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Athol Memorial Hospital v. Commissioner of the Division of Medical Assistance8/6/2002
ctual issues on the question of the medical necessity of services could be resolved by the board of hearings. If the board of hearings applied the law incorrectly to the facts it found, such an error could be rectified in a complaint for judicial review under G.áL. c.á30A, §á14, as it was in Massachusetts Eyeá& Ear Infirmary v. Commissioner of the Div. of Med. Assistance, supra.
Moreover, the Legislature did more than express an intent to have factual disputes under the medical assistance program resolved in the first instance by the division. Under the statute, exhaustion of remedies is a jurisdictional prerequisite to judicial review. General Laws c.á118E, §á38, third par., states: "The provider's right to payment under this chapter shall be extinguished if the provider fails to file an appeal within the time prescribed by the division." Those claims for which no appeal was taken to the board of hearings within thirty days of notice of the division's final denial of the claim, which comprise a vast majority of the hospitals' claims, have been "extinguished." Id. See Massachusetts Respiratory Hosp. v. Department of Pub. Welfare, supra at 338. Those cases that are still pending are entitled to the benefit of our decision in Massachusetts Eyeá& Ear Infirmary v. Commissioner of the Div. of Med. Assistance, supra.
Judgment affirmed.
CORDY, J. (concurring, with whom MARSHALL, C.J., joins).
I agree with the court's conclusion that the plaintiffs cannot proceed on a breach of contract theory, and that they have forfeited any right to reimbursement at the inpatient rate on any denied claim not administratively appealed to the division's board of hearings as required by 130áCode Mass. Regs. §á450.211 (1997). I write separately to express my view that the plaintiffs could properly have sought reimbursement at the outpatient rate for all claims denied solely on the ground that the treatment, while medically appropriate, could have been provided in a more conservative or less costly (i.e., outpatient) setting, even though they did not administratively appeal from those denials.
It is uncontested that prior to our decision in Massachusetts Eyeá& Ear Infirmary v. Commissioner of the Div. of Med. Assistance, 428 Mass. 805 (1999) (Mass. Eyeá& Ear), the division's regulations did not permit any reimbursement for claims submitted as inpatient claims, even when the medical treatment provided was appropriate in every respect, if the division concluded that the treatment could have been provided in an outpatient setting. Although the division's regulations permitted the appeal of the denial of a "medically appropriate" inpatient claim, the only issue the hearing board could decide was whether the setting of the treatment (inpatient) was warranted. The board was specifically without jurisdiction to decide challenges to the regulatory scheme, including challenges to the propriety of excluding all reimbursement for medically necessary treatment rendered in the wrong setting, nor did it have the authority to grant outpatient reimbursement for inpatient care.
In these circumstances, any attempt by the plaintiffs to obtain anything other than reimbursement at the inpatient rate through the administrative appeals process would have been completely futile. Futility is a well-recognized exception to the requirement that plaintiffs exhaust their administrative remedies before seeking relief from the court. See Space Bldg. Corp. v. Commissioner of Revenue, 413 Mass. 445, 448 (1992); DiStefano v. Commissioner of Revenue, 394 Mass. 315, 319 (1985). Its application is particularly apt where the customary rationales for the doctrine of exhaustion, avoidance of
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