GAB Decision 286
April 30, 1982 Tennessee Department of Public Health; Docket No.
81-124-TN-HC Garrett, Donald; Ford, Cecilia Settle, Norval
This appeal involved the disallowance by the Health Care Financing
Administration (Agency) of the State's claim in Fiscal Year 1980 (FY 80)
for federal financial participation (FFP) for an abortion performed in
Fiscal Year 1979 (FY 79). The Agency disallowed $109 in FFP for
physician services and $35 in FFP for anesthesiologist services for the
abortion on grounds that the appropriation act in effect at the time of
the State's claim did not provide funds for that specific type of
abortion. The State's basic position was that payment should be based
on when the service was performed (FY 79) rather than claimed (FY 80).
The Board issued an Order to Show Cause (incorporated in this
decision) containing the following conclusions: that what is
controlling is not when the abortion was performed or when FFP was
claimed, but rather which Federal funds were used to pay for the
abortion; that the FY 80 appropriations act did not authorize FY 80
funds for the type of abortion in question; and that the Agency should
deterjine whether the abortion had been paid for with Federal funds and
if so which funds were used.
The Agency responded that it had paid the State's $109 claim for
physician servies from FY 80 funds and that the $35 disallowance for
anesthesiologist services was paid from FY 81 funds. Neither the FY 80
nor the FY 81 appropriations acts provide funds for the type abortion in
question. See P.L. 96-123, November 20, 1979 and P.L 96-369, October 1,
1980.) /1/
The State essentially reiterated its original arguments, adding three
points. The first was that the Board's proposed result would make it
impossible for the State to rely on the expectation of receiving FFP (2)
for services performed during a final quarter of a fiscal year. While
acknowledging the difficult position in which the State is placed, the
Board does not find this to be grounds for reversal.As the Board stated
in Illinois Department of Public Aid, Decision No. 260, February 26,
1982, a decision dealing with a related issue:
(however) equitably compelling the circumstances may be, a federal
officer cannot pay funds except in accordance with the limitations on
the use of the those funds in the law appropriating them.(p.10)
The State's second point was that the problem stems from:
a failure of the agency to provide safeguards against
non-appropriation problems. . . . The nonappropriation problem has been
litigated in various circumstances for years yet the agency has not
addressed it. Roe v. Casey 623 F 2d 829 (1980); Los Angeles v. Adams
556 F 2d 40 (1977); Larionoff v. United States, 533 F 2d 1167 (1976);
New York Airways v. United States, 369 F 2d 7443 (1966); ad nauseum.
The State has not developed this point by articulating how the cited
cases related to the problem here or what basis the cases form for
reversal of the disallowance. Moreover, an examination of the cases
does not reveal a basis for reversal. /2/
(3) The State's third point was that the Agency's "failure to provide
for the situation by a notice system, a reserve fund, or some other
workable method, constitutes a failure to act as required by 42 USC
1302." That section calls upon the Secretary to make such regulations as
may be necessary for efficient administration of the functions with
which he is charged. The Board is not persuaded by this point for
several reasons: the State has not developed the point beyond its brief
and conclusory statement; the record does not establish a failure of
the Secretary to act; and what happened in this case was beyond the
control of the Secretary -- that is, it arose out of an action of
Congress. Simply stated, Congress specifically limited how FY 80 and 81
funds could be used, and the Department (and therefore this Board) has
no discretion to disregard the limitation.
(4) The State also argued that section 117 of P.L. 96-86 and section
108 of P.L. 96-123 (the FY 80 joint resolutions), which stated that
"(all) oligations incurred in anticipation of the appropriations and
authority provided in this joint resolution are hereby ratified and
confirmed if otherwise in accordance with the provisions of the joint
resolution", indicated Congressional intent not to disrupt the funding
pattern that the State relied on in its cooperative relationship with
the Agency. However, we conclude the Agency correctly determined that
the dependent phrase -- "if otherwise in accordance with the provisions
of the joint resolution" -- imposes the abortion funding limitation on
the general proposition cited by the State. Circumstances in this case
suggest that the State relied on the practical certainty that a fiscal
year's funds would be available to pay claims for services performed in
a prior fiscal year. /3/ Unfortunately, Congress provided an unpleasant
surprise for the State when it crossed this particular fiscal year
boundary.
CONCLUSION
Based on the foregoing, and the analysis in the incorporated Order to
Show Case, the Board upholds the disallowance. If the parties later
determine that FY 79 funds were indeed used to pay for the abortion in
question, the disallowance should be modified to that extent.
(5) DATE: February 18, 1982
ORDER TO SHOW CAUSE
The Tennessee Department of Public Health (Appellant) appealed the
disallowance by the Health Care Financing Administration (Agency) of
$144 in FFP for an abortion. The provider performed the abortion in
Fiscal Year 1979 and the State claimed FFP for the abortion in Fiscal
Year 1980. The Appropriations Act for FY 1979 provided funds that could
be used for the abortion but the Appropriations Act for FY 1980 did not.
The issue in dispute is which act is applicable -- the one in effect at
the time the abortion was performed (FY 1979) or the one in effect at
the time FFP was claimed (FY 1980). The State has advised us that
although the amount in dispute here is small, the issue is substantial.
I. BACKGROUND
Section 210 of Public Law 95-480 (October 18, 1978), the Health,
Education, and Welfare (HEW) Appropriations Act for FY 79, allowed the
expenditure of Federal funds for abortions to prevent severe and long
lasting physical harm to the mother. The continuing resolutions which
appropriated funds to HEW (now Department of Health and Human Services)
during FY 80 (P.L. 96-86 and 96-123, October 12 and November 20, 1979,
respectively) were more restrictive, eliminating Federal expenditures
for such abortions.
On its quarterly statement of expenditures for the quarters ended
March 31, 1980 and June 30, 1980, the State claimed $109 FFP for
physician services and $35 FFP anesthesiologist services for an abortion
performed on July 27, 1979 to prevent severe and long lasting physical
harm to the mother. By letter dated July 17, 1981, the Agency
disallowed both claims on grounds that the Appropriations Act in effect
at the time of the claim, the FY 80 Act, did not provide funds for the
procedure. (6)II. ANALYSIS OF ISSUES RAISED BY APPELLANT
The appellant has not denied that the abortion could not be paid for
from funds in the FY 80 Appropriation Act. The appellant, however,
contests the disallowance on three bases.
A. THE APPLICABLE APPROPRIATION ACT.
The appellant alleged that FFP should be paid because the State met
all the conditions set out in the regulations to be eligible for FFP for
an abortion performed in FY 79 and that the Agency should look to the
Act in effect at the time the abortion was performed, not the date FFP
was claimed, to determine whether funds for the procedure were
available. The Agency responded by arguing that the date the procedure
was performed is irrelevant and that the Agency has consistently
maintained that Medicaid payments for abortions be determined according
to the date of the claim.
The Agency pointed out that the appropriations acts from FY 77
through 79 all stated that "none of the funds provided for or contained
in this paragraph or (Act) shall be used to perform abortions except .
. . ." The Agency cited virtually identical language in the HEW and HHS
appropriations for FY 1980 and 1981. The Agency argued that the
language of the acts clearly limited the use of the funds provided by
the acts to the types of abortions outlined in the acts. Since the FY
80 appropriation did not specify that abortions to prevent severe and
long lasting physical harm to the mother would be paid for with FY 80
funds, such abortions could not be paid for in FY 80. The Agency argued
further that Congress ratified the Agency's interpretation of the acts
by re-enacting them without rejecting the policy of determining whether
to pay based on the date of payment rather than the date of service.
The Board dealt with a related issue in West Virginia Department of
Welfare, Decision No. 228, November 30, 1981 (copy enclosed). In West
Virginia the Board observed essentially that questions such as when the
abortion was performed are irrelevant; the issue is what funds were
used, or are available for use, to pay for the abortion. On page 4 the
Board stated:
(The) key element which the Review does not clarify is which funds
were used to pay for an abortion; the matter of when the abortion was
performed appears better considered only a coincidental red herring. In
simple terms, it appears that an abortion performed with P.L. 94-399
funds, regardless of when performed, was subject to the single
limitation of the (act) and its implementing rules; and an abortion
performed with P.L. 95-205 funds, regardless of when performed, was
subject only to the more generous . . . rules in and implementing
95-205.
The Board requests that the Agency determine and advise the Board as
to which funds were used to pay for the abortion in question (if Federal
funds were used). If the abortion has not been paid for and the Agency
has no funds remaining from the earlier and more liberal FY 79
appropriation, the (7) Agency's disallowance apparently should be
upheld, for the Agency would be without authority to pay.
B. STATUTORY INTERPRETATION.
The appellant broadly alleged that the rule of law which should apply
is that an interpretation of the statute should be avoided which gives a
retrospective operation to a law so as to impair a contract or vested
right. The appellant has not made any argument, however, which would
establish that it had a contract or vested right to receive Federal
funds for the abortion in question. Moreover, in view of the analysis
stated above in Section A, the State's allegation appears to be
irrelevant. HHS can only spend appropriated funds in accordance with
the restrictions imposed by Congress on those funds in Appropriation
Acts.
C. REGULATORY PROVISION GOVERNING SUBMISSION OF CLAIMS.
The appellant noted that 42 CFR 447.45(d)(1) provides that the State
Medicaid agency must require the provider to submit all claims no later
than 12 months from the date of service. Although the argument of the
State concerning this provision is not clear, apparently the State
interprets the regulation to mean that since the provider has up to a
year to submit its claim, the State has a right to receive FFP up to a
year after the abortion if the abortion was authorized under the act
then in effect. This might by coincidence be so if funds from the
earlier appropriation were still available for expenditure for abortions
performed then, but we do not understand that to be the case; in any
event, it appears that the Board cannot reverse a disallowance based on
a regulation which on its face does not deal with FFP but only the
provier-State relationship. Nevertheless, if the State wishes to pursue
this argument, the Board requests that the State further specify how 42
CFR 447.45(d)(1) is grounds for reversing the disallowance. The Board
also requests that the Agency respond to the Board's above stated
understanding of the State's interpretation of the regulation.
ORDER
No material facts appear to be in dispute. It does not appear likely
that either an evidentiary hearing or informal conference will be
required.
Accordingly, it is directed that the parties respond to this Order
within 21 days of the date of receipt. The parties should address any
questions raised by the Board and identify the respects, if any, in
which the Board's analysis is materially incomplete or inaccurate.
The parties are advised that new procedures governing grant appeals
were published on August 31, 1981 (46 Fed. Reg. 43816, copy enclosed),
effective September 30, 1981. Paragraph IV of the preamble cases "to
the extent practicable and not inconsistent with fairness to the
parties." Unless a party objects, the new procedures will be used in
this case.
(8)All further submissions or correspondence should refer to the
Board's docket number shown above and should be filed in accordance with
the provisions of 45 CFR 16.20 as published at 46 FR 43821. (Copy
enclosed). /1/ During an April 26, 1982 conference call, the Agency
stated that it had assumed the State had paid for the abortion
with post-FY 79 funds since the State had presented no documentation
that it had paid the provider from FY 79 funds and since the State had
not submitted its claims for FFP to the Agency until FY 80. The Agency
acknowledged that to the extent the State could document that it had
paid the providers out of FY 79 funds, the disallowance should be
reduced. The State noted that due to internal reporting problems it had
not been able to identify which funds were used to pay for the abortion
although it expected to be able to do so in the near future. /2/
Roe v. Casey involved a Pennyslvania statute which contained more
restrictive provisions regarding abortion funding than the federal
appropriations act then in effect. The court found the appropriations
act to be a substantive modification of Title XIX and found the State
statute to be at variance with Title XIX as modified by the
appropriations act and, accordingly, enjoined operation of the
Pennsylvania law. It is not clear how this case supports the State.
Lose Angeles v. Adams involved a statute which authorized expenditures
for airport development over a five year period and included a formula
for allocating funds. Subsequent appropriations acts limited total
grants made in each year. Plantiffs sued for their share of the sums
orginally authorized. The court found that the appropriations acts
imposed monetary constraints on the general statute but that compliance
with the statute required the agency to provide available funds in
accordance with the allocation formula. Again, it is not clear how Los
Angeles supports the State. The circumstances of this decision are
distinguishable from Los Angeles in that the appropriations act involved
here precluded funding for the type abortion in question whereas the
appropriations act in Los Angeles provided less funds than originally
authorized for airport development, raising the issue of how available
funds should be allocated. Larinoff v. United States involved navy
personnel who signed reenlistment agreements after choosing training
programs which, upon completion, carried service ratings for which
special reenlistment bonuses were available. After the men received the
required ratings, but before they entered the reenlistment period, the
navy announced that personnel with the rating were no longer eligible
for the bonus. The navy subsequently denied the bonuses claiming no
entitlement until the reenlistment period began. The court found that
the personnel had contract rights to the bonuses. The court also
examined a subsequent amendment which repealed the bonus provision. The
court found that the legislative history showed Congressional concern
for saving money but no Congressional intent to abrogate contract
rights. Again it is not clear how this case supports the State. It is
possible that the State might argue based on Larinoff that it had a
contract right to receive funds for the abortion under the statute and
regulations in effect in FY 79. However, as discussed in the attached
Order, the State has not established such a contract right and even if
it had the Board would be without authority to order payment of funds
not authorized by appropriation. New York Airways v. United States
involved a statute requiring the Postmaster General to provide
"reasonable compensation" for carrying the U.S. mail and giving the
Civil Aeronautics Board responsibility for fixing reasonable
compensation. Subsequent appropriations acts failed to provide
sufficient funds so that funds earmarked by the acts for a certain
element of compensation were exhausted before plantiff helicopter
companies were paid. The court found that the companies had an implied
contract right to receive payment and stated that the failure of
Congress to appropriate funds, without further words repealing the
substantive law, does not defeat a government obligation created by
statute. It is not clear how this case supports the State. It is
noteworthy that the appropriations act involved in this decision clearly
stated that no funds were to be used for the type of abortion in
question. /3/ The Board recognizes that if during FY 79 the
Agency might be said to have incurred a legal obligation to pay for the
abortion notwithstanding the lack of appropriated funds, the State might
have a case in another forum. The question before the Board however, is
not whether the Agency incurred an obligation in FY 79 to pay for the
abortion out of FY 79 funds, but whether the Agency properly disallowed
the use of FY 80 and 81 funds for an abortion for which the FY 80 and 81
appropriations acts did not provide funds.
OCTOBER 22, 1983