Opinion
B292691
01-28-2020
CONTRA COSTA REGIONAL MEDICAL CENTER, Plaintiff and Appellant, v. CALIFORNIA DEPARTMENT OF HEALTH CARE SERVICES et al., Defendants and Respondents.
Foley & Lardner and Tami S. Smason for Plaintiff and Appellant. Xavier Becerra, Attorney General, Cheryl L. Feiner, Assistant Attorney General, Richard T. Waldow, Gregory D. Brown, and Gregory M. Cribbs, Deputy Attorneys General, for Defendants and Respondents.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Los Angeles County Super. Ct. No. BS170629) APPEAL from an order of the Superior Court of Los Angeles County. Amy D. Hogue, Judge. Affirmed. Foley & Lardner and Tami S. Smason for Plaintiff and Appellant. Xavier Becerra, Attorney General, Cheryl L. Feiner, Assistant Attorney General, Richard T. Waldow, Gregory D. Brown, and Gregory M. Cribbs, Deputy Attorneys General, for Defendants and Respondents.
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This appeal presents a sole legal issue: For purposes of the three-year window specified in Welfare and Institutions Code section 14170, subdivision (a)(1), does the California Department of Health Care Services (Department) complete the action of auditing or reviewing Medi-Cal reimbursements when the action is completed by its staff or when a report of the action is issued to a medical provider? The statute only requires that the action be completed by staff. We affirm the denial of the writ of mandate filed by Contra Costa Regional Medical Center (Contra Costa) challenging an audit that adjusted its reimbursable expenses on the ground that the audit report was not issued within three years. The Department's action of auditing or reviewing Contra Costa's cost report and data was finished by staff within three years. As a result, section 14170 did not require the Department to automatically accept Contra Costa's cost report and data as true and correct.
All further references are to the Welfare and Institutions Code unless otherwise indicated.
"The Medi-Cal program . . . represents California's implementation of the federal Medicaid program . . . through which the federal government provides financial assistance to states so that they may furnish medical care to qualified indigent persons. [Citation.] The Department is the single state agency designated to administer the Medi-Cal program[.]" (Robert F. Kennedy Medical Center v. Belshé (1996) 13 Cal.4th 748, 751.) A provider receives interim payments corresponding to its historical rates of reimbursement for costs. The Department later conducts an audit to determine the amount of reimbursement owed. If the provider was overpaid, then the Department can recover the excess payments. (Id. at pp. 751-754.)
In its appeal letter, Contra Costa challenged the audit as untimely and averred: "The estimated Medi-Cal reimbursement at issue is $3,637,669 . . . , which represents the net change in cost between the reported/final cost report and [the] audit report[.]"
Contra Costa named the Department as well as Jennifer Kent (Kent), Director of California Department of Health Care Services, as respondents to the petition for writ of mandate. Given that Kent was sued in her official capacity, all discussion related to the Department applies equally to Kent.
FACTS
On July 20, 2012, Contra Costa submitted a Medi-Cal cost report for the fiscal year ending June 30, 2011, to the Department. The parties stipulated that the three-year audit period set forth in section 14170, subdivision (a)(1), started on July 20, 2012, and ended on July 20, 2015. The Department completed its audit on July 17, 2015. On that same date, an audit manager delivered the audit report and a cover letter to the mailroom. They were mailed to Contra Costa on July 21, 2015.
Contra Costa filed an administrative appeal. It argued that the audit report violated section 14170 because it was not issued within three years, and it requested a reversal of all Medi-Cal audit adjustments. The Department denied the appeal.
Subsequently, Contra Costa filed a petition for writ of mandate to overturn the Department's decision. The petition was denied and judgment was entered in favor of the Department.
This appeal followed.
DISCUSSION
I. Standard of Review.
"In mandate proceedings, [the] Court[] of Appeal review[s] legal questions, including questions of statutory interpretation, de novo." (Goldstein v. California Unemployment Ins. Appeals Bd. (2019) 34 Cal.App.5th 1006, 1013.)
II. Analysis.
This case hinges upon whether section 14170, subdivision (a)(1) requires the Department to issue an audit report to a provider within three years.
It does not.
Section 14170, subdivision (a)(1) establishes that a provider's cost reports and data "shall be considered true and correct unless audited or reviewed within three years after the close of the period covered by the report[.]" While the parties agree that the action of auditing or reviewing must be completed within three years, they dispute what constitutes completion for purposes of the statute. Contra Costa contends that completion does not occur until an audit report is issued, e.g., mailed to the provider. The Department, in contrast, contends that it is when the action is completed by staff.
When interpreting a statute, our aim is to ascertain the intent of the Legislature. Our first task is to examine the statutory language. If it is clear and unambiguous, there is no need to engage in interpretation. (California Ins. Guarantee Assn. v. Workers' Comp. Appeals Bd. (2012) 203 Cal.App.4th 1328, 1338.) A court may not add to a statute or rewrite it to conform to an assumed intent that is not apparent in its language. (City of Claremont v. Kruse (2009) 177 Cal.App.4th 1153, 1172; People v. Guzman (2005) 35 Cal.4th 577, 587 ["'insert[ing]' additional language into a statute 'violate[s] the cardinal rule of statutory construction that courts must not add provisions to statutes"]; Code Civ. Proc., § 1858 ["In the construction of a statute or instrument, the office of the Judge is simply to ascertain and declare what is in terms or in substance contained therein, not to insert what has been omitted, or to omit what has been inserted"].)
We conclude that the language is clear and unambiguous. The Merriam-Webster Collegiate Dictionary defines an "audit" as "a formal examination of an organization's or individual's accounts for financial situation" or "a methodical examination and review." (Merriam-Webster Collegiate Dict. (10th ed. 1999), p. 76.) The words "audited" and "reviewed" are past tense and therefore indicate the completed actions of auditing or reviewing. Thus, the statute requires only that the action of auditing or reviewing be completed within three years. "Completed" means "having all necessary parts, elements, or steps." (Merriam-Webster, supra, at p. 23.) The only necessary steps for conducting a formal examination are the examining of items and the reaching of conclusions. Issuing a report of conclusions is not a step in the process.
Despite the statute's plain meaning, Contra Costa contends that California Code of Regulations, title 22, section 51016 (Regulation 51016) dictates that auditing or reviewing is not completed under section 14170, subdivision (a)(1) until a report of the action is issued. We disagree.
A state agency has "no power to vary or enlarge the terms of an enabling statute [citation], or to issue regulations which conflict with [the enabling statute] or any other statute. [Citation.]" (Credit Ins. Gen. Agents Assn. v. Payne (1976) 16 Cal.3d 651, 656.) A regulation is invalid if it would alter or amend the governing statute or enlarge or restrict an agency's statutory power. (City of San Jose v. Department of Health Services (1998) 66 Cal.App.4th 35, 42.) Any part of Regulation 51016 that conflicts with section 14170 is invalid.
Regardless, Regulation 51016 is inapplicable and does not conflict with the statute.
We note that Regulation 51016 implements section 14171, a statute that requires the Department's director to establish administrative appeal processes to review complaints arising from audit or examination findings under sections 10722 and 14170. Regulation 51016 does not implement section 14170. Moreover, the regulation's terms and purpose are different than those of the statute.
Per Regulation 51016, "'Audit or examination report' means a document that presents the final audit or examination findings and is formally issued to the provider by the Department upon the completion of the audit or examination." (Regulation 51016, subd. (a)(1).) "'Completed audit or examination' means an audit or examination for which an audit or examination report has been issued." (Regulation 51016, subd. (a)(2).) A provider may request a hearing for any disputed audit or examination finding within 60 calendar days of the receipt of the written notice of the audit or examination findings. (Cal. Code Regs., tit. 22, § 51022, subd. (a).)
While the regulations establish that issuance of a report is relevant to the appeal process, they do not impinge upon whether a provider's cost report and data must be accepted. Also, Regulation 51016 defines "audit or examination report" and "completed audit or examination," nouns that do not appear in section 14170, whereas section 14170 uses the term "audited" or "reviewed," verbs that do not appear in Regulation 51016. The regulation sheds no light on the meaning of section 14170 because they involve different terms and contexts; the statute controls when and if provider cost reports and data are subject to Department challenge, and the regulations control the time table for a provider's audit appeal.
Contra Costa warns that if there is no requirement of timely communication to the provider, "an audit report could theoretically be date-stamped internally and sit in a desk drawer or the mailroom of an entirely separate agency forever, and there would never be finality for the provider for its fiscal year[.]" Based on policy, Contra Costa urges us to impose an issuance requirement in section 14170. We decline because we cannot rewrite the statute, and because Contra Costa's premise does not prove true. Section 14172.5, subdivision (a) provides: "No later than 60 days after the completion of an audit or examination pursuant to Sections 10722 or 14170, the department shall issue the first statement of account status or demand for repayment." Thus, the statutory scheme does not permit the Department to delay notifying a provider of a decision.
Multiple cases cited by Contra Costa do not factor into our analysis because they do not interpret section 14170. (Florence Western Medical Clinic v. Bonta (2000) 77 Cal.App.4th 493, 496 [whether a writ petition challenging a final decision in an audit appeal was barred by a six-month statute of limitations in section 14171]; HealthSmart Pacific Inc. v. Belshé (1999) 72 Cal.App.4th 1202, 1204-1205 [same]; Sunnyside Nurseries, Inc. v. Agricultural Labor Relations Bd. (1979) 93 Cal.App.3d 922, 928-930 [noting that a writ petition challenging an order by the Agricultural Labor Relations Board must be filed within 30 days from the date the order is issued]; Martinez-Serrano v. INS (9th Cir. 1996) 94 F.3d 1256 [a petition to challenge the Board of Immigration Appeals' denial of a motion to reopen or reconsider must be filed no later than 90 days after the date of the issuance of the final deportation order].)
DISPOSITION
The order is affirmed. The Department is entitled to its costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
/s/_________, Acting P. J.
ASHMANN-GERST We concur: /s/_________, J.
CHAVEZ /s/_________, J.
HOFFSTADT