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THOMAS J. WEISS, State Bar No. 63167 ELECTRONICALLY
tweiss@weisslawla.com
SHA ZAMAN, State Bar No. 306224 FILE D :
szaman@weisslawla.com County of San Francisco”
Freep enous WEIS 10/21/2017
entul ‘ark East, Suite
Los Angeles California 90067 Tov uaponnacanesre.
Telephone: (310) 788-0710 Deputy Clerk
Facsimile: (310) 788-0735
Attomeys for Petitioner
HOAG MEMORIAL HOSPITAL PRESBYTERIAN
SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO
Case No. CPF-14-513970
HOAG MEMORIAL HOSPITAL
PRESBYTERIAN, REPLY IN SUPPORT OF PETITION
eee FOR ADMINISTRATIVE WRIT OF
etitioner, MANDAMUS PURSUANT TO C.C.P.
a SECTION 1094.5
TREE REESE SEPRECTEROF } tines SINS Svan
OF HEALTH CARE SERVICES, Department: 302
Respondent. RESERVATION NO. 08141013-04
Petition Filed: September 7, 2014
1. SUMMARY OF REPLY.
1. The Department admits that by its Notice of December 19, 2013, it accepted
as proper Hoag’s challenge to the auditor’s calculation of the AB 1183 adjustment.
2. The Department does not argue or even suggest that the Department is in
any way prejudiced by having the administrative tribunal determine whether there
was an error by the auditor in computing the AB 1183 adjustment.
3. The Department does not deny that it made the error addressed by Mr.
Petrak’s letter of December 12, 2013. (Administrative Record, “AR”:73.)
4. Hoag did not “waive” objection to the administrative law judge’s dismissal
for purported lack of jurisdiction.
1
REPLY IN SUPPORT OF PETITION FOR FOR ADMINISTRATIVE WRIT
OF MANDAMUS PURSUANT TO C.C.P. SECTION 1094.5Co em YN DH BF BW He
Se a ik
A nB wD NH S&S S
17
2. DEPARTMENT OFFERS NEITHER AUTHORITY NOR LOGIC NOR
EQUITY TO BAN HOAG FROM SHOWING EVIDENCE OF THE
AUDITOR’S ERROR.
The Department does not contest that on December 19, 2013, the Department
issued a “Notice of Acceptance” confirming that Mr. Petrak’s December 12, 2013
letter “has been accepted as an appeal of the identified issues,” and that a formal
hearing would be held on this matter May 21, 2014. AR 60-61. This concession is by
itself ample reason to grant the writ petition. According to the Department’s present
litigation position, this act of acceptance of an appeal, which is specifically
contemplated and referred to by the statute, at section 14171(g), would be
meaningless. To the contrary, having confirmed the procedural propriety of the appeal
in accord with the statute, the Department cannot contradict its own decision.
On the question of the meaning of “issue,” the Department contents itself with
a superficial and tautological argument that obscures rather than enlightens. Citing no
authority, the Department seems to equate “issue” with any argument used in support
of the provider’s challenge to a particular audit finding or adjustment. The
Department makes no attempt to harmonize its present litigation position with the
statute or with rational and fair administrative procedure. The Department cites no
case law addressing the definition of issue in an administrative law or other context.
Apparently, there isn’t any.
In one of several throwaway arguments, the Department also attempts to claim
that Hoag should litigate the error in computation in the group CCP 1085 proceeding,
rather than in the administrative appeal. This argument is not made with a straight
face. Errors in computation are precisely the kind of matters within agency expertise,
and which, contrary to the section 1085 proceeding, are peculiar to each provider,
requiring agency fact-finding for that specific adjustment.
Nor is this a matter of administrative law judge discretion. The administrative
law judge has no “discretion” to dismiss a properly pending appeal. Whatever
2
REPLY IN SUPPORT OF PETITION FOR FOR ADMINISTRATIVE WRIT
OF MANDAMUS PURSUANT TO C.C.P. SECTION 1094.5YA Ww FB ww
discretion the agency had to abate or not abate the administrative appeal, was
exercised May 29, 2012 to abate the appeal. Whatever discretion the Department had
to exclude the error from consideration in the appeal was exercised December 19,
2013. The Department does not contend that anything changed in either interim. The
decision to dismiss was arbitrary and illegal.
3. HOAG PROPERLY PURSUED ITS ADMINISTRATIVE REMEDY
WHILE AWAITING THE RESULT OF THE GROUP COURT
PROCEEDING UNDER CCP 1085.
Regarding the pendency of the administrative appeal while the group CCP
1085 writ proceeding goes forward, the Department attempts to reject the Hi-Desert
court’s explicit approval of the procedure used here: the hospital files an
administrative appeal, puts it in abeyance pending the ultimate resolution of the issue
of the statute’s validity, and returns to it when that issue is resolved. Hi-Desert
Medical Center v. Douglas (2015) 239 Cal.App.4th 717. The Department rejects that
analysis as “dictum,” but is unable to cite any purported holding of any case which is
inconsistent with Hi-Desert. In fact, the Department now claims that the agency
cannot assert “any jurisdiction” over a claim of illegality of a statute “unless the claim
asserts that an appellate court has held the statute unconstitutional or unenforceable.”
That is an odd assertion, backed up by nothing but an attempted cite of McHugh v.
Santa Monica Rent Control Bd. (1989) 49 Cal. 3d 348, 356, resorting to the weak cite
signal “see” (which really means “don’t see”). McHugh says absolutely nothing
about the subject addressed by Hi-Desert, that is, that the provider may assert
illegality of the statute in its administrative appeal before any appellate court has
decided the issue, and the agency should abate the appeal pending the appellate
decision. This practice makes sense because the provider only has 60 days from
receipt of notice of the audit or examination finding within which to file its
administrative appeal. 22 CCR 51022(a). Yet though the agency has followed that
practice, the Department now says it was wrong.
3
REPLY IN SUPPORT OF PETITION FOR FOR ADMINISTRATIVE WRIT
OF MANDAMUS PURSUANT TO C.C.P, SECTION 1094.5Without coherent explanation, the Department rejects this practice, which,
contrary to the administrative law judge’s off-handed assertion, is what the agency
actually did both in this case as to AB 1183 and in numerous cases involving the
earlier similar rate cut statute addressed in Hi-Desert. On May 29, 2012, the agency
and its Office of Administrative Hearings and Appeals , ordered “This case will be
held in abeyance” pending the outcome of litigation concerning the validity of AB 5
and AB 1183. AR 87. Now the Department argues, against all logic, and its own
practice that its own order of abeyance was wrong. Quod erat demonstrandum: the
dismissal order is arbitrary and capricious.
4. THE ADMINISTRATIVE LAW JUDGE ILLEGALLY DISMISSED THE
ABATED HEARING AND HOAG DID NOT WAIVE THAT
ARGUMENT.
The Department, conceding arguendo it should not have dismissed the appeal,
erroneously asserts that Hoag “waived” any objection to dismissal of the appeal on
jurisdictional ground. To the contrary, this point was argued in detail before the
administrative law judge in opposition to the Order to Show Cause. AR 32:1-33:8. In
its memorandum submitted to the administrative tribunal March 6, 2014, Hoag stated
as follows: “The Order to Show Cause, at page 1, states: ‘Thus, the issue raised in the
SODI as to the validity, legality or constitutionality of AB 5 and AB 1183 is beyond
the jurisdiction of this Tribunal.’ That is not a correct statement of the law or of the
provisions of Section 14171 of the Welfare and Institutions Code.” There follows an
explication of how the tribunal was confusing the scope of its authority with
jurisdiction.
Again, on April 21, 2014, Hoag filed its response to the Department’s
memorandum, and made the same point directly, including the observation: “This
tribunal in fact is the only body which now has subject matter jurisdiction over the
audit appeal. Until a determination is made by this tribunal, no court may act on the
audit appeal. Abelleira v. Court of Appeal for the Third District (1941) 17 Cal.2d 280
4
REPLY IN SUPPORT OF PETITION FOR FOR ADMINISTRATIVE WRIT
OF MANDAMUS PURSUANT TO C.C.P. SECTION 1094.5co MD
291-292.” AR 10:17-28. The administrative law judge, at the end of her order
dismissing the appeal, acknowledged that Hoag had made this argument, but
reflexively brushed it aside without analysis, vaguely referring to a supposed
policy of OAHA to dismiss legal challenges to AB 5 and AB 1183.
At page 11, lines 9-11, of its memo the Department, either negligently or
deliberately, flatly misquotes Hoag’s memorandum text. The text is “Nothing in the
statute or regulations says that the administrative tribunal lacks subject matter
jurisdiction over question of legality of a statute.” AR 32:9-11. The Department
renders this sentence to mean the exact opposite by the simple trick of loping off the
subject and verb of the sentence and asserting the contrary, namely, that Hoag
“acknowledged” that the administrative tribunal “lacks subject matter jurisdiction
over questions of legality [sic] of a statute.” (The “sic” was apparently inserted by
some misguided drafisperson who had never encountered the word, tipping the
verdict here toward negligent rather than deliberate misrepresentation.)
5. CONCLUSION.
The truth here is simple. The Department twists itself into knots to throw
obstructions in the way of Hoag’s attempt to get the auditor’s error corrected, and
ends up supporting a totally irrational and inequitable outcome and process. The
Department abated the action, but then dismissed the case anyway. Accepted the
appeal, then “un-accepted” it. The Department made a large-dollar calculation error,
and now labors mightily to avoid correcting it by hook or crook.
All Hoag is asking for is its statutory right to proceed with its challenge to the
accuracy of the audit finding which unjustly lifted $620,903 from the hospital with no
legal right.
fii
Mid
tif
5
REPLY IN SUPPORT OF PETITION FOR FOR ADMINISTRATIVE WRIT.
OF MANDAMUS PURSUANT TO C.C.P. SECTION 1094.5CeO NIN DN HW RB wi
10
LAW OFFICES OF THOMAS J. WEISS
Thomas J. Weiss
Attorneys for HOAG MEMORIAL HOSPITAL
PRESBYTERIAN
6
REPLY IN SUPPORT OF PETITION FOR FOR ADMINISTRATIVE WRIT
OF MANDAMUS PURSUANT TO C.C.P. SECTION 1094.5PROOF OF SERVICE
STATE OF CALIFORNIA, COUNTY OF LOS ANGELES:
Jam employed in the County of Los Angeles, State of California, I am over the age
of eighteen (18) and not a party to the within action. My business address is 192
Century Park East, Suite 2140, Los Angeles, On October 31, 2017, I served the
attached document described as REPLY IN SUPPORT OF PETITION FOR
ADMINISTRATIVE WRIT OF MANDAMUS PURSUANT TO C.C.P.
SECTION 1094.5 on all interested parties to this action by placing a true copy
thereof enclosed in a sealed envelope addressed as follows:
Xavier Becerra Attorneys for California Department of
Susan M., Carson _ Health Care Services
Joshua N. Sondheimer
Office of the Attorney General Tel: (415) 703-5615
455 Golden Gate Ave., Suite 11000 Fax: (415) 703-5480
San Francisco, CA 94117
email:
joshua.sondheimer@doj.ca.gov
BY MAIL: By placing a true cop thereof in a sealed envelope addressed
as above, and placing it for collection and mailing following ordinary
business practices. I am readily familiar with the practice of collection and
Rrocessing correspondence for mailing by the Law Offices of Thomas J.
eiss. Under that practice it would be deposited with U.S. postal service on
that same day with postage thereon fully prepaid at Los Angeles, California,
in the ordinary course of business, I am aware that on motion of party served,
service is presumed invalid if postal cancellation date or postage meter date
is more than one day after date of deposit for mailing in affidavit.
BY OVERNIGHT COURIER: I caused the above-referenced document(s)
to be delivered to _ for delivery to the above
address(es).
BY E-MAIL OR ELECTRONIC TRANSMISSION: Based on a court
order or an agreement of the parties to accept service by e-mail or
electronic transmission, I caused the documents to be sent to the persons at
the e-mail addresses listed above or on the attached service list, The email
transmission was sent through our attorney service, One Legal and the
attorney general’s name was on the list for electronic service.
I declare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct and that this declaration was executed on 10/31/17 at Los
Angeles, CA.
4
Kini}
Af <2
Karen Genova Bre fT Be Q
Xx]
[PRINT NAME] [SIGNATURE]
(Q\H80013-Hoxg Hospital FYE 9.30-09\F VE 9.30-2009\01 PROOF WRIT. xpd
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THOMAS J. WEISS, State Bar No. 63167 ELECTRONICALLY tweiss@weisslawla.com SHA ZAMAN, State Bar No. 306224 FILE D : szaman@weisslawla.com County of San Francisco” Freep enous WEIS 10/21/2017 entul ‘ark East, Suite Los Angeles California 90067 Tov uaponnacanesre. Telephone: (310) 788-0710 Deputy Clerk Facsimile: (310) 788-0735 Attomeys for Petitioner HOAG MEMORIAL HOSPITAL PRESBYTERIAN SUPERIOR COURT OF CALIFORNIA COUNTY OF SAN FRANCISCO Case No. CPF-14-513970 HOAG MEMORIAL HOSPITAL PRESBYTERIAN, REPLY IN SUPPORT OF PETITION eee FOR ADMINISTRATIVE WRIT OF etitioner, MANDAMUS PURSUANT TO C.C.P. a SECTION 1094.5 TREE REESE SEPRECTEROF } tines SINS Svan OF HEALTH CARE SERVICES, Department: 302 Respondent. RESERVATION NO. 08141013-04 Petition Filed: September 7, 2014 1. SUMMARY OF REPLY. 1. The Department admits that by its Notice of December 19, 2013, it accepted as proper Hoag’s challenge to the auditor’s calculation of the AB 1183 adjustment. 2. The Department does not argue or even suggest that the Department is in any way prejudiced by having the administrative tribunal determine whether there was an error by the auditor in computing the AB 1183 adjustment. 3. The Department does not deny that it made the error addressed by Mr. Petrak’s letter of December 12, 2013. (Administrative Record, “AR”:73.) 4. Hoag did not “waive” objection to the administrative law judge’s dismissal for purported lack of jurisdiction. 1 REPLY IN SUPPORT OF PETITION FOR FOR ADMINISTRATIVE WRIT OF MANDAMUS PURSUANT TO C.C.P. SECTION 1094.5Co em YN DH BF BW He Se a ik A nB wD NH S&S S 17 2. DEPARTMENT OFFERS NEITHER AUTHORITY NOR LOGIC NOR EQUITY TO BAN HOAG FROM SHOWING EVIDENCE OF THE AUDITOR’S ERROR. The Department does not contest that on December 19, 2013, the Department issued a “Notice of Acceptance” confirming that Mr. Petrak’s December 12, 2013 letter “has been accepted as an appeal of the identified issues,” and that a formal hearing would be held on this matter May 21, 2014. AR 60-61. This concession is by itself ample reason to grant the writ petition. According to the Department’s present litigation position, this act of acceptance of an appeal, which is specifically contemplated and referred to by the statute, at section 14171(g), would be meaningless. To the contrary, having confirmed the procedural propriety of the appeal in accord with the statute, the Department cannot contradict its own decision. On the question of the meaning of “issue,” the Department contents itself with a superficial and tautological argument that obscures rather than enlightens. Citing no authority, the Department seems to equate “issue” with any argument used in support of the provider’s challenge to a particular audit finding or adjustment. The Department makes no attempt to harmonize its present litigation position with the statute or with rational and fair administrative procedure. The Department cites no case law addressing the definition of issue in an administrative law or other context. Apparently, there isn’t any. In one of several throwaway arguments, the Department also attempts to claim that Hoag should litigate the error in computation in the group CCP 1085 proceeding, rather than in the administrative appeal. This argument is not made with a straight face. Errors in computation are precisely the kind of matters within agency expertise, and which, contrary to the section 1085 proceeding, are peculiar to each provider, requiring agency fact-finding for that specific adjustment. Nor is this a matter of administrative law judge discretion. The administrative law judge has no “discretion” to dismiss a properly pending appeal. Whatever 2 REPLY IN SUPPORT OF PETITION FOR FOR ADMINISTRATIVE WRIT OF MANDAMUS PURSUANT TO C.C.P. SECTION 1094.5YA Ww FB ww discretion the agency had to abate or not abate the administrative appeal, was exercised May 29, 2012 to abate the appeal. Whatever discretion the Department had to exclude the error from consideration in the appeal was exercised December 19, 2013. The Department does not contend that anything changed in either interim. The decision to dismiss was arbitrary and illegal. 3. HOAG PROPERLY PURSUED ITS ADMINISTRATIVE REMEDY WHILE AWAITING THE RESULT OF THE GROUP COURT PROCEEDING UNDER CCP 1085. Regarding the pendency of the administrative appeal while the group CCP 1085 writ proceeding goes forward, the Department attempts to reject the Hi-Desert court’s explicit approval of the procedure used here: the hospital files an administrative appeal, puts it in abeyance pending the ultimate resolution of the issue of the statute’s validity, and returns to it when that issue is resolved. Hi-Desert Medical Center v. Douglas (2015) 239 Cal.App.4th 717. The Department rejects that analysis as “dictum,” but is unable to cite any purported holding of any case which is inconsistent with Hi-Desert. In fact, the Department now claims that the agency cannot assert “any jurisdiction” over a claim of illegality of a statute “unless the claim asserts that an appellate court has held the statute unconstitutional or unenforceable.” That is an odd assertion, backed up by nothing but an attempted cite of McHugh v. Santa Monica Rent Control Bd. (1989) 49 Cal. 3d 348, 356, resorting to the weak cite signal “see” (which really means “don’t see”). McHugh says absolutely nothing about the subject addressed by Hi-Desert, that is, that the provider may assert illegality of the statute in its administrative appeal before any appellate court has decided the issue, and the agency should abate the appeal pending the appellate decision. This practice makes sense because the provider only has 60 days from receipt of notice of the audit or examination finding within which to file its administrative appeal. 22 CCR 51022(a). Yet though the agency has followed that practice, the Department now says it was wrong. 3 REPLY IN SUPPORT OF PETITION FOR FOR ADMINISTRATIVE WRIT OF MANDAMUS PURSUANT TO C.C.P, SECTION 1094.5Without coherent explanation, the Department rejects this practice, which, contrary to the administrative law judge’s off-handed assertion, is what the agency actually did both in this case as to AB 1183 and in numerous cases involving the earlier similar rate cut statute addressed in Hi-Desert. On May 29, 2012, the agency and its Office of Administrative Hearings and Appeals , ordered “This case will be held in abeyance” pending the outcome of litigation concerning the validity of AB 5 and AB 1183. AR 87. Now the Department argues, against all logic, and its own practice that its own order of abeyance was wrong. Quod erat demonstrandum: the dismissal order is arbitrary and capricious. 4. THE ADMINISTRATIVE LAW JUDGE ILLEGALLY DISMISSED THE ABATED HEARING AND HOAG DID NOT WAIVE THAT ARGUMENT. The Department, conceding arguendo it should not have dismissed the appeal, erroneously asserts that Hoag “waived” any objection to dismissal of the appeal on jurisdictional ground. To the contrary, this point was argued in detail before the administrative law judge in opposition to the Order to Show Cause. AR 32:1-33:8. In its memorandum submitted to the administrative tribunal March 6, 2014, Hoag stated as follows: “The Order to Show Cause, at page 1, states: ‘Thus, the issue raised in the SODI as to the validity, legality or constitutionality of AB 5 and AB 1183 is beyond the jurisdiction of this Tribunal.’ That is not a correct statement of the law or of the provisions of Section 14171 of the Welfare and Institutions Code.” There follows an explication of how the tribunal was confusing the scope of its authority with jurisdiction. Again, on April 21, 2014, Hoag filed its response to the Department’s memorandum, and made the same point directly, including the observation: “This tribunal in fact is the only body which now has subject matter jurisdiction over the audit appeal. Until a determination is made by this tribunal, no court may act on the audit appeal. Abelleira v. Court of Appeal for the Third District (1941) 17 Cal.2d 280 4 REPLY IN SUPPORT OF PETITION FOR FOR ADMINISTRATIVE WRIT OF MANDAMUS PURSUANT TO C.C.P. SECTION 1094.5co MD 291-292.” AR 10:17-28. The administrative law judge, at the end of her order dismissing the appeal, acknowledged that Hoag had made this argument, but reflexively brushed it aside without analysis, vaguely referring to a supposed policy of OAHA to dismiss legal challenges to AB 5 and AB 1183. At page 11, lines 9-11, of its memo the Department, either negligently or deliberately, flatly misquotes Hoag’s memorandum text. The text is “Nothing in the statute or regulations says that the administrative tribunal lacks subject matter jurisdiction over question of legality of a statute.” AR 32:9-11. The Department renders this sentence to mean the exact opposite by the simple trick of loping off the subject and verb of the sentence and asserting the contrary, namely, that Hoag “acknowledged” that the administrative tribunal “lacks subject matter jurisdiction over questions of legality [sic] of a statute.” (The “sic” was apparently inserted by some misguided drafisperson who had never encountered the word, tipping the verdict here toward negligent rather than deliberate misrepresentation.) 5. CONCLUSION. The truth here is simple. The Department twists itself into knots to throw obstructions in the way of Hoag’s attempt to get the auditor’s error corrected, and ends up supporting a totally irrational and inequitable outcome and process. The Department abated the action, but then dismissed the case anyway. Accepted the appeal, then “un-accepted” it. The Department made a large-dollar calculation error, and now labors mightily to avoid correcting it by hook or crook. All Hoag is asking for is its statutory right to proceed with its challenge to the accuracy of the audit finding which unjustly lifted $620,903 from the hospital with no legal right. fii Mid tif 5 REPLY IN SUPPORT OF PETITION FOR FOR ADMINISTRATIVE WRIT. OF MANDAMUS PURSUANT TO C.C.P. SECTION 1094.5CeO NIN DN HW RB wi 10 LAW OFFICES OF THOMAS J. WEISS Thomas J. Weiss Attorneys for HOAG MEMORIAL HOSPITAL PRESBYTERIAN 6 REPLY IN SUPPORT OF PETITION FOR FOR ADMINISTRATIVE WRIT OF MANDAMUS PURSUANT TO C.C.P. SECTION 1094.5PROOF OF SERVICE STATE OF CALIFORNIA, COUNTY OF LOS ANGELES: Jam employed in the County of Los Angeles, State of California, I am over the age of eighteen (18) and not a party to the within action. My business address is 192 Century Park East, Suite 2140, Los Angeles, On October 31, 2017, I served the attached document described as REPLY IN SUPPORT OF PETITION FOR ADMINISTRATIVE WRIT OF MANDAMUS PURSUANT TO C.C.P. SECTION 1094.5 on all interested parties to this action by placing a true copy thereof enclosed in a sealed envelope addressed as follows: Xavier Becerra Attorneys for California Department of Susan M., Carson _ Health Care Services Joshua N. Sondheimer Office of the Attorney General Tel: (415) 703-5615 455 Golden Gate Ave., Suite 11000 Fax: (415) 703-5480 San Francisco, CA 94117 email: joshua.sondheimer@doj.ca.gov BY MAIL: By placing a true cop thereof in a sealed envelope addressed as above, and placing it for collection and mailing following ordinary business practices. I am readily familiar with the practice of collection and Rrocessing correspondence for mailing by the Law Offices of Thomas J. eiss. Under that practice it would be deposited with U.S. postal service on that same day with postage thereon fully prepaid at Los Angeles, California, in the ordinary course of business, I am aware that on motion of party served, service is presumed invalid if postal cancellation date or postage meter date is more than one day after date of deposit for mailing in affidavit. BY OVERNIGHT COURIER: I caused the above-referenced document(s) to be delivered to _ for delivery to the above address(es). BY E-MAIL OR ELECTRONIC TRANSMISSION: Based on a court order or an agreement of the parties to accept service by e-mail or electronic transmission, I caused the documents to be sent to the persons at the e-mail addresses listed above or on the attached service list, The email transmission was sent through our attorney service, One Legal and the attorney general’s name was on the list for electronic service. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct and that this declaration was executed on 10/31/17 at Los Angeles, CA. 4 Kini} Af <2 Karen Genova Bre fT Be Q Xx] [PRINT NAME] [SIGNATURE] (Q\H80013-Hoxg Hospital FYE 9.30-09\F VE 9.30-2009\01 PROOF WRIT. xpd