Appeal from the Order of the Office of Hearings and Appeals of the Department of Public Welfare, in case of Appeal of: Twining Village, File No. 23-84-210 (FPE 9/28/83).
Edward F. Murphy, with him, Caroline F. Achey, McBride and Murphy, for petitioner.
Bruce G. Baron, Assistant Counsel, for respondent.
Judges Craig and Doyle, and Senior Judge Kalish, sitting as a panel of three. Opinion by Judge Doyle.
[ 105 Pa. Commw. Page 228]
Twining Village (Petitioner) has petitioned for review of the decision of the Pennsylvania Department of Public Welfare (DWP) which denied part of the reimbursement claimed by Petitioner for its last three months of operation beginning July 1, 1983. We reverse.
The facts of this case are not in dispute. Petitioner, a total life care retirement community located in Bucks County, contains an eighty-two bed skilled nursing facility known as Twining Hall (Facility). The Facility participated in the Medical Assistance Program from approximately October, 1978 through September 28, 1983. As a participant in this program, the Facility received reimbursements from DPW pursuant to the DPW regulations found in its Medical Assistance Manual. The Facility was reimbursed by DPW for its final full fiscal year ending June 30, 1983. The Facility continued to operate until September 28, 1983. It did not file a final cost report with DPW within thirty days of its date of termination as required by 55 Pa. Code § 1181.73(a). This final cost report would have encompassed the period of July 1, 1983 through September 28, 1983. The Facility provided 806 patient days during the period in question; and DPW reimbursed the Facility $33,537.66, or $41.61 per diem. The Facility appealed to the Office of Hearings and Appeals on the ground that it was entitled to an additional $7.11 per diem for depreciation and interest on capital indebtedness. DPW argued that 55 Pa. Code § 1181.73(b) places a cap on the final per diem rate for reimbursement when a facility fails to file a cost report within the required thirty days and that the final per diem rate ($41.61) includes depreciation and interest. The hearing
[ 105 Pa. Commw. Page 229]
officer recommended that the Petitioner's appeal be sustained and that DPW be directed to reimburse the Facility at the rate of $48.72 ($41.61 $7.11) per diem for the period in question. The Director of the Office of Hearings and Appeals rejected this recommendation and held in favor of DPW's original interpretation of its regulation. Upon reconsideration, the determination of the Office of Hearings and Appeals was affirmed. This appeal followed.
The sole issue before us is whether DPW's interpretation of its regulation, 55 Pa. Code § 1181.73(b), as precluding Petitioner from receiving reimbursement for depreciation and interest on capital indebtedness, is correct. An agency's interpretation of its own regulation will be given judicial deference where it is not clearly erroneous or inconsistent with the regulation interpreted and where it is consistent with the policy and objectives of the authorizing statute. Mansion Nursing and Convalescent Home, Inc. v. Department of Public Welfare, 96 Pa. Commonwealth Ct. 138, 506 A.2d 1343 (1986); Michael Manor, Inc. v. Department of Public Welfare, 88 Pa. Commonwealth Ct. 583, 490 A.2d 957 (1985).
Our review shows that DPW's regulations demonstrate a consistent policy of differentiating between operating costs, and depreciation and interest. Pertinently, 55 Pa. Code § 1181.73, provides:
(a) A facility that enters into a termination agreement or agreement of sale is required to file a cost report with the Department within 30 days after the effective date of the termination or transfer and is required to provide financial records to the Department for auditing.
(b) Except for non-State operated intermediate care facilities for the mentally retarded, when a final cost report ...