Appalachian Regional Healthcare, Inc. v. West Virginia Department of Health & Human Resources

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA

September 2013 Term FILED

_______________ November 21, 2013

released at 3:00 p.m.

No. 11-1187 RORY L. PERRY II, CLERK

SUPREME COURT OF APPEALS

_______________ OF WEST VIRGINIA

APPALACHIAN REGIONAL HEALTHCARE, INC.,

D/B/A BECKLEY ARH HOSPITAL,

Plaintiff Below, Petitioner

v.

WEST VIRGINIA DEPARTMENT OF HEALTH AND HUMAN RESOURCES;

KAREN L. BOWLING, Secretary, in her official capacity and not individually; WEST

VIRGINIA BUREAU FOR MEDICAL SERVICES; NANCY ATKINS, Commissioner,

in her official capacity and not individually,

Defendants Below, Respondents.

____________________________________________________________

Appeal from the Circuit Court of Kanawha County

The Honorable James C. Stucky, Judge

Civil Action No. 10-C-2311

AFFIRMED

____________________________________________________________

Submitted: September 13, 2013

Filed: November 21, 2013

Michael S. Garrison, Esq. Patrick Morrisey

Spilman Thomas & Battle, PLLC Attorney General

Morgantown, West Virginia Kim Stitzinger Jones

Counsel for the Petitioner Assistant Attorney General

Charleston, West Virginia

Stephen R. Price, Sr., Esq. Counsel for the Respondent

Wyatt, Tarrant & Combs, LLP

Louisville, Kentucky

Appearing pro hac vice for the Petitioner

CHIEF JUSTICE BENJAMIN delivered the Opinion of the Court.

SYLLABUS BY THE COURT

1. “Appellate review of a circuit court’s order granting a motion to

dismiss a complaint is de novo.” Syl. pt. 2, State ex rel. Scott Runyan Pontiac-Buick, 194

W. Va. 770, 461 S.E.2d 516 (1995).

2. “The trial court, in appraising the sufficiency of a complaint on a

Rule 12(b)(6) motion, should not dismiss the complaint unless it appears beyond doubt

that the plaintiff can prove no set of facts in support of his claim which would entitle him

to relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957).” Syl. pt. 3, Chapman v. Kane

Transfer Co., 160 W. Va. 530, 236 S.E.2d 207 (1977).

3. “Where the issue on an appeal from the circuit court is clearly a

question of law or involving an interpretation of a statute, we apply a de novo standard of

review.” Syl. pt. 1, Chrystal R.M. v. Charlie A.L., 194 W. Va. 138, 459 S.E.2d 415

(1995).

4. “The following is the appropriate test to determine when a State

statute gives rise by implication to a private cause of action: (1) the plaintiff must be a

member of the class for whose benefit the statute was enacted; (2) consideration must be

given to legislative intent, express or implied, to determine whether a private cause of

action was intended; (3) an analysis must be made of whether a private cause of action is

i

consistent with the underlying purposes of the legislative scheme; and (4) such private

cause of action must not intrude into an area delegated exclusively to the federal

government.” Syl. pt. 1, Hurley v. Allied Chemical Corp., 164 W. Va. 268, 262 S.E.2d

757 (1980).

5. W. Va. Code §§ 9-15-16 (1988) and 16-29B-20 (1997) do not

provide for an express or implied private cause of action by a Medicaid provider for

judicial review of reimbursement rates for medical services.

ii

Benjamin, Chief Justice:

In this proceeding we are presented with the question of whether there is a

private cause of action for a hospital accepting Medicaid patients and Medicaid payments

for unreasonable rate-setting. The Circuit Court of Kanawha County dismissed the

complaint of the petitioner, Appalachian Regional Healthcare, Inc., d/b/a Beckley ARH

Hospital (“Beckley ARH”), in a lawsuit against the respondents seeking a remedy for

inadequate Medicaid reimbursement rates. The respondents are the West Virginia

Department of Health and Human Resources and its Secretary, Karen L. Bowling, and

the West Virginia Bureau for Medical Services (“BMS”) and Nancy Atkins, its

Commissioner (collectively referred to as “the Department”).1 The circuit court found

that the complaint of Beckley ARH failed to state a claim upon which relief could be

granted, and dismissed the case pursuant to W. Va. R. Civ. P. 12(b)(6).

After a thorough review of the record presented for consideration, the

briefs, the legal authorities cited and the argument of the parties, we find that W. Va.

Code §§ 9-15-16 (1988) and 16-29B-20 (1997) do not provide for an express or implied

private cause of action by a Medicaid provider for judicial review of reimbursement rates

1

While this case was pending, Karen L. Bowling replaced Michael J. Lewis,

M.D., Ph.D., as Secretary of the Department. See W. Va. R. App. Proc. 41(c) (explaining

procedure for substitution of parties who hold public office).

1

for medical services. We affirm the circuit court order dismissing the petitioner’s claims

for failure to state a claim upon which relief may be granted.

I.

FACTUAL AND PROCEDURAL BACKGROUND

The petitioner, Appalachian Regional Healthcare, is a not-for-profit

Kentucky corporation that operates a number of hospitals in Kentucky and West Virginia,

including Beckley Appalachian Regional Hospital (“Beckley ARH”) in Beckley, West

Virginia. Beckley ARH is a voluntary provider of medical services through the Medicaid

program pursuant to an agreement executed between it and the BMS. Medicaid is a

cooperative federal-state program in which the federal government provides financial

assistance to the states. Participating states match federal funds with state funds and use

this money to administer each state’s Medicaid program. The Medicaid program

provides medical assistance to eligible recipients.2 This assistance is in the form of direct

payments to participating providers, such as Beckley ARH, for services rendered to

Medicaid recipients. See 42 C.F.R. § 430.0 (1988).

The federal agency empowered with the administration of Medicaid is the

Centers for Medicare and Medicaid Services (“CMS”). To participate in the Medicaid

program, states must create a plan for medical assistance (“State Plan”), and that plan

2

Examples of eligible recipients include indigent persons, disabled persons,

impoverished persons as well as income-eligible persons with dependent children.

2

must be approved by the Secretary of the United States Department of Health and Human

Services. The requirements for each State Plan are enumerated in 42 U.S.C. § 1396a

(2006) and 42 C.F.R. §§ 430 and 447 (1978). The requirement pertinent to this appeal is

the requirement that a single state agency be established or designated as the

administrator of the State Plan. 42 U.S.C.. 1396a(5) states, in pertinent part:

A State plan for medical assistance must —

(5) either provide for the establishment or designation

of a single State agency to administer or to supervise the

administration of the plan; or provide for the establishment or

designation of a single State agency to administer or to

supervise the administration of the plan . . . .

Therefore, while the federal government through its grants provides financial assistance

to the states for the payment and provision of medical services to those covered by

Medicaid, the individual states administer their programs through a single, designated

agency and pursuant to the State Plan.3 In West Virginia, the administering state agency

is the BMS, pursuant to W. Va. Code § 9-1-2(n) (1998).

One of the BMS’s statutory duties is to establish Medicaid reimbursement

rates in compliance with federal law for medical and laboratory services rendered to

Medicaid recipients. Once these services are determined, the BMS then establishes the

reimbursement rate for these medical providers, using methodology and standards

developed by each state. The states then submit the reimbursement rates to the federal

3

The states likewise provide funding to the Medicaid program, but a majority of

the state’s Medicaid funding comes from federal resources.

3

government through CMS, which approves or disapproves the State Plan. See 42 U.S.C.

1396a(a)(13)(A).

Beckley ARH entered into a provider agreement with BMS and agreed to

be a Medicaid provider of acute care inpatient and psychiatric services. Part of the

agreement was that Beckley ARH would be reimbursed as per the established Medicaid

rates under the State Plan for services rendered. The specific reimbursement rates were

not included in the agreement. The contract did not state that Beckley ARH would be

reimbursed all of its costs for treating Medicaid beneficiaries.

On December 27, 2010, Beckley ARH filed a complaint in the Circuit

Court of Kanawha County, alleging, inter alia, that the Medicaid rates being paid to it

were inadequate to cover the cost of providing services to Medicaid patients. Beckley

ARH contended that the Department established grossly inadequate reimbursement rates

for its services. In 2009, Beckley ARH incurred costs for treating Medicaid patients of

$14.7 million, but received reimbursements from Medicaid in only the amount of $11.9

million. The petitioner sought declaratory, injunctive and other legal or equitable relief

in accordance with state and federal law.

The petitioner’s complaint relied upon two West Virginia statutes, §§ 16­

29B-20 and 9-5-16, and the complaint contained ten grounds: (1) the Department failed

to apply the proper standards pursuant to W. Va. Code §§ 16-29B-20 and 9-5-16 in

4

setting Medicaid reimbursement rates; (2) a writ of mandamus should issue to require the

Department to reimburse it at rates that are “adequate and reasonable and in keeping with

statutory standards”; (3) BMS failed to take into account the petitioner’s unreimbursed

costs of providing care to recipients of the Public Employee’s Insurance Agency

(“PEIA”), and therefore, the petitioners are entitled to a declaration that W. Va. Code §

16-29B-20 must be followed by the Department; (4) petitioners are entitled to a

declaration of rights stating that the respondent’s Medicaid rates were unreasonable; (5)

the Due Process Clause of the West Virginia Constitution was violated because the

inadequate Medicaid rates disproportionately affect the petitioner, as a mandatory

provider for low-income and indigent patients, because of the large proportion of

Medicaid patients that it treats; (6) the Equal Protection clause of the West Virginia

Constitution was violated because the State provided special payments to state-owned

hospitals that received Medicaid reimbursement at the same rate at which the petitioner

was reimbursed; (7) the petitioner is entitled to a declaratory judgment that the

Department’s rule-making authority in establishing Medicaid reimbursement rates was

exercised in a manner to interfere with, impair or threaten to interfere with or impair the

legal rights or privileges of Beckley ARH; (8) the Department breached the contract by

failing to pay adequate and reasonable reimbursements pursuant to West Virginia Code;

(9) it is inequitable, based on a theory of quantum meruit, for the Department to obtain

the benefit of medical services to Medicaid beneficiaries without making adequate and

reasonable payment for services; and (10) the Department unilaterally set rates for

reimbursement, and in doing so, failed to establish fair and reasonable rates.

5

The Department filed a motion to dismiss Beckley ARH’s complaint

pursuant to W. Va. R. Civ. P. 12(b)(6), arguing that the complaint failed to state a ground

upon which relief could be granted. The circuit court entered an order on July 19, 2011,

granting the Department’s motion to dismiss.

In its order, the circuit court made a number of findings and conclusions.

First, the circuit court found that Beckley ARH had voluntarily entered into a Medicaid

provider agreement with the Department for the provision of acute care inpatient and

psychiatric services. As part of this agreement, Beckley ARH agreed to accept the rates

set for reimbursement by the Department as payment in full for services rendered, so long

as the reimbursement rates were set in conformance with established rates, fee schedules

and payment methodologies approved by CMS.

The circuit court also found that neither W. Va. Code § 16-29B-20 nor § 9­

5-16 required the respondent to establish Medicaid rates that were adequate, reasonable

or in accordance with those statutory sections. Furthermore, the court found that the West

Virginia Health Care Authority (“HCA”) did not have the authority to review or set

Medicaid reimbursement rates pursuant to W. Va. Code § 16-29B-20(a)(1) and (3), and

that BMS has that sole authority. The court found that Beckley ARH admitted that BMS

was solely responsible for the setting of Medicaid reimbursement rates.

6

The circuit court found no merit in Beckley ARH’s claim for recovery

based upon quantum meruit because there was an express contract between Beckley ARH

and the Department in which Beckley ARH agreed to accept the Medicaid reimbursement

rate. The circuit court found that any state-law based requirement to deal in good faith

and fairly was preempted by the federal law.

From this order Beckley ARH pursues the instant appeal.

II.

STANDARD OF REVIEW

This appeal is based upon the circuit court’s granting of a motion to dismiss

for failure to state a claim upon which relief may be granted. “Appellate review of a

circuit court’s order granting a motion to dismiss a complaint is de novo.” Syl. pt. 2,

State ex rel. Scott Runyan Pontiac-Buick, 194 W. Va. 770, 461 S.E.2d 516 (1995).

The trial court, in appraising the sufficiency of a complaint on

a Rule 12(b)(6) motion, should not dismiss the complaint

unless it appears beyond doubt that the plaintiff can prove no

set of facts in support of his claim which would entitle him to

relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957).

Syl. pt. 3, Chapman v. Kane Transfer Co., 160 W. Va. 530, 236 S.E.2d 207 (1977).

This appeal also requires us to interpret several statutes. We have further

held in syllabus point 1 of Chrystal R.M. v. Charlie A.L., 194 W. Va. 138, 459 S.E.2d 415

7

(1995), that “[w]here the issue on an appeal from the circuit court is clearly a question of

law or involving an interpretation of a statute, we apply a de novo standard of review.”

III.

ANALYSIS

Beckley ARH asserts nine separate assignments of error in this appeal.4

However, upon our review, we recognize that there is a threshold issue: whether W. Va.

4

The assignments of error, in the order presented by the petitioner, are as

follows:

A. The circuit court erred in signing without modification the

order drafted by the Department, which stripped W. Va.

Code §§ 9-5-16(a) and 16-29B-20 of all meaning and

functions, leaving the Department with unfettered

authority to set Medicaid rates in the arbitrary and

capricious manner they have employed.

B. The circuit plainly erred in holding that Beckley ARH

does not have a clear legal right to challenge the

Department’s methodology of setting Medicaid

reimbursements, an error that affected the circuit court’s

handling of the entire complaint.

C. The circuit court erred in holding that federal law

preempted a state court; if allowed to stand, the circuit

court’s interpretation of West Virginia law would raise

federal supremacy clause issues and claims.

D. The circuit court erred in finding that Beckley ARH could

not have breached the provider agreement by failing to

establish Medicaid rates that did not meet the

requirements of state and federal law.

E. The circuit court clearly erred in construing the federal

prohibition against balance billing Medicaid patients in 42

C.F.R. § 447.15 to mean that the Department could set

(continued . . .)

8

Code §§ 9-5-16(a) and 16-29B-20 provide a statutory basis to challenge to Medicaid

reimbursements rates. Upon our review, we find that these statutes do not provide the

petitioner with a private cause of action, express or implied, to challenge the Medicaid

reimbursement rates. To the extent that the petitioner’s assignments of error rely on the

existence of a private statutory cause of action based upon these statutes, it is unnecessary

that we address them in full in this opinion.

A. W. Va. Code § 9-5-16(a) does not provide a private cause of action

Medicaid rates at any level they so choose, no matter how

low the rates were and even if they were in violation of

statutory standards.

F. The circuit court erred in holding the Federal Upper

Payment Limit rules in federal regulations that classify

government operated hospitals separately from privately

operated hospitals served as a reasonable classification to

pay West Virginia government hospitals higher Medicaid

reimbursement that similarly situated privately owned

hospitals.

G. The circuit court erred in finding that none of the ten

counts in the complaint could provide relief for the

Department’s failure to following statutory requirements

in setting the hospital Medicaid rates;

H. The circuit court applied the wrong standards in

dismissing the complaint under W. Va. R. Civ. P.

12(b)(6);

I. The circuit court misapplied W. Va. R. Civ. P. 12(b)(6)

and, considering matters outside the pleadings, effectively

converting the Department’s motion to one for summary

judgment under W. Va. R. Civ. P. R. 56, while improperly

deciding genuine issues of material fact.

9

Beckley ARH asserts that W. Va. Code § 9-5-16(a) provides a basis for an

action against the Department for the establishment of appropriate Medicaid

reimbursement rates. W. Va. Code § 9-5-16(a) states, in full:

(a) It is the purpose of the Legislature in enacting this

section to encourage the long-term well planned development

of fair and equitable reimbursement methodologies and

systems for all health care providers reimbursed under the

medicaid program in its entirely, and to ensure that

reimbursement for services of all such health care providers is

determined without undue discrimination or preference and

with full consideration of adequate and reasonable

compensation to such health care providers for the costs of

providing such services.

(b) In order that the Legislature become better

informed as to these matters, and appropriately appraise and

balance the interests among all such health care providers and

between all such health care providers and the interests of all

the state’s citizenry, the Legislature hereby directs the

Commissioner of the Department of Human Services to

identify, explore, study and consider the potential benefits

and risks associated with the adoption of alternative and

emerging and state-of-the-art concepts in reimbursement

methodology for such health care providers.

(c) Toward this end, the commissioner shall conduct

inquiries and hold hearings in order to provide all health care

providers and other interested persons the opportunity to

comment. In carrying out the provisions of this section, the

commissioner shall have jurisdiction over such persons,

whether such health care providers or not, as may be in the

opinion of the commissioner necessary to the exercise of the

mandate set forth in this section, and may compel attendance

before the department, take testimony under oath and compel

the production of papers or other documents. Upon

reasonable requests by the commissioner, all other state

agencies shall cooperate in carrying out the provisions of this

section.

(d) The Commissioner shall make monthly reports to

the Joint Committee on Government and Finance, created by

article three [§§ 4-3-1, et seq.], chapter four of this code, or a

10

subcommittee designated by the Joint Committee, and at the

completion of such identification, exploration, study and

consideration, present to the Joint Committee or its

subcommittee, no later than the first day of December, one

thousand nine hundred eighty-eight, a summary report which

shall set forth all activities pursuant to the mandate of the

Legislature as set forth herein, any policy decisions reached

and initiatives undertaken and findings and conclusions as

well as any recommendations for legislation. The

Commissioner shall also make such full report to the

Legislature no later than the first day of the regular session of

the Legislature in the year one thousand nine hundred eighty-

nine.

(e) Nothing in this section shall be construed to give

the Legislature any jurisdiction over the Medicaid program or

its operations.

The petitioner relies solely on subsection (a) to support its contention that it

may challenge rate setting.

There is no language within W. Va. Code § 9-5-16(a) or the remainder of

W. Va. Code § 9-5-16 that provides an explicit judicial remedy. Because the statutory

section does not provide for an express private cause of action, we must proceed to

determine whether the section provides for an implied private cause of action. In syllabus

point 1 of Hurley v. Allied Chemical Corporation, 164 W. Va. 268, 262 S.E.2d 757

(1980), we enumerated a four-prong test to determine whether a statute gives rise to a

private cause of action. We held:

The following is the appropriate test to determine when a

State statute gives rise by implication to a private cause of

action: (1) the plaintiff must be a member of the class for

whose benefit the statute was enacted; (2) consideration must

11

be given to legislative intent, express or implied, to determine

whether a private cause of action was intended; (3) an

analysis must be made of whether a private cause of action is

consistent with the underlying purposes of the legislative

scheme; and (4) such private cause of action must not intrude

into an area delegated exclusively to the federal government.

The first consideration is whether Beckley ARH is a member of the class

for whose benefit the statute was enacted. Because Beckley ARH is a “health care

provider” within the meaning of W. Va. Code § 9-5-16(a), and because the purpose of W.

Va. Code § 9-5-16 is “to ensure that reimbursement for services of all such health care

providers is determined . . . with full consideration of adequate and reasonable

compensation,” we conclude that Beckley ARH is a member of the class for whose

benefit the statutes was enacted. The first prong weighs in favor of the petitioner.

The second consideration is legislative intent. The express purpose of W.

Va. Code § 9-5-16 is to gather information used to set the methodologies for

reimbursement rates. This information was to be included in a report to the Legislature in

1989.5 Nothing within this statute indicates an express or implied intent on the part of the

Legislature to provide a private cause of action for rate setting. The statute is solely

focused on information gathering. Therefore, the second prong weighs against the

petitioner.

5

W. Va. Code § 9-5-16(d), quoted supra, required the Department to make monthly

reports to the Legislature, culminating in a full and final report due no later than the first

day of the legislative session in 1989.

12

The third consideration is whether a private cause of action is consistent

with the underlying purposes of the legislative scheme. Again, we note that the express

purpose of W. Va. Code § 9-5-16 is information gathering. Therefore, this prong also

weighs against the petitioner.

The fourth and final consideration is whether a private cause of action

would intrude into an area delegated exclusively to the federal government. We

conclude that it does not. The focus of W. Va. Code § 9-5-16 is on developing fair rates

in West Virginia. Therefore, the fourth prong weighs against the petitioner because the

federal government has relegated rate-setting for Medicaid reimbursements to the states.

In view of the lack of legislative language establishing an express cause of

action and our consideration of the Hurley factors, we conclude that W. Va. Code § 9-15­

16 does not provide for an express or implied private cause of action by a Medicaid

provider for judicial review of reimbursement rates for medical services. Therefore, the

petitioner may not use this code section as the basis for its cause of action.

B. W. Va. Code § 16-29B-20 does not provide a private cause of action

Beckley ARH next contends that W. Va. Code § 16-29B-20 provides a

basis for judicial review of Medicaid reimbursement rates. W. Va. Code § 16-29B-20

relates to the HCA and its duties to establish hospital rates throughout the state.

13

The pertinent part of W. Va. Code § 16-29B-20 upon which Beckley ARH

relies relates to the setting of these rates. This section establishes the role of the HCA in

reviewing rate proposals by hospitals, including Beckley ARH. A directive toward the

setting of rates of payment for Medicaid services is contained in subsection (3) of this

section. It states:

The rates of payment for Medicaid are reasonable and

adequate to meet the costs which must be incurred by

efficiently and economically operated hospitals subject to the

provisions of this article. The rates shall take into account the

situation of hospitals which serve disproportionate numbers

of low income patients and assure that individuals eligible for

Medicaid have reasonable access, taking into account

geographic location and reasonable travel time, to inpatient

hospital services of adequate quality.

Beckley ARH admits that BMS is the federally authorized and designated

state agency in charge of administering the Medicaid program. The Department argues

that the HCA never established Medicaid reimbursement rates and that BMS had this

responsibility.6 Beckley ARH contends that in reading this statutory section along with

6

The record contains the affidavits of one former and the current chairperson of

the HCA who state that at no time did the Authority establish or regulate Medicaid

reimbursement rates. Beckley ARH argues in one of its assignments of error that the

circuit court wrongfully relied upon these affidavits, which are outside of the complaint,

in granting the Rule 12(b)(6) motion to dismiss filed by the Department. We do not rely

upon these affidavits in making our determination of whether these statutes provide the

basis for a state-based claim for increased reimbursements for Medicaid services as

argued by Beckley ARH.

14

W. Va. Code § 9-5-16, the Legislature intended for Medicaid providers to be

compensated “with full consideration of adequate and reasonable compensation to such

health care providers for the costs of providing such services.”7

Upon our review of the applicable authority, the setting of reimbursement

rates is delegated by statute to the Department, not the HCA. BMS is the single state

agency designated by CMS to administer the Medicaid program in West Virginia.

Therefore, while the HCA rate-setting statutes discuss that agency’s role in setting

7

Beckley ARH contends that W. Va. Code §§ 9-5-16 and 16-29B-20 were enacted

by the Legislature in conjunction with the Boren Amendment. The Boren Amendment

was passed by the U.S. Congress in 1980 and was codified in 42 U.S.C. §

1398a(a)(13)(A) (1982 ed, Supp V). The Boren amendment required State Plans for

medical assistance to be “reasonable and adequate to meet the costs which must be

incurred by efficiently and economically operated facilities” participating in the Medicaid

program. In Wilder v. Virginia Hospital Association, 111 S.Ct. 2510 (1990), the

Supreme Court held that there was no provision in the Boren Amendment that would

foreclose a private judicial remedy for enforcement of the Boren Amendment.

Furthermore, the Supreme Court found that the Boren Amendment created a substantive

federal right to the adoption of reasonable and adequate reimbursement rates. This

amendment allowed affected providers to sue for additional payments for Medicaid

services provided to beneficiaries pursuant to 42 U.S.C. § 1983.

In 1997, the Boren Amendment was repealed by the adoption of the Balanced

Budget Act of 1997. Now under 42 U.S.C. § 1396a(a)(30)(A), the State Plan for

Medicaid must contain methods and procedures to “safeguard against unnecessary

utilization of . . . . [Medicaid] services and . . . . to assure that payments are consistent

with efficiency, economy, and quality of care and are sufficient to enlist enough

providers so that care and services are available . . . at least to the extent that such care

and services are available to the general population.” BMS must use a public process for

determining reimbursement rates, to publish the proposed and final rates, as well as the

methodologies underlying the rates and the justification for the rates and give interested

parties a reasonable opportunity for review and comment on the proposed rates,

methodologies and justifications.

15

Medicaid reimbursement rates, W. Va. Code § 9-2-6(10) (2005) clearly delegates that

duty to the Department.8

The Department argues that federal law preempts the statutes upon which

Beckley ARH relies. In Harrison v. Skyline Corp., 224 W. Va. 505, 510, 686 S.E.2d 735.

740 (2009), this Court discussed preemption questions, stating:

We most recently discussed the analysis applied to

preemption questions in Morgan v. Ford Motor Company,

224 W.Va. 62, 680 S.E.2d 77 (2009). As related in Morgan,

the preemption doctrine has its roots in the supremacy clause

of the United States Constitution and is based on the premise

that federal law can supplant inconsistent state law. Id. at Syl.

Pt. 2. However, preemption is not automatic, especially in

areas such as health and safety which have traditionally been

regulated by the states. Id. at Syl. Pt. 3. Thus for preemption

to occur, there has to be convincing evidence that Congress

intended a federal law to supersede a state law. Such

Congressional intent may be express or implied in the

language of the statute under consideration. Id. at Syl. Pts. 4

and 5. Preemption may be implied when the pervasive

regulatory scheme of a federal Act leaves no room for state

regulation (field preemption), or where compliance with both

federal and state regulations is physically impossible or state

regulation otherwise is an obstacle to accomplishing

congressional objectives (conflict preemption). Id. at Syl. Pt.

7. In brief, the first step in a preemption analysis is to

determine if the federal Act in question expressly bars state

action. If state involvement is not expressly barred by the

8

In 2013, this section of the W. Va. Code was revised, and the designation of

BMS as the single state agency for the administration of Medicaid programs is now

contained in W. Va. Code § 9-2-6(12).

16

terms of the federal statute, the second step is to determine

whether field preemption or conflict preemption may be

implied from the construction of the statute or federal

standards promulgated thereunder.

Our analysis of the federal statutes and regulations indicates that Medicaid

rate-setting is field preempted by federal law. For the purposes of administering all state

aspects of the Medicaid program, CMS requires that each state designate a single state

agency. As indicated herein, BMS is that single state agency. CMS’s designation

necessarily precludes the involvement of the HCA. Furthermore, W. Va. Code § 9-2-3

(1970) provides direct support for this preemption, by acknowledging that the State’s

participation in a cooperative assistance program such as Medicaid requires compliance

with the applicable federal laws, rules and regulations. W. Va. Code § 9-2-3 states:

The State assents to the purposes of federal-state assistance,

accepts federal appropriations and other forms of assistance

made under or pursuant thereto, and authorizes the receipt of

such appropriations into the state treasury and the receipt of

other forms of assistance by the department for expenditure,

disbursement, and distribution by the department in

accordance with the provisions of this chapter and the

conditions imposed by applicable federal laws, rules and

regulations.

We have held that “[w]here states have traditionally regulated conduct in a

given area, field preemption may only be founded on clear and manifest congressional

17

intent to alter that tradition and occupy the field.” English v. General Electric Co., 496

U.S. 72, 79, 110 S.Ct. 2270, 110 L.Ed.2d 65 (1990). By enacting a statutory scheme that

allows the states to establish rates in accordance with federal laws and regulation, the

federal government has clearly manifested its intention that Medicaid reimbursement

rates are preempted by the federal legislation. 42 U.S.C. § 1396a establishes this field

preemption as it relates to the state statutes upon which Beckley ARH relies. Therefore,

Beckley ARH cannot maintain a cause of action related to rate-setting under W. Va. Code

§ 16-29B-20.

D. The Circuit Court Correctly Dismissed the Case

In Highmark West Virginia Inc. v. Jamie, 221 W. Va. 487, 491–492, 655

S.E.2d 509, 513–514 (2007), we discussed this Court’s review of the dismissal of a

complaint for failure to state a claim upon which relief may be granted.

In reviewing a Rule 12(b)(6), dismissal, assistance in

appraising the sufficiency of the claim or counterclaim is

provided by Rule 8(a)(1) of the West Virginia Rules of Civil

Procedure which requires, in a pleading, “a short and plain

statement of the claim showing that the pleader is entitled to

relief.” Subsection (e) of Rule 8 states that each averment of a

pleading shall be “simple, concise and direct.” As observed in

Scott Runyan Pontiac-Buick (citation omitted): “Rule 8 of the

Rules of Civil Procedure requires clarity but not detail * * *

Under Rule 8, a complaint must be intelligibly sufficient for a

circuit court or an opposing party to understand whether a

valid claim is alleged and, if so, what it is.” 194 W.Va. at 776,

461 S.E.2d at 522. Thus, while bald statements or a carelessly

drafted pleading will not survive a Rule 12(b)(6) motion to

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dismiss, Fass v. Nowsco Well Service, 177 W.Va. 50, 52, 350

S.E.2d 562, 564 (1986), a circuit court should not dismiss a

claim “merely because it doubts that the plaintiff will prevail

in the action.” John W. Lodge Distributing Co. v. Texaco, 161

W.Va. 603, 605, 245 S.E.2d 157, 159 (1978). The complaint

is to be construed in the light most favorable to the plaintiff.

Price v. Halstead, 177 W.Va. 592, 594, 355 S.E.2d 380, 383

(1987); Chapman v. Kane Transfer Co., Inc., 160 W.Va. at

538, 236 S.E.2d at 212.

In the case before us, in the light most favorable to Beckley ARH, there is

no valid claim for relief propounded in any of the ten counts of the complaint. Beckley

ARH entered into a voluntary agreement with the Department to provide medical services

to Medicaid beneficiaries. The contract did not specify a particular reimbursement rate.

Beckley ARH agreed to accept that rate. Beckley ARH now attempts through this action

to create a mechanism for challenging the Medicaid reimbursement rate, under a number

of theories (quantum meruit, due process, equal protection, breach of contract), based

upon two code sections unrelated to the Department’s role in establishing Medicaid

reimbursement rates. Neither statute directly or indirectly provides for a private cause of

action against the Department to address the issue of Medicaid reimbursements.

This is not a question of dismissing a case because it is doubtful that

Beckley ARH would prevail; this dismissal is based upon the absence of a statutory basis

upon which to pursue any claims. Beckley ARH argues that dismissal of its complaint

prior to discovery left contested material facts unresolved. We disagree and we affirm

the circuit court’s dismissal of Beckley ARH’s complaint.

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Our resolution of this case is in accord with the Supreme Judicial Court of

Massachusetts’ recent holdings in Boston Medical Center v. Secretary of the Office of

Health and Human Services, 974 N.E.2d 1114 (2012). That case involved the complaint

of hospitals providing Medicaid services against the Massachusetts’ equivalent of West

Virginia’s BMS for reimbursement rates that did not equal the financial requirements of

providing care to recipients of medical assistance. The hospitals sued on violations of

several Massachusetts statutes regarding the establishment of reimbursement rates for

Medicaid services. The Massachusetts court affirmed the dismissal of the hospitals’

complaint for failure to state a claim upon which relief could be granted, finding that the

statutory scheme did not create a private right of action to challenge the reasonableness of

Massachusetts’ Medicaid program (MassHealth) payment rates. The Massachusetts court

considered “whether it would be reasonable as a matter of public policy for the

Legislature to have intended a statutory duty without a judicial remedy” and concluded

that judicial review of a hospital’s payment rates would be complex and difficult. The

Massachusetts court also found that the Massachusetts legislature did not intend to waive

sovereign immunity in a Medicaid reimbursement challenge. Boston Medical Center,

974 N.E.2d at 1124.

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IV.

CONCLUSION

For the foregoing reasons, we find no error in the order of the Circuit Court

of Kanawha County that dismissed Beckley ARH’s complaint against the Department for

failure to state a claim upon which relief may be granted. We conclude and hold that W.

Va. Code §§ 9-15-16 (1988) and 16-29B-20 (1997) do not provide for an express or

implied private cause of action by a Medicaid provider for judicial review of

reimbursement rates for medical services. The judgment of the circuit court is affirmed.

Affirmed.

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