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decided: July 21, 1987.


Appeal from the Order of the Department of Public Welfare, Office of Hearings and Appeals, in case of Appeal of: Allied Services for the Handicapped, Inc., Allied Services Long Term Care Facility, File Nos. 36-83-06; 36-83-07, and 23-83-105, dated August 15, 1985.


Mary Gardier Paterson, with her, Joseph A. O'Brien, Oliver, Price & Rhodes, for petitioner.

Diane J. Bartels, Assistant Counsel, for respondent.

Judges MacPhail and Palladino, and Senior Judge Blatt, sitting as a panel of three. Opinion by Judge Blatt. Judge Palladino dissents.

Author: Blatt

[ 107 Pa. Commw. Page 516]

Allied Services For The Handicapped, Inc. (Allied), has petitioned for review of an order of the Director of the Office of Hearings and Appeals (Director) of the Department of Public Welfare (Department). The Director's order had rejected the recommendation of the hearing examiner and denied Allied's appeal from the Department's refusal to pay certain medical assistance invoices pursuant to the General Provisions of the Medical Assistance Manual (Manual), 55 Pa. Code §§ 1101.11-1101.95.*fn1

Allied actually filed several appeals*fn2 from the Department's denial of provider reimbursement and the

[ 107 Pa. Commw. Page 517]

    matter was scheduled for hearing by a Departmental hearing officer. A hearing was held and, thereafter, the hearing examiner issued his recommended decision which included the following material, comprehensive and specific findings of fact:

1. On January 1, 1981, DPW adopted the MAMIS SYSTEM for processing and payment of MA claims of long term care facilities, requiring that invoices must be submitted to DPW within 6 months of the date of service.

2. DPW did not enforce its 6 month limitation until March 1, 1982.

3. Many claims submitted by Allied Services (Allied), for services provided to qualified MA patients during the period January-November, 1981 (with most of those days of service occurring in February/March, 1981), in the amount of $41,214 [Ledger One], were not reflected as approved, rejected, or pended on the remittance advices (RA's); all claims were submitted within 180 days of date of service.

4. Allied was informed by Dottie Alexander, who was conducting provider training in the MAMIS system, at the training seminar held at the beginning of 1981, that when an RA came back and the claim was not approved, rejected or pended, that it was not to be resubmitted, but, rather, they were to be sent back at the end of the year in the cost report.

5. Allied relied on the advice from Ms. Alexander and did not resubmit any of its claims for payment, which were reflected on the RA's.*fn3

[ 107 Pa. Commw. Page 5186]

. Dottie Alexander, at the time, was employed by the Computer Company (TCC), a firm retained by DPW to administer/operate the MAMIS system.

7. On September 24, 1981 DPW issued MAB 36-81-13 which proposed three suggested ways providers could reconcile submitted invoices with the RA's received form [sic] DPW. The method adopted by Allied, in its final step, provided that if an invoice did not appear on a [sic] RA marked approved, rejected or pended within 45-50 days after submission, it should be resubmitted.

8. Allied used the aforementioned method for claims not appearing in the RA's arising after July 1, 1981. It did not use the method for claims for January-June, 1981 because they were in the prior fiscal year and Allied expected that they would be resolved in that year's cost report as directed by Ms. Alexander.

9. On January 29, 1982 DPW issued MAB 36-82-01 which informed providers that the provisions of Regulation 1101.68, which require submission of all claims within 180 days, would be strictly enforced starting March 1, 1982.

10. As a result of receiving MAB 36-82-01, all claims for January-June, 1981 were resubmitted by certified mail on February 25, 1982. (Exhibit A-1, RA, shows 2-25-82 as the date of invoice).

11. On March 12, 1982 DPW rejected all the claims resubmitted on February 25, 1982 on the grounds that they were not submitted and approved by March 1, 1982.

12. The parties agree that the basis for DPW's rejection was based on DPW's interpretation of Regulation 1101.68 and MAB 36-82-01 to require

[ 107 Pa. Commw. Page 519]

    that claims be submitted and approved within the 180 day period.

13. Claims submitted by Allied for Services [sic] provided to qualified MA patients during the period December 1981 -- February, 1982, in the amount of $11,846, designated Ledger Three, were timely submitted.

14. The Ledger Three claims were rejected by the Department on grounds that insufficient information was provided.*fn4

16. Ledger Three claims were subsequently rejected by DPW on the same grounds as Ledger One claims -- that they were not submitted and approved within the 180 day deadline.

From these findings, the hearing officer concluded that, as a matter of law, the Department's interpretation of § 1101.68 of the Manual, i.e., that in order to satisfy the 180 day rule contained in § 1101.68, medical assistance provider invoices must be received, and approved, by the Department within that period, is plainly erroneous and, therefore, invalid. See State College Manor Ltd. v. Department of Public Welfare, 92 Pa. Commonwealth Ct. 89, 498 A.2d 996 (1985). Accordingly, the hearing officer recommended that the Department pay the disputed amounts to Allied.

As noted above, the Director rejected the hearing officer's recommendations and denied Allied's appeal. The material portions of the Director's order*fn5 are as follows:

[ 107 Pa. Commw. Page 520]

AND NOW, this 15th day of August, 1985, after careful review and consideration of the Recommendation of Hearing Officer Herman Kaufman, it is hereby ORDERED and DECREED that the Recommendation is rejected and the appeal of the appellant is denied.

On December 26, 1980, the Department clarified that in order for invoices to be considered timely submitted, the Department must receive the invoices within the specified 180 day timeframe. Medical Assistance Bulletin No. 99-80-15. Accordingly, in the instant case, the Department correctly denied payment because the invoices were not submitted (received) within the 180 day period. [Emphasis in original.]

On review, Allied repeats its contention that the Department's interpretation of § 1101.68 is erroneous; that the Department should be estopped to deny payment of the Ledger One claims on grounds that these invoices were not received by the Department by March 1, 1982; and that the record evidence does not support a finding that all of the involved invoices were not received by the Department by March 1, 1982. The Department responds*fn6 that these invoices were not

[ 107 Pa. Commw. Page 521]

    timely filed and that, under a strict interpretation of § 1101.68, these invoices were properly denied; that Allied failed to raise the estoppel argument before the administrative authorities and that, therefore, that issue has been waived; that Allied has failed to comply with state and federal law and did not reasonably rely on the Department's representation to its detriment and, therefore, that estoppel will not lie here; and that the Director's adjudication is in accordance with the law, not in violation of Allied's constitutional rights and is supported by substantial evidence.*fn7

Unfortunately, we are unable to reach these questions. Recently, in Northwestern Institute of Psychiatry v. Department of Public Welfare, 99 Pa. Commonwealth Ct. 213, 513 A.2d 495 (1986), this Court, en banc, held that, in provider appeals, such as the instant matter, the Director,*fn8 not the hearing officer, is the fact-finder. And, as can be seen above, the only factual statement in the Director's order here is the blanket declaration that "the invoices were not submitted (received) within the

[ 107 Pa. Commw. Page 522180]

day period." Clearly, such a vague finding of fact is insufficient to resolve the complex questions presented in this case. We are compelled, therefore, to remand this case to the Office of Hearings and Appeals so that the Director may make the necessary factual findings.*fn9 Page's Department Store v. Velardi, 464 Pa. 276, 346 A.2d 556 (1975).

Accordingly, we will vacate the Director's order and remand for a new adjudication with appropriate findings of fact and conclusions of law.


And Now, this 21st day of July, 1987, the order of the Director of the Office of Hearings and Appeals of the Department of Public Welfare in the above-captioned matter is vacated and the record is remanded for further proceedings in accordance with this Opinion.

Jurisdiction relinquished.

Judge Palladino dissents.


Vacated and remanded.

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