Appeal from the Orders of the Department of Public Welfare in case of Appeal of: Saunders House, dated July 22, 1983 and September 1, 1983.
Charles O. Barto, Jr., for petitioners.
Joel M. Ressler, Deputy Attorney General, with him, Allen C. Warshaw, Deputy Attorney General, Chief, Litigation Section, and LeRoy S. Zimmerman, Attorney General, for respondents.
Judge Colins and Senior Judges Barbieri and Kalish, sitting as a panel of three. Opinion by Judge Colins. Judge Williams, Jr., did not participate in the decision in this case.
This Petition for Review is on behalf of several nursing home patients (petitioners)*fn1 who have been receiving skilled nursing care under the Medical Assistance Program.*fn2 Following an evaluation by a Pennsylvania Department of Public Welfare (DPW) Inspection of Care Team,*fn3 the DPW determined that petitioners should be reclassified from skilled care to intermediate care. Petitioners appealed this determination, and a hearing was held on June 6, 1983, at
which a hearing examiner ruled in favor of the DPW. On July 22, 1983, the decision of the hearing examiner was affirmed by the DPW Office of Hearings and Appeals. Petitioners filed a request for reconsideration with the Executive Deputy Secretary of the DPW on August 5, 1983, which was denied on September 1, 1983. This appeal followed.
Petitioners were reclassified subsequent to a revision of DPW's regulations concerning skilled and intermediate nursing care facilities.*fn4 This revision came about following an audit of the Allegheny County Nursing Home by federal officials in 1980. The auditors discovered that physicians were qualifying patients for skilled care under DPW regulations, but also discovered that these same patients would not qualify for skilled care under federal regulations. Therefore, in July of 1982, DPW proposed a new classification system and a revision of its regulations in order to comply with federal law.
The United States Department of Health and Human Services (HHS) rejected the 1982 proposal as being inconsistent with federal law.*fn5 The DPW had to once again revise their regulations and resubmit them to the HHS for approval. DPW's revised and final regulations were adopted on January 8, 1983, and contained criteria drafted in collaboration with a representative of the Health Care Financing Administration (HCFA), a branch of the HHS. After reviewing
the final regulations, HCFA responded by letter received March 31, 1983 by the DPW. The letter provided in part:
A thorough review of the level of care criteria was conducted by both HCFA Regional Office and headquarters staff. The revised State definition is now consistent with federal statute and ...