, 2013, asserting that DHHS's determination that it had overpaid

SeniorsPlus was in error. (R. Tab DHHS-7.) SeniorsPlus asserted: (1) that

approximately $437,008 in payments from DHHS to SeniorsPlus, though received

during the 2009 fiscal year, were for a prior contract and incorrectly included in the

agency's 2013 audit; and (2) that the remaining $670,645 in alleged overpayments were

the result of DHHS's use of an improper settlement methodology. (Id.) DHHS's

Division of Audit denied the appeal on August 8, 2014. (R. Tab DHHS-8.)

On October 2, 2014, SeniorsPlus filed a letter of appeal and request for a hearing

with DHHS's office of administrative hearings. (R. Tab DHHS-9.) An administrative

hearing before a DHHS hearing officer was held on November 16, 2015. (R. Tab A at 1.)

On February 16, 2016, the hearing officer issued a recommended decision upholding the

agency's determination that SeniorsPlus owed the agency $1,108,787 in reimbursement.

(Id. at 6.) SeniorsPlus filed exceptions to the recommended decision on March 8, 2016.

(R. Tab B.) The Commissioner of DHHS issued final decision adopting the hearing

officer's recommended decision on April 13, 2016. (R. Tab C.)

Pursuant to §11002 of the Maine Administrative Procedures Act ("APA") and

Maine Rule of Civil Procedure SOC, SeniorsPlus filed a petition for review of final

agency action with this court on May 20, 2016. SeniorsPlus asserts the following: (1) the

hearing officer violated the provisions of APA and committed errors of law by

improperly excluding relevant evidence, prohibiting SeniorsPlus from presenting

Page 2 of 18
evidence and argument on relevant issues, and failing to require DHHS to produce

employees with relevant evidence; (2) the hearing officer committed errors of law in

interpreting the 2009 contract and finding that DHHS was not estopped by its promises

to SeniorsPlus; (3) the hearing officer's interpretation of "cost sharing" was not

supported by substantial evidence in the record; and, (4) the hearing officer's decision

was arbitrary, capricious, and an abuse of discretion because the hearing officer

repeatedly misstated the issues presented, denied SeniorsPlus access to relevant and

material evidence, and denied SeniorsPlus the opportunity to present relevant and

material evidence and witnesses. (Pet. q[q[ A-E.)

Following an extension of time, the certified record was filed on July 18, 2016.

SeniorsPlus filed this motion to take additional evidence along with an offer of proof on

August 31, 2016. The court granted DHHS's motion to allow the late filing of its

opposition to the motion to take additional evidence on October 5, 2016. SeniorsPlus

filed a reply on October 24, 2016.

II. STANDARD OF REVIEW

Pursuant to Maine Rule of Civil Procedure Rule 80C(e) and § 11006(1) of the

AP A, a party seeking judicial review of an agency action may file a motion with the

court requesting that the court order the taking of additional evidence before the

agency. M.R. Civ. P. 80C(e); 5 M.R.S. § 11006(1)(B). The motion shall be supported by a

"detailed statement, in the nature of an offer of proof, of the evidence intended to be

taken." M.R. Civ. P. 80C(e). The moving party's statement must be sufficient to permit

the court to determine whether the taking of additional evidence is appropriate. Id.

After hearing, the court shall issue an appropriate order specifying the future course of

proceedings. Id.

Page 3 of 18
Section 11006(1)(B) of the APA provides that the court may order the taking of

additional evidence by the agency if: (1) the court finds that that the additional evidence

is necessary to deciding the petition for review; or (2) if the moving party demonstrates

(a) that the additional evidence is material to the issues presented in the review; and (b)

the additional evidence could not have been presented or was erroneously disallowed

in the proceedings before the agency. 5 M.R.S. § 11006(1)(B). After the taking of

additional evidence, the agency may modify its findings and decisions. Id. The agency

shall file the additional evidence and any new findings or decisions with the court,

which shall become part of the record for review. Id.

Under the APA, an agency need not observe the rules of evidence observed by

courts. Id. § 9057(1). Generally, evidence shall be admitted before an agency "if it is the

kind of evidence upon which reasonable persons are accustomed to rely in the conduct

of serious affairs." Id. § 9057(2). An agency may exclude irrelevant or unduly

repetitious evidence. Id. DHHS's own Administrative Hearing Regulations mirror the

APA: evidence shall be admitted if it is the kind of evidence upon which reasonable

persons are accustomed to rely in the conduct of serious affairs; evidence that is

irrelevant or unduly repetitious may be excluded; and formal rules of evidence shall not

be observed. 10-144 C.M.R. ch. 1, § VII (A)(l)-(3). DHHS's Administrative Hearing

Regulations also state, "Evidence which may reasonably be construed as relevant and

which is not otherwise unduly repetitious shall be admitted." Id.§ VII (A) (4).

DHHS's Administrative Hearing Regulations further provide that a hearing

officer's decision "must be based on agency regulations." Id. § VII (B)(3)(a). Where the

agency's regulations are ambiguous or silent, reference to other sources of law for

guidance is appropriate. Id.§ VII (B)(3)(b). "When a hearing officer relies upon sources

Page 4 of 18
of law other than the agency's regulations, the written decision shall indicate the source

of law and the reasons for that reliance." Id.

III. ANALYSIS

According to the hearing officer's recommended decision, the two issues before

the hearing officer were: (1) whether DHHS was correct in its determination that, for the

2009 fiscal year, SeniorsPlus failed to follow the proper "cost-sharing" settlement

method illustrated in the in 2009 contract, thereby owing DHHS $1,108,787 in

reimbursement; and (2) whether the department was correct in its determination that

SeniorsPlus must return $437,008 to the DHHS because $437,008 was an overpayment

under the 2009 contract. 1 (R. Tab A at 3.)

At the hearing, SeniorsPlus asserted the following arguments: (1) that the

approximately $437,008 were not overpayments under the 2009 contract because those

amounts were payments made during the 2009 fiscal year for services actually rendered

during the 2008 fiscal year and attributable to the prior contract between SeniorsPlus

and EOS for the 2008 fiscal year, contract number OE-08-051 (the "2008 contract"); (2)

that it continued to provide services during the 2008 fiscal year in detrimental reliance

on DHHS's representations that it would be paid for those services during the 2009

fiscal year; and (3) that the remaining $670,645 in alleged overpayments were the result

of DHHS incorrectly interpreting the term "cost sharing" in the 2009 contract to mean

"cost settling" or "cost based" and incorrectly applying a "cost settling" methodology in

its audit of the 2009 contract. (R. Tab A at 9-11.)

1
SeniorsPlus objected to this statement of the issues by the hearing officer. (R. Tab SeniorsPlus­
2 at 2.) However, that objection is not at issue in this motion for the taking of additional
evidence.

Page 5 of 18
SeniorsPlus asserts that the hearing officer erroneously excluded evidence that

was material to each of its arguments. (Pet'r Mot. Add'l Evid. 7-10.) The court

addresses each issue in turn.

A The $437,008 Payment

Prior to the hearing, SeniorsPlus requested that DHHS produce all emails sent or

received by five present or former DHHS employees identified as witnesses between

~pril 1, 2008, and March 31, 2009, referring to any DHHS contract with SeniorsPlus or

any amounts or payments claimed by or paid to SeniorsPlus under any contract with

DHHS. (R. Tab H0-7 at 1.) The hearing officer requested that both parties file pre­

hearing briefs addressing SeniorsPlus's requests. (Id.)

On April 9, 2015, the hearing officer issued pre-hearing order stating that she

would not permit SeniorsPlus to present evidence or testimony related to the 2008

contract. (R. Tab H0-8 at 2-3.) The hearing officer held that SeniorsPlus could not

submit evidence regarding the 2008 contract because SeniorsPlus had accepted the

audit of the 2008 contract on November 18, 2011, that the sixty-day appeal period of

that audit had long expired, and permitting SeniorsPlus to present evidence of

regarding the 2008 contract would be "an end run around" DHHS's appeal regulations.

(Id. at 2.) Because the hearing officer disallowed any evidence or testimony regarding

the 2008 contract, DHHS did not produce any emails relating to the 2008 contract or the

payments during the 2009 fiscal year totaling $437,008 that were allegedly allocated to

the 2008 contract. (R. Tab D, Hr'g Tr. 3:23-5:9.)

The hearing officer misconstrued SeniorsPlus' s argument regarding the alleged

$437,008 overpayment and the 2008 contract. In its pre-hearing brief, SeniorsPlus

stated:

Page 6 of 18
... SeniorsPlus is asserting that these two payments (totaling $437,008) that
were received during fiscal year 2009, were payments for services
provided during the fiscal year that ended June 30, 2008, under previous
contracts. Further, SeniorsPlus asserts that these payments were properly
reported in the 2008 contract settlement, and that they cannot be
considered overpayments under the 2009 contract, because they were not
payments made pursuant to the 2009 contract. Once these payments were
properly credited to the 2008 contract, which was settled in 2011, there
was no overpayment or underpayment, and SeniorsPlus received the
correct amount. Now, the audit division is trying to take payments that
were properly allocated to the 2008 contract, and treating them as
overpayments in 2009, while arguing that SeniorsPlus cannot challenge
the allocation of these payments to 2009 (which would result in an
overpayment) because it did not appeal the 2008 settlement which was
correct.

(R. Tab H0-14 at 2.) It is clear that SeniorsPlus was not challenging the 2011 audit and

settlement of the 2008 contract. SeniorsPlus expressly conceded that the 2011 audit and

settlement were correct. Rather, SeniorsPlus was asserting that the alleged

overpayments were properly credited to the 2008 contract and included in the 2011

settlement.

According to its offer of proof, SeniorsPlus was prepared to offer testimony from

Debra Parry, SeniorPlus's former finance director responsible for contract negotiations

and settlements from 2008 through 2012, and Diana Scully, Director of OES from 2007 to

2011, who oversaw the negotiation of the contracts with SeniorsPlus. (Pet'r Offer of

Proof 1.) SeniorsPlus asserts its witnesses would have testified to the following: that

from 2003 through at least 2008, it was common practice for OES to agree that

SeniorsPlus should continue to provide services to clients though contract funds had

been exhausted before the end of the contract year, and that OES paid for those services

out of appropriations for the next fiscal year; that those agreements were done orally or

through email; that OES did pay SeniorsPlus from funds for the following fiscal year;

that OES did not want services to its clients interrupted; that SeniorsPlus had two

outstanding accounts receivable totaling $437,008 at the end of the 2008 fiscal year that

Page 7 of 18
were paid using 2009 fiscal year funds; that SeniorsPlus was told by DHHS to apply

those payments to the 2008 contract; that SeniorsPlus' s settlement report for fiscal year

2008 included the $437,008 as payments received under the 2008 contract; that there was

no overpayment or underpayment on the 2008 contract and no reason to appeal the

2011 audit or settlement; that SeniorsPlus did not include the $437,008 in its 2009 fiscal

year settlement report because it had been included in the 2008 fiscal year settlement;

and, that DHHS's inclusion of the $437,008 in the 2009 fiscal year audit created an

"overpayment" because the amount had been counted twice. (Pet'r Offer of Proof '119I a­

m.) SeniorsPlus also asserts that it would have offered documentary evidence to

support the above testimony, and that SeniorsPlus had requested additional

documents, including emails, relevant to the above testimony that DHHS did not

produce due to the hearing officer's April 9, 2015 order. (Id. at 5.)

The anticipated testimony set forth in SeniorsPlus's offer of proof is clearly

material to the issue of whether the $437,008 were overpayments under the 2009

contract and to SeniorsPlus's argument that the $437,008 in payments during the 2009

fiscal year were for services rendered during the 2008 fiscal year and properly allocated

to the 2008 contract. Because DHHS hearings do not observe strict rules of evidence

and because DHHS's Hearing Regulations state that any evidence "which may

reasonably be construed as relevant" shall be admitted, it was erroneous for the hearing

officer to exclude all evidence regarding the 2008 contract. See 10-144 C.M.R. ch. 1, § VII

(A)(4). The hearing officer should have allowed SeniorsPlus to present evidence

regarding whether the $437,008 in payments during the 2009 fiscal year were actually

Page 8 of 18
an overpayment or whether those payments were for services actually rendered during

the 2008 fiscal year and attributable to the 2008 contract. 2

Moreover, when acting in an appellate capacity pursuant to Rule SOC and the

APA, the court reviews the agency's decision for abuse of discretion, error of law, or

findings not supported by the evidence. Guar. Tr. Life Ins. Co. v. Superintendent of Ins.,

2013 ME 102, <JI 16, 82 A.3d 121; 5 M.R.S. § 11007(4)(C). The anticipated testimony and

evidence set forth in the otter of proof is clearly necessary to the court's eventual

decision on SeniorsPlus's petition pursuant to Rule SOC, particularly whether the

hearing o££icer committed errors of law by excluding evidence and prohibiting

SeniorsPlus from presenting argument on certain issues and whether the decision was

arbitrary, capricious, or an abuse of discretion. (Pet. <JI<JI A-B, E.)

The hearing officer found that SeniorsPlus had expressly raised the issue of

estoppel. (R. Tab A at 10.) In its post-hearing brief, SeniorsPlus asserted, "DHHS is

estopped by its representations and promises to SeniorsPlus, upon which SeniorsPlus

relied to its detriment by continuing to provide services based on assurances by DHHS

that SeniorsPlus would be paid." (R. Tab SeniorsPlus-2 at 6.) In her recommended

decision, the hearing officer stated:

The hearing officer presumes that Seniors Plus is raising this issue based
upon its offer of proof that there were oral agreements between the
Department and Seniors Plus regarding the extension of services when
funds had been exhausted. Specifically, Seniors Plus sought to show that
the Office of Elder Services had agreed that a payment from the
Department to Seniors Plus of $437,008.00 provided in 2009 was to be
applied to the 2008 contract.

(R. Tab A at 11.)
2
The court expresses no opinion whether some of the evidence SeniorsPlus sought to introduce
may still be excluded as "unduly repetitious." See 5 M.R.S. en: 9057(2); 10-144 C.M.R. ch. 1, § VII
(A)(2) .

Page 9 of 18
Under DHHS's Administrative Hearing Regulations, the hearing officer was

authorized to address the issue of equitable estoppel. See 10-144 C.M.R. ch. 1, § VII

(B)(6). Pursuant to§ VII (B)(3)(b) of DHHS's Administrative Hearing Regulations, the

hearing officer properly set forth the applicable law regarding the doctrine of estoppel

in her recommended decision. (R. Tab A at 11 ); see 10-144 C.M.R. ch. 1, § VII (B )(3 )(b ).

"[T]he doctrine of equitable estoppel may prevent a governmental entity from

discharging governmental functions or asserting rights against a party who

detrimentally relies on statements or conduct of a governmental agency or official."

State v. Brown, 2014 ME 79, cir 14, 95 A.3d 82. However, the courts views claims of

equitable estoppel against government agencies with caution. Mrs. T. v. Comm'r of the

Dept. Health & Human Servs., 2012 ME 13, cir 10, 36 A.3d 888. Claims of estoppel against

government agencies are "carefully and sparingly applied," particularly when the

application would have an adverse impact on the state treasury. Id. (citation omitted).

To prove equitable estoppel against a governmental entity, the party must

demonstrate: (1) the governmental official or agency made misrepresentations, whether

by misleading statements, conduct, or silence, that induced the party to act; (2) the party

relied on the government's misrepresentations to its detriment; and (3) the party's

reliance was reasonable. Brown, 2014 ME 79, cir 14, 95 A.3d 82. The doctrine of estoppel

requires "clear and satisfactory proof." Id. cir 15 (internal quotation marks and citation

omitted). "In assessing a claim of estoppel against a government agency, the court

considers "the totality of the circumstances, including the nature of the particular

governmental agency, the particular governmental function being discharged, and any

considerations of public policy arising from the application of estoppel to the

governmental function." Id. cir 14 (citation omitted).

Page 10 of 18
The hearing officer concluded that SeniorsPlus "failed to meet the final element ­

that its reliance was reasonable." (R. Tab A at 11.) The hearing officer stated, "[I]t was

not reasonable for SeniorsPlus to rely on alleged oral misrepresentations by someone in

the Department that contradicted or was not in accordance with the MAAP rules or the

Contract." (R. Tab A at 11.)

As previously discussed, according to its offer of proof, SeniorsPlus was

prepared to offer testimony from Debra Parry and Diana Scully that it was common

practice for OES to agree that SeniorsPlus should continue to provide services to clients

though contract funds had been exhausted before the end of the contract year; that it

was common practice for OES to pay for those services out of appropriations for the

next fiscal year; that those agreements were done orally or through email; that OES did

pay SeniorsPlus from funds for the following fiscal year; that OES did not want services

to its clients interrupted; that SeniorsPlus had two outstanding accounts receivable

totaling $437,008 at the end of the 2008 fiscal year that were paid using 2009 fiscal year

funds; and that SeniorsPlus was told by DHHS to apply those payments to the 2008

contract. (Pet'r Offer of Proof <JI<JI a-i.) SeniorsPlus also asserts that it would have

offered documentary evidence to support the testimony discussed above, and that

SeniorsPlus had requested additional documents, including emails, relevant to the

above testimony that DHHS did not produce due to the hearing officer's April 9, 2015

order. (Id. at 5.)

The anticipated testimony set forth in SeniorsPlus's offer of proof is clearly

material to the issues of whether DHHS officials made misrepresentations to

SeniorsPlus and whether SeniorsPlus reliance on those representations was reasonable.

See Brown, 2014 ME 79, <JI 14, 95 A.3d 82. Thus, the anticipated testimony was material

to the issue of estoppel. However, the hearing officer disallowed all testimony or

Page 11 of 18
evidence regarding the 2008 contract. (R. Tab H0-8 at 2-3.) Because DHHS hearings do

not observe strict rules of evidence and because DHHS's Hearing Regulations state that

any evidence "which may reasonably be construed as relevant" shall be admitted, it

was erroneous for the hearing officer to exclude all evidence regarding the 2008

contract. See 10-144 C.M.R. ch. 1, § VII (A)(4). The hearing officer should have allowed

SeniorsPlus to present evidence regarding whether DHHS officials made

representations and promises to SeniorsPlus and whether SeniorsPlus reasonably relied

on those representations to its detriment by continuing to provide services to DHHS

clients. 3

Furthermore, the anticipated testimony and evidence set forth in the offer of

proof is clearly necessary to the court's eventual decision on SeniorsPlus's petition

pursuant to Rule SOC, particularly whether the hearing officer committed errors of law

in finding that DHHS was not estopped by its promises to SeniorsPlus and whether the

decision was arbitrary, capricious, or an abuse of discretion. (Pet. <J[<j[ C, E); see Guar. Tr.

Life Ins. Co., 2013 ME 102, <fI 16, 82 A.3d 121; 5 M.R.S. § 11007( 4)(C).

C. The "Cost Sharing" Methodology

In its appeal to the agency, SeniorsPlus asserted that the 2009 contract contained

three different payment/ settlement methods for different services: "cost based," "unit

cost/ fee for service settlement," and "provider payments." (R. Tab DHHS-7.)

SeniorsPlus asserted that DHHS incorrectly applied a "cost based" or "cost settling"

methodology to payments received by SeniorsPlus from DHHS for direct HBC services

to clients in its audit of the 2009 contract. (R. Tabs DHHS-7, H0-14 at 1-2.) SeniorsPlus

3
Again, the court expresses no opinion whether some of the evidence SeniorsPlus sought to
introduce may still be excluded as "unduly repetitious." See 5 M.R.S. <JI 9057(2); 10-144 C.M.R.
ch. 1, § VII (A)(2).

Page 12 of 18
asserted that direct HBC services to clients were to be reimbursed and settled using the

"unit cost/ fee for service settlement" method . (R. Tabs DHHS-7.)

Rider F-2 to the 2009 contract identifies the audit methodology to be used in

settling the agreement between the DHHS and SeniorsPlus. (R. Tab DHHS-4a.)

According to Rider F-2, a "cost sharing" methodology was to be applied to the

settlement of direct service payments. (Id.) Thus, SeniorsPlus' argument turns on the

meaning of the term "cost sharing" in the 2009 contract.

DHHS asserted that MAAP use the terms "cost share" and "cost settle"

interchangeably. (R. Tab DHHS-14 at 6.) Thus, according to DHHS, "cost settling" was

the appropriate methodology for the audit. (Id.) SeniorsPlus asserted that "cost

sharing," as used in the 2009 contract, is different from "cost settling" or "cost based."

(R. Tab SeniorsPlus-2 at 5.) SeniorsPlus asserted that "cost sharing" refers to the

sharing of costs "between or among multiple revenue sources when there is more than

one source of revenue in a program." (Id .) SeniorsPlus further asserted that, because

direct HBC services were completely state-funded, there were no other sources of

revenue with which to share costs. (Id.) Thus, according to SeniorsPlus, the meaning of

"cost sharing" in the 2009 contract is ambiguous and extrinsic evidence regarding the

intent of the individuals that made the contract should be admitted. (Id.)

At the hearing, SeniorsPlus sought to present evidence regarding the intent of

the individuals who negotiated the 2009 contract, particularly the methodology to be

used to settle and reconcile the payments and the meaning of the term "cost sharing" in

the 2009 contract. (R. Tab D, Hr'g Tr. 191:5-195:23.) However, the hearing officer

disallowed such evidence. (Id.) In her recommended decision, the hearing officer

stated that she disallowed the evidence "because the 2009 Contract speaks for itself, and

does not require any parol evidence for interpretation." (R. Tab A at 7.) The hearing

Page 13 of 18
officer stated, "It is settled law that a fact finder not look beyond the four corners of a

contract so long as the contract is clear and unambiguous." (Id.) The hearing officer

stated that she "does not find any ambiguity in the 2009 Contract." 4 (Id.)

Although the 2009 agreement contained a merger clause stating, "this document

contains the entire Agreement of the parties and neither party shall be bound by any

statement or representation not contained herein," that does not completely foreclose

any consideration of extrinsic evidence. (R. Tab DHHS-4(a).) If specific provisions of

an integrated agreement are found to be ambiguous, a court may still consider extrinsic

evidence concerning the parties' intent in order to interpret those provisions contained

in an otherwise integrated agreement. Handy Boat Serv. v. Prof'l Servs., 1998 ME 134, 9I

13, 711 A.2d 1306.

Though the hearing officer concluded the 2009 contract was unambiguous, her

recommended decision demonstrates that "cost sharing" was actually ambiguous and

that the hearing officer relied on extrinsic evidence presented by DHHS in interpreting

the term. The hearing officer's recommended decision does not identify any provision

in the 2009 contract defining the term "cost sharing" (Id. at 6-10.) The hearing officer

expressly noted that: "neither party provided any rules nor regulations that define cost

settling or cost sharing." (R. Tab A at 9.) The hearing officer specifically cited

testimony from Tony Madden, Deputy Director of DHHS's Division of Audit, who

4
DHHS's Administrative Hearing Regulations are silent regarding the interpretation of
contracts and the admissibility of extrinsic evidence. See 10-144 C.M.R. ch. 1. The rules of
contract interpretation and the admission of extrinsic evidence relied on by the hearing officer
in this case are clearly derived from principles of contract law. See Villas by the Sea Owners Ass'n
v. Garrity, 2000 ME 48, 9f 10, 748 A.2d 457; Handy Boat Serv. v. Prof'l Servs., 1998 ME 134, <JI<JI 11­
131 711 A.2d 1306. As previously discussed,§ VII (B)(3)(b) of DHHS's Administrative Hearing
Regulations states, "When a hearing officer relies upon sources of law other than the agency's
regulations, the written decision shall indicate the source of law upon which the hearing officer
relied." 10-144 C.M.R. ch. 1, § VII (B)(3)(b). The court notes that the hearing officer in this case
failed to properly indicate the source of law upon which she relied regarding her interpretation
of the 2009 contract in her recommended decision.

Page 14 of 18
stated that the terms "cost sharing" and -"cost settled" "mean the same thing and are

used interchangeably." (Id.); see (R. Tab D, Hr'g Tr. 75:1-4, 135:25-,137:21.) The hearing
· ,·
officer concluded that DHHS's interpretation of "cost sharing" was correct and that
11
cost settling" was the correct methodology for auditing the 2009 contract. (R. Tab A at

9.) The hearing officer stated that SeniorsPlus "did not provide a foundation for its

interpretation of cost sharing." (Id.)

According to its offer of proof, SeniorsPlus was prepared to offer testimony from

Debra Parry and Diana Scully regarding the following: that direct HBC services were

100% state-funded; that there were no MaineCare funds involved in the 2009 contract;

that the cost settlement methodology used by DHHS in the 2013 audit incorrectly

"removed" more than $70 million MaineCare funds related to a different program; that

it was the expectation and intention of SeniorsPlus and OES when the 2009 contract was

negotiated that the settlement method for direct HBC services would be to subtract

SeniorsPlus' actual payments to third-party providers from the total amount paid by

OES to SeniorsPlus for direct services; that neither OES nor SeniorsPlus officials who

negotiated the 2009 contract expected any portion to of the contract to be subject to

"cost settlement" methodology; that the parties who executed the 2009 contract marked

an "x" on Rider F-2 next to "cost sharing" based on their understanding it meant that

SeniorsPlus' payments for direct HBC services would be settled by subtracting

SeniorsPlus' "costs," i.e., payments to third-party providers, from the total payments
II
made by OES to SeniorsPlus; that the terms cost settling" or "cost based" are different
II
from cost sharing;" that "cost sharing" refers to the sharing of costs between or among

multiple revenue sources; that DHHS's use of the wrong methodology resulted in an

erroneous calculation of $670,645 in overpayments; and that the 2008 contract and a

Page 15 of 18
2012 contract for the same services were settled using a methodology other than cost ff

settling.JJ (Pet'r Offer of Proof <JI9[ n-p, r, t-z.)

The hearing officer clearly relied on extrinsic evidence submitted by DHHS in

interpreting the term cost sharing." It was unfair and erroneous for the hearing officer
11

to deny SeniorsPlus an opportunity to present its own extrinsic evidence regarding the
11 11
meaning of cost sharing. Furthermore, the anticipated testimony set forth in

SeniorsPlus' offer of poof is clearly material to what the parties intended when the 2009

contract was negotiated. Because DHHS hearings do not observe strict rules of

evidence and because DHHS' s Hearing Regulations state that any evidence which may11

reasonably be construed as relevantjf shall be admitted, the hearing officer should have

allowed SeniorsPlus to offer evidence regarding the parties' intent and the meaning of

the term cost sharing" in the 2009 contract. 5 See 10-144 C.M.R. ch. 1, § VII (A)(4).
11

Moreover, the anticipated testimony and evidence set forth in the offer of proof is

clearly necessary to the court's eventual decision on SeniorsPlus' petition pursuant to

Rule BOC, particularly whether the hearing officer committed an error of law in
11
interpreting the 2009 contract, whether the hearing officer's interpretation of cost

sharing" was supported by substantial evidence in the record, and whether the decision

was arbitrary, capricious, or an abuse of discretion. (Pet. CJI<JI C-E); see Guar. Tr. Life Ins.

Co., 2013 ME 102, <JI 16, 82 A.3d 121; 5 M.R.S. § 11007(4)(C).

Because the additional evidence is material to the issues presented in the review,

but was erroneously disallowed, and because the additional evidence is necessary to the

court's review of SeniorPlus' Rule BOC petition, this matter must be remanded to DHHS

for the taking of additional evidence.
5
Again, the court expresses no opinion whether some of the evidence SeniorsPlus sought
introduce may stiU be excluded as "unduly repetitious." See 5 M.R.S. <JI 9057(2); 10-144 C.M.R.
ch. 1, § VII (A)(2).

Page 16 of 18
IV. CONCLUSION

Petitioner SeniorsPlus' motion take additional evidence is granted.

The court hereby orders the following:

1. This matter is remanded to the Maine Department of Health and Human

Services for the taking of additional evidence by the agency.

2. DHHS shall permit SeniorsPlus to obtain discovery of all emails sent by,

or received by, the DHHS employees previously identified by SeniorsPlus between

April 1, 2008 and March 31, 2009, referencing any DHHS contract with SeniorsPlus, or

any amounts or payments claimed by or paid to Seniors under any contract with DHHS

that were not previously produced.

3. DHHS shall conduct further hearing to allow SeniorsPlus to present

witnesses and evidence regarding the following: (a) whether certain payments made

during the 2009 fiscal year were reimbursement for services provided during the 2008

fiscal year; (b) whether the parties who negotiated the 2009 contract did not intend for
II II
the 2009 contract to be settled using cost settling" or cost-based" methodology; and

(c) whether SeniorsPlus continued to provide services during the 2008 fiscal year after

contract funds had been exhausted in reasonable reliance on promises by DHHS

officials that SeniorsPlus would be paid from 2009 fiscal year funds.

4. After taking the additional evidence, DHHS may modify its findings and

decisions, and shall file with the court, to become part of the record for review, the

additional evidence and any new findings or decision.

5. This matter is stayed pending the filing of additional evidence and any

new findings or decision by DHHS.

6. Following the filing of additional evidence ru""ld any new findings or

decision by DHHS, the court shall hold a status conference with the parties to establish,

Page 17 of 18
if -necessary, the- briefing schedule for Petitioner SeniorPlus' s -Rule-BOE appeal of final

agency action.

The Clerk is directed to enter this Order on the civil docket by reference pursuant

to Maine Rule of Civil Procedure 79(a).

Page 18 of 18

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10811488. Public record. Not legal advice.