-: SJC 13051, Suburban Home health Care Inc V,
Executive Office of Health and Human Services,
Office of Medicaid.
-: Okay, Attorney Kelly.
-: Good morning, may it please the court,
Brian Kelly, on behalf of Suburban Home Health Care.
In this case, the lower court
mistakenly found there was no statute of limitations,
in a situation where
MassHealth is trying to recoup payments
it made to my client almost 11 years ago.
And that is wrong based upon SJC precedent, and here's why-
-: Counsel, before you get going,
counsel, before you get going,
can I ask you was there ever a moment
when they indicated that the audit was over?
-: I'm sorry well, the third party vendor,
when it sent its notice of audit to my clients,
said it would be over in 30 days.
30 days passed, and it turned into 11 years.
-: Okay.
-: And this is not permissible under SJC precedent,
because you have to go back almost 40 years to 1979,
you start with the Nantucket opinion,
and that opinion is important to this case for two reasons.
In the Nantucket, this court found that
if the statutory scheme,
does not discuss statute of limitations,
that doesn't mean there's no statute of limitation.
The Nantucket court said that if the legislature
wants no statute of limitations, it will say so.
-: So counsel can I stop you there,
because there is a statute of limitations here, right?
On some DA actions or the AG actions,
so given that the statute of limitations was addressed,
in the statutory scheme, why isn't it...
It's not like Nantucket, I guess is what I'm saying.
It's not silent.
-: Well your honor, we think it has no statute of limitations
in this matter, and that's why the superior court
went to Woodward.
Here, as Nantucket says,
you look at the essential nature of the claim.
It's a contract dispute.
And there's a whole series of cases, including--
-: But the statue of limitation
wasn't contested in Nantucket.
It was what the statute of limitation was,
not whether or not there was a statute of limitations.
-: But in Nantucket this court said,
well, if it's not enumerated in the statute,
you look to the essential nature of the claim.
And if it's not enumerated in the statute,
that doesn't mean the legislature says
there's no statute limitation.
It would give an enormous advantage to MassHealth
to not have a statute of limitation.
In this court, I believe it was Justice Kafker
just recently, in December in the NRA Kendall case said,
that when MassHealth gets a clear advantage,
the legislature says so carefully and explicitly.
That's what you recently held,
and that's consistent with this whole line of cases,
starting with Nantucket.
-: Well, let me go to perhaps a weaker point for you,
but I have to say, you did a very good job in your brief,
distinguishing the Woodward case no doubt about it.
and I won't go through all the different ways
you distinguish it, but right there in Woodward,
Justice Spina says, "The word action in chapter 260,
section two has consistently been construed,
to refer to court proceedings."
-: Well, your honor...
-: And that's what, 2006 case?
-: Yeah, but Woodward was a court proceeding.
There were administrative action like here,
was in dispute in Zuora and Annawan.
So it's clear that administrative proceedings,
have this analysis applied to it as well.
It's not just because Woodward was a civil case,
that doesn't mean the rule doesn't apply
in the administrative context which it does,
under Zuora and Annawan.
And as the court suggest, Woodward is completely different.
It's an automatic legal consequence there,
and the language there was expressed.
The legislature said in no event,
would a convicted legislator be entitled to a pension,
so if the board of retirement wanted to wait a year,
five years, it's just a ministerial act.
-: I understand but that the pension proceedings
was not a court proceeding,
the pension proceedings, and the forfeiture of the pension,
they indicated that it wasn't subject
to the statute of limitations,
and interestingly enough again,
Justice Spina, I understand referring
back to some arbitration cases, I recognize that
but just came out and said actions mean court proceedings.
-: Well, your honor, I think that there's no indication
that he meant to overrule or actually,
Zuora and Annawan were after Woodward.
So, you know, maybe that was his view in 2006,
but both Zuora and Annawan were afterwards.
-: Yeah, but Zuora was an adjudicatory hearing,
it's dealing with the Ethics Commission.
-: This is an adjudicatory hearing as well.
It's in front of the board of hearings,
they sent their initial notice of overpayment in 2016.
Almost 11 years
after the initial audit requests for documents.
So it's that initial notice of overpayment in 2016,
which triggers the action.
I think we cite in our opening brief at page 65,
then in our reply brief at page 59,
it's actually a code of Mass regulation,
which describes what initiate an action,
801 CMR, 1.0168, again at page 65 and 59,
about our respective briefs and it has to...
It can't just be an audit,
that's asking for documents.
It doesn't give the party notice
that there's something wrong, it doesn't make a demand,
it doesn't tell them
that there's going to be a hearing later,
as an order to show cause does, or as was done here,
with the initial notice of overpayment.
That commences the action
and it's 11 years after the action accrued.
They clearly knew about it, way back in 2005.
They sent them an audit letter and they requested it,
and they-
-: Now counsel, I see that Zuora and Annawan
both go pass the issue and the statements in Woodward,
and Shafnacker that an action,
only refers to a court proceeding and then,
figure out which of the statute of limitations should apply,
given the nature of the action.
What's your best argument to make Shafnacker and Woodward,
consistent with those Zuora and Annawan cases,
without just ignoring it.
Because there are those statements
as Justice Lowy pointed out,
that action means court action.
And yet in Zuora and Annawan I'll grant you
they didn't even decide, reconcile that statement.
-: Well, I think the same principles would apply
because the same principles of fairness and of notice
apply to a business or a client.
They can't be at the mercy of the health
for over a decade.
So there's no legal reason or policy reason even,
why it should be different.
The policy reasons favor a statute of limitations,
in this case.
And it's consistent with Annawan and Zuora.
And here, you know-
-: What I'm asking you to try to provide to us some rationale
that could reconcile the statements
in Shafnacker and Woodward,
with the application of a statute of limitations
in the other context of the other two cases.
-: I would say this Woodward is a ministerial act,
by the Board of Retirement.
It's an automatic legal consequence.
There's nothing in dispute, the person's been convicted,
the statute says you don't get a pension.
Here, the dispute is still technically ongoing
in the board of health, the facts haven't been decided,
my client's disputing, the initial notice said 95,000,
the final notice at 75,000, there's no finale.
And that's the distinction with Woodward.
It's an automatic ministerial act,
and Woodward sites both Nantucket and Zuora.
So it's not taking issue with those two rules.
-: Well besides Nantucket, I'll grant you that,
I think Zuora came after.
-: If the rule is as simple as,
if it's an administrative proceeding, none of this applies,
isn't all the verbiage in Woodward all unnecessary?
Couldn't they have just said,
"Oh, it's an administrative proceeding,
no statute of limitations ever applies there."
Couldn't they have just done that if that were that easy?
-: No, because I think in the Nantucket case which again,
is a seminal case that leads into this,
it talked about, if the legislature wanted to say,
there was no statute of limitation, it could do so.
Just you recently said if MassHealth wanted the advantage,
that the legislature can do so.
So, consistent with that,
Nantucket said if there's an express intent,
by like the legislature, you have to follow it of course.
And that's what I did.
-: Mr. Kelly, I'm sympathetic to your argument
I just find that our two strands of case law
seem inconsistent with each other.
There's the one strand that you're focusing in on,
which is we look at the statute,
we look at the nature of the action,
and then there's this other Woodward strand where,
as a preliminary step we draw this distinction
between administrative law and court actions.
I'm just wondering whether they're irreconcilable,
or is there a way of making the two different strands
make sense the way Justice Wendlandt was asking you,
I just can't tell where you can.
-: Yes, I don't think
Woodward was considering the administrative context,
because it wasn't in the administrative context.
So, I don't think it's necessarily
in conflict with Zuora and Annawan.
-: Well then quote,
I tracked through that language in Woodward,
in the Supreme court cases, and the arbitration cases,
there is the statement that says,
"Statute of limitations apply to court actions."
And we've made...
I don't know if it makes any sense,
and when you actually look at what they looked at,
they're really these very old equity cases,
and some others and arbitration stuff,
but I'm just wondering
whether we can reconcile these two strands.
-: I think you can.
I think the court may have been saying
it applies to court action
because that was in fact the court action.
And they may not have felt the need to
also expand upon it, and announce a ruling,
on an issue not before I.e. the administrative proceedings.
Whereas- -: Can I push you
into a different issue which is I'm trying to...
You know, Justice Wendlandt's point
that there is a statute of limitations here,
for the DA and the AG actions.
But there's not an express one for this type of,
administrative action, but at the same time
it uses the same six year language for the audit, right?
Retention of records is for six years, right?
-: Why didn't..
I'm just trying to figure out how we...
Again, I'm sympathetic to your point
that this looks like a six year statute of limitations,
but at the same time, they didn't
just include this proceeding
in that six year statute limitation provision.
Couldn't they have just done that?
-: Well, they could have
and it would have made it clearer
but that's not the initiation of the action.
It's the initial notice of overpayment
which commences the action.
And that's the one that's 11 years
almost 11 years after the audit where they were on.
-: But why didn't they just say
that this process itself is covered by the same six year
statute of limitations?
We just define the time period,
the commencement period differently.
-: Well, I'm not sure why the legislature
did what it did, but the essential nature of this case
is clearly contractual deed, in the record appendix at 23,
you see the provider agreement.
It talks about consideration, promises, mutual agreements.
This is a contract matter of the essential nature is,
and therefore, it should be six years.
And therefore this should be barred
from trying to collect on claims that are so old because-
-: Well that's the answer, that's not the question.
The question is whether,
recruitment action is based on the contractual relationship,
or is really the essential nature of this relationship,
between your client and MassHealth contractual.
And of course you know the brief,
they've gone through the different cases,
including Centennial as to why it's a contractual.
Why is that wrong?
-: Well, because those cases,
if there was a federal regulation-
-: I mean, it's statutory,
that it's a statutory relationship, that's their position.
And they, go ahead, I'm sorry.
-: I'm sorry, if there's a federal regulation
on point about the statute of limitations, it would control.
But there's nothing on point,
so that's why common law, this court's opinions-
-: But they're saying it's the whole relationship,
and the whole manner of payment,
between the provider and MassHealth,
is based on chapter 118 E.
And so put aside are incomprehensible two lines
the cases that we've spent a lot of time on,
and go to I think your point,
the nature of the underlying dispute.
Why isn't, if we look to the relationship,
this relationship governed from A to Z by the statute?
-: Well because, my client provides home health care services
pursuant to a provider agreement,
exhibit one in the record dependence.
That's a contract with the state and the state pays it.
And if the state decides it's overpaid it,
first they investigate it.
They have this algorithm that tells them there's a red flag.
They send an audit, and then they tell the-
-: But that scheme that you're about to describe,
is all in the statute.
The question I think that Justice Lowy is asking is
why is this not a statutory?
The core nature of the dispute here is statutory,
not the contract,
the contractor says, "Hey, you have to abide by the statute
if you wanna be a provider."
-: Right, because there's nothing in the statute
that says there's a six year statute of limitations.
It's a silent.
So they go back to saying,
"Well, the legislator could've decided
that there was no statute of limitations."
It would've said so expressly, like it did-
-: Your argument is that because the statute
doesn't say there's a statute of limitations,
the nature of the dispute is constructual?
-: Yeah, almost until the end, because there's nothing
in the statute that talks about statue of limitation,
you have to look to the essential nature of the claim.
Could be tort for instance Nantucket I think was in tort.
-: Yeah, and I guess that's my question, that second part.
So tell me why the essential nature of the claim
is contractual.
-: Because my client signed a contract, a provider agreement,
with MassHealth to provide services.
It did, now MassHealth over a decade later,
is trying to claw back some of that monies,
when we can't get all our records together,
which by the way, it is in the record of pendings at 65,
contrary to the MassHealth brief.
We can gather all our records.
It's just common sense to think that
after a decade passes, memories fade.
So it does prejudice us, you see my time's run out,
but it does prejudice us, there are strong policy reasons,
There should be a statute of limitations here,
so I know laches we've briefed it,
I'll rely upon the brief-
-: Before you leave that, can I ask one,
with Chief Justice Budd's permission, one last question,
can the feds make the state give back money,
more than six years later?
Cause the statute of limitation...
I remember the intersection
between the federal and the state,
being extremely complicated here.
Can the feds demand money back more than six years,
after it's been paid under the federal statute?
-: It appears the feds can, once it's decided.
I mean this still hasn't been decided
but that's a battle so to speak
between the feds and the state.
It's not between the state and the service provider,
cause we have a contractual relationship.
-: I'm just trying to figure out
whether the state could be on the hook for money,
that you're saying the statute of limitations precludes
the state from going after the provider.
Is that a possibility here?
-: It is a possibility,
but that's another reason they should be incentivized,
to do these audits and make these recoupments,
earlier than a decade later.
The taxpayer has an interest in getting this money back,
and the state has an interest in having the money
to pay the feds, so there should be a statute of limitations
on the policy grounds, the taxpayer,
as well as the businesses who now,
who's gonna go into this business,
if they can be on the hook for claims 20, 30,
40 years later and that's why laches again we briefed it,
but if in any case, the doctrine of laches applies
I think it applies here because again,
MassHealth is asking you to say,
hey they can wait 10 years, 20 years, 30 years,
how about half a century before they try to recoup payments,
from these private businesses, who are in a difficult space,
there's not wide margins, they service people
who have all sorts of medical problems,
and you're gonna drive companies out of this business,
if there's not some certainty,
and I think the statute of limitations would provide that,
and statute of limitations is required respectfully
under SJC precedent.
So I apologize for going over, a thank you for your time.
-: Okay, thank you.
Okay attorney Marks, you've heard attorney Kelly's argument,
tell us why there should not be a statue limitations here.
-: (clears throat) May it please the court,
David Marks, assistant attorney general,
for the Executive Office of Health and Human Services,
and the messengers of Medicaid program as health.
Before I reach the merits, just a word on exhaustion.
The case should be dismissed,
because as a matter of subject matter-
-: We all are exhausted
can you answer Justice Budd's question,
Chief Justice Budd's question?
-: The superior court correctly determined,
that the six year statute of limitations,
in chapter 260 section two,
did not apply to the administrative regulatory proceedings,
that the statute and the regulations
provide MassHealth go through, in order to identify-
-: What is the upper limit, you know, can you wait,
you just tag the provider and say,
"Hey I'm gonna do an audit 50 years later,
oh, guess what you owe us $100,000."
Is that really your position?
-: Position is that, and the statute is clear on this,
the legislature did not impose
a limitations period on this process so...
-: Yes, your, your answer is yes,
that is your position that so long as you tag the provider
within the six year window for retaining records,
you can come back 10, 20, 30, 100 years later,
and ask for your money back.
Is that your position?
-: Well, as a practical matter, first of all yes.
The regulation that requires maintenance of the records,
for six years...
(judges chattering)
-: Pretty much re-entering the courtroom.
-: Attorney Marks you're back with us.
-: I am, I lost my-
-: Yeah no problem,
do you remember what question you were answering?
-: Why should I win this case?
-: Didn't hear that one.
(judges laughing)
-: The answer is that number one,
the statute of limitations in 260 section two,
does not apply as the Woodward case said,
because it only applies to actions, courtroom proceedings,
and that's not what this is.
This is a administrative regulatory process.
-: Well, let's say as we've talked about a little,
that our cases seem to go in two directions here,
so we need to figure out then
whether this recruitment action is more a function
of a statute, or contractual.
And I know you point to the language
right in chapter 118,
and where the provider agrees to be responsible
for overpayment, but why isn't Mr. Kelly right?
Take a step back look sort of simple.
You paid the money for services,
and now you're saying they owe some of that money back,
because they over billed,
isn't that just court contract stuff?
-: First of all, it's not necessarily true
that there are two lines
of analysis that this court has entered into.
both Zuora and Annawan,
were decided on the basis of an agreement if you will,
the parties agreed,
that a period of limitations would apply,
the only question before the court was,
which period of limitation the courts they are.
-: How do we know that Mr. Marks?
The briefs say that we agree
the statute of limitation applies,
we just have to figure out which one it is,
or did the court just assume when there's a lack of clarity
including an administrative processes,
we have to figure out what statute of limitation applies?
-: In Zuora and Annawan, the decisions,
this court's opinions make it clear,
that the parties agreed that a limitations applied.
And the only question in the case was
which period of limitations apply.
This court did not decide
whether the six year statute of limitations,
in 260 section two,
should apply to administrative proceedings.
-: I don't find that, but I'll reread those cases.
But how about...
So if you're right,
why didn't you Woodward stop after one sentence?
This is an administrative process,
statute of limitations don't apply,
instead of 20 pages of all this sort of back and forth
of why there's no statute of limitations there.
Why couldn't they just say, "This is simple,
Admin is outside the of limitations context."
-: Well, I think that this court likes to be
as explanatory as possible,
and this court's next point in the Woodward case,
which is that the action in contract,
that the Woodward in that case argued
applied thus the legislature specifically,
did not call this aspect of the retirement law,
pension forfeiture, a contract action.
-: We don't have that.
I agree the pension law breaks things down
to what are contract rights,
and what are not contract rights,
we don't have that here.
We don't have, this is a contract under Medicaid,
this isn't right, we don't have that language
in there do we?
-: You absolutely do have that here.
-: Where? -: Here,
the legislature specifically said,
in section 44 of chapter 118 E,
that there is a six year statute of limitations,
on the attorney generals pursuit of actions in court,
seeking to establish violations of the Medicaid law.
In sections 36 and 38 of chapter 118 E,
which the legislature provided
for determining over payments by providers,
there is no provision for a statute of limitations.
As this court has said most recently,
in the Estate of Kendall case,
the court will not read into the statute language
that is not there.
And that's exactly what the Woodward case said as well.
Where the legislature refer the limitations period,
in one section of the statute, but does not refer to it
in another section of the statute,
the legislature did not intend to
impose a limitations period.
-: Marks, there's a lot of unfairness going on here,
and Woodward didn't have that problem.
There was a criminal trial,
and there was proof beyond reasonable doubt,
as to the representatives.
And it's just as Justice Kafker said,
it wasn't just one line, it went on for another 20,
or whatever pages.
Here, you have just the opposite problem.
This case is dripping with unfairness.
Where are the witnesses?
Where are the documents?
This started in 2005, and 2019 we had a final decision,
so Woodward is in a lot of ways,
despite that one line of perhaps get the apples and oranges.
-: I'm sorry, your honor.
There is no unfairness here.
Let me explain why, the legislature did not intend,
for there to be a limitations period,
a MassHealth process of identifying overpayment.
Number one, it did not say so.
Number two in section 36-
-: It doesn't go to the issue of fairness, right?
-: It goes to the issue of legislation.
-: That was my question
before we had the technical difficulty.
Why is it fair for MassHealth to be able to tag somebody
in year one, wait 20, 30, 40, 50, 60
70 years later, finished its audit,
and say I want our money back.
Why is that fair?
-: The question is did the legislature
intend to impose a limitations period?
-: Right, so the issue of fairness,
you're saying is besides the point?
-: (laughs) It's the law.
The law does not enshrine the question of fairness here.
There is no reason to believe...
-: Then why do they have the six year provision
on keeping records?
And why does that track the six year statute
of limitations language?
Don't we have a lot of similar quacking going on?
It looks like a duck, it quacks like a duck,
there's a lot of six years in here,
and this also all originates
out of a contractual relationship.
-: Again, again, Woodward itself talks about this.
-: Just answer a specific question.
Why do they have the six years on the audit?
Why not?
Why do they have the same six year provision elsewhere
in the statute, in the part that you're dealing with?
Why is it there if it basically,
as Justice Wendlandt asked you, in the year 3000,
you can come complete your audit?
-: The six year provision is in the regulations,
it requires the records be kept for six years,
but it requires the records not be discarded,
if within that six years there was an ongoing investigation,
an audit that-
-: Does the statute have a six year provision
related to this audit the administrative process
or is it only in the regulation?
-: I think it is only in the regulations.
I do not think the statute has a specific provision
for how long records need to be kept.
-: Just the regulations.
-: (indistinct) Our law as it relates to court actions,
and you're right about the nature of the relationship
being governed by chapter 118.
I know that laches is not something we really talk about,
in terms of against the government,
we do have that Wiener versus Roderick
(indistinct) psychologists,
are there situations where the outcome becomes so ridiculous
that we should have a very very narrow exception
to laches against the government?
-: Well, first of all, laches does not apply here
because it's an equitable remedy,
there's no issue of equity here,
this is an-
Judge: He may just have to forfeit that loss.
-: Administrative (indistinct). (judges chattering)
In the course of an adjudicatory process,
could raise these kinds of issues.
Prejudice, I got rid of the records, you led me astray,
those could be raised in the context
of the administrative proceedings,
and during the administrative adjudicatory hearing.
And clearly there is a difficulty,
if a provider no longer has the records,
because after six years they properly discarded them.
There is no evidence of that in this case,
and there is no allegation in the complaint in this case.
The reasons the legislature
does not want to see a statute of limitations
in this context is because,
as this case observed in the AtlantiCare,
this court observed in the AtlantiCare case,
this is that pay and chase system,
under federal statute or federal regulations.
That's 42 CFR section 447.45,
a state is required to pay Medicaid claims,
within 30 to 90 days.
And a state's ability to determine
whether there is an overpayment depends on a States
retroactively reviewing the records of a provider,
and then determining or discovering as-
-: Six years isn't enough to get your homework done?
-: The other reason the legislature
would not intend to apply that limitations period,
is because the federal government,
does not have a limitations period.
-: The feds can come in 10 years from now and say...
What provision in federal law says
that I'd like to read that?
-: The federal law...
Okay so the notion that the federal government,
has no limitations period upon which it can seek
return of over payments from the state,
is in departmental appeals board decisions.
The CMS has this thing called the Departmental Appeals
which is an administrative hearings process,
where it reviews instances in which the federal government
has disallowed payments, the federal portion of payments,
made to States, where the federal government says that,
the state has overpaid a provider.
-: And there's no statute of limitations,
on federal recoupment?
-: That's right.
-: InJustice when it's hypothetical,
in the year 3000 they can say to you,
"You overpaid in the year 2021, turn it over to us."
They can do that?
-: Yes.
-: And what's the provision that provides,
cause when we'd have to dig through these Medicaid laws
they're almost incomprehensible.
Which particular provision do you know that?
And if you don't, I'd like you to send a 16 L letter,
indicating which provision allows the feds to recoup
in this delayed fashion.
-: The departmental appeals board, sites among others
42 CFR section 433.316 and 42 CFR 430.42.
There no express language in these regulations,
that says how long the federal government can take,
there's no limitation in these regulations.
So what is important is again, if the federal government.
-: I'm sorry, attorney Marks I'm gonna just...
If you're gonna reiterate something, we've got it.
So thank you, and we'll take a moment.
Man: All rise.