# Petition for Writ of Certiorari — Doe v. United States

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1991
- **Citation:** 502 U.S. 869

## Text

, | FILED

| CU , APR 20 1992
i-1 679

IN THE

Supreme Court of the United States

OCTOBER TERM, 1991

ILLINOIS COUNCIL ON LONG TERM CARE;
GILMAN NURSING CENTER, an Illinois limited
partnership; SPRING VALLEY NURSING CENTER,
an Illinois limited partnership; and
WOODSIDE MANOR, an Illinois corporation,

Petitioners,
V.

PHILLIP BRADLEY, in his official capacity as
Director of the Illinois Department of Public Aid;
DAWN CLARK NETSCH, in her official capacity as
Comptroller of the State of Illinois; and
PATRICK QUINN, in his official capacity as
Treasurer of the State of Illinois,

Respondents.

Petition for Writ of Certiorari to the United
States Court of Appeals for the Seventh Circuit

PETITION FOR WRIT OF CERTIORARI

RICHARD F. ZEHNLE
Counsel of Record
NEAL A. CROWLEY
ANN A. MCKENZIE
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, Illinois 60601
(312) 609-7500

Attorneys for Petitioners

April, 1992

Midwest Law Printing Co., Chicago 60611, (312) 321-0220

i

QUESTIONS PRESENTED

1. Whether, in view of the consistent holdings of fed-
eral courts that States, in reimbursing providers for Medi-
caid services, may not freeze or diminish rates or delay
implementation of rate increases for budgetary reasons,
the Medicaid Act, and the Boren Amendment in particu-
lar, prohibit the State of Illinois, when it has failed to
appropriate adequate funds to make the payments, from
accomplishing the same result by delaying payments of
the rates it has determined to be adequate and reasonable
to the extent that annual payments to providers are re-
duced by one-sixth and providers are threatened with ir-
reparable injury.

2. Whether, in view of the decision of this Court in
Wilder v. Virginia Hospital Association, the fundamental
obligation of the States under the Boren Amendment is
to actually make payments for services that are reason-
able and adequate to meet the costs which must be in-
curred by efficiently and economically operated facilities
in rendering the services, and not just to determine rates
that would, if paid, satisfy the statutory standard.

3. Whether a State’s extraordinary delay in making
Medicaid payments beyond its practice over more than
ten years, to the extent that ten payments were made
in a calendar year in lieu of the usual twelve payments,
constitutes the kind of “change in payment methods and
procedures” for which the State is required to make find-
ings and assurances to the Secretary of the Department
of Health and Human Services.

il

LIST OF PARTIES

The parties to this action both in the Federal District
Court for the Northern District of Illinois and the Court
of Appeals for the Seventh Circuit are those stated in
the caption on the cover. Apparently by inadvertence, one
of the petitioners was omitted from the decision of the
Court of Appeals.

Pursuant to Supreme Court Rule 29.1, petitioners state
that petitioner, Illinois Council on Long Term Care, is a
not for profit corporation having no parent companies or
subsidiaries, and petitioner, Woodside Manor, is a for profit
corporation having no parent companies or subsidiaries.

ill

TABLE OF CONTENTS

QUESTIONS PRESENTED .................. i
Oo ge eee il

STATEMENT OF THE CASE ...............

REASONS FOR GRANTING CERTIORARI ..
I.

THE RULING OF THE COURT OF APPEALS
WILL PERMIT ALL STATES AND THEIR
MEDICAID AGENCIES TO CIRCUMVENT
THE CONSISTENT DECISIONS OF FEDERAL
COURTS THAT HAVE CONSTRUED THE
MEDICAID ACT TO ENJOIN REDUCTIONS
IN REIMBURSEMENT SOLELY FOR BUD-
RE CED Acc cw cccrecnensaccsecs 9

A. Federal Courts Have Consistently Held
That a State May Not Reduce Medicaid
Reimbursement Solely Because of Bud-
getary Concerns by Freezing, Diminishing
or Delaying Implementation of Increases
een Wk kta ehh anencee nas os 10

B. The Decision of the Court of Appeals Per-
mits a State Medicaid Agency to Diminish
Medicaid Reimbursement Solely Because
of Budgetary Concerns by Simply De-
laying Payments Without Reducing the
eae she aCe bCAd ae h See ss 12

iv

C. The Decision of the Court of Appeals
Conflicts with This Court’s Insistence on
Compliance with the Medicaid Act in
Practice and on the Prime Importance of
CUS -WacCaakethGaeeis ceeeriebees«

II.

THE RULING OF THE COURT OF APPEALS
IS CONTRARY TO SETTLED PRINCIPLES OF
STATUTORY INTERPRETATION .........

A. The Court of Appeals Ignored the Explicit
Language of the Medicaid Act and Other
Evidence of the Intent of Congress ....

1. Statutory Language ..............
2. Congressional Intent .............
De RO RD ask Sokwccicescce

B. The Court of Appeals Purported to Ascer-
tain Agency Intent Without Sufficient
Evidence and then Unjustifiably Attrib-
uted Such Intent to Congress ........

GE Gi cirauins ccbekecsanvakscsaxes
ETE San aNV hs uu mN andy cubs ak baekebexes

14

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V

TABLE OF AUTHORITIES

Cases PAGE

Amisub (PSL), Inc. v. State of Colorado Depart-
ment of Social Services, 879 F.2d 789 (10th Cir.
1989), cert. denied, 110 S.Ct. 3212 (1990) .. 10, 11, 19

Bethesda Hospital Association v. Bowen, 485 U.S.
399, 108 S.Ct. 1255, 99 L.Ed. 2d 460 (1988) ... 16

California Association of Health Care Facilities v.
Department of Health Services, No. S-90-1086,
CCH Medicare and Medicaid Guide 439,053 (E.D.
Cs SEES Be EE Wace dcx cuonesmeteanees 10, 11, 22

Chicago Osteopathic Medical Centers v. Duffy, 88
C 1174, Medicare & Medicaid Guide (CCH),

ee a te OE $x eh vnscdencciveses 17
Commissioner of Internal Revenue v. Engle, 464
U.S. 206, 104 S.Ct. 597, 78 L.Ed. 2d 420 (1984) .. 16

Illinois Healthcare Association, Inc. v. Quern, No.
77-C-1109, Medicare and Medicaid Guide (CCH)

Pan eee CHD. Th. TOBE) once cecsccccsuae 10, 13, 14
Illinois Hospital Association v. Illinois Department
of Public Aid, 576 F. Supp. 360 (N.D. Ill. 1983) .. 10

Kansas Health Care Association, Inc. v. Kansas
Department of Social and Rehabilitation Ser-
vices, No. 90-4207-S, Medicare and Medicaid
Guide (CCH) 439,059 (D. Kan. Dec. 31, 1990) .. 10, 11

Nebraska Health Care Assoc. v. Dunning, 578 F.
Supp. 543 (D. Neb. 1983), affirmed in part, 778
F.2d 1291 (8th Cir. 1985) (as amended on denial
of rehearing 1986), cert. denied, 479 U.S. 1063
GUOUED Sebecedetcuveuds Gracesdeaiareeneees 11

vi

Temple University v. White, 729 F. Supp. 1327
(E.D. Pa. 1990), aff'd, 941 F.2d 201 (8d Cir.
1991), cert. denied, Snider v. Temple University,
oe 8 rere en 10

United Cerebral Palsy Assn. of New York State,
Inc. v. Cuomo, 1992 U.S. Dist. Lexis 1122
Ce EA at “SE (5b 5 0 be a0 dst date of receipt ... .” 42 C.F.R. § 447.45(dX2),(8),
and (4).

—

—19—

Section 1396a(aX37XA) shows that when Congress wanted
to impose time limits for the payment of certain Medicaid
claims, it did so explicitly. Moreover, given the express
time limits previously imposed by § 1396a(aX37XA) and 42
C.F.R. § 447.45(d), it is all the more unlikely that Con-
gress intended to impose further time limits through the
Boren Amendment, which does not mention time at all
and speaks only about payment rates. We conclude from
the Boren Amendment’s language and context that the
Boren Amendment does not address the timeliness of claim
payment. Cf. King, 112 S. Ct. at 573-74. A state complies
with federal law so long as it pays providers’ claims with-
in the express time limits established by the statute and
regulations (in this case, the 12-month limit for “all other
claims” set forth in 42 C.F.R. § 447.45(d\4)).

The plaintiffs insist that if the only time limit placed
on Illinois is § 447.45(d\4)’s 12-month limit, the state can
avoid paying its Medicaid bills forever. This is so, say the
plaintiffs, because the 12-month period begins when the
state receives the provider’s claim. However, the provider
cannot submit its claim until it receives a Turnaround In-
voice, a document the state generates; as we have noted,
Illinois deems receipt of the Turnaround Invoice to be
receipt of the claim. The plaintiffs assert that Illinois may
avoid paying claims simply by not sending the Turnaround
Invoice. Illinois will never receive a claim, so the 12-month
time limit for payment will never begin. According to the
plaintiffs, Congress could not have intended this result.

There are at least three responses to this cynical argu-
ment. First, there is no evidence that Illinois has ever
delayed or will ever delay sending Turnaround Invoices
to avoid paying claims. Indeed, there is no evidence that
Illinois is not paying claims; it is just taking longer to
pay them than it has in the past. Second, the plaintiffs’
argument ignores 42 C.F.R. § 447.45(dX1), which requires
the state “to require providers to submit all claims no
later than 12 months from the date of service.” If Illinois
did delay sending Turnaround Invoices so that the nursing

nla

homes could not submit their bills within 12 months from
the date of service, it would violate § 447.45(dX1). Third,
the plaintiffs’ scenario does not change the Boren Amend-
ment’s language and context, both of which indicate that
the Boren Amendment does not address timeliness. If the
plaintiffs want absolute assurance in the Medicaid Act that
the scenario they posit never comes to pass, they should
look to Congress to amend the Medicaid Act to prevent it.

Besides arguing that Illinois has violated the Boren
Amendment by delaying payments, the plaintiffs also ar-
gue that Illinois has violated 42 C.F.R. §§ 447.253(a) and
(b). Section 447.253(a) provides that whenever a state seeks
to change the “payment methods and standards” in its
plan, it must make the findings and assurances set forth
in §§ 447.255(b) through (g). Section 447.253(b) requires
that whenever a state makes a change in its “methods
and standards,” it must make certain findings. The plain-
tiffs argue that by making payments later than it histori-
cally had made them, Illinois changed its “methods and
standards”; since Illinois did not make the necessary find-
ings and assurances before slowing down its payments,
it violated §§ 447.253(a) and (b).

Sections 447.253(a) and (b) do not apply to Illinois’ deci-
sion to delay payments to nursing homes. Section 447.253,
read as a whole and in the context of accompanying reg-
ulations, addresses methods and standards for rate set-
ting and not the time in which payments must be made.
Section 447.253 appears in a part of Subpart C of Chap-
ter IV of 42 C.F.R. entitled “Payment Rates.” Section
447.252(b) states that a plan must “specify comprehensive-
ly the methods and standards used by the agency to set
payment rates.” The findings mandated by § 447.253(b)
(the section relevant to nursing homes), and the assur-
ances mandated by §§ 447.253(c), (f), and (g), all relate to
methods and standards for determining payment rates.
None of the findings or assurances that §§ 447.253(b) through
(g) require mentions anything about assuring that states
will make timely payments. Since a specific regulation,

—9a—

42 C.F.R. § 447.45(d), imposes express time limits for pay-
ments to Medicaid providers, it is unlikely that the Sec-
retary would implicitly address timeliness in a separate
regulation that does not mention timeliness.

Moreover, Subpart C of Chapter IV of 42 C.F.R., the
subpart containing § 447.252 and § 447.253, implements the
Boren Amendment. See 42 C.F.R. § 447.250(a). As we
have seen, the Boren Amendment does not address the
timeliness of payments. It follows that the regulations
implementing the Boren Amendment would not address
timeliness either. The language of the regulations, which
expressly addresses rate-setting but not timeliness, is con-
sistent with this conclusion. Since a delay in making pay-
ments is not the kind of “change in payment methods and
procedures” that 42 C.F.R. §§ 447.252 and 447.253 ad-
dress, Illinois did not have to make the findings and as-
surances those sections require when it increased the time
in which it paid the plaintiffs for their services.

The district court correctly determined that the plain-
tiffs were not entitled to a preliminary injunction because
they could not show a better than negligible chance of
Succeeding on the merits of their claims. In fact, the plain-
tiffs have not demonstrated any chance of success on the
merits. The plaintiffs’ claims depend on alleged violations
of the Boren Amendment and its regulations. But Illinois
has not violated either the Boren Amendment or its imple-
menting regulations because neither the Boren Amendment
nor the regulations address Illinois’ conduct—delaying pay-
ments to Medicaid providers. The only limit on the time
in which Illinois must pay the plaintiffs’ Medicaid claims
is the 12-month rule set out in 42 C.F.R. § 447.45(d4).
The plaintiffs may wish to be paid more quickly, and per-
haps the law should require more timely payments. But
that decision is for Congress, not the federal courts, to
make.

The plaintiffs have not ever suggested that Illinois has
violated § 447.45(dX4) or that any real possibility exists
that it will do so in the future. Since plaintiffs cannot win

—10a—

on the merits, there is no point in remanding the case
for further proceedings. Therefore, we affirm the district
court’s judgment and remand with instructions to dismiss
the case on the merits. See Pratte v. N.L.R.B., 683 F.2d
1038, 1044 (7th Cir. 1982); Hurwitz v. Directors Guild of
America, 364 F.2d 67, 70 (2d Cir. 1966).

AFFIRMED AND REMANDED WITH
INSTRUCTIONS TO DISMISS.

A true Copy:
Teste:

Clerk of the United States Court of
Appeals for the Seventh Circuit

—lla—

APPENDIX B

[Dated March 20, 1991]

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
; EASTERN DIVISION

ILLINOIS COUNCIL ON LONG )
TERM CARE; GILMAN NURSING _)
CENTER, an Illinois limited )
partnership; SPRING VALLEY )
NURSING CENTER, an Illinois )
limited partnership; and )
WOODSIDE MANOR, an Illinois )
corporation, )
Plaintiffs, )
V. ) NO. 91 C 1666
)
PHILLIP BRADLEY, in his )
official capacity as Director )
of the Illinois Department of )
Public Aid, )
Defendant. )

ORDER
JAMES F. HOLDERMAN, District Judge:

Illinois Council On Long Term Care, Gilman Nursing
Center, Spring Valley Nursing Center and Woodside
Manor, having moved for a Temporary Restraining Order
pursuant to Rule 65 of the Federal Rules of Civil Pro-
cedure, notice thereof having been provided to counsel for
the Defendant Phillip C. Bradley, Director of the Illinois
Department of Public Aid, and the court having consid-
ered this motion, the Complaint in this action, Piaintiffs’

—12a—

Memorandum of Law in Support of Plaintiffs’ Motion for
Issuance of a Temporary Restraining Order and the ex-
hibits attached to all of these documents and having heard
the arguments of counsel, and based on the court’s find-
ings that:

(a)

(b)

(c)

(d)

(e)

The standard to be applied, as has been set forth
by the United State Court of Appeals for the Seventh
Circuit, is whether plaintiffs have demonstrated a
better than negligible likelihood of prevailing on the
merits of this action; whether plaintiffs will suffer
irreparable harm from which there is no adequate
remedy at law; whether issuance of the temporary
restraining order will not disserve the public in-
terest; whether the threatened injury to plaintiffs
outweigh any threatened harm the temporary re-
straining order may provide to defendants;

The State admittedly has delayed and unless en-
joined will continue to delay the payment of funds,
contrary to the procedures and the timeliness that
has been heretofore used in conjunction with these

payments;

There is a reasonable likelihood that the delay of
payment is equivalent to decreasing the payment
rate;

There is a reasonable likelihood that the delay of
payment is in violation of 42 U.S.C. §1396a (aX13)A;

The recent case of Chicago Osteopathic Medical
Center vs. Duffy, 1989 U.S. Dist. LEXIS 12824, is
distinguishable from this matter in that the situa-
tion there was not one where there was a possibil-
ity of harm resulting such as the harm that has
been shown by the affidavits to potentially occur

—13a—

here, and there is no waiver of the Boren Amend-
ment or negotiated rates in this matter;

(f) There has been a showing by plaintiffs of substan-
tial harm if this temporary restraining order is not
entered and no indication with regard to harm to be
suffered by the State if plaintiffs’ request for this
temporary restraining order were to be granted;

(g) The temporary restraining order will not disserve
the public interest.

IT IS HEREBY ORDERED that the Defendant is tempo-
rarily restrained pending a hearing on plaintiffs’ request
for preliminary injunction from delaying the processing
of claims for provision of long-term care to Medicaid bene-
ficiaries, and shall be required to pay all such claims
within the same time frame that has been utilized here-
tofore but in any event not to be later than 30 days from
the date of submission of such claims.

IT IS FURTHER ORDERED this case shall be set for
a hearing on entry of a preliminary injunction on March
29, 1991 at 10:30 a.m. and the parties shall proceed with
expedited discovery to prepare for said hearing.

IT IS FURTHER ORDERED THAT no bond shall be re-
quired with respect to this Order.

Issued this 20th day of March, 1991 at 1:45 p.m.

ENTER:

JAMES F. HOLDERMAN
United States District Judge

—l4a—

APPENDIX C

[Dated March 29, 1991]

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

ILLINOIS COUNCIL ON LONG
TERM CARE; GILMAN NURSING
CENTER, an Illinois limited
partnership; SPRING VALLEY
NURSING CENTER, an Illinois
limited partnership; and
WOODSIDE MANOR, an Illinois
corporation,

Plaintiffs,

v. NO. 91 C 1666
PHILLIP BRADLEY, in his

official capacity as Director

of the Illinois Department of

Public Aid}; DAWN CLARK NETSCH,
in her official capacity as
Comptroller of the State of

Illinois; and PATRICK QUINN, in
his official capacity as

Treasurer of the State of

Illinois,

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)

Defendants.

MEMORANDUM OPINION AND ORDER
JAMES F. HOLDERMAN, District Judge:

Plaintiffs, Illinois Council on Long Term Care (a not-
for-profit health care association representing over 150
proprietary Illinois nursing homes) and three nursing

homes with at least 70% Medicaid recipients as residents,
bring this action for declaratory and injunctive relief
against the director of the Illinois Department of Public
Aid (IDPA), the state agency which administers the IIli-
nois Medicaid program, and the Comptroller and Treasurer
of the State of Illinois.

Plaintiffs seeks preliminary injunctive relief claiming
that the slowdown in IDPA’s Medicaid reimbursements to
nursing homes for care provided to Medicaid beneficiaries
violates the federal Medicaid Act (the ‘“‘Act”), Title 42,
United States Code, Sections 1396a(aX2), 1396a(aX13)\A),
and 1396a(aX30XA), and implementing regulations at 42
C.F.R. § 447.250-.257.

—1l5a—

BACKGROUND FACTS

Illinois participates in the Medicaid program, a cooper-
ative federal-state program established by the Act under
which federal matching funds are provided to states to
furnish medical assistance to persons ‘“‘whose income and
resources are insufficient to meet the costs of necessary
medical services.”’ 42 U.S.C. § 1396. IDPA administers
and supervises the Illinois Medicaid program pursuant to
§ 1396a(aX5) and Ill. Rev. Stat. ch. 23, § 1-1 et seg. Plain-
tiff Illinois Council on Long Term Care has a member-
ship comprised of 150 proprietary Illinois nursing homes.
Most of the Council’s members, including the three plain-
tiff nursing homes, participate in the Illinois Medicaid
program.

Under 42 U.S.C. § 1396a, a state becomes eligible to
participate in the Medicaid program, and to receive federal
matching funds, by submitting to the Secretary of Health
and Human Services (HHS) (the “‘Secretary’’) a State Medi-
caid Plan that meets the federal standards prescribed in

ite.

the Act and its implementing regulations, and by having
the plan approved by the Secretary. A state plan for med-
ical assistance must provide for financial participation by
the state on a basis “which will assure that the lack of
adequate funds from local sources will not result in lower-
ing the amount, duration, scope, or quality of care and
services available under the plan.” 42 U.S.C. § 1396a(aX2).

As of October 1, 1981, the Act requires a state plan
to provide for payment at rates “which the State finds,
and makes assurances satisfactory to the Secretary, are
reasonable and adequate to meet the costs which must be
incurred by efficiently and economically operated facilities
in order to provide care and services in conformity with
applicable State and Federal laws, regulations, and quality
and safety standards. . . .” 42 U.S.C. § 1396a(aX13)XA).

Section 1396a(aX30) requires that state plans “provide
such methods and procedures relating to the utilization
of, and the payment for, care and services available under
the plan . . . as may be necessary ... to assure that
payments are consistent with efficiency, economy, and
quality of care.”

A Medicaid agency must pay for long term care ser-
vices using rates determined in accordance with methods
and standards specified in an approved state plan. 42 CFR

§447.253(g).

When a Medicaid agency makes a change in its “pay-
ment methods and standards,” but not less often than an-
nually, the agency must provide assurance and make find-
ings that “the agency pays for. . . long-term care facil-
ity services through the use of rates that are reasonable
and adequate to meet the costs that must be incurred by
efficiently and economically operated providers to provide
services in conformity with applicable State and Federal

—17a—

laws, regulations, and quality and safety standards.” 42
C.F.R. § 447.253(a), (b).

The IDPA has established monthly billing cycles. His-
torically, IDPA has had a median delay of approximately
30 days from the time services are rendered to the com-
mencement of the processing of claims, and another 30
days delay before reimbursement is made to the providers.
Plaintiffs claim that this 60 day delay in reimbursement
from the date services are provided reflects the intention
of the state plan and the expectations of the nursing
homes. In fiscal years 1989 and 1990, however, the delay
after presentation of claims to IDPA increased from 30
days to approximately 40 days. The delays expanded again
in fiscal 1991: Payment for November, 1990 services were
made between 80 and 90 days after presentation of the
invoice, and, on March 21, 1991, payment was received
for certain services rendered through December 6, 1990.
As of the date of this opinion, March 29, 1991, no pay-
ments had been received by any nursing homes for any
services rendered after December 6, 1990.

DISCUSSION

To support the issuance of a preliminary injunction, a
plaintiff must demonstrate: (1) a reasonable likelihood of
success on the merits; (2) the inadequacy of a remedy at
law; (3) the existence of irreparable harm without the in-
junction; (4) that the threat of harm to the plaintiff
outweighs any harm to the defendant if the injunction
were issued; (5) that the public interest would not be
disserved if the injunction were granted. Kellas v. Lane,
No. 89 C 4290. slip op. at 3 (7th Cir. Jan. 22, 1991).
Though the plaintiff must satisfy each of these elements
to prevail, his threshold burden is to show the first three

~_

factors. Jd. Only when this burden is met does the in-
quiry become a “sliding scale” analysis of the harm to
the parties and the public from the grant or denial of the
injunction and the actual likelihood of success on the
merits. Id.

In order to establish a reasonable likelihood of success
on the merits, the plaintiff need only show that his
chances are better than negligible. Jd. The court, having
considered the evidence presented at the evidentiary hear-
ing held on March 28, 1991, finds that plaintiffs have not
met this standard.

Plaintiffs allege that the delay of Medicaid reimburse-
ment payments violate various provisions of 42 U.S.C.
§ 1396a(a)—namely §§ 1396a(aX13XA), 1396a(aX30XA), and
1396a(aX2). The provisions of § 1396a(a) set forth the re-
quirements of state plans for medical assistance. The Sec-
retary will approve state plans which fulfill the conditions
specified in § 1396a(a). 42 U.S.C. § 1396a(b). It is un-
disputed that the Illinois State Medicaid Plan (the “State
Plan”) has been approved by the Secretary. The only pro-
vision in the State Plan concerning timeliness of payments
for services rendered by providers is § 4.1%e). It states
that “(t]he Medicaid agency [IDPA] meets all require-
ments of 42 CFR 447.45 for timely payment of claims.”’
(Exhibit E, Illinois State Medicaid Plan, p. 61.) That fed-
eral regulation requires IDPA to pay all claims within
twelve months of the date of receipt of the claim. 42
C.F.R. § 447.45(d\4).

In evaluating the State Plan pursuant to 42 U.S.C.
§ 13896a(b), the Secretary was required to evaluate the
State Plan in light of the requirements of 42 U.S.C.
§ 1396a(a). The subsequent approval of the State Plan
signifies the Secretary’s finding that the sole timeliness

—19a—

provision in § 4.19(e) adequately addresses any timeliness
concerns raised by § 1396a(a). For example, the Secre-
tary’s approval of the State Plan demonstrates that the
directive of 42 U.S.C. § 1396a(aX13XA)—that the plan pro-
vide for payments through the use of rates which are rea-
sonable and adequate to meet the costs which must be in-
curred by efficiently and economically operated facilities—
is satisfied by the State Plan. Also, approval indicates that
the Secretary found that the State Plan, including the
§ 4.1% e) timeliness provision, adequately “‘provide[s] such
methods and procedures relating to the utilization of, and
the payment for, care and services available under the
.plan . . . as may be necessary . . . to assure that pay-
ments are consistent with efficiency, economy, and quali-
ty of care,” as required by § 1396a(aX80XA). Finally, the
Secretary’s approval demonstrates that the State Plan
provides for financial participation by the state on a basis
“which will assure that the lack of adequate funds from
local sources will not result in lowering the amount, dura-
tion, scope, or quality of care and services available under
the plan,” as required by 42 U.S.C. § 1396(aX2).1 Thus,
by giving its imprimatur to the State Plan, the Secretary
has made a finding that a delay in payments of up to
twelve months, as permitted by the State Plan, does not
contravene the provisions of § 1396a(a). See Wisconsin
Hospital Ass’n v. Reivitz, 733 F.2d 1226, 1287 (7th Cir.
1984) (determination by Secretary of the reasonableness
and adequacy of rates provides major guidance to the dis-

1 Defendants claims that § 1396a(aX2) does not apply to Illinois
since the Illinois Medicaid pro is administered on a state
basis, and not a county basis. Thus, “the lack of adequate funds

from local sources” is not relevant to the Illinois Plan. The court
need not address this issue since the court finds that, in any event,
defendants have not violated § 1396a(aX2).

—20a—

trict court). By approving the State Plan, the Secretary
consented to the manner in which the State of Illinois and
the Medicaid providers in Illinois are to share the risk
of nontimely payment, with the Illinois providers respon-
sible for financing the first twelve months and the State
of Illinois responsible for any delays thereafter.

As stated above, it is the State Plan which must comply
with 42 U.S.C. § 1396a(a), and not the “practices,” “in-
tentions,” or “expectations” of the agency and the pro-
viders.? Plaintiffs’ allegations of a slowdown simply consti-
tute a change in practice by IDPA. A new practice, even
one that imposes great hardships on Medicaid providers,
that does not violate the provisions of the State Plan
cannot, by itself, cause the Plan to contravene the fed-
eral requirements with which the Plan has been found to
comply.

Plaintiffs contend that, by paying in a slower manner
than was previously the practice of IDPA, the agency has
violated 42 C.F.R. § 447.253(bX1Xi).

An agency does not encounter the requirements of 42
C.F.R. § 447.253(a) and (b) unless a change has been made
to the state plan’s “methods and standards.” Throughout
this subpart of the federal regulations, the term “methods
and standards” relates to payment rates. See 42 C.F.R.
§ 447.252(b) (“the methods and standards used by the

agency to set payment rates”); § 447.253(f) (“significant

? Plaintiffs argue that “{mJoathly payment of Medicaid reimburse-
ment rates . . . has been the consistent practice of the IDPA under
its state plan,” and “it is clear that the intention of the State
and the expectation of the nursing homes is that the monthly bills
will be paid on a regular basis, not to exceed sixty days from
median date services are provided. . . .” (Mem. in Support, p. 3.,
emphasis added)

iain emaa ial i iin A

—2la—

changes to its methods or standards for setting payment
rates”); § 447.253(g) (“using rates determined in accord-
ance with methods and standards specified in an approved
State plan’). The provision of the Medicaid Act imple-
mented by this subpart, 42 U.S.C. § 1396a(aX13XA), re-
quires “‘the use of rates (determined in accordance with
methods and standards developed by the State).” Thus,
unless the IDPA slowdown amounts to a change in the
“methods and standards” of payment rates, IDPA is not
required to make the assurances and findings specified
in 42 C.F.R. § 447.253(a) and (b).

Plaintiffs equate delayed payments with reduced pay-
ments, which would constitute a change of rates under
the State Plan. However, plaintiffs cite no authority for
this position. Most of the cases cited by plaintiff pertain
to actual rate changes. The remainder involve rate freezes.
None of the cases concern delays in reimbursement with-
out alleging that the actual payment rates used by the
state agency are different from those set out in the state
plan. Plaintiffs make two arguments to equate the slow-
down to a rate reduction. First, plaintiffs claim that the
slowdown is tantamount to a decision by the IDPA to
make no payments for November and half of December,
1990. Second, plaintiffs try to equate the slowdown to a
rate reduction of 12.5 percent for 1990. Both of these posi-
tions would be correct if IDPA had taken the posture that
no reimbursement for services rendered during that one
and one half month period would be forthcoming. How-
ever, the circumstances are to the contrary. IDPA has
not denied liability for that period, and has stated that
it plans to reimburse plaintiffs for that period at the rates
and in the time frame set forth by the State Plan. At
this point, plaintiffs are unable to, and have no reason
to, disprove this assertion. Thus, plaintiffs attempts to

a

—~229—

equate delayed payment with reduced payment are unper-
suasive.

The court finds that the payment slowdown is not in-
consistent with the terms of the State Plan. Consequently,
the slowdown does not constitute an amendment to the
Plan and IDPA is not required to obtain an approval from
the Secretary through the submission of assurances and
findings.®

For these reasons, the court finds that plaintiffs do not
have a better than negligible likelihood of success on the
merits of their claim. Where the plaintiff is unable to show
likelihood of success on the merits, the harm to the plain-
tiff will never override this failure. Curtis v. Thompson,
840 F.2d 1291, 1296 (7th Cir. 1988). Denial of an injunction
for failure to establish such likelihood of success is appro-
priate and proper. Jd. at 1297.

Although the court need not and therefore will not ad-
dress the other requirements for the issuance of a pre-
liminary injunction, the court is not unmindful of the
necessity of adequate health care for those who qualify
for Medicaid benefits and would once again er:courage the
parties to attempt to settle this dispute.

8 The methods and standards for establishing i rates as
set forth in the State Plan include a two month working capital
component. (Exhibit E, Illinois State Medicaid Plan, Attachment
4.19-D, p. 12E.) Plaintiffs contend that the working capital com-
ponent infers that reimbursements by IDPA must be made within
sixty days of the date services are rendered in order for Medicaid
— to maintain proper working capital. The court disagrees.

working capital pe pel mean in this section of the State Plan
is for the purposes of calculating the capital cost component in
establishing payment rates. A plain reading of this section in con-
text does not persuade the court that the working capital compo-
nent constitutes an indirect requirement that IDPA pay Medicaid
claims within sixty days.

—23a—

CONCLUSION

Defendants’ motion to dissolve the temporary restrain-
ing order dated March 20, 1991 is GRANTED. Plaintiffs’
motion for a rule to show cause and motion for prelimi-
nary injunction are DENIED. The parties are encouraged
to discuss settlement and report on the status thereof on
May 3, 1991 at 10:00 a.m.

ENTER:

JAMES F. HOLDERMAN
United States District Judge

DATED: March 29, 1991

—24a—

APPENDIX D

SD oeneeEEEEEEEEEEEEeeeeeeel

[DEPARTMENT OF HEALTH & HUMAN
SERVICES LETTERHEAD]

Region V
105 West Adams
Chicago, Ill 60603

Philip C. Bradley, Director
Illinois Department of Public Aid
Jesse B. Harris Building

100 South Grand Avenue East
Springfield, Illinois 62762-0001

Dear Mr. Bradley:

This letter is to express my serious concern about the
length of time the Illinois Department of Public Aid (IDPA)
is taking to pay providers under the Illinois Medicaid pro-
gram. My office has been receiving inquiries and concerns
from Medicaid providers, the press and the Congress. It
appears that the concerns are now intensifying despite
previous State optimism that backlogs would be reduced
during the State’s current fiscal year.

The State’s figures on the average number of days to pay
claims from Medicaid providers has consistently exceeded
30 days for calendar years 1989 and 1990 and approached
or exceeded 50 days in July of each of those years. Aver-
age number of days to pay most claims exceeded 50 days
= December of 1990 and have risen fairly steadily since
then.

I had hoped that the increased appropriations for the cur-
rent State fiscal year would be used to reduce the backlog

ee Dh a AEN Soins

—25a—

of claims. The average number of days from claim receipt
to payment for August and September, 1991, however,
are the highest overall since early 1989. The most recent
figures we have indicate that average payment days for
non-institutional provider, pharmacist, ambulatory hospital,
and physician claims are well in excess of 100 days, long
term care claims are in excess of 90 days and inpatient
hospital claims are in excess of 80 days.

I am especially concerned about providers who serve a
large percentage of Medicaid and uninsured patients that
are highly dependent on Medicaid reimbursement for a
significant portion of their revenues. I understand that
IDPA has been prioritizing payments on the basis of the
percentage of Medicaid recipients a provider serves. This,
however, is not solving the basic underfunding problem.

As we discussed when I spoke with you recently, I would
like to meet with you to discuss your plan of action for
addressing this serious issue. In addition, I would like to
discuss my concerns related to the recently submitted re-
quest to revise Illinois’ alternative disposition plan for the
mentally ill and mentally retarded residents of nursing
facilities. I am requesting that you invite representatives
of the Illinois Department of Mental Health and Develop-
mental Disabilities as well as a representative of the Gov-
ernor’s office to this meeting.

My office will be in contact with you to arrange a con-
venient time for this meeting.

Sincerely,

Chester C. Stroyny
Regional Administrator

ec: [Various]
file code—R-4, Illinois disc 10—LATEPAYM.LT2

—26a—

Mr. Phil Bradley

Director

Department of Public Aid
Jesse B. Harris Building II
3rd Floor

100 S. Grand Avenue, East
Springfield, Illinois 62762

Dear Mr. Bradley:

During fiscal year (FY) 1991, staff from the Chicago Re-
gional Office (RO) of the Health Care Financing Admin-
istration (HCFA) conducted an operational review of your
Medicaid Management Information System (MMIS). The
purpose of the review was to evaluate your State’s sys-
tem against performance standards and review criteria
established under the authority of section 1903(r) of the
Social Security Act. A copy of the System Performance
Review (SPR) package used for the MMIS evaluation was
furnished to you prior to the last quarter of FY 1990 to
permit you to prepare for the review.

The SPR results of FY 1991 indicate that your State’s
MMIS meets all current conditions for reapproval. Conse-
quently, the 75-percent Federal financial participation cur-
rently available to your State for MMIS operations will
be continued. This rate will remain in effect until the
results of your next scheduled SPR are evaluated. The
Chicago RO will notify you before undertaking that re-
view.

I am pleased that your State’s MMIS met the conditions
for reapproval. However, I want to call to your atten-
tion those facts for which Illinois received a less than
minimally satisfactory score of 70 percent. They are:

Factor 18—Timeliness of Processing Clean Practi-
toner Claims—Part 1—The SPR revealed that IIli-
nois did not pay 90 percent of clean practitioner
claims within 30 days of receipt. Sixty-eight out of

A ea RAN ta Leb AOk ith

—27a—

eighty clean practitioner claims were not paid within
that time period. Actwal Score: 0

Factor 15—Timeliness of Processing Claims Other
Than Clean Practitioner Claims—The SPR also re-
vealed that Illinois did not satisfactorily pay other
than clean practitioner claims within 30 days of re-
ceipt. Only one of the twelve claims in the sample
were paid within that time period. Actual Score: 8

These problems are similar to those we identified in each
of the past 4 consecutive years (FYs 1987 through 1990).
Your State’s passing the FYs 1990 and 1991 SPRs can
be contributed largely to changes in our scoring method-
ology, rather than to corrective actions taken by your
State in these areas.

I encourage you to take prompt action to resolve these
timely claims processing problems. HCFA staff are ready
to assist you. Please contact the Chicago RO for any as-
sistance you need or if you have any questions.

Sincerely yours,

Christine Nye
Director
Medicaid Bureau

ce:
Regional Administrator
Chicago

State Medicaid Director

—28a—

(ILLINOIS DEPARTMENT
OF PUBLIC AID LETTERHEAD]

November 27, 1991

Mr. Chester C. Stroyny, Regional Administrator
Department of Health and Human Services
Health Care Financing Administration

Region V, 105 West Adams, 15th Floor
Chicago, Illinois 60603-6201

Dear Mr. Stroyny:

This letter is in response to your letter of November 1,
1991. I am responding for Phil Bradley, Director.

You requested our corrective action plan to the “1991
Medicaid Management Information System, System Per-
formance Review.” We concur with your finding, however,
we want to reiterate that failing the Timeliness Factors
13 and 15 was not due to MMIS Systems deficiencies but
ome was caused by an extreme shortfall of appropriated
funds.

If you have any questions please contact me at (217)
782-1136.

Sincerely,

James R. Donkin, CIA
Chief Internal Auditor

JRD:nw
ec: Charles W. Hazlett

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386011_0520%3A1. Public record. Not legal advice.