KCCDD, Inc. v. State of Illinois

ORDER

This cause comes before the Court on Claimant’s Amended Motion for Summary Judgment. Respondent filed an objection, and Claimant filed a response. The Court being fully advised, finds as follows:

Background

Claimant, a licensed provider of day training services for the disabled (“DT services”), based in Galesburg, Illinois, filed this complaint, along with 20 others, on February 26, 2018, using a pre-printed lapsed appropriation form complaint.

In each case Claimant seeks reimbursement for DT services rendered to various disabled residents of long-term care and residential facilities on behalf of the Illinois Department of Human Services (“DHS”). In each case Claimant alleges that it was contracted to provide DT services by the long-term care facility but never received payment from DHS even though the services were performed.

On September 12, 2019, this Court consolidated this case with the other 20 claims for purposes of judicial economy.1

On the same date, the Court also granted Claimant’s Petition for a Rehearing in this matter for reasons not relevant to this decision.

[*153] On May 5, 2023, Claimant filed its motion for summary judgment.2

On June 1, 2023, Respondent filed a response in opposition on the sole basis that the Claimant has failed to exhaust its available remedies pursuant to 705 ILCS 505/25.

Analysis

The relevant facts in this case are not in dispute. Claimant is a licensed DT provider certified by DHS to provide the services at issue. Claimant provided the services pursuant to a written contract with Community Living Options (CLO), a not-for-profit corporation that operates the long-term care facilities. CLO has its own written agreements with DHS to provide long-term care at its various facilities, including, if needed, DT services.

According to the pleadings and affidavits on file, the typical payment process in cases such as this is for the DT provider to submit invoices to the long-term care provider, which in turn submits them to DHS for reimbursement. This is based on various rules set forth in the Illinois Administrative Code that control payments for medical services. Once DHS approves the bills, payment is made to the long-term care facility to reimburse it for payments to the DT provider.

Claimant apparently did its part in this case, submitting its bills to CLO. However, for reasons that are unclear, CLO either failed to submit the bills to DHS or they submitted them by paper, under an old system, instead of electronically, using a new system mandated by DHS. In any event, Claimant’s bills were never entered into the DHS computer payment system.

According to the Departmental Report filed by DHS in response to Claimant’s complaint:

Documentation from Healthcare and Family Services MM1S LTC Subsystem

indicates the recipient billing for Day Training Program was never entered into the

system for the time period indicated in number 6. The Provider’s bill was not

timely filed pursuant to Title 89, Chapter I, Sub chapter d, Section 140.20 of the

Illinois Administrative code that indicates that in order to be eligible for payment

Claimant’s Amended Motion for Summary Judgment included all of the cases consolidated and reflected in the caption above except for 18-CC-1908, which involved a different legal issue and disputed facts. As such, this Order does not apply to Case No. 18-CC-1908.

[*154] consideration, a Provider’s vendor-payment claim or bill, must be received by the

Department, no later than 180 days after the date on which medical goods or

services were provided…

In this case, the Provider is the long-term care facility. The Departmental Report includes a series of questions that establish that the services were provided and that, but for missing the deadline, the Provider (on behalf of the Claimant) would have been paid for all the claims at issue in this case.

[Question] No. 16. If this claim had been presented to your agency before the

lapsing of this line item, would it have been paid? ANSWER: Yes.

Thus, there is no dispute that the Claimant provided services at issue. Nor is there any dispute that DHS did not make any payment to the Provider (the long-term care facility) for these services rendered. This is not a case, therefore, where the Provider has been paid and it is now incumbent on the Claimant to go after the Provider to get what it is owed. Rather, Claimant is simply seeking payment from DHS in the first place.

Respondent has moved for summary judgment on the basis that Claimant has failed to exhaust its available remedies. Respondent asserts that Claimant provides DT services pursuant to contracts with the various long-term care providers. Therefore, Claimant needs to show it pursued payment from the various long-term care providers, including by suing them in circuit court if necessary, before it can seek relief through this Court.

Section 25 of the Court of Claims Act states that any person who files a claim in the court shall, before seeking final determination of his or her claim exhaust all other remedies and sources of recovery whether administrative or judicial; except that failure to file or pursue actions against State employees, acting within the scope of their employment, shall not be a defense. 705 ILCS 505/25.

However, Court of Claims Rule 60 states in relevant part “that no frivolous or unreasonable action is required to be brought against any third party in order to comply with this exhaustion of remedies requirement.” 74 Ill. Adm. Code 790.60.

As a threshold matter, we agree with Respondent that Claimant would appear to have a viable cause of action against CLO and/or the long-term care providers. The DHS system is clearly set up with the expectation that the long-term care providers are [*155] responsible for paying the DT providers for services. The long-term care providers can then be “reimbursed” by DHS for those costs, assuming the long-term care providers submit their claims for reimbursement properly and in timely fashion under the relevant administrative rules that govern the payment of such claims for DHS vendors.

In this case, it appears that CLO either failed to submit the bills or submitted them incorrectly. Such, DHS did not pay the claims. Whether DHS acted properly, within the rules and other law, is a separate issue. That is a matter between CLO and DHS, and one that is not presently before this Court. All we know in this case is that Claimant performed services pursuant to a written contract with CLO, and it stands to reason that it would have a viable claim against CLO for not being compensated.

That being said, we believe it would be unreasonable at this point to require Claimant to file suit against CLO in circuit court merely to comply with the exhaustion of remedies requirements.

The pleadings and evidence in the record show that the long-term providers are pass-through entities for these particular purposes and the services are at all times being provided to the disabled residents on behalf of the DHS. More important, there is no dispute that the Claimant provided the services, and that DHS has not paid for the services. Nor has CLO or the long-term care facilities received any payment. There is also sworn testimony that Claimant timely submitted its bills to the long-term care provider, and that the Claimant played no role in the error that led to the untimely receipt of the bills by DHS.

If the Claimant were to sue CLO in this matter in circuit court and prevail, it is likely that CLO would be out of pocket for the costs since it would be well past the statute of limitations to file any claim against DHS in this Court. While this might be considered a just outcome given CLO’s apparent error in submitting its bills to DHS, we can’t say this for certain because CLO is not a party to this matter and has not had the opportunity to defend itself. All we know for certain is that Claimant provided DT services to a disabled Illinois resident on behalf of DHS and was not compensated for it, and that if the parties were to proceed to litigation, it likely would end up with one of the social service providers suffering a pecuniary loss for services the benefits of which went entirely to DHS.

[*156] In finding that Claimant need not pursue litigation against CLO in this case, we make no determination as to whether DHS correctly applied the particular administrative rules to the claims in this case. Nor should this order be relied on as support for the proposition that any claimant in this court, including DT providers under DHS programs, are exempt from the exhaustion of remedies requirement set forth in Section 25 of the Act. It is well-established that a claimant must exhaust all available remedies, administrative or judicial, and pursue all other sources of recovery, prior to having this case heard in this court. Devaney v. State, 48 Ill.Ct.C1. 461, 463 (1996). This remains a mandatory jurisdictional requirement. Nolasco v. State, 74 Ill.Ct.Cl. 140, 143 (2022).

We simply hold that in this particular case, with these particular facts, it would be unreasonable to require Claimant to bring action against the long-term care providers in order to comply with the exhaustion of remedies requirement, and thus it falls within the exception set forth by Court of Claims Rule 60. Lowery v. State, 72 Ill.Ct.C1. 102, 105 (2020).

For these reasons, Claimant’s Amended Motion for Summary Judgment is granted.

Conclusion

IT IS HEREBY ORDERED that Claimant’s Amended Motion for Summary Judgment is granted. The Claimant is awarded the sum of $31,808.77 in full and final satisfaction of all claims listed in the caption except for Case No. 18-CC-1908. The Clerk is directed to reinstate Case No. 18-CC-1908 to the docket and return that matter to the Commissioner for further proceedings.