State, nursing homes reach potential settlement in Medicaid lawsuit

June 12--PROVIDENCE, R.I. -- House budget writers -- and the Raimondo administration -- have reached a potential "settlement" with the state's nursing homes that could lead to withdrawal of a $24-million Medicaid-recovery lawsuit against the state.

As House Speaker Nicholas Mattiello explained it on WPRO radio on Tuesday morning, the nursing homes would end up with an increase in their reimbursement rates of about 2.5 percent, instead of the 8.5 percent cut spelled out for them in the budget bill approved by the House Finance Committee late Friday night.

Further details details were not immediately available from Mattiello, but Jim Nyberg, the director of one of the two groups that represents nursing homes at the State House -- LeadingAge RI -- gave this summary: in exchange for dropping their lawsuit, the nursing homes would get a 1.5 percent increase on July 1, and another 1 percent in October and the lawmakers would reject Governor Raimondo's attempt to limit payments to them to the point a Medicaid application is approved, rather than the point at which someone entered a nursing home.

"We are trying to translate those numbers now," Nyberg said.

"Yes, the nursing homes are settling," confirmed Virgina Burke, the head of the other group that represents nursing homes at the State House.

"There is a settlement proposal which I think is a very reasonable one," said Burke, who is president/CEO of the Rhode Island Health Care Association.

Asked why, having won the lawsuit, she would recommend the nursing homes settle, she said: "It's always better to settle because who knew when we would ever get the money, who knew what was going to happen with an 8.5 percent rate cut."

"I don't know how it would have been decided on appeal. My assumption is it would have been decided the same way it was decided at the lower court level. It also evidently would have been quite a problem for the state to come up with" that much money, at least $16 million in retroactive payments and another $8 million if the lawmakers followed Raimondo's lead for next year's budget," Burke said.

Burke noted her organization is not a party to the lawsuit, and what is required now is a sign off on the potential settlement by all 59 of the nursing homes who are party to the suit.

Before agreeing to drop the lawsuit, Nyberg said the nursing homes he represents that were party to the lawsuit need to see the settlement proposal in writing for deciding where they stand, and whether they are willing to drop a lawsuit that they won, that became even bigger news last week when it came to light the state's lawyer -- Gregory Hazian, who has since resigned -- neglected to file an appeal during a period when he was not allowed to practice law.

The lawsuit centers on the nursing homes' attempt to recover $8 million a year in Medicaid payments withheld from them since FY 2016 based on, what they argued, was an improper year-after-year application of a one-time, time-limited rate cut. Superior Court Judge Jeffrey Lanphear sided with the nursing homes, in an April 9 decision that could have cost the state as much as $24 million.

After the lapsed deadline for filing an appeal came to light, the Raimondo administration petitioned the Rhode Island Supreme Court to let the state file an appeal anyway based on Hazian's "egregious" conduct. It also asked the attorney general and the Supreme Court's disciplinary counsel to investigate Hazian's conduct.

Over the weekend, LeadingAge RI issued a statement over the weekend that said the proposed new budget -- as it stood Friday night -- "will have immediate and devastating consequences for nursing homes and their residents."

"Tucked into the budget is a cut of 8.5 percent for nursing homes that will go into effect July 1st, in just 21 days. How can we, as an industry, be prepared to react responsibly when we are already significantly underfunded?" Nyberg asked.

"Our capacity to care for residents will be significantly impacted. These cuts, coupled with UHIP debacle, will put undue financial distress on our industry and the people in our care," he said.

-- This report was updated at 12:21 p.m.

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