We granted further appellate review to the plaintiffs, three proprietary chronic-care hospitals (hospitals). They claim error in the issuance of an Appeals Court order which summarily dismissed their appeal on the ground that the filing of the appeal was untimely. In addition, the hospitals allege error by the judge of the Superior Court in his determination of the merits of their claim.
The defendant Rate Setting Commission (commission) had reduced previously set rates of Medicaid reimbursement for the plaintiff hospitals. The hospitals appealed the commission's action to the Division of Hearings Officers (division). See G.L.c. 6A, § 36. After the division affirmed the rate reductions, the hospitals sought review in the Superior Court. See G.L.c. 6A, § 36; G.L.c. 30A, § 14. On January 4, 1983, a Superior Court judge entered a judgment for the commission, based upon a recommendation by a special master that the decision of the division be affirmed.
The hospitals moved to vacate the judgment on January 12, 1983. The judge denied the motion on April 4, 1983. On April 29, 1983, the hospitals filed a notice of appeal. The Appeals Court declined to reach the merits of the hospitals' claims because the hospitals had failed to file their notice of appeal within sixty days of the entry of judgment on January 4, 1983.
The Appeals Court treated the hospitals' motion to vacate as a motion under Mass. R. Civ. P. 60 (b), 365 Mass. 828 (1974),
There are no Massachusetts decisions which address the issue whether a motion to vacate, if served within ten days of judgment, should be treated as a rule 59 (e) motion to alter or amend judgment, or as a rule 60 (b) motion for relief from judgment. The only decision of this court which has touched upon this issue assumed a motion to reconsider was a rule 60 motion. Wolfberg v. Hunter, 385 Mass. 390, 392 n. 4 (1982). In the instant case, both the trial judge and the Appeals Court treated the hospitals' motion to vacate as one for reconsideration, and cited Wolfberg, supra, to place it under rule 60.
The Reporters' Notes to rule 59 (e) state that the rule encompasses a motion for rehearing, reconsideration, or vacation. Reporters' Notes to Mass. R. Civ. P. 59 (e), Mass. Ann. Laws, Rules of Civil Procedure at 560 (1982).
"As a general principle, we apply to our rules of civil procedure the construction given to the cognate Federal rules." Chavoor v. Lewis, 383 Mass. 801, 806 n. 5 (1981). Rule 60 does not provide for general reconsideration of an order or a judgment. Blair v. Delta Air Lines, Inc., 344 F.Supp. 367, 368 (S.D. Fla. 1972). Nor does it provide an avenue for challenging supposed legal errors, nor for obtaining relief from errors which are readily correctible on appeal. Id., citing 3 W.W. Barron & A. Holtzoff, Federal Practice and Procedure (Rules ed.) § 1322 (Wright rev. ed. 1958). Roque v. Redlands, 79 F.R.D. 433, 435 (C.D. Cal. 1978). Relief under rule 60 (b) (6) will be granted only in extraordinary circumstances. Artco, Inc. v. DiFruscia, 5 Mass.App.Ct. 513, 517 (1977). Larsen v. International Business Machs. Corp., 87 F.R.D. 602, 604 (E.D. Pa. 1980). Roque, supra.
Where doubt exists as to the proper characterization of a postjudgment motion, some courts simply treat all timely-filed motions which call into question the correctness of a judgment as rule 59 (e) motions. See Western Indus., Inc. v. Newcor Canada Ltd., 709 F.2d 16, 17 (7th Cir.1983); Dove v. Codesco, 569 F.2d 807, 809 (4th Cir.1978); Foman v. Davis, 292 F.2d 85, 87 (1st Cir.1961). Cf. Seshachalam v. Creighton Univ. School of Medicine, 545 F.2d 1147 (8th Cir.1976). We find this approach consistent with our view described in Page v. New England Tel. & Tel. Co., 383 Mass. 250, 252 (1981), that rule 59 (e) is designed to correct judgments which are erroneous because they lack legal or factual justification.
We give a brief summary of the facts and of the Medicaid program, necessary to an understanding of the substantive issues. Although the Federal government and each participating State jointly fund the Medicaid program, each State designs its own program within certain Federal guidelines. See 42 U.S.C. § 1396 et seq. (1976 & Supp. III 1979). Massachusetts
In 1974, the commission adopted a new system of reimbursement for hospitals through the promulgation of Regulation 74-1, under the authority of G.L.c. 6A, § 32. Under the regulation, the commission separately calculates a rate for each hospital prior to the beginning of the rate year. The rate is based on operating costs reported by each hospital for its "base" year (two years prior to the rate year), and increased by an inflation factor. Added to this figure are a hospital's base year "non-operating" expenses and any additional allowance resulting from administrative adjustments.
The commission originally adopted the rates here at issue by using cost information contained in forms known as HCF-100 and HCF-400 submitted by each hospital to the commission. After the rates were set, the commission conducted audits on every HCF-100 and HCF-400 submitted by the hospitals during the four-year period of 1974-1977. The commission had received information from the Department of Public Health that the hospitals' administrative salaries included in the administrative expense category on the forms exceeded maximums set by Federal guidelines.
The hospitals do not contest the finding of excessiveness of their administrative cost claims, nor do they contest the power of the commission to establish reasonable levels of compensation for owner-administrators. Rather, they argue that, for a
When the meaning of a statute is brought into question, a court properly should read other sections and should construe them together, Holbrook v. Holbrook, 1 Pick. 248, 250 (1822), so as to constitute an harmonious whole consistent with the legislative purpose. Board of Educ. v. Assessor of Worcester, 368 Mass. 511, 513-514 (1975). We note first that the sixth paragraph of § 32, after commanding the establishment of prospective rates whenever possible, then provides for the setting of "interim" rates. See note 16, supra. In the eighth paragraph of § 32 the Legislature establishes the ability of the commission to set a "preliminary final rate" and provides for auditing procedures.
The hospitals also argue that the redeterminations of their rates violate the commission's own regulations governing hospital reimbursement. Specifically, the hospitals contend that the rate redeterminations, resulting from audits which revealed excessive administrative costs, are not authorized by the regulations. At issue are four regulations, each covering a separate rate year, promulgated pursuant to G.L.c. 6A, §§ 31-36.
The regulations covering the first two years, Regulation 74-1 and Regulation 74-26, do not require explicitly that the commission conduct audits. The regulations do make reference, however, to audits in several instances, including the section pertaining to the method for determining rates and in the section
In light of the regulation's purpose to "produce fair and reasonable rates of payment," we believe that the commission could conclude that "substantial error[s]" should include unreasonable administrative costs. Only reasonable costs properly may be used to determine rates. The discovery that the rates were fixed, in part, on the basis of excessive rates of compensation for owner-administrators clearly revealed a "substantial error," and the commission was entitled to readjust the rates on that basis.
The later regulations, 14 Code Human Services Regs. 3 and 14 Code Human Services Regs. 3, as amended, unambiguously authorize audits and anticipate the setting of rates before audits are complete: "Rates determined under this part shall be calculated from audited and adjusted HCF 400 statements when possible." 14 Code Human Services Regs. 3, § 3.54.
We next address the hospitals' contention that the rate redeterminations conflict with Federal mandates. A Federal regulation required that, if the medicare standards and principles were not adopted, the alternative methods and standards must provide "[i]ncentives for efficiency and economy." 45 C.F.R. 250.30(b)(1)(iii)(a) (1971). The hospitals argue that such incentives depend on their ability to rely on the finality of the rate set.
Prior to 1972, Federal law required participating States to reimburse hospitals for inpatient services provided to Medicaid patients on the basis of cost methodology used by the Federal Medicare program. In response to concerns about spiraling costs, Congress amended Title XIX of the Social Security Act in 1972 to allow each State to develop its own alternative reimbursement scheme. Mississippi Hosp. Ass'n v. Heckler, 701 F.2d 511, 515 (5th Cir.1983). "`[E]xperience under the ... medicaid ... program ha[d] clearly demonstrated there [was] little incentive to contain costs or to produce the services
The nature of a prospective methodology, such as the one here at issue, is to indicate to a hospital what its reimbursement will be for the coming year; the prospective system itself induces efficiencies and economies. Hospital Ass'n of N.Y. State, Inc. v. Toia, 473 F.Supp. 917, 938 (S.D.N.Y. 1979). While increased efficiency was a goal of the 1972 changes, Federal law also gave State authorities great flexibility in the areas of cost-finding and rate-setting. Mississippi Hosp. Ass'n v. Heckler, supra.
Regulation 74-1, which was approved by the Department of Health, Education and Welfare (HEW), provides several avenues for rate redetermination. Health care providers may request adjustments after the rate is set in a variety of circumstances. See Regulations 74-1 and 74-26, §§ 9.1-9.3; 14 Code Human Services Regs. 3, §§ 3.73-3.75; 14 Code Human Services Regs. 3, as amended, §§ 3.74-3.76. In addition, the commission may order a rate reduction where costs have been transferred or eliminated during the rate year. See Regulations 74-1 and 74-26, § 9.4; 14 Code Human Services Regs. 3, § 3.77; 14 Code Human Services Regs. 3, as amended, § 3.78.
Given these other avenues for rate redeterminations and their approval by HEW, we cannot say that the redetermination of a rate following revelation of a nonallowable expense defeats Federal mandates for incentives for economy and efficiency.
Finally, the hospitals contend that the division based its decision on findings of fact which were not in the record, i.e., they were not stipulated to by the parties. Our reading of the record indicates that some of these findings may be inferred reasonably from the stipulations, and that, in any event, these facts are not necessary to support the division's conclusions. Accordingly, the judgment of the Superior Court is affirmed.
1972 1973 1974 1975Marjorie O'Toole $61,320 $61,963 $66,082 $64,920 Joseph O'Toole 93,052 94,627 98,199 98,350 Mary O'Meara 40,847 45,950 46,048 33,840
The Provider Reimbursement Manual guidelines for facilities of the size of each hospital ranged from $19,200 to $39,600.
Section 32 was enacted by St. 1973, c. 1229, § 2, replacing and enlarging former G.L.c. 7, § 30L. General Laws c. 7, § 30L, had no explicit provision for the setting of tentative or provisional rates, yet in Murphy Nursing Home, Inc. v. Rate Setting Comm'n, 364 Mass. 454, 458-459 (1973), this court found proper a regulation establishing a tentative rate.
14 Code Human Services Regs. 3, § 3.78, provides: "Upon notice of administrative review, a hospital shall submit such books, records, documentation, and information as the Commission may require. After review, the Commission will render a written decision and statement of reasons for its decision. The decision may include an increase, decrease, or maintenance of rate."
14 Code Human Services Regs. 3, as amended, did not significantly change these sections.