ATTORNEYS FOR APPELLANTS: ATTORNEYS FOR APPELLEES:
STEVE CARTER J. MICHAEL GRUBBS
Attorney General of Indiana THOMAS F. SHEA
JODY L. DEFORD
FRANCES BARROW Barnes & Thornburg
Deputy Attorney General Indianapolis, Indiana
INDIANA FAMILY AND SOCIAL ) SERVICES ADMINISTRATION, et al., ) ) Appellants-Defendants, ) ) vs. ) No. 49A05-0203-CV-117 ) AMHEALTH (EVANSVILLE ), INC., et al., ) ) Appellees-Plaintiffs. )
The Indiana Family and Social Services Administration (FSSA) promulgated emergency rules changing Medicaid reimbursement formulas for nursing homes. A number of nursing homes and the Indiana Health Care Association (collectively, Amhealth) challenged the rules, and the trial court entered a declaratory judgment in favor of Amhealth on the basis that FSSA had not properly adopted the emergency rules. It permanently enjoined FSSA from enforcing those rules and ordered FSSA to reprocess the nursing homes claims submitted under the emergency rules. FSSA appeals, See footnote raising a number of issues. We address two but find one dispositive: whether budget committee members had adequate notice of the emergency rulemaking and an opportunity to participate in the deliberations.
We reverse and remand.
Id. However, that source also notes that under the principles of restitution,
a party who obtains benefits from an improperly issued injunction has a duty
to restore those benefits to those injured by the granting of the injunction.
This remedy is separate from the theory of malicious prosecution and in
the absence of an injunction bond. Id. § 339.
We addressed this question in Community Care Centers, Inc. v. Sullivan, 701 N.E.2d 1234, 1240 (Ind. Ct. App. 1998), trans. denied 726 N.E.2d 299 (Ind. 1999). There, we determined the State could obtain restitution from nursing homes that were reimbursed at a higher rate than they would have been had the States reimbursement formula not been enjoined to the extent it was. Community Care had obtained two injunctions, one in state court and one in federal court, to prevent the States use of certain aspects of its nursing home reimbursement formula. The injunctions were reversed on appeal and the State brought an action for restitution. The trial court determined on summary judgment that the State was entitled as a matter of law to recover the difference between the sums paid to Community Care under the erroneous injunctions and the amounts it would have received under the States lawful rate-setting methodology in the absence of the injunctions[,] id. at 1238, and we affirmed.
In situations like the one before us, where a valid government regulation or procedure has been enjoined and improper payments have been made pursuant to the subsequently reversed injunction, this type of enrichment in the form of improper payments has typically been characterized as unjust.
Id. at 1240.
One of the underlying injunctions in that case was preliminary and one was permanent, indicating the remedy of restitution is available regardless of the nature of the injunction that is subsequently reversed. Because FSSA is entitled to restitution from Amhealth for Medicaid overpayments made during the time the emergency rules were enjoined, we decline to hold that this appeal is moot.
AmRhein v. Eden, 779 N.E.2d 1197, 1206 (Ind. Ct. App. 2002) (citations and
internal quotations omitted).
The trial court determined the regulations were not adopted in conformity with Public Law 291-2001 section 48 (Section 48), Ind. Code § 4-22-2-19.5, or Ind. Code § 12-15-21-12. FSSA asserts the case before us is controlled by the Walgreen decision, which held the State followed proper procedures in promulgating emergency pharmacy reimbursement rules, which were promulgated at the same time FSSA promulgated the emergency nursing home rules at issue here. Amhealth argues that even if the appeal is not moot, the nursing home rule promulgation process differed enough from the prescription drug rulemaking process our supreme court approved in Walgreen that the process used to promulgate the nursing home rules was not proper even under the Walgreen standards.
(Emphasis supplied.) The legislature explicitly provided that this statute would supplant all
others. Therefore, if the statutes provisions were met, the emergency rule would
be valid. Walgreen, 769 N.E.2d at 164.
In the Walgreen rule promulgation process, the FSSA director testified with regard to the pharmacy reimbursement rules that she presented the budget committee with a summary of all pending cost containment rules and advised the committee members of the likelihood of emergency action. The committee members listened to the information and asked questions, and there was discussion among the members of the budget committee about the dispensing fee and reimbursement rate reductions that were the subject of the emergency pharmacy rules. The director also gave budget committee members a handout summarizing the status of Medicaid cost containment proposals.
The Walgreen court noted that the director told the committee about the specifics and urgency of the anticipated measures, and committee members had an opportunity to express their views. This, the court held, appears to comply with the straightforward language of the statute:
[Section 48] assures budget committee members advance notice of agency actions and creates an opportunity for the members to participate in the deliberations. It does not, however, condition FSSAs authority to act on approval by the committee, as certain other statutes do.
Id. at 165.
The trial court in the case before us did not, of course, have before it the Walgreen standard for review by the budget committee. It noted that Section 48 does not define review. It therefore relied on the words common and ordinary meaning and concluded there was no review because 1) the budget committee had never been given a copy of the rules, 2) it had not been given any report, account, or evaluation of the changes in nursing home reimbursement methods the rules would effect, and 3) there was no consideration or deliberation whatsoever by the committee.
The trial court found that the committee was not given a copy of the emergency rules to examine but was instead given two handouts. The first was a one-page document, one paragraph of which states that a proposed permanent case-mix reimbursement rule would be published on July 1, 2001, but that does not describe the changes in reimbursement rates under the rule. (App. to Br. of Appellants at 14.)
The FSSA director testified that she merely handed the document to the budget committee members and that there was no discussion of the nursing home rules. See footnote While the handouts addressed in the Walgreen case contained information about the pharmacy rules and the States intention to adopt them on an emergency basis, they do not indicate what the proposed nursing home reimbursement rules consist of, and they merely suggest that emergency rulemaking is contemplated. For example, the handout indicated a public hearing date, and then stated, Due to requirements under federal law to provide 45 days prior notice of reimbursement changes for nursing homes the earliest implementation date, using emergency rulemaking authority, would be September 2001. (Id. at 35.)
FSSA does not explicitly argue that the budget committee could have reviewed the proposed rules when it had never been told what those rules were. Rather, it asserts the requisite review occurred by virtue of the directors Medicaid update, the handouts she distributed, and the budget committee members awareness for some time that the Medicaid director predicted a budget shortfall, that the agency anticipated adopting emergency rules, and that some of the rules would pertain to nursing facility reimbursement. (Br. of Appellants at 12.)
Amhealth notes that in Walgreen, the committee had been given a handout that included all of the pharmacy rules; the committee was advised that emergency action was likely; it listened to the directors information and asked questions; and there was discussion of the pharmacy rules among members of the committee. So, it argues, the review that was adequate in the Walgreen case did not occur with regard to the nursing home rules in the case before us.
While the budget committee review of the nursing home reimbursement rules was minimal at best, it satisfied the standard articulated in Walgreen. The budget committee was made aware that, as a result of the budget shortfall, the agency anticipated adopting emergency rules some of which would pertain to nursing facility reimbursement. Its members could have commented on or discussed the proposed nursing home rules at the same meeting where they discussed the proposed pharmacy rules. Adequate review under the Walgreen standard does not explicitly require that the budget committee be aware of the content of the proposed rule but only that it have advance notice of agency actions. Walgreen, 769 N.E.2d at 165. Nor does it require actual discussion, but only an opportunity for the members to participate in the deliberations. Id. The trial court therefore erred when it determined the proposed emergency rules did not receive budget committee review as required by Section 48.
BROOK, Chief Judge, concurring
I concur in the majoritys reversal of the trial courts judgment for Amhealth.
I write separately, however, to clarify the distinction between a legal claim
of damages premised on a wrongfully issued temporary injunction and an equitable claim
Amhealth correctly contends that FSSA can only recover legal damages resulting from the wrongful issuance of a temporary injunction but not from the wrongful issuance of a permanent injunction. See, e.g., Harless v. Consumers Gas Trust Co., 14 Ind. App. 545, 43 N.E. 456 (1896). In the instant case, however, were we to determine that the trial court wrongfully issued its permanent injunction, FSSA could nevertheless seek restitution from Amhealth, and the nature of the injunction at issue would be irrelevant. See Community Care Centers v. Sullivan, 701 N.E.2d 1234 (Ind. Ct. App. 1998) (concluding that FSSA could seek restitution from appellant based on two wrongfully issued injunctions, one permanent and the other temporary), trans. denied (1999).
Restitution is described as a return or restoration of what the defendant has gained in a transaction. As distinct from damages, restitution is an award made to remedy defendants unjust enrichment rather than plaintiffs loss. Stated differently, restitution measures the remedy by the defendants gain and seeks to force disgorgement of that gain.
Rollings v. Smith, 716 N.E.2d 502, 507 (Ind. Ct. App. 1999) (citations and
quotation marks omitted). Thus, FSSAs appeal is not moot because it could
seek restitution if we determine that the trial court wrongfully issued its permanent