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decided: March 10, 1986.


Appeal from the Order of the Department of Public Welfare in the case of Appeal of Overlook Medical Clinic, Inc., File Nos. 23-83-381, 382; 23-83-140 and 23-84-32, dated October 15, 1984.


Edward A. Gamble, Gamble, Verterano, Mojock, Piccione & Green, for petitioner.

Bruce G. Baron, Assistant Counsel, for respondent.

Judges Craig and Palladino, and Senior Judge Kalish, sitting as a panel of three. Opinion by Judge Palladino.

Author: Palladino

[ 95 Pa. Commw. Page 537]

Petitioner, Overlook Medical Clinic, Inc., has appealed from an order of the Department of Public Welfare (Department) concerning the final audit of Petitioner, which denied Petitioner an extension of time to file its Final Cost Report as part of the audit. We reverse.

Petitioner operated nursing home facilities which participated in the Medical Assistance program administered by the Department. Effective April 12, 1983, these facilities were sold, triggering a requirement that Petitioner file a final cost report within thirty (30) days. By letter dated May 3, 1983, Petitioner requested an extension from the Department for filing the final cost report, for several enumerated reasons.*fn1 The Department denied the extension by letter dated May 11, 1983, which stated that the regulations

[ 95 Pa. Commw. Page 538]

    do not authorize extensions. The Department prepared the final audit and settlement of Petitioner's account without the final cost report. Petitioner filed its final cost report on June 9, 1983.

Petitioner appealed from the final audit, arguing that the Department arbitrarily denied it the extension, because extensions for filing final cost reports had been granted to other parties under the same regulations. The opinion of the hearing examiner, adopted by the Department, stated that the grant of the other extensions was "an aberration, a blip, an error on the part of the Department." Because the regulations do not provide specifically for the allowance of an extension, the Department concluded that none is permitted.

Petitioner has presented two issues in this appeal: 1) that the regulations may be read to allow extensions, or in the alternative, that the Department has the power to grant extensions without a specific grant of such authority in the regulations; and 2) that, having granted extensions to other parties, the Department is estopped from changing its mind on the availability of extensions under the language of the regulations.

We agree with Petitioner that the Department has the inherent authority to grant extensions where cause is shown, as in the instant case. The Department has promulgated regulations allowing the grant of extensions for the filing of annual cost reports. 55 Pa. Code ยง 1181.91.*fn2 It possesses, therefore, the

[ 95 Pa. Commw. Page 539]

    ability and authority to do so for final cost reports. The fact that such extensions have been granted in the past further supports this proposition. The order of the Department denying the extension is, therefore, arbitrary and capricious, and must be reversed. Because Petitioner has shown ample reason for its need of the extension, the Department should have granted the extension. Petitioner's cost reports, therefore, shall be included in the final audit.

The decision of the Department is reversed and the matter is remanded for the preparation of Petitioner's final audit with the inclusion of Petitioner's final cost report as submitted on June 9, 1983.


And Now, March 10, 1986, the order of the Department of Public Welfare at File Nos. 23-83-381, 382; 23-83-140, 23-84-32, dated October 15, 1984, is reversed, and the matter is remanded for proceedings in accordance with the foregoing opinion.


Reversed and remanded.

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