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Athol Memorial Hospital v. Commissioner of the Division of Medical Assistance8/6/2002
h adjudication as well as through rulemaking"). Thus, the administrative procedure under the Medicaid regulations for deciding whether appropriate medical services could have been provided in a less costly outpatient setting remains viable. There is no basis to conclude that the remedy for a breach of contract arising from certain "invalid" regulations is a jury trial to determine whether a hospital should have decided to provide a clinically necessary service on an outpatient rather than an inpatient basis.
The hospitals' reliance on Warner Ins. Co. v. Commissioner of Ins., supra, and Lapierre v. Maryland Cas. Co., 14 Mass. App. Ct. 248 (1982), is misplaced. In Warner Ins. Co. v. Commissioner of Ins., supra at 360-361, we said that the Commissioner of Insurance had no authority under any statute to make a binding interpretation of a settlement agreement to which he was a party, and that interpretation of the settlement agreement was a matter for the court. Here, the division has been given authority to determine the question of medical necessity subject only to limited judicial review under G.áL. c.á30A, §á14. See Massachusetts Eyeá& Ear Infirmary v. Commissioner of the Div. of Med. Assistance, supra at 813; Massachusetts Respiratory Hosp. v. Department of Pub. Welfare, supra at 336.
In Lapierre v. Maryland Cas. Co., supra at 252, the Appeals Court held that an insured was not required to pursue his administrative remedy against his insurer for unlawful cancellation of his motor vehicle policy before commencing an action for breach of contract because the administrative remedy was limited to reinstatement of the policy and there was no indication that the Legislature intended that reinstatement should be the exclusive remedy. By contrast, determination of the medical necessity of inpatient hospital services, precisely the question that the hospitals ask the court to resolve, is a matter that the Legislature has committed to the division's discretion. See id. at 250, citing Murphy v. Administrator of the Div. of Personnel Admin., 377 Mass. 217, 221 (1979).
Where the Legislature has authorized the division to promulgate regulations to determine claims for payment of medical services rendered pursuant to the Medicaid program, where the division has adopted an administrative review process for that purpose, and where the provider contract requires the hospitals to submit their claims thereunder before pursuing their judicial remedies, the hospitals must exhaust their administrative remedies. See Massachusetts Respiratory Hosp. v. Department of Pub. Welfare, supra at 338. The judicial remedies available to hospitals in such cases are those afforded under G.áL. c.á30A. Id.
(b) Question of law. The hospitals argue that they were not required to exhaust administrative remedies because their claims presented only issues of law beyond the division's expertise. See Briggs v. Commonwealth, 429 Mass. 241, 249 n.19 (1999); Hartford Acc.á& Indem. Co. v. Commissioner of Ins., 407 Mass. 23, 26-27 (1990). The hospitals cannot escape the fact that they seek payment for services at the inpatient rate, a question committed to the discretion of the division based on its investigation of the medical facts. The hospitals abandoned most of the claims for which they now seek payment, leaving no administrative record to support their current contention that there is no question of fact as to whether a clinically necessary procedure should have been performed on an inpatient or outpatient basis. In particular, it does not follow from our decision in Massachusetts Eyeá& Ear Infirmary v. Commissioner of the Div. of Med. Assistance, supra at 817, that because certain regulations, as implem
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