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Wilmac Corp. v. Bowen

filed: February 19, 1987.

WILMAC CORPORATION, D/B/A HEATHERBANK REHABILITATION AND NURSING CENTER, APPELLANT
v.
OTIS R. BOWEN, M.D., SECRETARY OF THE UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES AND COHEN, WALTER W., SECRETARY OF THE PENNSYLVANIA DEPARTMENT OF PUBLIC WELFARE



Appeal from the United States District Court for the Eastern District of Pennsylvania, D.C. Civil No. 84-5491.

Author: Mansmann

Before: ALDISERT, Chief Judge, and WEIS and MANSMANN, Circuit Judges.

Opinion OF THE COURT

MANSMANN, Circuit Judge.

Wilmac Corporation is a provider of health care to Meidcaid recipients and holds a certificate of need giving it permission to build an addition to its existing nursing home. Wilmac appeals from the district court's entry of summary judgment for the defendants in Wilmac's suit for a declaratory judgment to invalidate an amendment to Pennsylvania's Medicaid reimbursement policy promulgated by the Pennsylvania Department of Public Welfare with the approval of the Secretary of the Department of Health and Human Services. The amended regulations discontinue reimbursement of Medicaid providers for capital costs associated with the future construction of new long-term care facilities.

Wilmac seeks a declaration that the amended regulations violate federal standards for reimbursement of Medicaid providers under the Boren Amendment to the federal Medicaid statute, 42 U.S.C. § 1396a(a)(13)(A) (1981), and they infringe upon the authority of the Pennsylvania Department of Health pursuant to the National health Resources Planning and Development Act, 42 U.S.C. § 300k et seq.

We find that in light of the standards set forth in Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S. Ct. 1507, 18 L. Ed. 2d 681 (1967), this controversy is not presently ripe for judicial review. We find that further factual development would sharpen the issues and that the plaintiff has alleged no hardship to itself or to Medicaid beneficiaries which would result from withholding judicial review of the promulgation or approval of the amended regulations at this time. Accordingly, we will vacate the judgment of the district court and remand for entry of an order of dismissal.

I.

Title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq. establishes the "Medicaid" program which provides for the federal government and participating state governments to share the cost of providing medical care to dependent children and to aged, blind or disabled individuals who are without resources sufficient to meet their medical care needs. States choosing to participate in the program must submit a plan for medical assistance for approval by the Secretary of Health and Human Services ("HHS") 42 U.S.C. § 1396. Long-term care facilities must be certified by the state agency administering the state Medicaid plan if they choose to participate in the Medicaid program, see 42 U.S.C. § 1396a(a)(28), and they must agree that Medicaid payments will be accepted as full compensation for services to Medicaid beneficiaries. 42 U.S.C. § 1396h(c).

Plaintiff Wilmac Corporation ("Wilmac") owns Heatherbank Rehabilitation and Nursing Center ("Heatherbank"), a Medicaid-certified skilled nursing facility. Wilmac desires to build a 90-bed addition to Heatherbank and intends to apply for Medicaid certification of the new beds. A certificate of need ("CON") authorizing construction of the addition was issued to Wilmac on August 11, 1983 by the Pennsylvania Department of Health ("DOH"), which is the agency designated to administer Pennsylvania's health planning and development program under the National Health Planning and Resources Development Act of 1974 ("NHPRDA"), 42 U.S.C. § 300k et seq. The NHPRDA allocates federal funds to facilitate state planning to achieve the national goals of equal access to quality health care at a reasonable cost. 42 U.S.C. § 300k(a)(1).

In September of 1982, the Pennsylvania Department of Public Welfare ("DPW"), which is the agency designated to administer Pennsylvania's Medicaid program, revised its Manual for Allowable Cost Reimbursement for Skilled Nursing and Intermediate Care Facilities ("Manual"), 55 Pa. Code § 1181.1 et seq. As revised, the manual places a moratorium on medicaid reimbursement of depreciation and interest on capital indebtedness for new long-term care construction. While facilities approved or existing at the time of the amendment are still reimbursed for these costs, capital costs are no longer a component of the per diem rate for reimbursement of health care facilities providing care to Medicaid patients in facilities approved for construction after August 31, 1982. HHS approved the revised regulations on July 1, 1983.*fn1

Assuming that Wilmac completes the addition to Heatherbank and that the new beds are certified for medicaid participation, if the regulations as amended are still in effect, payments to Wilmac for the care of Medicaid patients occupying new beds will not include an amount for capital reimbursement. Consequently, prior to undertaking construction, Wilmac filed this action seeking pre-enforcement review of the amended regulations.

In its complaint Wilmac alleged that the regulations should be declared invalid as contrary to federal law. The district court found that there were no issues of material fact and that the defendants were entitled to judgment as a matter of law. The plaintiff asserts the following errors on appeal.

First, Wilmac challenges the district court's finding that, on their face, the state regulations do not violate the standard for reimbursement of Medicaid providers under the Bore Amendment to the Medicaid ...


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